In Ramon Magsaysay the world lost one of the greatest democrats that Asia has yet produced. Though ridiculed by some for being a country bumpkin, his tremendous compassion for the needs of people around him and his utter dedication to the service of his nation revived hope in a time of despair and inspired other men in government to a new level of administrative activity unknown before in the Philippines. Because as Secretary of National Defense he had become acutely aware of the plight of the small farmer during his military and economic fight against the Huks, and because this struggle was so closely related to his major goal of restoring the people’s faith in the government, his heart was most of all in that aspect of his program which he called “rural improvement.”
The rural improvement program was divided into two types of activity. The first entailed merely the extension and intensification of governmental services in rural areas—e.g. drilling of artesian wells, building irrigation systems, and expanding rural health services—and was designed to increase agricultural production and raise rural living standards. Because it involved merely the more rapid flow of government funds to rural areas, it engendered little or no opposition.
The second type of activity was designed in the long run to accomplish the same objectives, but in the process it became necessary to change the whole economic and social structure of Philippine rural life. Transformation of the existing pattern of agricultural credit, land tenure, and landlord-tenant relations may be called in their totality “agrarian reform.” Because there were not enough men with his own dedication to public service to fill all the important posts and because his concept of democratic decision-making gave more consideration to the views of the opponents of reform than the most rabid social reformers would have liked, agrarian reform under Magsaysay certainly did not accomplish the impossible,1 but it did accomplish more in three years than had all the administrations in the past thirty years. Agrarian reform involved plucking some of the gaudiest feathers of the privileged birds of Philippine politics, many of whom protested vociferously.
It is hard to imagine how settlement of public lands could be included under the category of agrarian reform. Transformation of land tenure patterns from public to private ownership cannot be said to transform the economic and social structure of “rural life” of previously uninhabited areas. Nor does migration to new land alter the social or economic structure of the pioneers’ provinces of origin, as will be noted later. But in so far as public land settlement creates a new type of community (one of owner-cultivators having equal opportunity for self-improvement and one without widely varying extremes of wealth or power), it certainly can be said to contribute to the long-term transformation of the social structure of the national community.
Public land settlement engenders the least opposition from vested interests because of its rather indirect contribution to agrarian reform. In fact, it has been so generally applauded in the Philippines that political leaders before Magsaysay often emphasized it to distract attention from the fact that the more difficult direct agrarian reform was not being undertaken. Yet there was one kind of opposition. “Landgrabbers” (persons who acquired public land illegally or quasi-legally for speculation or to become absentee landlords) had developed a vested interest in the lax enforcement of the law under previous administrations. Quite naturally they opposed vigorous enforcement under Magsaysay. The man who was able to stand up to such opposition was Undersecretary of Agriculture Jaime Ferrer. Without him the President’s wishes for rapid distribution of public land to small farmers could never have come close to realization.
It had long been a pernicious and widespread practice for people with money or political influence to lease or purchase at a nominal price up to 144 hectares of public land (or 1024 ha. if incorporated)—the legal maxima—with no intention of cultivating the land or grazing cattle on it, the ostensible purposes of acquisition. While the paper transaction was completed at the Bureau of Lands in Manila, an uneducated small farmer looking for land would enter the area and, failing to notice any evidences of private ownership, would proceed to cultivate a plot for himself. Soon his friends and relatives would join him in unwittingly improving another’s claim. Then the “legal” owner or lessee would appear on the scene either offering to sell the land at a fantastic profit or demanding a share of the crop from the cultivators. Sometimes large applications were even made after the unsuspecting cultivator had entered the land. Ferrer halted this perversion of the law’s true intent by investigating scores of large public land applications and rejecting or cancelling them if he found that the applicants were not abiding by the legal requirement to cultivate one fifth of the area applied for.
In the course of the education which these investigations provided, Ferrer learned that even legal acquisition of large tracts of public land could be used in such a way as to frustrate the real aims of the administration’s program. So, in April 1956, to prevent further frustration, he sent a memorandum to the Director of Lands instructing that all sales applications for areas over 50ha. be accompanied by a statement outlining a five-year program of agricultural development for the land in question, offering proof of financial resources to carry out the plan, evidence of possessing work animals or farm machinery, and a promise that the land would not be worked by tenants—cancellation to be automatic upon non-compliance with any of these conditions. These new requirements will undoubtedly reduce the number of large sales applications approved.2
Traditionally the slow pace of the wheels of administration in the Bureaus of Lands and of Forestry has been as important a deterrent to the acquisition of titles by cultivators as has landgrabbing and speculation. Under the Public Land Law no application for homestead, sales, or lease may be accepted without a certification by the Bureau of Forestry that the land is “disposable agricultural land” and, under the terms of an executive order, a survey. Since the real pioneer could seldom afford a private survey, a dearth of government-financed surveys especially handicapped the poor. In the fiscal years 1951 to 1953 these two bottlenecks were widened with the provision of more than one quarter of a million dollars of U.S. aid. The tangible result was an increase of over 50 percent in the number of applications received in 1953. The remaining bottleneck was the seemingly endless paperwork in the Bureau’s offices.
Just before Magsaysay’s inauguration the Bureau was issuing patents at the rate of 7,504 per year, twice the rate of the previous year. But at that rate it would have taken the Bureau more than twelve years to act on its backlog of pending applications. With U.S. help ($735,000) in the form of mechanical office equipment, with the advice of a management consultant firm, and with the intensification of activity under Magsaysay’s leadership, the volume of patent issuance by 1956 had been multiplied nearly six times and, though the annual rate of applications received had doubled since 1953, the backlog amounted to little more than three years’ work.
Since the great majority of patents issued by the Bureau of Lands are to homesteaders, one can say that the accelerated pace of the Bureau’s activities in the last three years has satisfied the Filipinos’ land hunger at a more rapid rate than ever before in Philippine history. But are the land hungry coming from the heavily populated, high-tenancy areas of Central Luzon? Unfortunately all available evidence indicates that those from Central Luzon account for a disproportionately small percentage of public land pioneers.
Largely to stimulate the movement of Central Luzon tenants to Mindanao and other under-populated regions, the government has for many years organized agricultural colonies. The agency in charge of this program when Magsaysay came to power was the Land Settlement and Development Corporation (LASEDECO) . In 1950 it had taken over the colonies started by the National Land Settlement Administration before the war and the mechanized rice-growing projects of the Rice and Corn Production Administration. It undertook very few new projects of its own, partly because it received no new appropriations and partly because some of its employees were too busy making money for themselves by selling the Corporation’s machinery to be able to devote much time to the business of land settlement. Thus Magsaysay recommended in his first State of the Nation address to Congress the abolition of LASEDECO and the creation of a new agency.
Republic Act 1160, adopted in June 1954, established the National Resettlement and Rehabilitation Administration (NARRA) and authorized for its use 5 million pesos the first fiscal year and 8 million each year thereafter. Only 3,750,000 pesos, however, was actually released for expenditure in fiscal year 1955. Nearly a quarter of this had to be used to pay old debts, mainly back wages, of LASEDECO. Approximately 60 percent of the remainder went for direct and indirect aid to settlers. Since LASEDECO left its financial records in a tangled mess and since a number of its employees were Liberal Party political appointees who were not retained, NARRA’s first year of operations was largely taken up with establishing a working organization. Nevertheless, under its imaginative, hardworking Chairman (Eligio Tavanlar) nearly 1,000 families were transported from Luzon to Mindanao and Palawan. LASEDECO projects were reorganized and several new projects initiated, accommodating “pioneers” (persons who had traveled to the settlement area at their own expense) as well as NARRA-trans-ported settlers. In fact, 37.5 percent of the 8,041 families in NARRA settlements in 1955 were pioneers.3
In NARRA’s second year P9.25 million was released and nearly six thousand families were transported to Mindanao and Palawan.4 NARRA estimated that the cost of settling a family from Luzon on another island ranged betwen P600 and P1500, including full subsistence until the first crop is harvested and partial subsistence the second year. This is to be compared with the less than P9.00 which it costs the Bureau of Lands to issue a patent for a plot of public land.
Government supervised agricultural colonies are by their nature an expensive way to open new land. Are the results worth the cost? Of the settlers in projects in June 1955, only 37 percent had come from provinces in which, according to the 1948 census, less than 50 percent of the cultivated land was farmed by owner-operators. Furthermore, even if a tenant did leave Pampanga, for instance, to go to Mindanao, he would undoubtedly have been replaced by another tenant. Thus public land settlement cannot be said to have any appreciable effect on tenancy percentages in Central Luzon or other highly tenanted areas. Nor can it be said that government financed colonization has been more successful than pioneers in increasing the national agricultural product. The techniques of scientific agriculture have not been adequately utilized in the projects and the nature of the selection process has so far not tended to get the best farmers as settlers. In fact, many men, especially those transported from Manila, have had no farming experience at all. Nearly a quarter of the family heads residing in settlements in June 1955 were formerly unemployed artisans and laborers. Such persons often do not make good settlers. Now, in search of experienced tenant farmers to resettle, NARRA has launched an extensive information drive in Central Luzon.
