March 31, 1998

DAR OPINION NO. 42-98

RUFO LIMON, JR.

No. 50 Ma. Elena Street

Carmel 1 Subd ., Proj. 6

Quezon City, 1100

Dear Mr. Limon:

This refers to your letter dated February 22, 1998 seeking opinion as to whether or not a tenant who expressed his desire to buy the agricultural land he cultivates is still entitled to be paid a disturbance compensation.

This instant query is posed in connection with the offer of one Mr. Fortunato Mardo, a third party, to buy the 18,000 square meter parcel of land of Mrs. Leonila V. Limon which is located at Bo. Bagong Pook, Lian, Batangas. The subject agricultural land is being shared by two tenants, namely: Mrs. Anicia Malabanan and Mr. Ernesto Villadolid, Jr. It appears that Mrs. Malabanan did not contest such sale as evinced by the "Kasunduan sa Hublian" dated 01 November 1997. On the other hand, Mr. Villadolid expressed his desire to purchase the said property himself and demanded that he be paid a disturbance compensation of P300,000.00, whether he buys the property or not. He also contended that the landowner should bear the expenses of the "capital gains tax". The landowner in turn is asking Mr. Villadolid, the said tenant, to equal the offer of Mr. Pardo in terms of the price of the said land and to pay Mr. Villadolid a disturbance compensation, at the rate provided for by law, only if he will not opt to buy the said agricultural land.

Thus, your queries are summarized as follows:

1.         Whether or not a landowner before he sells his tenanted property to a Third Party, has to offer first the same to his tenant and when such tenant decides to exercise his option to buy, he has to equal the offer of the Third Party in every respect; and

2.         Whether or not the tenant who opts to buy the property is entitled to a disturbance compensation.

Anent your first query, Section 11 of R.A. No. 3844 (as amended by Section 2 of R.A. No. 6389) provides that in case the landowner/lessor decides to sell his tenanted/leased land, he/she must first offer to sell the landholding to the tenant or lessee thereof, who has the preferential right to buy the same under reasonable terms and conditions (i.e., not necessarily equal to the offer of a third party in all respect). Said right of preemption may be exercised within 180 days from notice in writing. Any dispute as to the reasonableness of the terms and conditions may be brought by the lessee or by the Department of Agrarian Reform to the proper Court of Agrarian Relations, now the DAR Adjudication Board (Rule II, Section 1. e and g of the DARAB New Rules of Procedure), Hence, before selling the land to a third person, you must first comply with the aforesaid legal requirements.

As to your second query, Section 36, paragraph 1 of R.A. No. 3844 as amended by Section 7 of R.A. No. 6389 states that disturbance compensation is mandated to be given to the tenant only if the said tenant will be dispossessed of the land because the land is converted or is declared by DAR to be suited for purposes other than agricultural (e.g., residential, commercial or Industrial). Applying the said law to your query, it is apparent that a tenant is entitled to disturbance compensation only if the land is legally converted to non-agricultural use wherein in the process he is dispossessed thereby. If said land is intended to be sold to a third person but the tenant opts to buy the same, logically, there is no disturbance compensation to speak of since, clearly, there is no conversion and he is not, at all dispossessed of the land.

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:

The Provincial Agrarian Reform Officer

DAR PARO Office

Lipa City, Batangas

The Municipal Agrarian Reform Officer

PAR MARO Office

Lian, Batangas

ATTACHMENT
J. P. Rizal Street
Lian, Batangas
May 15, 1998

Mr. Rufo Limon Jr.

No. 50 Ma. Elena St.

Carmel I Subd . Proj. 6

Quezon City, 1100

Based on Mr. Adasa's response dated March 31, 1998 to your letter dated February 22, 1998, there seems to be a misunderstanding on who would like to buy the land. Your query, was based on the assumption that the tenant, Mr. Ernesto Villadolid Jr. is also the intended buyer; hence, Mr. Adasa's response was based on a wrong premise.

Please be clarified that the intended buyer is Mr. Ernesto M. Villadolid Sr., the owner of the adjacent land and brother of landowner and thus has the priority right to buy the land. In as mush as I, the tenant is not the buyer, I am entitled to a disturbance compensation as per Mr. Adasa's response to your second query as explained in the last paragraph of his letter.

I would like to settle on an agreement as soon as possible. As I have stated on my January 27, 1998 letter, if no agreement could be reached, I, Ernesto L. Villadolid Jr. as tenant has no recourse but to change our sharing system from 50-50 basis to leasehold.

Very truly yours,

(SGD.) ERNESTO L. VILLADOLID, JR.

copy furnished:

Mr. Artemio A. Adasa Jr.

Department of Agrarian Reform

Elliptical Road, Diliman, Quezon City

The Provincial Agrarian Reform Office

DAR PARO Office

Lipa City, Batangas

The Municipal Agrarian Reform Office

DAR PARO Office

Lian, Batangas