March 8, 1996

DAR OPINION NO. 12-96

Mr. Jesus O. Baterina

Baterina Trading

No. 2 Bogayong Bldg.

Upper Mabini, Baguio City

Dear Mr. Baterina:

The Manila Times has referred to this Office your letter dated 23 January 1996 requesting information on whether there is a law regulating "possession fees" or a system of computation thereof.

You state that you want to sell your tenanted agricultural land with an area of less than a hectare for about P250,000. Your tenant who is your grandson is asking for what you have termed a "possession fee" of P50,000.00 which you believe is too much, hence your query.

Please be informed that nowhere in the Agricultural Land Reform Code (R.A. 3844, as amended) is there a provision on "possession fee" similar to that which your tenant is asking for.

As we understand it, your grandson is asking for P50,000.00 in exchange for surrendering his rights as tenant over the farmlot. These rights include his right to security of tenure, which means that he cannot be ejected or removed therefrom except upon final order of the court for cause. Said security of tenure continues even if the farmlot is sold, in which case the new owner takes the place of the former landowner vis-a-vis the tenant. The tenant, may, however, choose to voluntarily surrender the farmlot, and this is one way of extinguishing his tenancy on the land. Tenants usually request for some amount from the landowner when they surrender their tenancy rights, to enable them to start a new source of livelihood. We take it that P50,000.00 is the amount your tenant-grandson has determined to be sufficient to help him start a new life, in exchange for his tenancy rights. As the Agricultural Land Reform Code does not provide for such cases, but allows the tenant to voluntarily surrender his tenancy, the matter is left to the parties concerned to negotiate on.

We hope to have clarified the matter with you.

Very truly yours,

(SGD.) HECTOR D. SOLIMAN

Undersecretary
LAFMA