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LAND

VALUATION

WHAT IS LAND VALUATION?


LAND VALUATION the process of determining
the just compensation for the land owners, the
modes of payment and the appeals process in
case the value is deemed too low.

JUST COMPENSATION has been defined as the full


and fair equivalent of the property taken from its
owner by the expropriator.

HOW
DOES
JUST
Criteria in determining just compensation.
1. Section 17of Republic Act No. 6657,
as amended by RA 9700
COMPENSATION
BE
Cost of acquisition of the land
Value of the standing crop
DETERMINED?

Its nature, actual use and income


Sworn valuation by the owner
Tax declarations
Assessment made by government assessors
70% of the zonal valuation of the BIR
Social and economic benefits contributed by the farmers and
the farmworkers and by the government
Non-payment of taxes or loans from any government financing
institution on the said land.

2. DAR Administrative Order No. 2, series of 2009


Capitalized Net Income (CNI) which is based on land use and
productivity;
Comparable Sales (CS) which is based 70% of the zonal value;
and
Market Value (MV) which is based on the Tax Declaration.

The basic formula for the valuation of lands:


If all factors are present:

LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)

When CNI is not present:

LV = (CS x 0.90) + (MV x 0.10)

When CS is not present:

LV = (CNI x 0.90) + (MV x 0.10)

When CNI and CS are not present:

LV = MV x 2

RECKONING OF VALUATION
In determining just compensation, the value of
the property at the time it was taken from the
owner and appropriated by the government
shall be the basis.
However, if there is undue delay in payment,
the value of the propetry should be determined
NOT at the time of taking of the land, but at
the time of full payment of the just
compensation.

PROCEDURE FOR DETERMINATION


OF JUST COMPENSATION
1. The Land Bank determines the value of the land.
2. The DAR makes an offer to the landowner using the Land Banks
valuation.
3. If the landowner rejects the offer, the DAR conducts a summary
administrative proceeding to determine the compensation for the
land by requiring the landowner, the Land Bank and other
interested parties to submit evidence as to the just compensation.
The DARAB or its PARAD can conduct a summary
administrative proceeding for the preliminary determination of
just compensation in order to determine whether land
valuation computations of the Land Bank are in accordance
with the rules or administrative orders.

The preliminary proceedings of land valuation shall be


conducted by:
(a)PARAD when the initial land valuation of the Land
Bank is less than P10M
(b)RARAD - when the initial land valuation of the Land
Bank is P10M to P50M
(c)DARAB when the initial land valuation of the Land
Bank is above P50M
4. If there is a party who disagrees with the decision of the adjudicator,
he may bring the matter to the RTC designated as a Special Agrarian
Court within 15 days from his receipt of the Board/Adjudicators
decision.
5. Immediately upon filing with SAC, a party shall file a Notice of Filing
of Original Action with the Board/Adjudicator, together with a certified
true copy of the petition filed with the SAC.

PARTIES IN THE VALUATION OF


LAND
1. Landowner
2. DAR
3. Land Bank

Thus, the consent of the farmerbeneficiary is not required in determining just


compensation.

MODES OF PAYMENT
A. Cash and financial instruments of the
government, payable as follows:

1. Lands above 50 hectares (with respect to the excess


hectarage):
i. 25% in cash; and
ii. 75% in government financial instruments.
2. Lands above 24 hectares to 50 hectares:
i. 30% in cash; and
ii. 70% in government financial instruments.
3. Lands 24 hectares and below.
i. 35% in cash; and
ii. 65% in government financial instruments.

B. Shares of stocks in government-owned or


controlled corporations, preferred shares of the
Land Bank, physical assets or other qualified
investments;
C. Tax credits which can be used against tax
liabilities; and
D. Land Bank bonds.

Features:
a. 10% of the face value of the bonds shall mature
every year from the date of issuance until the
10th year;
b. the bonds are transferable and negotiable;
c. the bonds can be used for any of the following:

i.

Acquisition of land or other real properties of the government, including


assets under the Asset Privatization Program and other assets
foreclosed by government financial institutions in the same province or
region where the land for which the bonds were paid are situated;

ii.

