January 9, 1998

DAR OPINION NO. 05-98

Mr. Edgar C . Ante

Assistant Department Manager

Philippine Deposit Insurance Corporation

2228 Pasong Tamo St.

Makati City

This refers to your letter with the following queries, to wit:

1)        How do we establish the tenancy rights of the present occupant? What, will be the stand of the occupant in case there is no leasehold agreement executed?

2)        Does the sale of tenancy rights of a beneficiary automatically transfer CARP benefits to the subsequent purchaser of the tenancy rights?

3)        What effect do the cited findings bear on our present transaction-offer of subject property with DAR? Would the treatment of herein presented circumstances automatically apply to similarly situated agricultural properties?

You state that the then Rural Bank of Mariveles, (Bataan) Inc. acquired an agricultural land from a certain Mr. Romualdo Binsol located in Tuyo and Tinajero, Balanga, Bataan with in area of 15,8422 hectares, more or less, and covered by TCT No. T-121748; that the subject property was included in the 3rd batch listings of landholdings offered for coverage under the Comprehensive Agrarian Reform Program (CARP) in DAR Central Office on July 28, 1997; that on October 22, 1997, Deputy Liquidator Ferdinand Pico and Municipal Agrarian Reform Officer (MARO) Guillerma Decepeda, inspected the subject land and observed that Mr. Dorotheo Romasanta, known caretaker of the property, sold his tenancy rights to a certain Mr. Remigio Mallari for P120,000.00; that the lot is planted with several mango trees, banana trees and other root crops; that the selling of rights in Bataan are rampant; and that the new tenant or tiller is being considered as potential CARP beneficiary.

Anent your first query, to establish tenancy relationship, the following conditions must be present: 1) the parties are the landowner and the tenant; 2) the subject is agricultural land; 3) there is consent by the landowner for tenant to work on the land, given either orally or in writing, expressly or impliedly; 4) the purpose is agricultural production; 5) there is personal cultivation or with the help of the immediate household; and 6) there is compensation in terms of payment of a fixed amount in money and/or produce. As per your allegations, deducible is the fact that the circumstances which surround the transfer of tenancy right to the present occupant of the land fall short of the conditions set forth by law in order to establish tenancy relationship. All the conditions set forth must be present and absence of any of said conditions would defeat the purpose and essence of tenancy relationship. Since the landowner (the bank) did not give its consent to the sale of the tenancy right from the caretaker to the present occupant, and in case there is no leasehold agreement executed between the bank and the present occupant, the latter shall be considered as a mere intruder in the said property.

Anent your second query, sale of tenancy rights is strictly prohibited under Republic Act No. 6657, Section 27 of the said law provides in part, quote: "Lands acquired by beneficiaries under this Act may not be sold, transferred or conveyed except through hereditary succession, or to the government, or to the Land Bank of the Philippines (LBP), or to other qualified beneficiaries for a period of ten (10) years: Provided, however, that the children or spouse of the transferor shall have the right to repurchase the land from the government or LBP within a period of two (2) years . . . " The law is quite clear and exclusive as to whom transfer of acquired lands by the beneficiaries may be effected. Outside of those transfers provided for by law will make the same null and void. If the sale, transfer or conveyance was made within the prohibited period and to other persons not mentioned in the above enumeration, such sale, transfer or conveyance would be rendered ineffective or without force and effect being violative of the provisions of R.A. No. 6657.

Anent Your last query, letters B and C of Item No. III of DAR Administrative Order No. 9, Series of 1990, (copy hereto attached) provides that all lands which are voluntarily offered for sale to the government, may no longer be withdrawn and shall immediately fall under Phase I, as provided for in Section 7 of R.A. No. 6657. If the land is tenanted, the farmer-beneficiaries shall continue to pay lease rental based on a leasehold agreement until such time as the landowner signs a Deed of Transfer of the Land Bank of the Philippines makes a deposit in cash or in LBP bonds. Moreover, Administrative Order No. 6, Series of 1997, amending A.O. 9, Series of 1990 (copy hereto attached) further provides that withdrawal of VOS shall no longer be allowed after the letter offer for VOS is received by the DAR. However, the DAR may allow the withdrawal of the VOS if the same is for the purpose of acquisition and compensation through the Voluntary Land Transfer/Direct Payment Scheme (VLT/DPS) and provided that the claim folder has not yet been forwarded to the LBP for the computation of the land value.

Clear from the abovequoted provisions of the law is that all lands which are voluntarily offered for sale to the government may no longer be withdrawn. However, should the subject land be tenanted, the beneficiaries shall continue to pay lease rental to the landowner until such time as the time as the landowner sign the Deed of Transfer (DOT) or the LBP makes a deposit in cash or in LBP bonds in the name of the landowner.

It bears stressing here that with the issuance of A.O. No. 6, Series of 1997, the voluntary offer to sell of lands constitutes a waiver of the right of retention. Besides, banks (whether private or government financing institutions) being juridical persons cannot avail of the right of retention over agricultural lands foreclosed or acquired by the compulsory requisition scheme pursuant to Section 71 of R.A. No. 6657. Said provision of law provides that bank may secure title to mortgaged properties, subject to existing laws on compulsory transfer of foreclosed assets and acquisition as prescribed under Section 16 of said Act.

Thank you for communicating with us, and we hope to have clarified the matters with you.

Very truly yours,

(SGD.) ARTEMIO A. ADASA, JR.

Undersecretary for Legal Affairs, and Policy and Planning

Copy furnished:

Dir. Gloria J. Fabia

Bureau of Land Acquisition and Distribution

DAR Central Office