Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

5183

HOUSE BILL NO,,

INTRODUCED BY REPRESENTATIVES
FERNANDO L, HICAP, LUZVIMINDA ILAGAN AND ANTONIO TINIO

EXPLANATORY NOTES

Contract growing, also known as growership contract, is a widespread
phenomenon in the country brought about by the government's all-out campaign to
attract foreign and local investments for the expansion and intensification of
export-oriented agricultural production, with our fertile lands and cheap rural
labor force as main selling points,

Since its introduction in Mindanao in the late 1960s,! it has become the
principal mode of expansion for local commercial farms and agri-business
transnational corporation (TNCs) in almost all major lines of export crop
production. In recent years, especially following the the institutionalization of the
World Trade Organization (WTO), contract growing has become most prevalent in
the production of export crops that have gained global market access such as
banana and pineapple. It has likewise branched out into the production of so-called
“new export winners” such as asparagus, cassava, and cauliflower.

Under a contract growing scheme, the landowner or farmer, called the
contract grower, undertakes to produce for the commercial farm or agri-business
TNC the crop of choice of the latter. It is one of the earliest forms of “sub-
contracting,” now euphemistically known as “outsourcing” (that is also currently in
vogue in service and information technology industries), wherein a commercial
farm or agri-business TNC contracts out the production phase of its plantation

* Contract growing was first introduced in Mindanao by Stanfilco (Standard Fruits Company, known
formely as Castle and Cooke) in 1966. The scheme was originally named by Stanfilco as “Independent
Growers Program.” Itis most predominant in Mindanao where commercial farms and agri-business ‘TNCs
engaged in agricultural export crop production are mostly located. But it has spread to other parts of the
country where it is sometimes known by other names. The “corporative scheme” which the Danding
Cojuangco-controlled San Miguel Corporation is using to lure farmers to its promotion of cassava
production in Isabela, Bicol, Cordilleras, and locos Region is actually a form of “contract growing.”

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operation to “independent producers.”2 When the crops are produced, the
commercial farm or agri-business TNC purchases them under terms and conditions
set out in the contract, One such term and condition is that the produce of
contract growers is subjected to quality control by the commercial farm or agri-
business TNC.

At the onset of contract growing in Mindanao, commercial farms or agri-
business TNCs tried to entice small landowners and farmers to participate in the
scheme by providing the contract growers, through loan, with capital funds for
production, But as more landowners and farmers came to adopt the scheme and
were caught in its web, the said loans were discontinued, leaving the contract
growers to their own devise in securing production capital.

In undertaking to produce the chosen crop, contract growers act
“independently” from the commercial farm or agri-business TNCs which contracted
them. One attribute of such “independence” is that it is the contract growers who
shoulder the production costs and the whole range of processes and obligations
involved in producing the crops. It is, therefore, a mode through which commercial
farms or agri-business TNCs are able to pass the production costs as well as the
business risks to the contract growers.

Such an arrangement has created several layers of production relations
among the stake holders in contract growing. These layers of relations form a kind
of pyramid with each production relation having its corresponding modes of
exploitation ultimately bearing down most heavily on farm workers who are
situated at the lowest layer. It is well to understand these layers of the production
relations because each constitutes an area of social concern that calls for legislative
remedies which this bill seeks to provide.

One such layer, which forms the topmost of the pyramid, is the production
relation between the commercial farm or agri-business TNC and the farmer or
small landowner. The commercial farm or agri-business TNC, in contracting out the
production phase of its operations to “independent producers” is able to control
and use the land of the farmer or small landowner without cost. On the part of the
farmer or landowner, he, as a contract grower, is actually mobilizing his land at the
disposal of the commercial farm or agri-business TNC.

‘The farmer or landowner initiates the undertaking by procuring, through his
own efforts, the material requirements (capital and production inputs) for
production, either through loans? or from his own pocket. He also organizes the

*For example, the Lapanday Agricultural Development Corporation (Ladeco), a local commercial farm owned
and controlled by the Lorenzo family and engaged in banana export production, is a contract grower of Del
Monte Philippines. Such contract growing however, is not the subject of this bill since its players enjoy a
relatively “level playing field”.