Acquisition of shares of stock of government-owned or controlled


corporations or shares of stocks owned by the government in private
corporations;

iii. Bail bonds for the provisional release of accused persons, or


performance bonds.
iv. Security for loans with government financing institution, provided that
the proceeds of the loans shall be invested in an economic enterprise;
v.

Payment for various taxes and fees to government;

vi. Payment for tuition fees of the immediate family of the original
bondholder in government universities, colleges, trade schools and
other institutions;
vii. Payment for fees of the immediate family of the original bondholder in
government hospitals; and

Presidential Decree No. 27


DECREEING THE EMANCIPATION OF
TENANTS FROM THE BONDAGE OF
THE SOIL TRANSFERRING TO THEM
THE OWNERSHIP OF THE LAND
THEY TILL AND PROVIDING THE
INSTRUMENTS AND MECHANISM
THEREFOR.

EXECUTIVE ORDER NO. 228


DECLARING FULL LAND OWNERSHIP
TO
QUALIFIED
FARMERBENEFICIARIES COVERED BY THE
PRESIDENTIAL DECREE
NO.
27;
DETERMINING
THE
VALUE
OF
REMAINING UNVALUED RICE AND
CORN LANDS SUBJECT OF P.D. NO. 27;
AND PROVIDING FOR THE MANNER
OF PAYMENT BY THE FARMER
BENEFICIARY
AND
MODE
OF
COMPENSATION TO THE LANDOWNER.

APPLICABILITY OF THE LAW


P.D. No. 27
This shall apply to tenant-farmers of
private agricultural lands primarily
devoted to rice and corn under a system
of share-crop or lease-tenancy, whether
classified as landed estate or not.

TRANSFER OF LANDS TO TENANTS


P.D. NO. 27
THE TENANT-FARMER, WHETHER IN
CLASSIFIED AS LANDED ESTATE OR NOT,
SHALL BE DEEMED OWNER OF A PORTION
CONSTITUTING A FAMILY-SIZE FARM OF FIVE
(5) HECTARES IF NOT IRRIGATED AND THREE
(3) HECTARES IF IRRIGATED.
E.O. NO. 228, SECTION 1
ALL QUALIFIED FARMER-BENEFICIARIES ARE
NOW DEEMED FULL OWNERS AS OF
OCTOBER 21, 1972 OF THE LAND THEY
ACQUIRED BY VIRTUE OF PRESIDENTIAL

STAGES OF LAND
TRANSFER
The land transfer under P.D. No. 27 is
effected in the two (2) stages;
namely:
1. Issuance of a Certificate of Land
Transfer (CLT) to the farmerbeneficiary; and
2. Issuance of Emancipation Patent
(EP).

DETERMINATION OF THE COST OF


THE LAND

P.D. NO. 27
THE VALUE OF THE LAND SHALL BE EQUIVALENT
TO TWO AND ONE HALF (2-1/2) TIMES THE AVERAGE
HARVEST OF THREE NORMAL CROP YEARS
IMMEDIATELY PRECEDING THE PROMULGATION OF
THIS DECREE
THE TOTAL COST OF THE LAND, INCLUDING
INTEREST AT THE RATE OF SIX (6) PERCENTUM PER
ANNUM, SHALL BE PAID BY THE TENANT IN
FIFTEEN (15) YEARS OF FIFTEEN (15) EQUAL
ANNUAL AMORTIZATIONS.
IN CASE OF DEFAULT, THE AMORTIZATIONS DUE
SHALL BE PAID BY THE FARMERS COOPERATIVE IN
WHICH THE DEFAULTING TENANT-FARMER IS A

E.O. 228, Section 6


The total cost of the land including interest at
the rate of six percent (6%) per annum with a
two percent (2%) interest rebate for
amortizations paid on time, shall be paid by
the farmer-beneficiary or his heirs to the land
bank over a period of up to twenty (20) years
in twenty (20) equal annual amortizations.

COMPENSATION SCHEME
1. Direct payment to the landowner by the
farmer-beneficiaries, in cash or in kind;
2. Payment by the Land Bank with 10%
payable in cash and the balance payable in
the form of Land Bank bonds over a 10year period;
3. Other modes of payment as may be
prescribed or approved by the Presidential
Agrarian Reform Council (PARC).

