AGRARIAN LAW AND SOCIAL

LEGISLATION
LAND VALUATION AND LANDOWNERS
COMPENSATION
I. JUST COMPENSATION
A. Legal Basis of Landowners Compensation

1. Section 9, Article III of the 1987 Constitution

Private property shall
not be taken for
public use without just
compensation.
I. JUST COMPENSATION
A. Legal Basis of Landowners Compensation

2. Section 4, Article XIII of the Agrarian and Natural
Resources Reform

The State, shall by law undertake an
agrarian reform program founded on the
right of farmers and regular farmworkers who
are landless, to own directly or collectively
the lands they till or, in the case of other
farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall
encourage and undertake the just distribution
of all agricultural lands, subject to such
priorities and reasonable retention limits as
the Congress may prescribe, taking into
account ecological, developmental or equity
considerations, and subject to the payment
of just compensation.
I. JUST COMPENSATION
B. What is JUST COMPENSATION?
It is defined, in a general sense and as a concept
under the Bill of Rights as:
I. JUST COMPENSATION
B. What is JUST COMPENSATION?
In some jurisprudence, it is defined as:
Association of Small Landowners in the Philippines vs.
Secretary of Agrarian Reform

xxx the full and fair equivalent of the property
taken from its owner by the expropriator. xxx the
measure is not the takers gain in the owners loss.
The word just is used to intensify the meaning of the
word compensation to convey the idea that the
equivalent to be rendered for the property to be
taken shall be real, substantial, full and ample.
I. JUST COMPENSATION
B. What is JUST COMPENSATION?
In some jurisprudence, it is defined as:
EPZA vs Dulay, 1987

The equivalent for the value of the property at
the time of its taking. It means a fair and full equivalent
for the loss sustained. All the facts as to the condition of
the property and its surroundings, its improvements and
capabilities should be considered.
I. JUST COMPENSATION
B. What is JUST COMPENSATION?
DAR Administrative Order No 06, 1992
Just compensation xxx cannot be an absolute
amount disregarding particularities, distance to the
marketplace, and so on. xxx, land valuation is not a
exact science but an exercise fraught estimates
requiring integrity, conscientiousness and prudence on
the part of those responsible for it. What is
important ultimately is that the land value
approximates, as closely as possible, what is broadly
considered to be just xxx.
I. JUST COMPENSATION
C. How is JUST COMPENSATION determine?

Section 17 provides that:
In determining just compensation, the cost of
acquisition of the land, the value of the standing crop, the
current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax
declaration, the assessment made by the government
assessors shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers and
by the Government to the property as well as the non-
payment of taxes or loans secured from any government
financing institution on the said land shall be considered as
additional factors to determine its valuation.
I. JUST COMPENSATION
D. Are the factors under Section 17 exclusive?
No. RA 6557 does not expressly state that only
such factors/criteria and no oters shall be considered,,
hence, such factors/criteria should be deemed as mere
standards. These factors are considered standards to
guide officials in determining just compensation but
these should not control or limit such determination.
-Small Landowneers Association vs Secretary of
Agrarian
I. JUST COMPENSATION
E. When is the compensable taking?
In the case of Republic of the Philippines vs Castellvi, there is
compensable taking when the following conditions concur:

1. The expropriator must enter a private property;

2. The entry must be for more than a momentary period;

3. The entry must be under warrant or color of authority;

4. the property must be devoted to public use or otherwise
informally appropriated or injuriously affected; and

5. The utilization of the property for public use must be in such a way
as to oust the owner and deprive him of beneficial enjoyment of the
property.
I. JUST COMPENSATION
Executive Order No. 405, June 14, 1990
The LAND BANK OF THE PHILIPPINES has the
responsibility of determining the land value of
properties covered by land reform.
I. JUST COMPENSATION
The final
determination of just
compensation is a
judicial function. The LBP
merely conducts
administrative valuation
which may be considered
in the court of proper
jurisdiction.
- Magana vs Paitan, 1990
I. JUST COMPENSATION
Illustrative case:

LBP vs Kumassie Plantation Company, Inc.

xxx while the determination of just
compensation is essentially a judicial function
which is vested in the RTC acting as a Special
Agrarian Court , the SC disregarded the
determination of just compensation made in the
RTC in LBP vs Banal, LBP vs Celadan and LBP vs Lim
because the judge gravely abused his discretion
by not taking into full consideration the factors
specifically identified by law.
I. JUST COMPENSATION
I. JUST COMPENSATION
The date of taking of the subject land for
the purposes of computing just compensation
should be reckoned from the date of issuance
of the emancipation patents.