* The Land Bank offers a credit window for contract growers at 18-24 % interest rate,


labor force and the production process according to the contracted specifications.
Thus, in form, the contract grower is “independent” but, in essence, his person and
labor are actually under the control of the commercial farm or agribusiness TNC. It
is a control that actually amounts to the “ascendancy of an employer.” Yet, he gets
nothing in return for the disposition of his land, labor and management skills in
servicing the needs of the commercial farm or agri-business TNC. What he gets in
return for all this is merely “the right to sell” his products to the commercial farm
or agri-business TNC.

‘The “purchase agreement” of contract growing is an exclusive contract. The
contractor grower cannot sell his produce to other entities. He cannot sell to other
entities even that portion of his products which was rejected by the commercial
farm or agri-business TNCs for failing to pass the quality standards. In effect, it is a
“restraint to trade.” The price of the produce is also contracted. If the price,
determined in the contract months before the harvest, is higher than the prevailing
market price, the contract grower gets a windfall, But contract growers who
experience this are said to have “hit the jackpot” because such is a rare occurrence
of luck, Most of the time, the contract growers yield to prices that are lower than
those prevailing in the market and thus find themselves at the losing end of the
deal.

To ensure a little profit margin or to just break even, the contract growers
are compelled to invariably scrimp on their insufficient capital outlay while
squeezing the most out of their hired farm workers. The contract growers usually
hire farm workers not on the basis of employment tenure but on a per-contract
arrangement. More popularly known as the “pakyaw” system, such arrangement
removes the hired farm workers out of the ambit of minimum wage, security of
tenure and other protection and benefits provided for by the Labor Code. The
“pakyaw” system constitutes the most exploitative production relations in the
pyramid and embodies the most evil aspect of contract growing.

Under the “pakyaw” system, the hired farm workers are contracted to work
on a “piece of work” or a specific phase (preparation of the soil, planting, care and
maintenance, harvesting, or hauling) of the production process following a fixed
schedule, quota or volume. For example, the preparation of the soil must be done
within one week.

“tt must be noted, however, that in the contact growing by and among commercial farms and agri-business
‘TNCs, the party which contracts out its production shoulders 70% of the production. Moreover, the contract
grower is allowed to sell to other commercial farms or agri-business TNCs. For example, Lapanday, in its
contract growing with Del Monte Philippines, is allowed to sell its products to other commercial farms.


They are not paid with wages since payment is not based on the number of
hours or days the farm workers have rendered but on the completion of the specific
phase of production according to the contracted schedule, quota, or volume.

In between the contract growers and the farm workers is a host of
“middlemen” who prey on the farm workers, forming another layer of exploitation in
the pyramid. These are the individuals and organized entities who recruit farm
workers for contract growing. In recruiting farm workers, they collect what they call
“finder’s fees,” with the amount varying from locality to locality, ranging from P50
to P150 per person recruited. They collect the amount even before the farm workers
get their first “wage.” They also collect such other fees incidental to “labor
mobilization,” In some places, mostly places where big commercial farms and agri-
business TNCs operate, the “finders” are well organized in the form of cooperatives
of contract growers. They keep the available farm workers in the locality as a
reserve pool and act as placement agencies that supply farm workers to where
there are contract growing schemes. They do not consider the pooled farm workers
as their employees but they nonetheless collect, in addition to “finder’s fees” and
“mobilization expenses,” such other money sums ostensibly for SSS, Philhealth and
other benefits.

Thus, the farm workers are bled dry even before they find work. Once they
get work deployment, they are subjected to the most inhumane working conditions.
Contract growing and the “pakyaw” system drive the farm workers to work beyond
the regular eight-hour workday in order to finish specific work phases according to
imposed schedules or quotas. Since employment is based on a contracted
schedule, extra hours of work do not translate to overtime pay. They don’t have
security to tenure since their “employment” status is governed by the contract.
When the work on the specific phase is done, the contract ends and so does any tie
established between the farm workers and the contract grower. This effect holds
true even if the workers have been working for the same contract grower for several
years.

