The Philippine Rice Share Tenancy Act

First published 1954/06

Article by David Wurfel, from Pacific Affairs 1954.

The Rice Share Tenancy Act as amended in 1946 is a much misunderstood piece of legislation in the Philippines today, and unfortunately that misunderstanding has been perpetuated by many Western reporters on Philippine affairs.

Former President Roxas did a magnificent job of salesmanship when he attached to this Act the label “the seventy-thirty law”. But popular though this terminology may have been, it has little relationship to the provisions of the Act. A more descriptive title, “the fifty-fifty law” would undoubtedly have been less popular.

The original Rice Share Tenancy Act was passed by the Philippine Legislature in 1933, during the administration of Governor-General Theodore Roosevelt, Jr. He and many of the legislators were aware of the increasing inequality of the tenants’ and the landlords’ bargaining power. They believed that legislation, even legislation alone, could balance the unbalanced social forces — a belief not often verified by Philippine experience.

The Act’s many admirable provisions were unfortunately rendered useless by the final one. The law could go into effect “only in provinces where the majority of the municipal councils shall, by resolution, petition for its application to the Governor-General who shall make the law effective by proclamation”.1 In view of the landlords’ control of the municipal councils, it was hardly surprising that in no province did this law come into effect.

But while reform by legislation was frustrated, changes of another kind did take place on the land. By 1939 some 35.1 percent of all farmers were tenants-more than double the percentage twenty years earlier. And the tenancy problem was, in reality, the rice share tenancy problem: 98.4 percent of tenants were share tenants and 54.8 percent of those were rice share tenants.2 Rice was the Philippines first crop, taking 39.1 percent of the farm area and 39.9 percent of rice farmers were share tenants. The second crop by area, coconut, accounted for only 11.8 percent of the share tenants, while 21.8 percent of the share tenants were on corn farms and 2.8 percent on sugar farms.

The tenancy problem was geographically as peculiar to Central Luzon as it was agronomically to rice. In 1939 five Central Luzon provinces, all of which had the greater part of their farm land planted to rice, had share tenancy rates above 50 percent: Tarlac, 50.5, Cavite, 53.5, Bulacan, 62.2, Pampanga, 64.6, and Nueva Ecija, 66.3.3 The only place outside Central Luzon where rice culture and high tenancy rates coexisted was Panay. In the third important rice growing region, Hocos, the land was usually cultivated by its owners.

In most cases these tenancy figures were disturbing to former President Manuel Quezon and other Filipino leaders only insofar as they were associated with agrarian unrest. But the tenancy rate cannot be said to be a complete explanation of unrest-and population density, poverty and backwardness of agricultural techniques are even less adequate explanations of this phenomenon. The sharp increase of tenancy in the 1930’S throws more light on the problem, but only the broad term “change” can fully explain agrarian unrest, or other revolutionary outbreaks. The change was both economic and psychological. The Filipino tao (peasant) was in increasing numbers being reduced from owner to tenant at the same time that education with all its attendant blessings (or evils), as well as high-sounding phrases from Manila politicians spread abroad by press and radio, was raising the tao’s expectation of the kind of life he was entitled to. Thus the politicos who wrote a piece of “reform legislation” which could not be put in effect unwittingly abetted the incipient unrest. Tenants’ hopes, especially those of the more politically alert, were raised, then dashed.

Though it seemed right and expedient at the time, Quezon’s attempt to enforce the Rice Share Tenancy Act probably also contributed to later unrest. At his behest Commonwealth Act No. 178 was passed in November 1936, amending Sec. 29 of Act No. 4054 in order to read: “This Act. . . shall take effect . . . by proclamation to be issued by the President of the Philippines upon recommendation of the Secretary of Labor, when public interests so require. . . .” In January 1937 Quezon proclaimed the Act to be in effect in five Central Luzon provinces, and by 1941 had extended it to five more provinces on Luzon and two on Panay.

The text of the Act — which is long, technical, and in places ambiguous, remained incomprehensible to many of the tenants for whose benefit it was intended. The crop-sharing provision was hardly revolutionary; it merely stamped legal approval on the prevailing arrangement. When the tenant furnished work animal and implements, and shared production expenses equally with the landlord, he was to receive 50 percent of the crop. Other provisions of the Act, which remain in effect today, were designed to bring real change in existing practice. “To be valid and binding” the tenancy contract was to be written in a language known to both parties and signed or thumb-marked in the presence of two witnesses, one chosen by each party.

