October 25, 1994

DAR OPINION NO. 87-94

DR. JOSE G. GEOTINA

38 Matipid Street

Sikatuna Village

Quezon City

Dear Dr. Geotina:

This has reference to your letter dated 14 April 1994 seeking clarification from this Office relative to the following queries:

1)        Is DAR Administrative Order No. 5, Series of 1993 already effective? If so, is it true that the leaseholders get 75% while the landowners get 25%? Who will pay the taxes on the land? Who will shoulder the expenses incurred in making copra? What right does the tiller have?

2)        If I voluntarily offer my coconut land for sale under CARL, how much compensation per hectare would I be paid? How will I be paid? Can I get ½ of the price upon signing and the balance payable in 2 or 3 annual installments? Are the taxes due on the land supposed to be paid first?

3)        If the tenant failed to give the landowner's share for the past ten years, does the landowner have the right to change him? If he does not obey, can he be complained to the local DAR official? If the local DAR official does not make any action, can he be reported to the head office? Can the tenant be accused of theft or estafa in this case?

We understand from your letter that you specifically wish to know whether or not the 25% leasehold rental is already applicable. DAR A. O. 5, Series of 1993 provides the guidelines for implementing. the DAR mandate under Section 12 of RA 6657 (Comprehensive Agrarian Reform Law or CARL) to determine and fix immediately the lease rentals in lands under leasehold in accordance with Section 34 of RA 3844, as amended (The Agrarian Reform Code). Said Section 34 provides that the consideration for the lease of riceland and lands devoted to other crops shall not be more than the equivalent of twenty-five per centum of the average normal harvest during the three agricultural years immediately preceding the date the leasehold was established after deducting the applicable deductible items. In coconut land, the deductible items are enumerated in paragraph VI-B2 of DAR Administrative Order No. 5 Series of 1993 (copy attached for ready reference). For further information on the leasehold rental for your tenanted coconut land, we advise that you visit our Municipal Agrarian Reform Officer (MARO) in the place where your property is situated, because it is said officer who conducts the mediation conference for the determination and fixing of rentals.

As regards taxes on the land, since the ownership of lands under leasehold remains with the landowner, it is his obligation to pay the same.

Under Section 23 of RA 3844, as amended, the following are the rights of the agricultural lessee in general: 1) To have possession and peaceful enjoyment of the land; 2) To manage and work on the land in a manner and method of cultivation and harvest which conform to proven farm practices; 3) To mechanize all or any phase of his farm work; and 4). To deal with millers and processors and attend to the issuance of quedans and warehouse receipts for the produce due him.

Regarding compensation, DAR Administrative Order No. 6 Series of 1992 provides a basic formula for the valuation of lands covered by Voluntary Offer to Sell and Compulsory Acquisition pursuant to CARL, taking into account the factors enumerated in Section 17 thereof, with revisions of said A.O. No. 6 in DAR Administrative Order No. 11 Series of 1994. The mode of compensation is provided in Section 18 of CARL (xerox copy attached). Please note that the initial payment of 50% cash is not one of the modes provided. Moreover, Section 66 of CARL provides: "Transactions under this Act involving a transfer of ownership, whether from natural or juridical persons, shall be exempted from taxes arising from capital gains. These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof: Provided, that all arrearages in real property taxes or interest shall be deductible from the compensation to which the owner may be entitled."

As regards your last query, deliberate non-payment of lease rentals is one of the grounds provided in Section 36 of R.A. 3844 for the dispossession of a tenant. If the tenant deliberately failed to pay the rentals, he may be ejected from his farmlot on the basis of a court, judgment that is final and executory. After said ejectment the landowner is free to choose a replacement if he so desires. However, if said non-payment is due to crop failure as a result of a fortuitous event, the same is not a ground for dispossession, although the obligation to pay is not extinguished. We advise that the matter of non-payment of rentals be first threshed out with your tenant in a mediation conference at the MARO's Office. Should mediation not be possible, a complaint for non-payment of rentals may be filed before the Provincial Adjudicator of the place where your property is situated.

Attached are copies of pertinent guidelines for reference.

We hope we have clarified matters for you.

Very truly yours,

(SGD.) HECTOR D. SOLIMAN
Assistant Secretary
Legal Affairs Office