Because of the contracted nature of their “employment,” farm workers get in
remunerated with amounts way below the minimum wage. According to a study

in the “pakyaw” system (also known as “piece rate or “quota” system), the contract grower deals with the
farm workers not as individuals but as a group, much like a “chain gang,” led by a “capataz” (team leader). He
pays the group of farm workers not with wages but a whole sum upon completion of the contracted phase of
the production process. The team leader then divides the sum among the members of the group, the division
being based on the complexity of the intervention of the money system. In fact, it’s a “share” corresponding o
the labor contributed by each farm worker reckoned according to the man/days work. This wrong
nomenclature operates to mask the exploitation of the farm workers.

° Farm workers in contract growing scheme tend to keep the “chain gang” small so as not to dissipate the
‘money sum paid to them upon completion of the specific phase of the production process. They then
compensate for their “leanness” by working beyond the 8 hours working day. The working life of a farm
worker normally starts at 6-7 am tll 5-6 pm, a sunrise to sundown existence.


conducted by the Peasant Education and Studies Center, farm workers working
under the “pakyaw” system earn only a daily income of P80 to P120 per day, the
variance being dependent on the prevailing “standards” of the labor market of each
locality (Peasant Education and Studies Center, An Investigation on CARP
Implementation in Plantation in Mindanao, September 2007). Most of the time,
because of the low level of “wages,” they consume their meager earnings way ahead
of the completion of their work schedule to meet their day-to-day needs.’

The farm workers provide for their own tools, equipment and protective
gears. The contract grower is under no obligations to provide them. Particularly, in
the specific production phase of care and maintenance which involves applying
fertilizer and pesticide, the farm workers make do with makeshift gears to protect
themselves, such as old shirts wound around the face and used as protective mask
against the obnoxious smell of chemicals. Neither is the contract grower under any
obligation to provide medical and social security benefits to the farm workers. If a
farm worker or a member of his family gets sick due to overexposure to the
elements, he is on his own in looking for medical care.

The “pakyaw” system encourages family labor that mobilizes school-age
children to work in the plantation instead of going to school. A hired farm worker
tends to bring his family along so the money sum he gets from the contract grower
upon completion of a specific phase will not “circulate out” to other families.

Families and gangs of farm workers coming from far-away towns are not
provided with housing. They usually live in makeshift shanties as temporary
shelters near the contract growing site to save on housing rental and
transportation costs.

Naturally, because the farm workers are not tenured employees, they do not
qualify for membership in trade or workers’ unions. They are forced instead to
become part of a “chain gang” headed by a “capataz” or a usually overbearing
foreman who makes sure that union organizers do not penetrate the ranks of the
farm workers. Unorganized, they are at the mercy of their “capataz” and the
contract grower.

Because contract growing generates obscenely cheap labor, the commercial
farms and agri-business TNCs are no longer regularizing their employed labor
force. As a result, the ranks of regular farm workers employed in commercial farms
and agri-business TNCs are thinning out due to dismissals, lay-offs and
retirements, with no entrants of new regulars. In effect, contract growing is
undermining the employment tenure of farm workers who are formally employed
while destroying the employment tenure of extremely exploited farm workers in
contract growing.

7 This is done through the “vale” system wherein the farm worker advances his daily “wage”.


‘These are the evils of contract growing which this bill seeks to address.
‘These evils have been the state of things since the late 1960s in many towns and
provinces in the country, the economies of which have been dominated by
commercial farms and agri-business TNCs and have been circumscribed within the
ascendant development strategy of intensified export-oriented agricultural
production.

The land-intensive monoculture export crop economy imposed by
commercial farms and agri-business TNCs effectively ensnares farmers, small
landowners and farm workers in a “single crop” and “single buyer” market. The
latter have found it almost impossible to shift to producing other commercial crops
or staples because there is simply no viable market for such products. With no real
choice, the farmers, small landowners, and farm workers are compelled to accept
contract growing despite the knowledge of its exploitative nature.