Manila newspapers in the spring of 1956 carried much discussion of investigating irregularities in NARRA. But politically inspired charges and counter-charges exaggerated the facts and in the long run no serious misuse of funds or abuse of authority was unearthed. NARRA’s firm adherence to the principle of family-sized farms makes necessary the use of only a small amount of mechanical equipment, thus reducing temptations to graft. And with Magsaysay ready to flare into indignation over the slightest complaint from a settler, officials were kept on their toes. After Magsaysay’s death, NARRA was given a new set of top officials, whose standards of performance cannot yet be judged.
Though NARRA may have claimed too many beneficial effects for its own accomplishments, it was not a failure within the frame of reference in which it was planned. It made the ownership of a 10-hectare plot of land in Mindanao a reality for several thousand families and a real alternative for thousands more who, even though they did not choose that alternative, were given new hope by the thought. Those who have proposed that NARRA funds would have opened more public land to settlement if they had been allotted to the Bureau of Lands, Bureau of Public Highways, and Bureau of Agricultural Extension for services to pioneers are economically correct but have overlooked this psychological effect of the NARRA program and its political consequences.
The Economic Development Corps (EDCOR) of the Armed Forces, started by Magsaysay when he was Secretary of National Defense, has perhaps been less criticized because its laudable political purposes were more clearly recognized from the first. It was designed to rehabilitate Huk soldiers by making economically independent and politically loyal citizens out of them. In the first days of the Magsaysay administration, before NARRA was effectively organized, EDCOR settlements began to take civilians in large numbers. By 1956 only 26.4 percent of the 935 settlers in four projects were ex-Huks and the whole program had taken on some of the same general objectives as NARRA. Agricultural planning is better in EDCOR, but its administration is over-staffed. There is one officer or enlisted man for every 2.8 settler families. EDCOR received $260,500 in U.S. aid in FY 1953; NARRA was given $194,000, also mostly in mechanical equipment, in FY 1955.
Another aspect of agrarian reform which received special attention in Magsaysay’s first State of the Nation address was rural credit. Said he, “Our small farmers and producers should find it easier to borrow money when they need it to increase production. This means more rural banks and more ample working capital for ACCFA.” The Rural Banks Act had been passed in June 1952. In the first year of the Magsaysay administration the number of rural banks grew from 20 to 28 and the volume of loans was increased by 66 percent. In 1955 ten new banks were established and loan operations expanded another 45 percent to total P6,717,920. Though in 1955 68 percent of the value of these banks’ loans were for agricultural purposes and 64 percent was given in amounts of less than P1,000, the Rural Banks were of minor importance for the tenant seeking credit, since 67 percent of the amount loaned was secured by chattel mortgages.5
ACCFA, or the Agricultural Credit and Cooperative Financing Administration, the government agency which lends money to and supervises the operation of the Farmers’ Cooperative Marketing Associations (FACOMA), is more suited to the tenants’ needs. The FACOMA grant loans with either a pledge from the farmer to deliver his next crop to the FACOMA warehouse or the actual deposit of palay6 as collatera1.7 The farmer gains both in the exceptionally low interest rate of 8 percent which the FACOMA charges and in the good price he gets for his palay, which can be stored until the seasonal fluctuation favors sellers.
The first FACOMA was established in January 1953 at the Arevalo EDCOR farm in Lanao. At the beginning of the Magsaysay administration there were 102 such cooperatives. Cooperative credit got off to a slow start under Magsaysay. As a legacy from the previous regime there was a shortage of funds, which reduced ACCFA loans released to FACOMA to P25,000 in April 1954. Vicente Araneta, whom Magsaysay had appointed as ACCFA administrator, blamed him for the delay in finding ACCFA new financial resources. The President, deeming this charge grossly unfair, dismissed Araneta. One week later, P2 million was made available by the Philippine National Bank for ACCFA loan operations and by July the FACOMA were receiving money from ACCFA at the rate of P1,723,410 per month.8
Colonel Osmundo Mondofiedo, who was appointed to replace Araneta, was one of the happiest results of Magsaysay’s often unrewarding search for honest, capable men. His experience as comptroller of the Armed Forces stood him in good stead when handling P32.6 million, the amount loaned by ACCFA during the first fiscal year under his direction. His devotion to the principles of cooperation—and to hard work—are unquestioned. His conception of the role of the cooperative in the Philippine economy is ambitious.9
By December 1955 there were 337 FACOMA and ACCFA was lending to them at an average of more than P5 million per month. ACCFA had expanded from rice into tobacco financing and marketing and had completed plans, now beginning to be implemented, for launching of coconut cooperatives. The U.S. aid mission in Manila expressed its evaluation of ACCFA’s importance to Philippine economic and social advancement by giving grants which totaled $1,651,200 by the end of FY 1955, the heaviest U.S. investment in any of the Philippine agencies implementing agrarian reform. U.S. assistance financed jeeps for ACCFA personnel, acquisition of mechanical office equipment, building of warehouses and rice mills, and technical advice to improve administrative procedures.
FACOMA operations have not, of course, been without problems, but difficulties have been surmounted with a much greater degree of success than in previous Philippine cooperative experiments.10 Careful checking of accounts by ACCFA auditors has minimized financial irregularities. Though a number of FACOMA officials have had to be dismissed for making money dishonestly, due to ACCFA tutelage, not a single cooperative has ceased to exist as a consequence. An intensive ACCFA educational campaign has attempted to inculcate cooperative principles in farmer members, a difficult task since most of them joined simply “to get a loan.” Inexperienced FACOMA officials are learning the techniques of cooperative credit and marketing.
The besetting sin of most FACOMA is politics, which is not surprising in a country where it is said to be the biggest “industry.” In most localities where they are found the FACOMA has become the most important organization besides the municipal government. Not only has office in a FACOMA become a stepping stone to local political office, but in some towns the reverse is also true. ACCFA supervisors have met the situation with stern regulations against political activity by FACOMA officials, but the regulations are sometimes hard to enforce, and, even if they were always enforced to the letter, the purely economic motivation would not necessarily have gained ascendancy in the conduct of FACOMA affairs.
External, overt, landlord opposition has been only sporadic. Most landlords who have not already decided to cooperate sincerely have found that their most advantageous course was to join the FACOMA and try to turn it to their own profit. They have sometimes done this by grabbing the lion’s share of FACOMA loans, then illegally relending the money to their tenants at much higher interest rates. Often, too, they have been thwarted in the attempt.
Cooperatives, which presuppose a rather egalitarian social structure, cannot function properly in a hierarchical one such as that of the Philippines. But under determined leadership they can gradually help to mold a society without great contrasts of wealth and power, and thus create for themselves a compatible environment. This is happening in the Philippines. The economic gains to 73,387 FACOMA members in FY 1955 have been estimated by ACCFA at over P12 million in usurious interest saved, P8 million earned from increased rice prices and P4.5 million from higher tobacco prices, in addition to the added income from increased production as the result of using more fertilizer and insecticides. The social gains are less tangible but no less real. Tenants are, on many occasions, being thrust into positions of community leadership by election to FACOMA boards of directors, and the landlords’ traditional techniques for directing community decision-making are being frustrated.
Within the entire agrarian reform program Magsaysay was most intensely concerned with the improvement of tenant-landlord relations. It was in landlord oppression that injustice became visible to him. Having seen injustice, the President felt impelled to act. Sometimes he sent terse notes to subordinates demanding prompt action to relieve a tenant’s distress; at other times, when he thought official negligence was the cause of the trouble, Magsaysay would call the official concerned to his office; or he might himself travel to the scene of the conflict to learn the tenant’s complaint first hand and to right the wrong, as far as possible, on the spot. Cabinet meetings were occasionally interrupted and important appointments cancelled to allow for such trips. One may find it hard to comprehend the value of such behavior by a Chief of State, but the circumstances dictated a need for it, and it was a measure of Magsaysay’s greatness that he perceived the need and acted upon it, even in the face of ridicule from his enemies and from some of his less unconventional friends.
Given the President’s special interest in this sphere, it is understandable that rent reduction and tenure security were the most successful aspects of his administration’s efforts toward agrarian reform. He called for better administration and a new law in his first State of the Nation address to Congress: “The government should extend greater protection to tenants who . . . are often badly in need of advice with respect to their rights. . . . I urge Congress to strengthen the legal staff entrusted with the specific task of rendering this kind of assistance. Existing legislation on tenancy relations is confusing, there are too many laws in too many books. We need a single, concise and easily understood farm tenancy code.”11 This is a mild way of stating the need for reform. But the President actually worked for and achieved more than the amalgamation of existing legislation.