CANCELLATION OF EP
Emancipation Patents may be cancelled on the
following grounds:
1. Abandonment of the land;
2. Neglect or misuse of land;
3.Failure to pay three (3) annual amortization;
4.Misuse or diversion of financial and support
services;
5. Sale, transfer or conveyance of the right to
use the land; and
6. Illegal conversion of the land.

EFFECT OF FAILURE TO PAY


AMORTIZATION
E.O. 228, Section 8
Failure on the part of the farmerbeneficiary to pay three (3) annual
amortizations shall be sufficient cause
for the land bank to foreclose on the
mortgage.

E.O. 228, Section 9


The land bank shall register a certification
under oath of its intent to foreclose with the
Register of Deeds of the city or province
attaching thereto:
1. A copy of the final notice of payment
2. Proof of service to the tenant-farmer and the
DAR of the final notice of payments; and
3. A certification that at least (3) annual
amortizations on the land of the sum thereof
remains unpaid.

E.O. 228, Section 10


The tenant-farmer, or any of his
compulsory heirs may lift the
foreclosure within a period of two (2)
years from its registration by paying the
Land Bank all unpaid amortizations on
the land with interest thereon of six
percent (6%) per annum.

TRANSFERABILITY OF THE
OWNERSHIP OF THE LAND
P.D. No. 27
The tenant-beneficiary cannot sell or transfer
ownership of the land acquired under the
Tenant Emancipation Law, except to the
Government or by hereditary succession.
E.O. 228, Section 6
Ownership of lands acquired by a farmerbeneficiary may be transferred after full
payment of amortizations.

LAND BANK OF THE PHILIPPINES VS.


HON. ELI NAVIDAD
FACTS:

Jose Caguiat filed a petition before the trial court for the
determination of just compensation for their agricultural lands which
were acquired by the government pursuant to PD 27 in 1972. The trial
court rendered a decision in favor of Jose Caguiat ordering DAR and Land
Bank to pay the amount of P30.00 per square meter. According to Land
Bank, Jose Caguiat should have sought the reconsideration of the DARs
valuation of their properties and that they failed to exhaust
administrative remedies when they filed a petition for the determination
of just compensation directly with the trial court. Land Bank further
alleged that the trial court erred in declaring that PD27 and EO228 are
mere guidelines in the determination just compensation, and relying of
Jose Caguiats evidence of the valuation of the properties at the time of
possession in 1993 and not on Land Banks evidence of the value thereof
as of the time of acquisition in 1972.

Issue:
Whether or not Jose Caguiat failed to exhaust administrative
remedies.
Ruling:
No. Land Banks contention is not entirely true. Jose Caguiat
wrote a letter to the DAR Secretary objecting to the land valuation
summary submitted by Municipal Agrarian Reform Office and
requesting a conference for the purpose of fixing just compensation.
The letter, however, was left unanswered prompting Jose to file a
petition directly with the trial court
In accordance with settled principles of administrative law,
primary jurisdiction is vested in the DAR to determine in a
preliminary manner the just compensation for the lands taken under
the agrarian reform program, but such determination is subject to
challenge before the courts. The resolution of just compensation cases
for the taking of lands under agrarian reform is, after all, essentially
a judicial function.

Issue:
Whether or not just compensation should be determined at the
time of acquisition and not at the time of possession.
Ruling:
No. The agrarian reform process is still incomplete as the just
compensation to be paid to Jose 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, RA6657 is the applicable law, with PD27 and
EO228 having only suppletory effect.

JOSEFINA LUBRICA VS. LAND BANK


OF THE PHILIPPINES
Facts:

Josefina S. Lubrica is the assigneeof Federico C. Suntay over certain


parcels of agricultural land with an area of 3,682.0285 hectares. In 1972, a
portion of the said property with an area of 311.7682 hectares, was placed
under the land reform program pursuant to PD 27 and EO 228. The land was
thereafter subdivided and distributed to farmer beneficiaries. The Department
of Agrarian Reform (DAR) and the LBP fixed the value of the land at
P5,056,833.54 which amount was deposited in cash and bonds in favor of
Lubrica.
Nenita Suntay-Taedo and Emilio A.M. Suntay III inherited from Federico
Suntay a parcel of agricultural land. consisting of two lots, namely, Lot 1 with
an area of 45.0760 hectares and Lot 2 containing an area of 165.1571 hectares
or a total of 210.2331 hectares. Lot 2 was placed under the coverage of P.D. No.
27 but only 128.7161 hectares was considered by LBP and valued the same at
P1,512,575.05.
Petitioners rejected the valuation of their properties, hence the Office of the
Provincial Agrarian Reform Adjudicator (PARAD) conducted summary
administrative proceedings for determination of just compensation. the PARAD
fixed the preliminary just compensation at P51,800,286.43 for the 311.7682
hectares and P21,608,215.28 for the 128.7161 hectares.

Not satisfied with the valuation, LBP filed two separate petitionsfor
judicial determination of just compensation before the Regional Trial Court
acting as a Special Agrarian Court. The petitioners prayed that LBP should
deposit the preliminary compensation determined by the PARAD. The trial
court ordered LBP to deposit the compensation as determined by the PARAD.
LBP filed with the Court of Appeals a Petition for the issuance of a Temporary
Restraining Order and Writ of Preliminary Injunction. The appellate court
issued a 60-day temporary restraining order. The Court of Appeals rendered a
Decisionin favor of the petitioners. The Court of Appeals held that the trial
court correctly ordered LBP to deposit the amounts provisionally determined
by the PARAD as there is no law which prohibits LBP to make a deposit
pending the fixing of the final amount of just compensation. It also noted that
there is no reason for LBP to further delay the deposit considering that the
DAR already took possession of the properties and distributed the same to
farmer-beneficiaries as early as 1972.
LBP moved for reconsideration. The CA reversed its own decision. the
Court of Appeals held that the immediate deposit of the preliminary value of
the expropriated properties is improper because it was erroneously computed.
Petitioners insist that the determination of just compensation should be
based on the value of the expropriated properties at the time of payment.
Respondent LBP, on the other hand, claims that the value of the realties
should be computed as of October 21, 1972 when P.D. No. 27 took effect.

Issue:
Whether or not the the determination of just compensation should be
based on the value of the expropriated properties at the time of payment.
Ruling:
Yes. In the instant case, petitioners were deprived of their properties
in 1972 but have yet to receive the just compensation therefor.The
parcels of land were already subdivided and distributed to the farmerbeneficiaries thereby immediately depriving petitioners of their use.
Under the circumstances, it would be highly inequitable on the part of
the petitioners to compute the just compensation using the values at the
time of the taking in 1972, and not at the time of the payment,
considering that the government and the farmer-beneficiaries have
already benefited from the land although ownership thereof have not yet
been transferred in their names. Petitioners were deprived of their
properties without payment of just compensation which, under the law,
is a prerequisite before the property can be taken away from its
owners.The transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner of the
corresponding payment or deposit by the DAR of the compensation with
an accessible bank. Until then, title remains with the landowner.

LAND BANK OF THE PHILIPPINES


VS. CA AND PEDRO YAP
FACTS: The private respondent is a landowner whose landholding was acquired by the
Department of Agrarian Reform (DAR) and subjected to transfer schemes to qualified
beneficiaries under Comprehensive Agrarian Reform Law (CARL). Based on the request of
the DAR together with a certification of the Land Bank of the Philippines (LBP) that the
sum of P 735,337.77 and P 719,869.54 have been earmarked for landowner Yap for his
parcels of lands and transferred in the names of the beneficiaries without notice to Yap and
without complying of requirement of Section 16.
ISSUE: Yap assails the fact that DAR and LBP merely earmarked, deposited in trust or reserved
the compensation in their names as landowners despite the clear mandate that before taking
possession of the property, the compensation must be first deposited in cash or bond.
HELD: It is very explicit there from that the deposit must be made only in cash or bond.
Nonehence does it appear nor can it be inferred that the deposit can be made in any other
forms. If it were the intention to include including a trust account among the valid modes of
deposit, that should have been made express, or at least, qualifying words ought to have
appeared deduced trust account. Section 18 and 16, the immediate effect in both situations is
the same, the landowner is deprived of the use of and possession of his property for which
he should be fairly and immediately compensated.

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