The export crop lines that use contract growing are among the fastest
growing industries in our agriculture. Consequently, the commercial farms and
agri-business TNCs engaged in the production of these export crops have been
reporting positive growth rates since the late 1990s. One of the factors for such
growth is that, having passed through contract growing the burden of production to
farmers and small landowners, they have successfully trimmed down their
production costs to the barest minimum. Among the overhead costs that they have
avoided through contract growing are land acquisition and maintenance, machines
and equipment, production inputs, and wage outlay. These items constitute about
75 per cent of production costs. It is thus about time that these companies take
their “corporate social responsibility” seriously by sharing their growth to the
communities that made that growth possible.

Previously filed in the 15% Congress by former Anakpawis Representative
Rafael Mariano, this bill is here being refiled with the same original intent of
imbuing growth with social justice by giving the real producers in contract growing
their due in order to protect and promote their welfare.

For the farm workers this bill aims for just wages, better human working
conditions, health benefits and social security, the enjoyment of their rights to
organization and concerted action and freedom from unjust and illegal exaction.
‘This bill likewise seeks to provide the farmers and small landowners with a system
for mutual sharing of costs and risks, benefits, fair prices for their produce, and
fair rental for their lands.


Approval of this bill is earnestly sought.

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ANAKPAWIS Party-list

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GABRIELA Women’s Hafty ACT Teachers Party



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

5189

HOUSE BILL NO,

INTRODUCED BY REPRESENTATIVES
FERNANDO L. HICAP, LUZVIMINDA ILAGAN AND ANTONIO TINIO

AN ACT PROMOTING THE WELFARE OF FARM WORKERS, FARMERS AND
SMALL LANDOWNERS IN CONTRACT GROWING
AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

Section 1. This Act shall be known and cited as the “Contract Growing
Stakeholders’ Welfare Act of 2014.”

Section 2. Declaration of Principles and Policies. - The State realizes
that contract growing has been used by commercial farms and agri-business
corporations to pass on their costs of production to small farmers and landowners
in order to gain maximum profits. This has led to business practices that created
layers of working relations and conditions that are highly exploitative and
disadvantageous to the lower stakeholders in contract growing.

‘The State recognizes that such conditions are not conducive to the
industrial peace of areas in our agriculture where contract growing is prevalent. At
the same time, they retard the development of our farm workers, farmers and small
landowner as productive members of our society.

In line with Section 3 of Article XIII of the Philippine Constitution, it is the
policy of the State to protect the rights of farmers, farm workers, and small
landowners in contract growing in order to promote their welfare and ensure their
just share in the fruits of production.

To this end, the State shall institute measure that will regulate contract
growing with the principles of social justice to ensure that the rights of farmers,
farm workers and small landowners, as stakeholders in contract growing, are
protected, their working conditions improved, and their socio-economic status
uplifted.


Section 3. Definitions — For the purpose of this Act, the following terms
shall be understood to mean:

a, Agri-business corporations refers to a corporation, whether foreign or
local, which is engaged in commercial farming in the country or whose
business interest is primarily in the production or trade of agricultural
products;

b. Commercial farms refer to farms usually operated by agri-business
corporations, local or foreign, and engaged in large-scale production of
commercial or export crops;

c. Department refers to the Department of Agriculture;

d, Farm workers as used specifically in this Act, refer to workers who
render farm work or any work in relation to crop production under a
contract growing scheme;

e. Contract growing refers to the agreement, formal or informal, by which a
farmer or small landowner, constituting one party known as the contract
grower, undertakes to dispose his land and industry for the production of
a specified commercial crop for a commercial farm or agri-business
transnational corporation which constitutes the other party; same as
growership contract;

{. The other party refers to a commercial farm or agri-business
corporation or any entity which contracts out the production of
commercial crops to a farmer or small landowner;

Chapter 1. Scope, Coverage and Effect on Contract Growing

Section 4. Scope. - All contracts, by whatever name the parties call them,
that possess the elements and character of a growership contract as defined in this
Act shall be governed by the provisions of this Act.

Section 5. Effects on contract growing. - All contracts that possess the
elements and character of growership contract shall explicitly provide that the
provisions of this Act are incorporated into the contract and form as integral part
thereof, Any such contract that does not explicitly provide the mandated
incorporated shall be void ab initio.