Agricultural Tenancy Act
On March 10 Magsaysay created an Inter-Departmental Committee on Land Tenure which was to “prepare a realistic land tenure program based on policies enunciated by the President,” to review bills already filed in Congress, and to prepare drafts of “complimentary bills” to insure “comprehensive implementation” of the program. The first piece of legislation influenced by the work of this Committee was, after its unanimous passage on August 3, known as the Agricultural Tenancy Act of 1954. Unanimity is a custom in the Philippine Congress which belies the fact that there had been considerable behind-the-scenes opposition. A spokesman for the Rice Producers Association, a landlords’ organization which had lobbied intensely against the Act, called it “a monument of ill-considered legislation . . . intended to please a certain group to the prejudice of another.” This is an exaggeration, however: the advances for the tenant, though important, were hardly “monumental.” Nevertheless, even this Act would not have passed Congress without the determination of the President and the loyalty to him of a few Senators and Representatives.
Leasehold, or fixed rent, tenancy was, except for bare mention in Republic Act 34, a new concept in Philippine tenancy legislation. When first proposed as a step upward in the agrarian ladder for kasamas (share tenants), it was designed to give them more independence and a larger share of production. Unfortunately, Republic Act 1199, which allows the tenant to opt for the leasehold system, has not really given them either. Managerial decisions in Philippine share tenancy have traditionally been made by the landlord. In fact, before 1954 all the landlord’s managerial rights were legally protected. The new Act nowhere explicitly transfers managerial rights to the lessor and, in Section 6, defines the “tenancy relationship” as one which “arises between a landholder and a tenant once they agree to undertake jointly the cultivation of land belonging to the former either under share tenancy or leasehold.” Yet “joint cultivation” is the essence of the kasama system and refers to the owner’s role in management, not in the actual tilling of the soil.
Under the most favorable sharing arrangement the tenant has to pay for the land only 30 percent of the cropafter the cost of fertilizer, pest and weed control, reaping and threshing has been deducted from the gross harvest. Under leasehold the tenant may be legally required by his landlord to pay in rent “for the use of the land” as much as 30 percent of the gross harvest and to shoulder the cost of fertilizers, threshing, etc. himself. In view of the law’s provision it is not surprising that the share tenants have not rushed to opt for the leasehold system. In fact, very few such changes have been recorded.
The extension of the coverage of Republic Act 1199 to crops other than rice was perhaps the most important advance of the 1954 law over previous tenancy legislation. In the bill passed in the regular session by the Senate there was an attempt to spell out in some detail the shares properly corresponding to the different factors of production in crops other than rice. But the Act merely stipulates a minimum share of 30 percent for the tenants’ labor. The gain for non-rice tenants came not so much from this provision, however, as from other portions of the Act which apply equally to all crops and types of tenancies. For example, Section 19 exempted 25 percent of the tenants’ share of the harvest from the landlords’ lien in case of unpaid debts, whereas under Act 4054, applicable to rice share tenantry only, there had been an exemption of just 15 percent.
Greater security, and at the same time greater freedom, for all tenants are the most significant results of the Act. Act 4051 had prohibited ejection of tenants without “just and reasonable cause,” but listed only some of the causes which might be so considered. Included in the list were vague phrases highly susceptible to landlord abuse, e.g. “gross misconduct or wilful disobedience on the part of the tenant to the orders of the landlord or of his representative in connection with his work; fraud or breach of trust in connection with work entrusted to him.” In R.A. 1199 these vague phrases have been eliminated and Section 49 provides that “the tenant shall not be dispossessed of his holdings except for any of the causes hereinafter enumerated.” This new enumeration is worded so as to be almost incapable of an interpretation unjustly detrimental to the tenant. Furthermore, the burden of proof to show the existence of a lawful cause for ejectment is, in Section 51, thrown upon the landlord. No ejectment can take place without a hearing in, and authorization of, the Court of Agrarian Relations.
The tenant’s freedom had been seriously restricted by Section 25 of Act 4054, which, with an almost feudal ring, said that “the tenant cannot leave his landlord at any time except for good cause.” R.A. 1199 only penalizes the tenant’s leaving his farm before the crop is harvested. Under the old law “the management of the farm rests with the landlord”; the only substantial management rights which now remain to the landlord are the right to choose the kind of crop and seeds and the right to require the use of fertilizer. The tenant, on the other hand, may provide any of the factors of production that he is able.
The rice tenant’s gain in the sharing of the crop and expenses is not apparent, but is nevertheless very real. The basic factors of land and labor continue to be awarded 30 percent of the net crop on first class land, with 5 percent each going to the party which contributes the work animal and the party which contributes the farm implements. A 1947 Court of Industrial Relations decision had allotted 30 percent to planting and cultivating. This is recognized in the new law, which gives 5 percent to the final harrowing and 25 percent to transplanting. Studies by the Agricultural Tenancy Commission have shown, however, that the real cost of transplanting is only about two-thirds of this 25 percent. Transplanting is often undertaken on an exchange labor basis, thus entailing little or no cash outlay for the tenant. Since the tenant may choose to shoulder any costs he is able, the “bonus” of over 8 percent to the party which does the transplanting will increasingly be the tenant’s. One of the most numerous causes of dispute under the new law has been the landlord’s reluctance to allow the tenant to collect this “bonus.” Since final harrowing is usually undertaken by the tenant, R.A. 1199 can be a real “70-30 law” for the tenant who owns his own carabao and plow. The escape clause of R.A. 34, “in the absence of any written agreement to the contrary,” which prevented it from being a “70-30 law,” is no more.12 On August 30, 1954, when the President signed the Agricultural Tenancy Act, the only possible obstacles to the achievement of greater justice for over 700,000 tenants were administrative.
Magsaysay had not waited, however, for a new law before coping with these administrative obstacles. During his second week in office he “suggested” to the Chief of Staff of the Armed Forces that a team of Judge Advocate officers be detailed to prosecute violations of tenancy laws. Soon Army officers with legal training, having been briefed on the applicable statutes, were scattered throughout Central Luzon mediating disputes and prosecuting obstinate tenants and overbearing landlords. After the Agricultural Tenancy Commission, and later the Court of Agrarian Relations, were formed, these officers cooperated with the new agencies. In June 1956, just before the Army Judge Advocates turned over their role in tenancy law enforcement to the Judge Advocate General’s Office (JAGO) of the Philippine Constabulary, which they had trained for the job, there were 6 officers working with ATC and 17 with CAR. This was perhaps an even more effective technique than EDCOR for persuading a large segment of the population that the Armed Forces are the people’s friends and not their enemies.
Congress did not provide for any new agency to help enforce Republic Act 1199, and, more important, it did not authorize any additional funds for the purpose. This had been an effective method in the past by which a conservative Congress could kill infant reforms. But, in the case of the Agricultural Tenancy Act, President Magsaysay prevented infanticide by allotting P150,000 from his “contingent fund” for the establishment of an Agricultural Tenancy Commission. During the last five months of the fiscal year it received an additional P66,000 from U.S. aid counterpart funds.
Duties of the ATC
The Commission, created by Administrative Order No. 67 on September 30, was to carry out the duties of the Secretaries of Agriculture and Justice listed in the Act. Section 52 required the Secretary of Agriculture to conduct educational programs “to acquaint the tenants and landholders with their rights and responsibilities,” to prepare and distribute contract forms, and to conduct research in order to determine the extent of compliance and fairness of the Act. The Secretary of Justice was made responsible in Section 53 for “formulating a national enforcement program.” Thus the Commission was divided into mediation, information, and technical (i.e. research) divisions. The Chairman and two commissioners are appointed by the two Secretaries “in consultation.” The ATC’s first Chairman, after only a few months in office, had to resign under a barrage of serious, but unproved, charges. He was replaced with Colonel Guillermo Santos of the JAGO who had distinguished himself in the early months of the Magsaysay administration with his fair, but forceful, handling of the explosive dispute at the government-owned Hacienda San Pedro Tunasan.
At the end of the first nine months of ATC operation the information division had distributed over 170,000 copies of educational pamphlets, tenancy contracts, and the law itself, in English and three Philippine languages, had produced one movie, and had organized 214 public forums to explain the new tenancy law in twenty provinces.13 In fiscal year 1956 the number of public meetings and of copies of Commission-printed literature distributed increased five-fold. The budget for that year, 69 percent of which came from U.S. aid counterpart funds,14 had increased more than three-fold over the previous nine-month period. By July 1, 1956, the ATC had also received approximately $64,000 in dollar aid from ICA for the purchase of jeeps and movie and office equipment.