Illustrative case:

DAR vs Tongson

LBP vs Estanilao
I. JUST COMPENSATION
LBP vs Abello, cited in DAR vs Tongson
xxx under the factual circumstances of the
case, the agrarian reform process is still
incomplete as the just compensation to be paid
respondents has yet to be settled. Considering the
passage of RA 6657 before the completion of this
process, the just compensation should be
determined and the process concluded under the
said law. Indeed, this cour has time and again
upheld the applicability of RA 6657, with PD 27 and
EO 228 having only suppletory effect, conformably
with our ruling in Paris vs Alfeche xxx.
II. LAND VALUATION THROUGH THE YEARS
A. Under EO No. 228 and DAR AO No. 13, s 1994
> EO No. 228 took effect on July 17, 1987 and
provided for the valuation mechanism for lands
acquired pursuant to PD 27. Lease rentals paid to
the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance
payment for the land.
II. LAND VALUATION THROUGH THE YEARS
Formula under EO No. 228:

LV for Riceland = (2.5 X AGP X P33.00) X A

LV for Cornland = (2.5 X AGP X P31.00) X A

Where:

LV is land value
AGP is the Average Gross production
P33.00 is the government support price for one cavan of palay in 1972
P31.00 is the government support price for one cavan of corn in 1972
A is the total area of the land acquired

A. Under EO No. 228 and DAR AO No. 13, s 1994
II. LAND VALUATION THROUGH THE YEARS
A. EO No. 228 and DAR AO No. 13, s 1994
> DAR AO No. 13 was issued providing for the
guidelines on the grant of an increment of 6% yearly
interest compounded annually based on the land
value as determined in the EO 228 formula
reckoned from the date when the land was actually
tenanted OR from October 21, 1972 UNTIL October
27, 1994.

> DAR AO No. 13 was the governments
answer to the problem/issue that PD 27 lands were
grossly undervalued resulting to landowners
rejection of the computed value for their land.
II. LAND VALUATION THROUGH THE YEARS
A. EO No. 228 and DAR AO No. 13, s 1994
Formula under DAR AO 13:

LV WITH INCREMENT = (Computed LV under EO 228
formula) X (1.06)n

Where:

N is the number of years from the date of tenancy up to October 27, 1994

In case of landowners who were partially paid, the yearly interest of
6% compounded annually shall be applied only to the unpaid balance. For
landowners claims which were previously approved for payment by Land
Bank, the landowners shall still be entitled to the difference.

II. LAND VALUATION THROUGH THE YEARS
> DAR AO 06 took effect on October 30, 1992 and
gave more weight on the net income factor substantially
raising the land value of covered lands.

> DAR AO 06 provides that there shall be one
basic formula for the valuation of lands covered by
voluntary offer to sell (VOS) or compulsory acquisition
(CA) regardless of the date of offer or coverage of the
claim which is:
II. LAND VALUATION THROUGH THE YEARS
II. LAND VALUATION THROUGH THE YEARS
Adherence to the formula prescribed by DAR
is MANDATORY. Based on the following
jurisprudence:

Land Bank vs Lim Cabochan, GR No. 171941, August
2, 2007
xxx in LBP vs Spouses Banal, this court
underscored the mandatory nature of Section 17 of RA
6657 and DAR AO 6-1992, as amended by DAR AO 11-
1994 xxx and in LBP vs Celada, this court set aside the
valuation fixed by the RTC of Tagbilaran which was
based solely on the valuation of neighboring properties
because it did not apply the DAR valuation formula.
II. LAND VALUATION THROUGH THE YEARS

LBP vs Banal, GR No. 143276, July 20, 2004

In determining the valuation of the subject
property, the trial court shall consider the factors
provided under Section 17 of RA 6557, as amended xxx.
The formula prescribed by the DAR in AO 6, 1992 as
amended by DAR AO 11, 1994, shall be used in the
valuation of land.
II. LAND VALUATION THROUGH THE YEARS

LBP vs Celada, GR No. 164876, January 26, 2006

DAR AO 5-1998 precisely filled-in the details of
Section 17, RA 6557 by providing a basic formula by
which the factors therein may be taken into account.
Xxx SAC was at no liberty to disregard the formula which
was devised to implement the provision xxx.
II. LAND VALUATION THROUGH THE YEARS
> RA 9700 took effect on August 7, 2009 extending the
implementation of CARP until June 30, 2014.

> RA 9700 provides that all previously acquired lands SUBJECT
TO CHALLENGE should be finally resolved in accordance with
Section 17 of RA 6557, as amended.


III. LANDOWNERS' COMPENSATION
III. LANDOWNERS' COMPENSATION
> Landowners are paid through combination
of Cash and in Kind.
> Payment in kind may be paid with:

1. Shares of stock in government owned and
controlled corporations, LBP preferred shares,
physical assets or other qualified investments;

2. Tax credits; or

3. LBP bonds
III. LANDOWNERS' COMPENSATION
What is the proportionate amount of cash and bond?
AREA CASH PORTION BOND PORTION
Above 50 hectares 25% of land value 75% of land value
Above 24 hectares and u
to 50 hectares
30% of land value 70% of land value
24 hectares and below 35% of land value 65% of land value
III. LANDOWNERS' COMPENSATION
> Full payment in cash is not feasible because
such will tremendously increase the current funding
requirements for CARP which the government can ill
afford at present. Furthermore, this will infuse a large
amount of money into the economy which could
result in inflation as cited in the case of Small
Landowners Association of the Philippines vs
Secretary of Agrarian Reform.
Why is the whole amount of valuation NOT paid in
cash?
III. LANDOWNERS' COMPENSATION
> The DAR will refer the case to DARAB for
summary administrative proceeding.

Illustrative case

LBP vs Banal.
AGRARIAN LAW AND SOCIAL
LEGISLATION
AGRARIAN LAW AND SOCIAL
LEGISLATION