Section 6. Mandatory registration. - All growership contracts shall be
registered with the Bureau of Rural Workers (BRW). Any such contract not
registered with the BRW shall be voidable. No person shall enter into the
implementation of the provision of such contract unless he/she complied with the
registration requirement.


The BRW shall see to it that the parties to the growership contract have
complied with the mandatory incorporation requirement mentioned in the
preceding Section.

In the registration of the growership contract with the BRW, the
voluntariness of the act of the parties in entering into the contract shall be proven
independently of the contract through a separate sworn undertaking. Such sworn
undertaking shall be attached to the growership contract in the submission for
registration.

Section 7. Growership contract as partnership contract. - For purposes
of determining the sharing of the income, fruits and other benefits, a growership
contract is hereby declared by law as a contract of partnership between parties.
The contract grower is hereby declared by the law as the industrial partner, with
his land and industry as his contribution to the partnership. The other party shall
be the capitalist partner.

Section 8. Growership contract as a contract agency. - For purposes of
determining liabilities, responsibilities and obligations to farm workers, a
growership contract is hereby declared by law as a contract of agency. The contract
grower is hereby declared by law as an agent of the other party and the other party
is hereby declared by law as the principal upon which the liabilities, responsibilities
and obligations to farm workers that arise from the contract are reposed.

Chapter 2. Rights of Farm Workers and Improving Their Working Conditions
in Contract Growing

Section 9. Minimum wage laws to cover farm workers in contract
growing. ~The minimum wage law and any increase thereof as maybe ordered by
the proper authority or as maybe agreed in a collective bargaining agreement shall
apply to all farm workers recruited or hired to work in a contract growing.

To protect the interest of farm workers in contract growing, the pakyaw
system or any similar wage scheme is hereby declared by law not only illegal but
also contrary to moral and public policy. Any provision in the growership contract
that stipulates a wage system lower than the minimum wage shall render the whole
contract void.

Section 10. Security of tenure of farm workers in contract growing. -
Farm workers hired to work in contract growing are hereby declared by law as
employees of the other party.

Any farm worker who has worked for two continuous and consecutive
production cycle in a growership contract involving the same parties shall
automatically become an employee with permanent or regular status of the other
party. Starting on the day marking the end of the second production cycle, he shall
enjoy the right of security of tenure and be entitled to all other rights, privileges,
and benefits, such as medical care, disability and retirement pension, as provided

10


for under the Labor Code and other laws and as may be provided for by collective
bargaining agreements between the farm workers and the other party.

Farm workers who do not qualify to become regular employees of the other
party shall not be dismissed from work without just cause. For purposes of
determining liabilities arising from the act of dismissing farm workers, the
dismissal made by the team leader (‘capataz”) of the farm workers shall be
considered as the act of the contract grower or the other party.

Section 11. Regular hours of work in contract growing; breaktime and
day-off. - In accordance with the Labor Code, the regular hours of work of farm
workers in contract growing shall not exceed eight (8) hours a day.

Farm workers shall also be entitled to break time and rest of at least one (1)
hour for lunchtime, Further, they shall be entitled to a day-off of once a week.

Section 12. Overtime pay. - Any work performed by any farm worker
beyond the regular hours of work shall be considered as overtime work subject to
the payment of overtime pay and other benefits provided by our labor laws and as
maybe provided by the collective bargaining agreement between the farm workers
and the other party.

If the extra work rendered by the farm workers is on the inter-cropping of
the contract grower, such work shall be paid by the contract grower under such
terms and conditions the farm workers and the contract grower may agree upon.

Section 13, Right to self-organization, collective bargaining and other
forms of concerted action. - Farm workers in contract growing shall have the
right to organize, form unions, go on strike and bargain for better working
conditions.

Section 14. Working and safety gears, tools, and instruments. ~ The
other party or the contract grower shall strictly observe international standards for
occupational health and safety for the hired farm workers,

The other party or contract grower shall provide the farm workers with the
working gears, tools, and instruments necessary to the performance of work and
necessary to the safety and protection to the health and well being of farm workers.
Such working and safety gears, tools, and instruments shall be provided by the
other party without cost to farm workers, No farm worker shall be made to begin
performing work without the provision of working and safety gears, tools and
instruments.