The ATC is engaged in the administration of a revolution: it is the mediation division’s job to quell the unrest fomented by the information campaign. During the first nine months of operation, 596 disputes were brought to the Commission and 270 settled amicably; the remainder were either acted upon and awaiting settlement, were pending investigation, or had been taken to court. In FY 1956 more than twice as many cases were referred to the Commission, while the number of those settled amicably increased nearly four times. ATC mediation attorneys are probably the first government officials which most tenants have ever seen who seem to exhibit a bias against landlords (though this is, of course, not always the case). They take very seriously Section 56 of R.A. 1199 which provides that “in the interpretation and enforcement of this Act” all “grave doubts” should be resolved in favor of the tenant. For example, in many instances they have interpreted “auxiliary crops,” a poorly defined term in the law, to mean any crop grown on a farm in addition to rice, even if, as is the case with tobacco, the “auxiliary crop” has a greater monetary value than the “principal crop.” Section 30 of the Act gives 80 percent of the “auxiliary crop” to the tenant if he shoulders all production costs.
The technical division undertakes research to provide the necessary information for amendments to the law. A study of costs and practices in corn tenancy which covered 73 villages in 12 provinces was completed in March 1956. It will eventually be the basis for new sections of the law covering corn. A similar study for rice was made from April to June of 1956. The division has already made recommendations to revise, among others, Section 26—to fix the minimum home lot as a percentage of the farm lot rather than as an absolute area—and Section 32—to reduce the share given to the party which defrays the expenses of transplanting.15
In the early drafts of the Agricultural Tenancy Act reference had been made to a “Court of Agrarian Relations,” since another bill, S.B. 142, had been introduced in the Senate at about the same time to create such a court. But the Agrarian Court bill faced even more opposition than the tenancy bill; when it became apparent that the latter would pass first, mention of an as yet non-existent court was omitted from it and the Court of Industrial Relations was given jurisdiction instead. The Tenancy Division of the CIR had existed since before the war, but its consistently inadequate appropriations reflected the signal lack of concern of a landlord-dominated Congress for vigorous enforcement of tenancy laws. This inadequacy was most keenly felt in the lack of travel funds sufficient to allow either Judges or Commissioners—except rarely—to go to the disputants, since tenants could not afford to travel long distances to Manila to present a case. The tripling of the rate of filing of new cases after the establishment of the CAR is some indication of the number of cases that were never filed because of the Court’s distance from its prospective customers.
Magsaysay could not create a Court by administrative order, but had to wait on an unenthusiastic Congress to enact a law. Though the Senate adopted the conference report in the July 1954 special session, the House conferees “engaged in consultation”—as it was later explained by the House Majority Floor Leader16—for nearly a year before asking approval of this report.
The result of one year’s delay in the enactment of the Agrarian Court measure resulted, perhaps inadvertently, in an important omission. Section 18 appropriated P400,000—in addition to the regular appropriation of the CIR Tenancy Division which was to be transferred to the new Courtfor expenses “up to the last day of the fiscal year 1955.” The President signed the Act just 17 days before the end of that fiscal year, so that there were obviously no funds to hire new personnel.
The amendatory bill which the President certified to the July 1955 special session was not, however, limited to a correction of the year of appropriation by the time it had emerged from the legislative mill as R.A. 1409. The CAR’s criminal jurisdiction was removed as being inappropriate for a court given the freedom to disregard Rules of Court, and the power to appoint commissioners and clerks was transferred from the executive judge to “the President of the Philippines with the consent of the Commission on Appointments of the Congress.” Debate on this latter item revealed that delay in the passage of the original bill may have been caused by Congressmen’s apprehension that they would be unable to influence the executive judge’s appointments. Patronage is the life blood of Philippine politics.
By August the country was in the midst of an election campaign. Nine Senators and 52 Governors were to be chosen in November. As he faced the necessity of appointing CAR judges, the President was subject to very great political pressures. Though he wanted to find good men, he was threatened with retaliation from his party’s supporters if their recommendees were not favored—and there were 200 applicants for the nine posts.17 The ensuing delay was probably caused by the lengthy screening which a conscientious choice required and by the President’s underestimation of his own political strength. Meanwhile tenancy disputes multiplied. On October 17 the Undersecretary of Justice authorized attorneys in the CIR Tenancy Division, who had been theoretically transferred to the CAR, to mediate tenancy disputes until the appointment of the CAR judges.18 The Executive Judge was finally named on November 14. By December, when four more judges were appointed, cases began to be heard, and 118 cases were decided or otherwise disposed of before the end of the year. This rapid start was the result of the constructive impatience of the Executive Judge, the former chairman of the ATC, Guillermo Santos, who believes that delay is injustice. (One of the junior commissioners of the ATC, 28-year-old Fernando Santiago, was appointed to replace Santos; he has a detailed knowledge of the laws and of tenancy conditions, and a willingness to stick his neck out for a good cause.)
The CAR inherited a tremendous backlog of cases, most of which had accumulated between the abolition of the CIR Tenancy Division and the appointment of the Executive Judge. The ATC information program was apparently quite successful: in the first full year of CAR operations 2,589 cases were newly filed, or slightly more than the total for the previous three years in the CIR. In view of the fact that the Court was at full strength little more than ten months during 1956, one need not be too pessimistic in noting that the number of cases decided and otherwise disposed of was only about seven-eighths of the FY 1953-55 total. Nearly 300 more cases were disposed of in 1956 than were filed. This was done on a budget of P364,235 during the first seven months of operation, since all the money authorized by Congress was not released. For the initial stages of a new agency this was not sufficient and supplies had to be borrowed from the ATC. For fiscal year 1957 the CAR was given an appropriation of P733,150, including P81,000 from counterpart funds.
During the Congressional debate on R.A. 1409 some doubt had been expressed as to whether the CAR was, strictly speaking, a “court”; some felt it would more properly be termed a “quasi-judicial body.” Certainly it is more mobile and its procedures more expeditious than any regular court in the Philippines. All eight associate judges hold court outside Manila. Because the Act is largely silent on this matter, the Executive Judge, who sits in Manila, has considerable discretion in the deployment of his colleagues. Though there are nine districts of the Court, Judge Santos can and does transfer judges temporarily from districts where cases are few to those where the backlog is heavy. Furthermore, though the judges’ courtrooms are located in the most centrally situated provincial capitals of the regions, they are authorized to hold court in any municipal building and in practice may even travel to remote villages to hear evidence or to make ocular inspections of fields in dispute. $58,111 in U.S. aid has bought 18 jeeps and 9 station wagons, among other things, to help make such mobility a reality.19
The CAR is working hard to break down traditional, and well-justified, tenant mistrust of courts. It attempts to accomplish this by being always available, and by rapid and relatively informal handling of cases. The Court is free from the procedural restrictions of the Rules of Court, and, under Section 11, it need not, in issuing orders or decisions, “be restricted to the specific relief claimed or demands made by the parties, but may include . . any matter . . . which may be deemed necessary and expedient for the purpose of settling the dispute or of preventing further disputes, providing that said matter . . . has been established by competent evidence during the hearing.” Besides lack of docket fees for litigants and firm reliance on the doctrine of R.A. 1199 that grave doubts should be resolved in favor of the tenant, the CAR is, in some other respects also, the “tenants’ court” that its enemies are fond of calling it, at least if one compares it with the courts of the past, in which tenants rarely obtained justice.
The legal staff of the Federation of Free Farmers, the only national tenant organization in the Philippines, helps make the CAR more accessible to hundreds of its members by offering free counsel. Though a large percentage of tenants’ lawyers appearing before the CAR are connected with some tenant organization, in most cases their services are not free. Many “tenants and farmers unions,” with dues-paying members, are formed by ambitious young lawyers to make a profitable business of tenancy cases. Usually these organizations are limited geographically to the towns adjacent to the lawyer-president’s home. Dues bring the members no services besides the Mina of court cases.
As of June 1955 the ATC listed the existence of 24 tenant organizations registered with the Department of Labor and 7 more which were unregistered but found to be active. In addition to attorney’s client groups, there were, in this very incomplete listing, a number of organizations on a single hacienda which were tenant-led, internally cohesive, and which dealt directly with the landlord more often than taking cases to court. But since the outlawing of the Communist-led National Peasants Union in 1948, there had been no active nation-wide peasant movement working peacefully and legally until the founding of the Federation of Free Farmers in October 1953. The ideology of the Federation’s founders—headed by Jeremias Montemayor, a dedicated young law professor—is Roman Catholic in origin and Jesuit in orientation. But the FFF’s Jesuit advisors have not usually overstepped the bounds of an advisor’s proper role, and no narrow religious concepts inhibit the effectiveness of the services which the Federation provides all its members.