In practice the contract was usually verbal. And even if it were written, the landlord retained the sole copy and could alter it if he were so inclined. Section 10 provided that all advances from landlord to tenant should not bear interest of more than 10 percent per agricultural year and that a record thereof should be kept in writing. The existing rates varied from 50 to 300 percent per annum. To prevent evasion of this provision, it further specified that in case of loans in kind any inflation of the original price of the article loaned was to be considered usury. Section 11 prohibited loans in excess of 50 percent of the tenant’s average yearly share. By Section 13 a final accounting between landlord and tenant was required within 15 days after threshing, to be recorded in a language known by the tenant and signed by two witnesses. Normally the accounts were kept in English or Spanish and seldom shown to the tenant anyway. No debts in kind, once converted into money, were to be again converted into kind. This provision proscribed a widespread practice whereby formerly a tenant might have to borrow a quantity of rice at a time of the year when the price was high and have to pay back a much larger quantity at a time when the price was low.

Parts III and IV of the Act listed the rights and duties of the landlord and tenant. The landlord was to retain the right of managing the farm and was held responsible for payment of the land taxes. Most important, the landlord was prohibited from dismissing his tenant except for “just and reasonable cause”. Section 19 listed some of such causes, among them being: “Gross misconduct or willful disobedience on the part of the tenant to the orders of landlord or of his representative in connection with his work; negligence on the part of the tenant to do the necessary farm work expected of him so as to insure a good harvest; non-compliance with any of the obligations imposed upon the tenant by the Act or by the contract. . . .” The tenant had the right to work elsewhere when there was no work to be done on the farm, and if he were requested by the landlord to perform work not connected with his duties as tenant, he was to be paid accordingly-“unless otherwise stipulated in the contract”.4 The tenant was to be entitled to a home lot on which he might construct a dwelling, and, in case of ejection, he was to be given 45 days notice. His duties included the “obligation to cultivate the farm as a good father of the family”, and to inform the landlord of any trespass on his farm committed by a third person (including a labor leader).

Though some of these provisions, such as the last mentioned, were mainly of benefit to the landlord, the Act as a whole, if enforced, would have improved the tenants’ lot. But the new day had not yet dawned for them. On those estates where the tenants were both acquainted with the law and bold enough to demand its application, the almost universal reaction of the landlord was to threaten ejection at the end of the agricultural year.5 This could be perfectly legal, since the traditional contract lasted only for one agricultural year and Act No. 4054 as amended did not require that a land lord retain a tenant with whom he had no contract.

Legal or not, the wholesale ejection of politically aware share-tenants would have brought even more unrest to Central Luzon than it was then experiencing. Consequently, on June 9, 1939, the National Assembly passed — undoubtedly as the result of pressure from Quezon — Commonwealth Act No. 461, which stated that no tenant under “any system of tenancy” should be “dispossessed of the land cultivated by him except for any of the causes mentioned in [Section 19 of] Act No. 4054 or for any just cause, and without the approval of a representative of the Department of Justice duly authorized for the purpose”. If either party felt aggrieved by the action of the Department, he was entitled to appeal to the Court of Industrial Relations (which also serves as a court of agrarian relations). Landlords were aggrieved, or so they felt; they talked loudly of the unconstitutionality of this new act. In the meantime they continued to file ejectment suits against unruly tenants who demanded the application of the Rice Share Tenancy Act. When, in March 1941, in the case of Jacinto v Catacutan the landlord’s petition was denied by the Department of Justice and appeal was brought to the Court of Industrial Relations, the legal confusion which had delayed the tenants’ enjoyment of their rights was swept away.6 The Court upheld the constitutionality of Commonwealth Act 461 against “due process” and “freedom of contract” attacks and ruled that expiration of the contract was not a “just cause” and was thus insufficient cause for discharge of the tenant. One month later the Supreme Court gave a similar decision in Tapang v Court of Industrial Relations and Amalia Robles.7 Throughout 1941 some 353 of the Court’s 415 new cases were tenancy disputes; 138 landlords and 507 tenants were affected. Of those cases which were appealed to the Court from lesser jurisdictions, 265 were won by landlords and only 44 by tenants.8

Thus, though the Court did not allow the law to topple in the face of the landlord’s onslaught, neither did it frequently grant tenant demands. Yet at the same time the Social Improvement Service of the Department of Labor, which was created on May 1, 1937, worked diligently to inform the barrio people about the provisions of the Rice Share Tenancy Act “and of the invaluable benefits and advantages emanating from a happy and harmonious relationship between the government and the masses”.9 Up to 1939 rural agents had visited 981 barrios, held 384 meetings and distributed 7,500 pamphlets to explain the Act. This activity, however, since it was not followed by effective enforcement of the Act, created discontent rather than “a happy and harmonious relationship”.