Section 15. Necessary training on handling chemical inputs. - The
other party or the contract grower shall provide farm workers who are into the
specialized work of applying fertilizers, pesticides and other chemical inputs on the
crops the necessary training on handling such chemicals. The training shall be free
of charge and shall be considered as work days in favor of the farm workers subject
to the payment of daily wage.

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It shall include first aid measures to be applied when a farm worker gets
injured from contact with the chemical inputs.

Section 16. Injuries and damages to farm workers due to non-provision
working and safety gears and lack of diligent precautionary supervision. —
The other party shall be liable for whatever injuries and damages to the health,
safety and physical well being of farm workers that may be caused by his failure to
provide working and safety gears, as provided in Section 14.

In the same manner, even if the other party has provided working safety
gears as mentioned in the preceding section, if he failed to exercise diligent
precautionary supervision as to the use of such safety gears, tools, and
instruments, including other inputs of production such as chemicals, the other
party shall likewise be liable for whatever damages such failure to exercise diligent
precautionary supervision may cause on the health, safety, and physical well-being
of the farm workers.

The payment by the other party for such injuries and damages mentioned in
the preceding paragraph shall be over and above what a farm worker is entitled to
demand and receive under the Workmen’s Compensation Act and other related
laws.

Section 17. Presumption of failure to exercise diligent supervision. - If
a farm worker suffers injuries and damages to his health, safety and physical well-
being while employed in the growership contract, such injuries and damages being
attributable to exposure to chemicals and other inputs of production, it shall be
assumed that he suffered such injuries and damages due to the failure of the other
party to exercise diligent precautionary supervision as to the proper use of such
chemicals and other inputs of production.

Section 18. Institution of health and safety committee. - The other
party or the contract grower shall institutionalize the health and safety committee
in their plantation units. Such committee shall be formed for each function of the
production process such as weeding, spraying, harvesting, and packing. If the
production unit is small scale, it shall be formed on the basis of farm parcels.

Such committee shall have representation from the ranks of farm workers.
Chapter 3. Other Protective Measures for Farm Workers

Section 19. Registration of recruiters. ~ All persons and entities engaged
in the act or business of recruiting farm workers to work in contract growing shall
register with the Department of Labor and Employment (DoLE). In their application
for registration, they shall execute a sworn undertaking that they will not collect
any fee or any other charge or exaction from the farm workers.

Any person or entity which enters into the act of recruiting farm workers to
work in contract growing without having first registered with the DoLE shall be

liable for the offense of illegal recruitment punishable under this Act.
12


Section 20. Collection of any fee from the farm workers is illegal. - It
shall be illegal for any person or entity to collect “finder’s fee” or any such similar
exaction from the farm workers recruited. Such act shall be punishable under this
Act.

Section 21, Expenses incurred by recruiters chargeable to the contract
grower or the other party, - Persons and entities which incurred necessary work
and incidental expenses in recruiting farm workers and mobilizing them to work in
contract growing shall charge such expenses to the contract grower or the other

party.

Section 22. Requisite for any signing of recruitment or employment
document. - The recruiter or the other party shall not make the recruited farm
workers sign any document or contract unless the signing is in the presence of a
leader of farm workers union, If there is no union leader or farm workers union in
the locality, the signing shall be in the presence of a leader of local farmers’
organization.

‘The union or farmers’ leader shall read the contents of the document to the
farm workers and categorically ask them if they understood their meaning and
implications. If a farm worker declares that he does not understand the document
or expresses reservation on any stipulation or portion of the document, the signing
shall not proceed.

Chapter 4 - Rights of Small landowners and Obligations of the Other Party in
Growership Contract

Section 23. Use of land in growership contract is a form of land lease.
= Any contract in which a farmer or small landowner disposes his land for the
production of commercial crops for the other party, be it a commercial farm or agri-
business transnational corporation or any entity, the production process being
subject to the terms and conditions imposed by the other party as to crop variety to
be cultivated, technology to be used, and product quality, in accordance with
phytosanitary and other standards determined by other party, is a contract that
puts the land to the use and control, management, and direct benefit of such other

party.