In four years of existence the Federation has grown to a national membership of well over 50,000, scattered in about 30 provinces but concentrated in Central Luzon. Besides providing its tenant members with ease of access to the CAR, the FFF staff has also acted as liaison with the other agrarian reform agencies. It brings information about NARRA settlement projects to the villages and arranges meetings between its members and NARRA officials; as a result, 300 FFF families have actually been resettled. The Federation was also distributing copies of R.A. 1199 in three Filipino dialects before any government agency had translated it from the English; 100,000 copies have been given out by now. In addition to supplementing the ATC’s information program, the FFF’s officers occasionally negotiate with landlords on behalf of the members for better tenancy contracts, or, more frequently, arrange for the speedy handling of tenancy disputes by ATC mediators. The Federation’s relations with the newest agrarian reform agency, the Land Tenure Administration, have been somewhat less cordial, but nonetheless productive of services to its members. Six tenant petitions for expropriation of big landed estates have been forwarded through FFF channels to the President and the LTA. This important phase of FFF activity, helping to bring government services to the farmers’ needs, was greatly assisted by President Magsaysay’s personal interest in the success of the Federation’s program. With this helping hand gone, the Federation is being forced to fall back on its own resources and on a variety of other political connections. It may well become a stronger organization in the process.
THE LAND REFORM ACT of 1955, which created the Land Tenure Administration, stirred more controversy than any other aspect of the Magsaysay administration’s agrarian reform program. The cause is obvious: it sought to strike at the basis of the economic and political power of a major portion of the Philippine elite—large landholdings. But that elite proved cohesive and adroit enough to parry the blow successfully, while at the same time complaining bitterly about their imaginary hurt.
The policy of government purchase and resale to tenants of large landed estates was, in 1955, not aninnovation, however. The Insular Government under Governor Taft had purchased 140,000 hectares from the Roman Catholic Church in 1904, and President Quezon actively revived this policy under the banner of “social justice” in the early years of the Commonwealth. After the war the Rural Progress Administration (RPA), created in 1940, received no new appropriations, but until its abolition in 1950 borrowed instead over P15 million from the Rehabilitation Finance Corporation and the Philippine National Bank, both government entities, to facilitate the continuation of its purchases of agricultural estates. From 1947 through 1950, 38,060 ha. of agricultural land was acquired, but in the last three years of the Quirino regime there were no purchases, “in view of the lack of funds.” Fulfillment of Magsaysay’s campaign promises of “land to the landless” required bolder action. As long as his action was purely administrative, he could move swiftly and effectively.
In two instances the Executive Office acted directly to acquire landed estates. On May 22, 1954, Executive Order 36 appointed “The President’s San Luis Project Committee” to administer the rural reconstruction project in Huk leader Luis Taruc’s home town. There, in a large area which had been abandoned because of frequent clashes between the Huks and the Army, the Army Engineer Corps and other government agencies cooperated with the partially American-supported Philippine Rural Reconstruction Movement, a private organization, to resettle several hundred farm families and to train them in the techniques of scientific agriculture and community development. Approximately 2,000 ha. of land owned by absentee landlords is being expropriated; the government took possession of the land in January 1955, but the Court has not yet finally determined the “fair value.”
An even more dramatic government purchase was of the long-time trouble spot, Hacienda San Pedro Tunasan in Laguna. In July 1954 the Army was ordered by the Court of Industrial Relations (CIR) to eject tenants who refused to recognize their landlord’s right to a share of the crop. Instead the Army’s Judge Advocate General Office ( JAGO) investigated the background of the conflict, sounded out tenant opinion, and obtained a stay of execution on the ejection. Government purchase of 850 ha. was recommended, the Cabinet approved the purchase on August 4, and by February 1955 the National Resettlement and Rehabilitation Administration (NARRA) had allocated lots to the future owner-cultivators.20
The Landed Estates Division of the Bureau of Lands, successor to the RPA, was reinvigorated and estates distribution policy revised. The statute under which estates were then being purchased, Commonwealth Act 539, had merely provided that the estates acquired should be resold to “tenants or occupants.” In many large haciendas, and especially in those owned by the Roman Catholic Church, the owner, to avoid the burdens of administration, leased large tracts for cash. Thus the “tenant” of the owner was not a tiller but a professional or businessman, and the man behind the plow was only a sub-tenant, or tenant of the lessee. Lands Administrative Order R-3 of 1951 gave the preferential right to purchase a lot to “bona fide tenants” of the former owner, explicitly permitting such tenants to acquire as much as 24 ha., with an additional 5 ha. for each child. Lands Administrative Order R-3-1 of August 1954 modified L.A.O. R-3 to bring it more into line with the basic intent of the landed estates policy. The maximum size of farm lots was reduced from 24 to 10 ha. and “bona fide tenants” who had previously leased more than that were prohibited from purchasing over 10 ha. unless they farmed the land themselves without tenants, an unlikely set of circumstances. The explicit priority for “bona fide tenants” of L.A.O. R-3 was omitted, thus allowing the Bureau of Lands to exercise discretion in favor of cultivator-occupants.
During FY 1955 the Landed Estates Division received 116 petitions for expropriation of landed estates covering 113,068 ha.21 This was impressive evidence of rising tenant expectations, and steps were being taken to meet those expectations. Already in May 1954, less than two months after its formation, the President’s Inter-Departmental Committee on Land Tenure had submitted a report proposing a comprehensive land transfer program with draft legislation attached. The report asked the President to certify the urgency of House Bill 2468, which was introduced on May 6, the day the Committee submitted its report. The House bill was identical to the Committee’s draft proposal. It created a Land Tenure Authority (LTA) in the form of a three-man commission with power to purchase private estates through negotiation or expropriation with no limitation as to size. The estates purchased were to be divided into “family sized farms” which might be larger than the existing average tenant holding. Expropriation was to be undertaken only when negotiations failed to result in acquisition. An expropriated landowner could choose to be paid either in interest-bearing amortized land certificates, nonnegotiable, and redeemable in 25 equal annual amortizations; in non-negotiable fixed maturity land certificates, also interest-bearing and redeemable in full after 25 years; or in negotiable land certificates payable to bearer on demand when presented at the Central Bank. Owners accepting negotiated purchase could receive a maximum of 50 percent in legal tender or negotiable certificates, the rest to be paid in non-negotiable certificates. The Central Bank was authorized to issue not more than P600 million in land certificates, including only P100 million of the negotiable type. Once the land was acquired by the LTA it was to be handed over to NARRA for survey, subdivision and resale to tenants. Then the tenant would repay to the government the price which it had paid for his plot and 1percent for administration in 25 equal annual installments, plus 6 percent interest per annum.
No action was taken by Congress on the land tenure bill during the 1954 legislative session. The 1955 regular session ended with only a Senate-passed bill; the House version narrowly missed obliteration in a vote on an amendment by substitution. Magsaysay then called a special session, with the land tenure bill heading the list of urgent measures to be enacted. The badly mutilated House bill was somewhat improved by the Senate members of the conference committee and the conference report finally adopted in the last hours of the special session.
Little was left of the original provisions when the legislative fight was over. Landlord lobbying in Congress was continuous and effective. It resulted in frontal attacks on the bill by some legislators, masterful delaying tactics by others. The bill’s avowed supporters accepted compromise after compromise, “with alacrity,” according to one journalist. Unfortunately President Magsaysay underestimated his own powers of legislative leadership: though he pressed for “a” bill, he agreed to so many changes in the draft that some of his advisors, both American and Filipino, considered the final product to be weaker than the existing law, and thus recommended that he veto the Congressional product. Those who recommended his signing prevailed, however.
When he did sign Republic Act 1400 into law on September 9, the President expressed the hope that it could later be improved through amendment. But when Congressmen who had been hostile to the bill’s most important provisions started to talk of amendment too, the dangers of early reconsideration became apparent. In December the President expressed a desire to “give the program a chance to bring results.” Key Senators gave him a vote of confidence by agreeing that the President should personally decide on the feasibility of amending the law in the next regular session. Aside from the minor change proposed by Representative Tolentino which resulted in R.A. 1485,22 no amendment was either introduced or adopted.
