Section 1. Sections 1, 2, 3 and 4 of Republic Act No. thirty eight hundred and forty-four, otherwise known as the Agricultural Land Reform Code, are hereby amended to read as follows:
"Sec. 1. Title. — This Act shall be known as the Code of Agrarian Reforms of the Philippines."
"Sec. 2. Declaration of Policy. — It is the policy of the State:
To establish cooperative-cultivatorship among those who live and work on the land as tillers, owner-cultivatorship and the economic family-size farm as the basis of Philippine agriculture and, as a consequence, divert landlord capital in agriculture to industrial development;
To achieve a dignified existence for the small farmers free from pernicious institutional restraints and practices;
To create a truly viable social and economic structure in agriculture conducive to greater productivity and higher farm income through a cooperative system of production, processing, marketing, distribution, credit and services;
To apply all labor laws equally and without discrimination to both industrial and agricultural wage earners;
To provide a more vigorous and systematic land resettlement program and public land distribution;
To make the small farmers more independent, self-reliant and responsible citizens, and a source of genuine strength in our democratic society;
To give first priority to measures for the adequate and timely financing of the Agrarian Reform Program pursuant to House Joint Resolution Numbered Two, otherwise known as the Magna Carta of Social Justice and Economic Freedom; existing laws; executive and administrative orders; and rules and regulations to the contrary notwithstanding;
To involve local governments in the implementation of the Agrarian Reform Program; and
To evolve a system of land use and classification."
"Sec. 3. Composition of Code. — In pursuance of the policy enunciated in Section two, the following are established under this Code:
An agricultural leasehold system to replace all existing share tenancy systems in agriculture;
A system of crediting rental as amortization payment on purchase price;
A declaration of rights for agricultural labor;
A machinery for the acquisition and equitable distribution of agricultural land;
An institution to finance the acquisition and distribution of agricultural land;
A machinery to extend credit and similar assistance to agricultural lessees, amortizing owners-cultivator, owners-cultivator and cooperatives;
A machinery to provide marketing, management, and other technical assistance and/or services to agricultural lessees, amortizing owners-cultivator, owners-cultivator, and cooperatives;
A machinery for cooperative development;
A department for formulating and implementing projects of agrarian reform;
An expanded program of land capability survey, classification, and registration;
A judicial system to decide issues arising under this Code and other related laws and regulations; and
A machinery to provide legal assistance to agricultural lessees, amortizing owners-cultivator, and owners-cultivator."
"Sec. 4. Automatic Conversion to Agricultural Leasehold. — Agricultural share tenancy throughout the country, as herein defined, is hereby declared contrary to public policy and shall be automatically converted to agricultural leasehold upon the effectivity of this section.
"The credit assistance traditionally extended by a land-owner and a local lender to a tenant under the share tenancy systems in agriculture for production loans and loans for the purchase of work animals, tillage equipment, seeds, fertilizers, poultry, livestock feed and other similar items, and advances for the subsistence of a lessee and his family, may be continued by said landowner and local lender: Provided, That the total charges on these loans, including interest and service, inspection and issuance fees, shall not exceed fourteen per cent per calendar year and the principal thereof shall not be subject to upward adjustment even in case of extraordinary inflation and/or devaluation: Provided, further, That on all loans or advances other than money, the interest shall be computed on the basis of the current price of the goods at the time when the loans or advances were made.
"Any work animal and tillage equipment in the possession of a share tenant but owned by a landowner shall automatically be sold to said tenant on installment for a period not exceeding five years and at a price agreed upon by the parties: Provided, however, That the tenant shall pay in advance ten per cent of the price agreed upon.
"Existing share tenancy contracts may continue in force and effect in any region or locality, to be governed in the meantime by the pertinent provisions of Republic Act Numbered Eleven hundred and ninety-nine, as amended, until the end of the agricultural year when the President of the Philippines shall have organized by executive order the Department of Agrarian Reform in accordance with the provisions of this amendatory Act, unless such contracts provide for a shorter period or the tenant sooner exercises his option to elect the leasehold system: Provided, That in order not to jeopardize international commitments, lands devoted to crops covered by marketing allotments shall be made the subject of a separate proclamation by the President upon recommendation of the department head that adequate provisions, such as the organization of cooperatives, marketing agreement, or other similar workable arrangements, have been made to insure efficient management on all matters requiring synchronization of the agricultural with the processing phases of such crops.
"In case some agricultural share tenants do not want to become agricultural lessees of their respective landholding, they shall, with the assistance of the Bureau of Agrarian Legal Assistance, notify in writing the landowners concerned. In such a case, they shall have one agricultural year from the date of the notice to accept leasehold relationship, otherwise the landowner may proceed to their ejectment."