Such a contract is hereby declared by law as a form of land lease,
notwithstanding that it is the other party who provides capital for the production
process and the owner of the land retains possession of the land under a
growership contract.

Section 24. Land rentals. — The owner of the land who enters into such a
contract, as mentioned in the preceding section, shall be entitled to land rentals.
The rental shall not be lower than seventy-five percent (75%) of the zonal valuation
of the land as made by the Bureau of Internal Revenue.

13


If the contract duration is for a period of five years and above, it shall
contain a provision for the acceleration of the rate rentals on the third year. The
acceleration rate shall not be lower than ten percent (10%) of the original rental.

Section 25. Owner of the land as industrial partner. - If under the
growership contract, the owner of the land is also involved in the production
process as the one who recruits farm workers, manages the farm workers and
supervises the production process from planting to delivery of the products to the
other party, including care and maintenance of the crop in growth, such owner of
the land shall be considered as an industrial partner who shall be entitled to a just
share of the income and profits of the growership contract.

Section 26. Obligation of the other party to provide capital, - the
growership contract being declared by this Act to be a partnership contract, it shall
be the duty of the other party to provide the necessary capital as its contribution to
the partnership/growership contract. Such capital to be provided by the other
party to the industrial partner shall answer for and cover all the expenses
necessary and incidental to the entire production process of the contract growing,
including the payment of wages of farm workers. Such capital shall not be
considered a loan to be paid by the industrial partner.

Section 27. Obligation of the other party to reimburse all expenses. - if
the industrial partner incurs any expenses, either from his own funds or through
loan, that are necessary or incidental to the crop production process, such
expenses shall be demandable for reimbursement by the other party upon the
delivery of the produce to the other party.

It shall be demandable on the other party without need of filing a claim or
reimbursement suit in court.

Section 28. Purchase price of the produce of the growership contract. —
If the other party, under the terms of the growership contract, is the one who buys
the produce of the farmer or small landowner or industrial partner, he shall buy
the produce of the growership contract as its current market price. The
determination of the current market price shall be at the point of delivery of the
produce by the farmer or small land owner or industrial partner to the other party.

Section 29. Right to sell to third parties if the crops produced are
rejected. - If the crops produced under the terms of the growership contract are
rejected by the other party due to failure of the produce to pass the quality and
phytosanitary standards as determined by the other party, the industrial partner
who produced the crops shall have the right to sell the crops to other persons or
entity willing to buy the crops.

Section 30. Right to inter-cropping. - Any farmer or landowner entering
into a growership contract shall have the right to grow/plant any other kind of
crops in the land other than that specified in the contract of growership unless the

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growing of other crop in the land is proven scientifically to be detrimental to the
growth of the specified crop in the growership contract.

‘The farmer or landowner shall have the exclusive right to own, enjoy and
disposed of the fruits of the crops which he has grown simultaneously with the
specified crop in the growership contract.

Section 31. Accounting at the end production cycle. - Within two weeks
after the produce of the growership contract are sold, it shall be the obligation of
the other party to conduct an accounting with the presence of the industrial
partner in order to settle all accounts, payables and other monetary obligations
between them,

Chapter 5 - Obligations of the Third Party Intermediaries, Agents and
Recruiters of Growership Contractors and Farm Workers

Section 82. Third party intermediary stands in the shoes of the other
party. - Any person or entity which enters into a growership contract with a
commercial farm or agri-business corporation or any other entity and recruits
farmers or small landowners to perform the obligation of actually producing in the
concept of a growership contract for the commercial farm or agri-business
corporation or any other entity shall be considered to be in the shoes of the other

party.

Such person or entity shall be primarily liable for whatever claims and
obligations arises from the growership contract, including claims by third parties.

Section 33. Collection of fees by recruiters is prohibited; exception. -
Any person or entity which recruits farmers or small landowners to enter into
growership contract with commercial farms or agri-business corporations shall be
prohibited from collecting ant fee from recruited farmers and small landowners
except those allowed under this Act.