The Act in its present form is thus likely to be in force for some time. Anyone concerned with agrarian reform in the Philippines must know its important provisions. The originally binding principle of resale only of family-sized farms is reduced to a generalization in the “Declaration of Policy”: “. . . the Government shall establish and distribute as many family-sizedfarms to as many landless citizens as possible.” Other vital sections of the original draft have been even more noticeably tampered with. The limitations on the size of expropriable land will have the most unfortunate results. The Senate-passed bill would have permitted landowners to retain 150 ha. in case of expropriation, the House bill up to 1,024 ha. The conferees set a retainable “300 hectares of contiguous area” for individuals and 600 for corporations. Thus, though the majority of tenants in the whole estate are required to petition for expropriation, in an individually owned estate of 400 contiguous ha., for example, only one quarter of the tenant-occupants could benefit from government purchase and resale. This will cause bitterness and rivalry between tenants, frustration of tenant dreams of land ownership—since very few tenants are today aware of this provision—and consequent disillusionment with government promises. The choice of what part of the estate to expropriate poses a dangerous opportunity for a corrupt relationship between government negotiator and owner. The law does not specify which has the power to choose.
As in the original draft, expropriation can be undertaken only when “the landowner continues to refuse to sell after all efforts have been exhausted by the Administration to negotiate . . ,” or when “the landowner is willing to sell . . . but cannot agree with the Administration as to price and/or method of payment.” In all cases the method of payment is more favorable to the landowner, more burdensome on government finances, and a greater threat to the stability of the economy than the provisions of the original draft. All mention of fixed-maturity and amortized land certificates has been deleted, thus placing payment, in effect, entirely on a cash basis, though non-cash payment in negotiated purchases had been the only major improvement of the original bill over Commonwealth Act 539. The issuance of land certificates is limited to P60 million the first year and P30 million annually thereafter. Actually, during the first year after the Act’s approval less than 1 percent of the authorized amount was issued. Thus the inflationary effect of reform, though potentially great, is, in practice, almost non-existent.
There were two improvements in the Act over the original bill, even though the general tendency was in the opposite direction. Section 28, “Repeal of Laws,” preserved the language of the most constructive amendment from the House floor, eliminating reference to any specific acts while repealing only “inconsistent” acts or provisions.23 Another House amendment, also authored by Representative Gonzales, preventing alienation of land or ejection of tenants after the filing of a petition with the LTA, is a useful restriction on belated landlord attempts to avoid the law’s application. But it should have prohibited alienation with intent to avoid expropriation any time after the law’s enactment. For, prior to the filing of any petition owners can (and in Nueva Ecija have done so) re-register land in the names of relatives or family corporations, thus bringing individual or corporate ownership below the legal retention limit. Landlords can also, before petitions, transfer small strips of land to other persons in order to break up the contiguity of their holdings.
Not until more than three months after the passage of the Act was the LTA actually established by Executive Order 140, though Manuel Castafieda, who was a technical assistant on landed estates in the Executive Office at the time, had been appointed chairman on October 1. The two commissioners were not appointed until after Christmas. Executive Order 140 had instructed the chairman of the LTA, together with the chairman of the ATC and administrators of the Agricultural Credit and Cooperative Financing Administration (ACCFA) and NARRA, to “work out in writing a plan of cooperation and coordination which will effect economy and provide for a more effective, complete and integrated implementation of the land reform program of the government.” A Land Tenure Council was formed, including the heads of the agencies just mentioned plus representatives from the Court of Agrarian Relations (CAR) and the Bureau of Lands. One immediate result of cooperation was the transfer of the NARRA-administered landed estates to the LTA. But the LTA did not come to the council table with a cooperative attitude. Unfortunately, under R.A. 1400 the LTA was given legal sanction for encroaching on the jurisdiction of these other agencies—e.g. “the responsibility . . . to prepare a plan for the systematic opening of virgin lands of the public domain,” which is clearly NARRA’s job. Section 5(3), which authorized the LTA to “inform the President and the Congress of any deficiency of the other departments or agencies of the Government in the implementation of legislation bearing on or affecting the land tenure reform,” proved in practice the wisdom of Code Commission Chairman Bocobo’s warning: “It is likely to cause friction between the LTA and the other departments and agencies.” During 1956 there were even LTA-sponsored moves to abolish NARRA and transfer its functions to the LTA. ATC and CAR have worked in close cooperation, mainly because of Executive Judge Santos’ previous association with the former, but in general much more effective coordination of the work of agencies concerned with land reform would be desirable.
Most of R.A. 1400 is concerned with the method of acquiring landed estates, and, in view of the backlog of petitions, it would seem that this was the most pressing business of the LTA. On January 31, 1956, just a few weeks after it had begun operation, the Administration compiled a list of 82 petitions for expropriation which were in its files: 8 were due for final investigation, 7 were under negotiation, 5 had been denied for lack of funds before the creation of the LTA, and one was referred for action under R.A. 267 to a city mayor.24 The remainder were pending action. On June 30, 1956, the LTA reported having 251 petitions, 60 of which had been investigated.25 If the difference between 251 and 82 indicates the true number of petitions received during the five months, then the tenant requests were piling up at a rate of slightly more than one a day. Even discounting those petitions which were not the result of spontaneous interest or did not accurately represent tenant opinion, this figure tells of a dangerous rise in tenant expectations. And in the same period only one agricultural estate, of 508 ha., worked by 187 tenants, was purchased by the government. In the previous 18 months NARRA had gained title to or filed expropriation proceedings over 3,137 ha. Since the cause of agrarian unrest is an increase in the discrepancy between expectation and fulfillment, this ratio between petitions and acquisitions is actually causing unrest, not solving it.
The slowing of the rate of acquisition can be partly explained by the unavoidable distractions of setting up a new office, with partly new personnel, and for the future the Administration has set itself more ambitious goals. Of the 60 estates investigated by the Technical Division, 45 were recommended for acquisition to the Administration, which in turn recommended the purchase of 10 of these. The President personally recommended four more. By the end of June 1956, at least 8 estates were the subject of final negotiations preliminary to purchase, and, as of September, expropriation suits had been filed against 11 more landowners. Three of these 11 suits were filed by the LTA; the remainder originated with the LTA’s predecessors. In January 1957 expropriation of 7 additional estates totaling more than 3,400 ha. was approved by the Cabinet, though preliminary investigations in two cases had revealed faulty titles.26
It is doubtful whether all these expropriation cases actually constitute tests of the power of the LTA under R.A. 1400 to expropriate land of reluctant owners. As has already been pointed out, the bag of tricks available to the landowner who is unalterably opposed to expropriation is a large one. An owner who allows himself to be subject to an expropriation proceeding has not—if the Administration has been prudent in its decision to file suit—used all the tricks in the bag. But there is more than the logic of self-interest that makes one of the September suits questionable. The owner of Hacienda Cacho, against whom action was taken, had agreed to a price of P1,000 per hectare at the final negotiations in June, attended by Chairman Castatieda and the two LTA commissioners;27 agreement was confirmed by LTA Resolution 31. The law allows expropriation only after negotiation has failed. It is not unlikely that news of the Court of First Instance decision in the Yaptinchay expropriation case has caused landlords to prefer expropriation to negotiation even when they have no objection to parting with their land. The Court fixed “just compensation” for that Cavite estate at P4,000 per hectare for irrigated riceland, the highest price ever named in an expropriation case. For the first time the government is appealing a decision which, legally speaking, it “won.” It had been granted the right to expropriate, but at an exorbitant price, a price nearly twice the usual one for high quality riceland in Central Luzon.
Though, as we have seen, there is no fiscal advantage to the government therein (since these certificates can, and probably would, be converted immediately into cash), LTA officials prefer negotiation to expropriation because half the price can be paid in negotiable land certificates. Unfortunately a preference for owners willing to sell is capable of misdirecting the whole land reform program. Many owners have not only consented to sell but have initiated the offer to the LTA, either directly, or indirectly through manipulation of their tenants. In a sample of 33 selected at random from the 60 estates investigated in FY 1956, 19 were in this category. Is it patriotism that stirs landowners to such an offer? Not usually. The price asked was, in most cases, considerably higher than fair market value, even though the land was frequently either uncultivated or of very low yield; in some cases tenant unrest made rentals uncertain and in others the owner’s title was in doubt. Over 42 percent of the offered estates were outside Central Luzon. However, out of approximately 20 estates in the process of acquisition—through expropriation or negotiation by the LTA at that time, Central Luzon was the locus of all but two. The Administration was not ordinarily deceived by expensive offers of poor land elsewhere. When it did appear ready to act on such an offer, however, it was taken to task by a vigilant press. In November 1956 news leaked out of its intention to purchase Hacienda Baluyot, 3,834 ha., and Hacienda Yutivo, 2,936 ha., both in Mindoro Occidental and both uncultivated. Hacienda Baluyot, owned by a former governor and cabinet member, and others, had a tax delinquency of nearly P20,000. Columnist Teodoro Valencia called the P250 per ha. to be paid for this land so high as to “appear suspicious.” He asked, “If the hacienda to be purchased is tax delinquent, would not confiscation be cheaper?”28 Governor Baluyot later denied that his land was for sale.29
The method for selecting estates to be acquired is generally unsatisfactory. From the bill’s inception there had been no attempt to set forth a clearcut and ironclad priority rule by which the LTA could adjust an item in scarce supply—money—to an overabundant demand—petitions. Given the existing methods and pace of work and the present size of the staff, it would take nearly eight years to dispose of the backlog of petitions either favorably or unfavorably. And at the end of the eight years, if petitions should continue to come in at the rate they did from January to June 1956, there would be an 80-year backlog. This is an exaggerated projection, of course; the rate at which petitions are acted upon will improve, and the rate at which they are filed will decline—as the messianic aura around the new law fades. It is, nevertheless, obvious that, as the waiting list lengthens, the pressures to have one estate acquired in preference to others equally “suitable” will increase. The law provides no criterion for selection other than “the suitability of the land for purchase,” which, not having been defined, is really no criterion at all. With the absence of formal criteria, informal ones are used.