Japan brought war to the Philippines and war brought new changes causing more agrarian unrest. A large percentage of Central Luzon landlords fled to Manila for the duration. Hukbalahap organizers urged their tenants to refuse to pay rent, and this the tenants did whenever they had Huk armed forces to back up their refusal. The Huks also provided the tenant a chance for participation in the governments which they set up in the areas not controlled by the Japanese. Thus for the rice share tenant the war was often a time of economic prosperity and of new-found political independence. The American “liberation” meant for many tenants the reestablishment of a near-feudal political and economic system which they had, at least for a while, thrown off.

Shortly after President Osmena returned to the Philippines in 1945, he and his Cabinet, as part of a deal to gain the support of the Democratic Alliance, agreed to amend the Rice Share Tenancy Act so that the tenant would receive 60 percent of the crop. But powerful landlord interests thwarted any legislative action to this effect. In 1946, however, when President Roxas came to power and when the Huks had demonstrated their political strength and resilience against armed attack, Republic Act 34, the so-called “Seventy-thirty Law”, was actually passed by a Congress still dominated by landlords.

Roxas and his followers seized the propaganda initiative from the Huks, but they had no intention of creating serious economic handicaps for the landlords. The new law ideally was suited for their limited purposes. It amended Section 8 of .Act No. 4054 to read, in part, as follows:

“. . . When the tenant furnishes the necessary implements and the work animals and defrays all the expenses for planting and cultivation of the land, the crop shall be divided as follows: the tenant shall receive seventy percent of the net produce of the land and the landlord thirty percent, for first class land, the normal production of which, based on the average yield for the three preceding years, is more than forty cavans of palay per one cavan of seed; seventy-five percent for the tenant and twenty-five percent for the landlord, in case of land the average normal production of which is not more than forty cavans of palay per one cavan of seed. In case the landlord furnishes the necessary work animals and farm implements and, likewise, bears all the expenses of planting and cultivation, the landlord shall receive seventy percent and the tenant thirty percent of the crop. . . .”

“The following stipulations are hereby declared to be against public policy:

“If the tenant shall receive less than fifty-five percent of the net produce, in case he furnishes the work animals and the farm implements, and the expenses of planting and cultivation are borne equally by said tenant and the landlord. . . .

“If the landlord is the owner of the work animal, and the tenant of the farm implements, and the expenses are equally divided between the landlord and the tenant, for the tenant to receive less than fifty percent of the net crop.”

The first sentence was most quoted; the second, less so. Actually the provisions of the second sentence were less detrimental to the tenant than might first appear, because the landlord rarely furnished both work animals and implements in addition to bearing all expenses of planting and cultivating. Nor were the provisions of the first sentence as advantageous as they appeared, since the tenant seldom furnished all capital equipment and paid all operating expenses. Both sentences were, for practical purposes, meaningless. Introduc ing the whole paragraph was the crucial phrase, “In the absence of any written agreement to the contrary”!

The first paragraph of Section 7 of Act No. 4054, which remained un-amended, had provided that “the landlord and tenant shall be free to enter into any or all kinds of tenancy contracts as long as they are not contrary to existing laws, morals and public policy.” Republic Act 34 proceeded to define “public policy”, something which had not been done by the earlier enactment:

In the final analysis the position of the average tenant had hardly been changed at all. The wartime mass destruction of carabaos (water buffaloes) by the Japanese had for the most part hurt the tenant, who had usually owned his own work animal. In the postwar period the landlord had capital with which to purchase carabaos; the tenant did not and so the landlord furnished the work animals. Thus for the tenant who owned his carabao before the war and afterwards did not-in most cases owning implements and sharing operating costs-the legal minimum share remained at 50 percent.

One might have thought that the Court of Industrial Relations and Supreme Court decisions of 1941 would have strengthened the tenant’s hand to the extent that he could have successfully refused to sign a contract without a 70-30 sharing basis. But it was not so. A Department of Justice Circular (No. 115 of April 30, 1947) held that:

“The refusal of a tenant to sign a contract of tenancy with his landlord shall, within the purview of Commonwealth Act No. 461, as amended, constitute a just cause for his ejectment from his landholding, upon proof of the following:

“( I) That the contract of tenancy is in accordance with the form prepared and furnished by the Department of Justice;

“(2) That the terms and conditions therein stipulated conform with the requirements of Act No. 4054, as amended;

“(3) That the ratio of crop-sharing assures for the tenant the minimum share that he may receive in conformity with the public policy provided in Section 7 of Act No. 4054; and

“(4) That the stipulations therein enumerated show a decided advantage or improvement in his favor or are better than the terms and conditions of his previous agreement or contract with his landlord entered into between them prior to the amendment of Act No. 4054 by Republic Act No. 34’”