In recruiting farmers or small landowners to enter into growership contract,
only the following are the allowable fees collectible under this Act:

a. Processing and service fee, including documentary stamps, for documents
prepared by such person or entity for and in behalf of recruited farmers and
small landowner; and

b. Notarial fees for the formal execution of documents necessary to legalize the
growership contract if the notary public is provided by such recruiting
person for entity.

‘The payment of the fees mentioned above shall be to the account of the other party.

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Chapter 6. Other Obligations and Liabilities Arising from the Growership
Contract

Section 34. Injuries and damages to third parties.- The other party shall
be liable to any third party who suffers injuries and damages to health, safety, and
physical well-being, including damages to property and the immediate habitat, due
to the use of chemicals and other production inputs in the production of crops
under a growership contract.

Section 35. Payment of environmental conservation endowment fee for
the use of chemicals. ~ In any contract growing that entails the use of chemicals,
the other party, before commencing the operation of the growership contract, shall
pay an environmental conservation endowment fee in the amount of fifty centavos
(P.50) per gallon of chemicals used or projected to be used. The payment of such
fee shall be made with the local government unit where the operation of the
growership contract is located.

Section 36. Environmental conservation endowment fee to be
constituted as trust fund for the conservation of the environment against ill
effects from the use of chemicals. - The revenues collected by the local
government units from the payment of environmental conservation endowment fee
by contract growers shall be constituted as Environmental Conservation
Endowment Fund. Such a fund shall be exclusively used as a trust fund for
programs to rehabilitate the environment that is damaged due to the ill effects from
the use of chemicals.

Chapter 7. Conflict Resolution and Venue

Section 37. Disputes. - The provision of the Labor Code of the Philippines
shall be applied in case any dispute arises relative to the terms and conditions of
employment of farm workers in contract growing.

Chapter 8. Penal Provisions

Section 38. Penalties. — Any person found to have violated the provisions of
this Act shall be penalized according to the following:

a. For violation of Section 6 and first paragraph of Sections 19 and 33, a
fine of not less than Twenty Five Thousand Pesos (P25,000.00) but not
more than Fifty Thousand Pesos (P50,000.00);

b. For violations of Sections 9 to 15 and 18, a fine of not less than One
Hundred Fifty Thousand Pesos (P150,000.00) but not more than Three
Hundred Thousand Pesos (P300,000.00); and

c. For violations of second paragraph of Section 19 and Section 20, an
imprisonment of not less than one (1) year but not more than three (3)
years and a fine of not less than One Hundred Thousand Pesos

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(P100,000.00) but not more than One Hundred Fifty Thousand Pesos
(P150,000.00).

Chapter 9. Miscellaneous Provisions

Section 39. Visitorial and inspectorial duty of DoLE; reporting - During
the first two years of implementation of this Act, to ensure that the provisions of
this Act on improving the working conditions of farm workers are immediately
followed and instituted, the DoLE, through the BRW, shall conduct quarterly
inspection of the premises of the farm or production unit for the other party or
contract grower. After the abovementioned period, the DoLE may conduct
inspectorial visits as regularly as necessary.

The DoLE shall submit a copy of its inspectorial report to the Committee on
Labor and Employment of the House of Representatives and the Senate
respectively.

Section 40, Implementing Guidelines, - In consultation with farmers or
their organizations in the area wherein the contract of growership shall be
implemented and in coordination with the Department of Agriculture, the DoLE
shall, in accordance with this Act, formulate and publish the implementing rules
and regulations for the effective implementation of this Act, within ninety (90) days
from its enactment.

Section 41. Suppletory Application. - All previous or existing laws,
decrees, executive orders, rules and regulations or parts thereof inconsistent with
this Act shall have suppletory effect.

Section 42. Repealing Clause. ~ All previous or existing laws, decrees,
executive orders, rules and regulations or parts thereof inconsistent with this Act
hereby repealed or amended accordingly.

Section 43. Separability Clause. ~ If, for any reason, any section or
provision of this Act is declared null and void, no other section, provision, or part
thereof shall be affected and the same shall remain in full force and effect.

Section 44, Effectivity Clause. - This Act shall take effect immediately
after publication in at least two (2) newspapers of general circulation.

Approved.

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