It is not unusual in any democracy for politics to play a role in administrative decisions, least of all in the Philippines. What is remarkable is the variety of results that political intervention can bring. The best advertised and most acceptable is the espousal of the tenant petitioners’ cause by a Congressman, a governor, or, most frequently, a municipal council. This brings faster and more favorable administrative consideration for the tenants. Or, a quiet word in the right place by a politically potent individual may cause indefinite postponement of plans to expropriate some reluctant landlord. The most insidious result of political influence is that estates are sometimes bought at too high a price without strong tenant interest. The worst example of the possible consequence of the lack of legislative delimitation of acquisition policy was the scandalous Buenavista-Tambobong estates deal, which occurred during the Quirino administration. Two valuable properties of the Roman Catholic Church had been leased with option to purchase by the Rural Progress Administration before the war. The option was exercised during the Japanese occupation and the land paid for. In 1949, amidst a complicated legal situation in which it appeared that the Supreme Court had upheld the wartime payment as valid, the RPA paid another P5 million to a French-Filipino lawyer claiming to act for an American who had purchased the Church’s rights over the estates. A subsequent investigation by the Senate revealed that nearly 10 percent of this had gone to two “unidentifiable” persons, widely suspected to be the Secretary of Justice and the President’s brother.30
Once a private hacienda has been acquired by the LTA the governmental role in this type of land reform is only half fulfilled. The estate has yet to be subdivided and resold to smallholders. At the end of FY 1956 the LTA reported the execution of 949 deeds of sale involving 1,258 lots. Whether or not this included the 586 deeds issued before November 1955 by the Bureau of Lands, it marked a steep decline from the 3,421 issued in FY 1955, which was 6 times the FY 1954 record. Only 46 percent of the deeds executed were for farm lots, the rest being residential. At least a partial explanation might be found in the fact that the LTA does not possess some of the mechanical office equipment and duplicators which has speeded the process in the Bureau of Lands.
If deeds of sale, which evidence full payment, continue to be issued at the FY 1952-56 rate, it will take 25 years to sell the lots transferred to the LTA at the time of its organization; under Administrative Order 2 the payment period for this land is still 20 years. But one cannot count on even that degree of progress. Deeds of sale can be issued only after “agreements to sell” have been signed. Since these agreements have been signed at a sharply decreasing rate in the last three years—though the majority of lot occupants have still not signed agreements—the present rate of patent issuance cannot be expected to continue.
Nor is sale of lots an accurate measurement of the degree of success in implementing land reform, though administrators have a tendency to accept it as such.
Under the new law the question of who buys the lots remains. As noted, there was an increasing awareness under Magsaysay of the necessity for protecting cultivators’ interests. But this awareness did not always materialize in effective administrative decisions. The controversy at the LTA’s Hacienda Dinalupihan in Bataan, though atypical, reveals the factors in a typical situation. In a conflict with occupant-cultivators who were tenants of a lessee of the previous owner, politically influential “residents of Dinalupihan”—neither “tenants” nor “occupants” in the estate—who wanted to buy lots from the LTA, used pressure, from the most subtle kind to armed violence, to push their claim of priority rights. They also hired a prominent Manila lawyer to explore the loopholes in LTA Administrative Order 2, and he found several.
Administrative Order 2, entitled “Rules and Regulations governing the acquisition and disposition of private agricultural lands,” is probably the most important document implementing R.A. 1400. There are no provisions in the law to punish violation, however. Thus lawyers are given wide latitude in circumventing it. Most crucial in distribution policy is Section 14: “Subject to the provisions of Section 16 hereof, any private individual who is qualified to acquire and own lands in the Philippines and who will personally cultivate and/or occupy the lot or lots which may be sold to him, may be allowed to purchase. . .” Though this may have been intended by the drafters to be a legal phrasing of a “land to the tillers” policy, it was certainly not this according to the interpretation of the lawyer for the “Dinalupihan residents.” “Cultivate and/or occupy” was a term used because the Order applied to both farm and residential lots and “cultivate” would obviously be inapplicable to the latter; but the lawyer applied “occupy” to farm lots and argued that “occupancy” could be “through a tenant.” He also interpreted “subject to the provisions of Section 16”—which provides for four orders of priority, i.e. tenant, occupant, occupant of another lot in the estate, and resident of the same municipality—to mean that “who will personally cultivate” applies only to persons not included in those four priorities. The possibility of making such interpretations, which, though contrary to the spirit, are not impossible readings of the text, points to the necessity for tightening the language of Administrative Order 2.
If anything is clear in the language of that Order, however, it is Section 1: “These rules and regulations shall apply to private agricultural lands previously acquired by and for the Commonwealth of the Philippines in pursuance of . . . C.A. 539, and to those that have been or may hereafter be acquired in accordance therewith and in pursuance of R.A. No. 1400 . . . by and for the Republic of the Philippines.” Yet in the tense atmosphere of the Dinalupihan controversy Chairman Castarieda himself averred that Order 2 did not apply to estates acquired by the government before the creation of the LTA, thus throwing the decision back to an era when regulations did not include the phrase “who will personally cultivate.”
It is apparent that when there are conflicts administrative decisions are made not in strict adherence to legal precepts but in compromise of the claims of the opposing groups based on their respective power positions. In other times and places the cultivating occupants of the lots would probably have made all the concessions, with most of them losing the right to purchase. But fortunately at Dinalupihan they had joined the Federation of Free Farmers (FFF) and as a result spoke with a stronger voice. FFF national leaders sent legal assistance to Dinalupihan members and visited Malacariang and the LTA Manila office frequently to present the cultivator-occupants’ stand to the President and his assistants. (The “Dinalupihan residents” also appealed to the President.) As a result of FFF activity most of their legally qualified members will be able to purchase lots in the subdivision in question. But without tenant organization the results of pressures to disregard the regulations would be less happy.
The financial problems faced by both government and cultivator under R.A. 1400 are serious. The LTA must pay to landlords the prevailing price in the area for land of the same quality, but since faithfully recorded sales of agricultural land are infrequent, the determination of the “prevailing price” depends to a considerable extent on the success of the owner’s maneuvers in negotiation, or in pleading before a court. There is thus no fixed relationship between price and yield, though it is yield that determines the cultivator’s ability to repay. In addition to the price the government pays the landlord, the tenant must pay to the government 1 percent for administration, the actual cost of subdivision and survey, and 6 percent interest on the unpaid balance—all divided into 25 annual installments. If the cultivator is to feel that the “land reform” is of any benefit to him, i.e. that it has accomplished its political purpose, it must mean a slight increase in his level of consumption. Considering, then, that in a government-purchased estate the tenant is cut off from his major source of credit (the landlord) and has to undertake all the expenses of production himself, if he must make installment payments of more than 20 percent of his gross income from the land he will not be able to stay out of debt, let alone raise his level of consumption. Repayment installments of 20 percent would require a government price to the landowner of approximately three times the value of the total annual production; a multiple of 2.5 was used in the Formosan land reform law. Yet the “prevailing price” actually paid by the government is frequently much more. And the tenant who cannot keep up his payments does not become an owner. He either transfers his right to purchase to another, or defaults on his payments, in which case someone else is given the right to purchase his lot.
Transfer of rights over subdivided lots is allowed with prior written permission of the chairman of the LTA. “The number of transfers of ownership [sic] over lots in several estates are so alarming that unless restricted would adversely affect if not entirely defeat the purpose for which these estates were acquired.” So said LTA Resolution 12 of March 24, 1956. In FY 1955 mortgages and transfers of rights approved by the Bureau of Lands outnumbered agreements to sell. Rights over farm lots were often transferred to non-cultivators, even absentees, when cultivators ran out of funds. Chairman Castafieda early established a policy of discouraging transfers “except in very meritorious cases predicated on strong and compelling grounds.”31 The number of transfers and mortgages authorized or approved in FY 1956 did drop more than 50 percent from the previous year, but what is not known is what increase there may have been in the number of unauthorized, illegal, transfers. The lower the price the LTA asks for the land the greater will be the pressure for transfer of rights.