By January of 1948 two decisions of the CIR, both written by Presiding Judge Arsenio Roldan, upheld this ruling. One cannot say that the Act was not being “enforced”. Judge Roldan was well acquainted with the text of Sections 7 and 8 when he said:

“The ceiling of 70-30 sharing basis allowed for. . . shall only prevail in the absence of a written tenancy contract formulated under the requirements of Section 4, Act No. 4054, as amended. If they [the tenants] reject it, the disposition of the Tenancy Law Enforcement Division granting authority to landowners to dismiss the tenants, contingent upon their refusal to sign the tenancy contracts offered, is well founded. . . . What the Act merely provides is a sharing in a level not less than 55 percent for the tenant, if he owns the work animals and farm implements and shares equally in the expenses of planting and cultivation.”10

Some decisions which went against the tenant were the results of his demanding even more than 70 percent of the crop, and by no means all the Court’s decisions were detrimental to tenant interests. In November 1947 the Court had rejected the contention of the Ongsiaco Hacienda that Republic Act No. 34 was applicable only to contracts drawn up after its passage.11 In March 1948 it declared that it had power to defer the dismissal of a tenant by his landlord, even though a just cause for such action existed.12

The Court’s November 1947 decision also included a ruling which called attention to the ambiguity of Republic Act No. 34. The Judges found in an examination of Sections 7 and 8 that in all cases the share of labor was 30 percent, of land 30, of planting and cultivating expenses 30, of work animals 5, and of farm implements, 5. Computing on this basis, and in light of the terms of the contract in the case at hand, the Court decreed that 60 per cent for the tenant would be legal. Thus the line between the sharing systems allowed by Section 7 as in accord with “public policy” and those allowed by Section 8 “in the absence of any written agreement to the contrary” was blurred-and rightly so, for the shares allotted to the factors of production were the same in both sections. One clear advantage of such an analysis is in its revelation of the real difference between the sharing provisions of Act No. 4054 and of Republic Act No. 34- The later act merely increased the share of labor from 25 to 30 percent and decreased the share of land from 35 to 30 percent.

There continued to be much talk in administration circles of the “enforcement” of the “seventy-thirty law”. Late in 1950 the Tenancy Law Enforcement Division was transferred from the Department of Justice to the Court of Industrial Relations. The transfer was said to be more economical for the government and to allow for a speedier disposition of tenancy cases.13 In June 1951 a delegation of tenants from Pampanga led by Judge Quirino Abad Santos visited the President to complain about the non-enforcement of the Law. The most that was achieved by this pilgrimage was the calling of a “tenant-landlord conciliation conference”.14 Tenant unrest and the potential mass base for Huk power remained.

Then on September 30, 1952, Chief Justice Ricardo Paras of the Supreme Court wrote a decision in Pineda v Pingul15 which, though it paid little attention to certain provisions of Republic Act No. 34, struck a blow for “social justice”. Pingul had just become the landlord of Pineda and 68 other cultivating tenants who had long been on the land. In the new contract which he asked them to sign he demanded a larger share of the crop than the previous landlord had received. In late 1951 the Court of Industrial Relations ruled that “the choice of contract terms is with the landlord and it is for the tenant either to accept or reject them. In the latter eventuality the landlord may exercise his property rights. . .” (i.e. evict the tenant).

With the help of Quirino and Vicente Abad Santos,16 the tenants appealed this decision to the Supreme Court. Though the newspaper reports led readers to believe that Chief Justice Paras’ decision would henceforth allow all tenants to choose the sharing arrangement,17 the “blow for social justice” was actually less telling. Paras agreed that the Court of Industrial Relations ruling held true at the inception of the tenancy relationship, when the “prospective tenant . . . , before being accepted, has of course to accede to the terms of the landlord”. But, said the Chief Justice, “We are inclined to hold that, where a situation involves an old and pre-existing tenant, as in this case, he cannot be forced to alter the existing share agreement.” Furthermore, “if any change is desirable in the matter of the sharing ration, the initiative and decision should lie with the tenant. . . .” The wording of this passage is certainly less than a clear promise to the tenant that he may choose the factors of production which he wants to furnish and thus what share he wants to receive. This decision, at least, makes the Rice Share Tenancy Act a bulwark against reaction in tenant-landlord relations, but re-emphasizes that its sharing provision does not constitute reform.

