July 15, 1996
DAR OPINION NO. 56-96
Ms. Theresa B. Dizon
167 Wilson Street
San Juan, Metro Manila
Dear Ms. Dizon:
This has reference to your letter requesting for opinion regarding your 5-hectare tenanted agricultural land at Capas, Tarlac.
You state that said property is your only landholding; that a portion thereof is planted to sugarcane and the rest to fruit trees; that you intend to sell the property, however, said sale is held in abeyance because the tenants are asking the buyer to pay them a very exhorbitant price in exchange for surrendering their tenancy rights. Your specific queries regarding the matter are:
1. How much is the landowner entitled to receive from the proceeds or sale of the fruits of her land with respect to the orchard?
2. How much is the reasonable compensation that should be paid to the tenants who are willing to surrender their tenancy rights or are no longer willing to remain as leaseholders?
Anent your first query, Sec. 12 of RA 6657 mandates that the DAR shall determine and fix the lease rentals within retained areas and areas not yet acquired for agrarian reform, in accordance with Section 34 of RA 3844, as amended (The Code of Agrarian Reform). DAR Administrative Order No. 5, Series of 1993 (copy attached) provides the guidelines governing agricultural leasehold and the determination of lease rental for tenanted lands. Section 34 of RA 3844, as amended by Section 5 of RA 6389, 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 or if there have been no normal harvests, then the estimated normal harvest during the three agricultural years immediately preceding the date the leasehold was established after deducting the amount used for seeds and the cost of harvesting, threshing, loading, hauling and processing, whichever are applicable". As applied to your orchard, the leasehold rental thereon shall not be more than 25% of the average normal harvest. In this connection, we advise that you request the Municipal Agrarian Reform Officer (MARO) of Capas, Tarlac to schedule a mediation conference for the purpose of determining the leasehold rental (please refer to VII-B of A.O. No. 5).
We wish to add that since Section 12 of CARL expressly mandates that the fixing of leasehold rental be made in accordance with Section 34 of RA 3844, and Section 76 of RA 6657 expressly repeals Section 35 of the Agrarian Reform Code, it follows that the maximum leasehold rental of 25% of the average normal harvest is applicable to all kinds of crop.
We wish to add that since Section 12 of CARL expressly mandates that the fixing of leasehold rental be made in accordance with Section 34 of RA 3844, and Section 76 of RA 6657 expressly repeals Section 35 of the Agrarian Reform Code, it follows that the maximum leasehold rental of 25% of the average normal harvest is applicable to all kinds of crop.
As regards your query on the compensation to be given to tenants in exchange for the voluntary surrender of their farmlots, there is no legal provision governing the same. While voluntary surrender is a mode of extinguishing tenancy relations, the practice is that tenants surrendering their tenancy and the rights granted to them by law as such, ask for some amount to enable them to start a new livelihood. Since the law requires the surrender to be voluntary, and there is no legal provision on compensation, the same is best left to the mutual agreement of the parties.
We hope to have clarified matters with you.
Very truly yours,
(SGD.) LORENZO R. REYES
OIC-Undersecretary
LAFMA