Failure to pay two consecutive yearly installments is cause for the cancellation of the agreement to sell and default of all payments to the government. But the government is very lenient in this matter, perhaps too lenient. The LTA therefore releases no figures on the number of agreements to sell that are cancelled, for if it becomes generally known that delinquent purchasers will not be punished, it will be impossible for the LTA to make adequate collections.
Annual collections have varied between P960,000 and P1,284,000 since FY 1949. The high was reached in FY 1954, with a slight decline in the two succeeding years.32 The appropriation for the administrative expenses of the Landed Estates Division was made from this sum, reaching P726,000 in FY 1956, and the remainder was used to reduce the outstanding mortgage debt on the estates. In FY 1956 a total of P447,291 was paid to outstanding obligations, but, as in previous years, this amount was not even sufficient to pay the interest! By June 1956, the debt to the RFC and the PNB was P16,800,626, nearly P2 million of which was accrued interest. The landed estates policy has not been a financially self-sustaining one.
It is difficult for one who is keenly aware of the need for effective land reform in the Philippines and who respects the motives of those who worked for the enactment of R.A. 1400 to say that it is simply not achieving the establishment of a “democratic agricultural economy,” the purpose of its original framers, the President’s Inter-Departmental Committee. But landed estates purchase in the Philippines has never been a successful policy. The purchase price is generally too high, redistribution is slow and inefficient, and, most seriously, the land is frequently re-sold to non-cultivators. R.A. 1400 is hardly an improvement over its predecessor, C.A. 539. The payment provision is substantially the same. Though the funds made available are larger, they remain largely unused. The power to expropriate, unrestricted in the earlier act, is so circumscribed as to be practically non-existent.
Philippine landed estates policy has never envisaged thoroughgoing land reform entailing a complete and rapid restructuring of the national pattern of land ownership, and such a policy is impossible as long as myopic landlord interests dominate the Philippine Congress. A cheap and effective method for breaking up landed estates, a progressive land tax, was proposed by Magsaysay’s Inter-Departmental Committee, but never got beyond the Senate Finance Committee. However, a progressive executive still has considerable latitude to initiate a more realistic approach to gradual reform.
Though it cannot yet be proven statistically, it appears that the Magsaysay administration may have halted the trend toward greater concentration of land ownership. Stricter enforcement of the Public Land Act and expanded land settlement programs increased the number of owner-cultivators on new lands; cheap agricultural credit prevented small owners in settled areas from losing their land because of debt; and increased shares for tenants through enforcement of the Agricultural Tenancy Act discouraged large investors from buying more agricultural land as income property. But to reverse the trend is more difficult.
The reason the landed estates policy has not contributed substantially to evolutionary change of land tenure patterns in the Philippines is that resources have not been channeled to assist those who by training and aptitude are ready to become owners. Little attention is paid, in the choice of estates for purchase, to the tenants’ probable ability to complete payments on their lots. An effective evolutionary land reform must rely on those tenants who have proven themselves capable of becoming owners. And it must be administered by an organization close enough to the tenant, both physically and ideologically, to make ocular inspection of land to be purchased, to be familiar with crop yields in the area, and to have tenant interests predominate in its deliberations and actuations. The Farmers’ Cooperative Marketing Association is becoming such an organization; it already makes loans to farmer-members to allow them to make permanent improvements on their land, such as irrigation pumps and fences. No further legislation—only additional ACCFA funds—would be necessary for it to lend money to tenant-members who wanted to purchase their lots, landlords willing (and if the price were an economic one, unwillingness to sell would be rare). An ideal system would provide payment in certificates which forced reinvestment in industrial enterprise, but this would require politically impossible legislation.
In the recent presidential elections in the Philippines, the only party which campaigned actively for more rapid land reform, the newly-formed Progressives (with former Under-Secretary of Agriculture Ferrer as one of its senatorial candidates), placed third in the nation, with slightly more than one million votes. However, it placed first or second in the provinces of Central Luzon, where most had been expected of the Land Reform Act of 1955. This indicates dissatisfaction which is likely to increase. President Garcia’s campaign, which stressed the administration’s existing achievement in land transfer, did not show adequate realization of this rising dissatisfaction. He was re-elected by a minority vote in a triumph of machine politics. Garcia has had the courage, however, to refuse to sign a bill passed in May which would have given non-cultivating lessees priority over cultivating sub-lessees in the distribution of government-acquired estates and thus defeated the whole purpose of land transfer. He also persuaded Congress to restore sizeable cuts that had been made in the appropriations for ACCFA and other agrarian reform agencies. It is thus likely that agrarian reform under the Garcia administration will not suffer any dramatic reverses, but, without Magsaysay’s dynamic leadership, will proceed at a leisurely pace. It is, unhappily, doubtful whether such a pace will be sufficient to retain the tenants’ faith in government which Magsaysay had fostered.
Mr. Wurfel, now in the Southeast Asia Program at Cornell University, has made detailed studies of agrarian reform in the Philippines. Research for the present article was made possible by a grant from the Ford Foundation, which is not, however, responsible for any statements made herein.
1 In his inaugural address Magsaysay said, “I have been warned that too much is expected of this administration, that our people expect the impossible. For this young and vigorous nation of ours, nothing is really impossible.”
2 Ferrer was one of the first Magsaysay stalwarts to be forced out of office by a budget-slashing Congress after Garcia’s assumption of the Presidency,
3 See NARRA, Annual Report of Operations and Activities, 1954-55, Appendix “d”. Most of the 8,044 were residents of LASEDECO projects at the time LASEDECO was abolished.
4 Condensed Report . . . of NARRA, FY1954-1 Oct. 1956, p. 5.
5 Rural Banks Administration, Third Annual Report, 1955, p. 41.
6 Unhusked rice.
7 In spite of the risk involved in demanding no more than a pledge as collateral, 91 percent of crop loans were repaid in FY 1954 and, despite drought and rat infestation, 75 percent in FY 1955. ACCFA, Annual Report, 1955, p. 30.
8 ACCFA, Third Annual Report, p. 13.
9 Unfortunately, a combination of political sniping from Garcia henchmen and a basic policy difference with the consumer-oriented NARIC caused Mondofiedo to resign in July 1957. He was replaced by another Army officer with considerable experience in ACCFA.
10 See Donn V. Hart, “The Philippine Cooperative Movement,” Far Eastern Survey, February and March 1955.
11 Manila Times, January 26,
12 See the author’s “Philippine Rice Share Tenancy Act,” Pacific Affairs, March 1954, for an analysis of R.A. 34.
13 See ATC, Annual Report, 1955, pp. 66-78.
14 See ATC, Annual Report, 1956, p. 15. The other 31 percent came from the regular appropriations of the Departments of Agriculture and Justice.
15 See ATC, Annual, Report, 1955, pp. 101-108.
16 Congressional Record, House, May 19, 1955, p. 3461.
17 See Joaquin Roces, “This is My Own: The Agrarian Court,” Manila Times, October 11, 1955.
18 Manila Times, October 18, 1955.
19 See CAR, Annual Report, 1956.
20 See Report to the President from General Vargas, August 24, 1954, and Manila Times, February 28, 1955. The government had first purchased a portion of this vast Jesuit-owned estate before the war.
21 Annual Report, 1955, p. 53.
22 R.A. 1485 amended Section 23 of R.A. 1400, which had been interpreted by the LTA to require the tenant-purchaser to pay 6 percent on the full price of his lot for 25 years, so that interest would be required only on the unpaid balance.
23 It appears that with this language C.A. 539 remains in force.
24 Republic Act 267 is “An Act authorizing cities and municipalities to contract loans for the purpose of purchasing or expropriating homesites and subdividing them for resale at cost.” This list of 82 is probably not complete, however. It may be recalled that the Landed Estates Division in June 1955, had 116 petitions on file, and the Presidential Expropriation Committee had received 109 as of the same date. Whether there is an overlapping between these figures is not known.
25 Annual Report, 1956, p. 47.
26 Manila Times, January 17, 1957.
27 Ibid., July 10, 1956.
28 Ibid., November 21 and 23, 1956.
29 Ibid., December 5, 1956.
30 Special Senate Committee created to investigate the Buenavista-Tambobong Estates Deal, Report, October 21, 1949.
31 LTA Resolution 3, December 29, 1955.
32 Bureau of Lands, Annual Report, 1955, Table 10. LTA, Annual Report, 1956, p. 52.