During the month following this ruling the Supreme Court in Vidal v Roldan again reversed the Court of Industrial Relations-this time to the detriment of the tenant. Section 1 of Republic Act No. 44 clearly stated that the latter Court had jurisdiction in disputes under “any system of tenancy” and Judge Roldan had assumed jurisdiction in a coconut tenancy dispute. But the Supreme Court held that the pertinent phrase in Republic Act No. 44 “should not be interpreted literally” and claimed that “the clear legislative intent is to make the law applicable to such other tenancy laws as may be enacted in the future, not to any system of tenancy for which no rules have yet been provided”,18 e.g. coconut tenancy. Thus the Supreme Court can become an agent by which tenant rights are diminished as well as expanded.

It is clear that a real attempt is being made by the Judiciary to enforce the Rice Share Tenancy Act. But it is not the great reform measure that the appellation “seventy-thirty law” connotes. Enforcement is not enough, nor is “amendment” by the courts. The task which the realistic Filipino reformer faces today in the realm of agrarian relations is the writing of an entirely new piece of legislation based on principles of universal application to all types of tenancy, of a 1ong-term tenancy contract — three agricultural years according to Dr. Jorge Bocobo’s proposals — and of at least 40 percent of the crop for the tenants’ labor. Dr. Bocobo, former president of the University of the Philippines, also contends that a new Share Tenancy Act should provide that the cultivator is manager of his farm, having exclusive possession of the entire crop before it is divided.19 The U. S. Mutual Security Agency (now Foreign Operations Administration) has helped the Philippine Council on United States Aid to draft a new tenancy law, but it has apparently become buried in the Philippine Congress. Such a law should have high priority in the legislative program of the new administration. The Philippine agricultural census in 1952 showed another increase in tenancy over 1939.

With these several needs in mind, it is disappointing to note a remark by the new President of the Philippines, Mr. Magsaysay, who has been hailed as a great bulwark against Communism. Shortly after the election President Magsaysay appointed a “rice committee” to make a study of that industry. On December 14 he approved the report which it presented, dealing mainly with the technical problems of production and of retail pricing. The one tenant representative on the committee, Segundino Samaniego, remarked that all the recommendations embodied in it were useless “if the tenant continues to receive the same deal as now”.20 Magsaysay assured Samaniego that the problem was easy to solve : “We will enforce the [tenancy] law and make it work”. It is to be hoped that with the keen appreciation of the plight of the rural masses which the President possesses he will, after more administrative experience, realize that the existing law cannot “work” for the tenants’ betterment and that he will demand a new one.

The key to the problem is greater political and economic strength for the tenant through organization. The Huks have completely discredited themselves and are unable now to work in peaceful ways even if they wanted to. Non-communist tenant unions and cooperatives will have to take their place as leaders of the agrarian movement. No tenancy law is likely to be enforced unless the tenants can speak with a powerful voice in the political arena.

DAVID WURFEL
Cornell University, February 1954

Notes

1 Act No. 4054, Sec. 29.

2 Commonwealth of the Philippines, Commission of the Census, Census of the Philippines, 1939. Vol. III, pp. 968, 1044, 1027.

3 Ibid., pp. 970, 1044. In this instance percentage is of cultivated land, not of number of farmers. In the Philippines as a whole 30.9 percent of cultivated land was farmed by tenants.

4 Tenants were often required to act as servants in the home of the landlord, or to build roads, bridges, dams, ditches, or plant fruit trees without compensation.

5 Karl J. Pelzer, Pioneer Settlements in the Asiatic Tropics, New York, 1945, p. 99.

6 Official Gazette:, 40:3 (July 19, 1941), pp. S80-S88.

7 Official Gazette:, 40: IS (October 11, 1941), pp. 31°7-3113.

8 Official Gazette:, 40: 7 (August 16, 1941), pp. !soS-ls06.

9 Jose G. Domingo, “What is the Social Improvement Service”, Manila Bulletin, February 1939, pp. 81-8S.

10 Policarpio B. Mendoza, “Tenants, What Now?”, Manila Times, January 28, 1948. The Court also upheld evictions when the landlord intended to cultivate the land himself or to employ tractors or other machinery to supplant manual labor. Ramirez v. Butor, et al., and Javelosa v. Mijares, et al. See also Department of Justice Circular No. II6, April 30, 1947.

11 Manila Times, November 27, 1947.

12 Manila Times, March 28, 1948.

13 Manila Times, February 11, 1951.

14 Manila Times, June 17, 1951.

15 Official Gazette, 48: 9 (September 1952), pp. 3901-05.

16 Brothers of both the late Chief Justice and the Central Luzon communist leader.

17 Manila Times, September 30, 1952.

18 Official Gazette, 48: 10 (October 1952), pp. 4343-46.

19 See Manila Times, January 18, 19, 1953.

20 {empty}