RA 6657 or the Comprehensive Agrarian Reform Program, is the

redistribution of public and private agricultural lands to farmers and

farmworkers who are landless, irrespective of tenurial arrangement. CARPs
vision is to have an equitable land ownership with empowered agrarian
reform beneficiaries who can effectively manage their economic and social
development to have a better quality of life.
One of the major programs of CARP is Land Tenure Improvement, which
seeks to hasten distribution of lands to landless farmers. Similarly, the
Department offers Support Services to the beneficiaries such as
infrastructure facilities, marketing assistance program, credit assistance
program, and technical support programs. Furthermore, the department
seeks to facilitate, resolve cases and deliver Agrarian Justice.
Chapter V (Land Acquisition) of RA 6657 would speak of Land
Acquisition and the procedure on how to acquire Public Lands. In connection
to that, Chapter VI (Compensation) will talk about Determination of Just
Compensation (Section 17.) and Valuation and Mode of Compensation
(Section 18), staing:
SECTION 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of the
like properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by 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.
SECTION 18. Valuation and Mode of Compensation. The LBP
shall compensate the landowner in such amounts as may be agreed upon by
the landowner and the DAR and the LBP, in accordance with the criteria
provided for in Sections 16 and 17, and other pertinent provisions hereof, or
as may be finally determined by the court, as the just compensation for the
land.

The compensation shall be paid on one of the following modes, at the option
of the landowner:
(1) Cash payment, under the following terms and conditions;
(a) For lands above Twenty-five percent fifty (50) hectares, insofar
(25%) cash, the balance to as the excess hectarage is be paid in
government concerned. financial instruments negotiable at any time.

(b) For lands above Thirty percent (30%) cash, twenty-four (24)
hectares the balance to be paid in and up to fifty (50) hectares.
government financial instruments negotiable at any time.
(c) For lands twenty-four Thirty-five percent (35%) (24) hectares and
below.
cash,
the
balance
to
be
paid in
government
financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations,
LBP preferred shares, physical assets or other qualified investments in
accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten
percent (10%) of the face value of the bonds shall mature every year
from the date of issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash portion, whether in full
or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by
the landowner, his successors in interest or his assigns, up to the
amount of their face value, 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 lands 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) Substitution for surety or bail bonds for the provisional
release of accused persons, or performance bonds;
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an
economic enterprise, preferably in a small-and medium-scale
industry, in the same province or region as the land for which
the bonds are paid;

(v) Payment for various taxes and fees to government; Provided,

That the use of these bonds for these purposes will be limited to
a certain percentage of the outstanding balance of the
financial instruments: Provided, further, That the PARC
shall determine the percentage mentioned above;
(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
(viii) Such other uses as the PARC may from time to time allow.
In case of extraordinary inflation, the PARC shall take appropriate measures
to protect the economy.

What is Land Valuation?

Land Valuation is the total cost of the land agreed upon by the parties
whether payable in kind or in money.
Specifically for lands acquired under VOS, CA, or EO 407, Land Value (LV) is
computed using the factors such as:
Comparable Sales (CS),
Capitalized Net Income (CNI) and,
Market Value (MV) per tax declaration.

How is land value computed under CARP?

There are four different formulas in determining land value in a given
situation.
The land value under CARP is computed as the sum of the Capitalized Net
Income, Comparable Sales and the Market Value weighted at 60%, 30% and
10% respectively ;
or Formula 1:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: CNI is the difference between the product of the Annual Gross
Production and Selling Price (AGPxSP) less the Total Cost of Operations (CO)
capitalized at 12%
CNI = (AGP x SP) CO
.12

 CS is any one or the average of all the applicable factors such as sales
Transactions, Acquisition Cost, and Market Value based on Mortgage Price
MV per tax declaration is the latest tax declaration and schedule of unit
market value issued prior to receipt of claimfolder by LBP.
If CNI factor is not available Land Value (LV) is equivalent to the sum of the
Comparable Sales (CS) and the Market Value weighted at 90% and 10%
respectively. The 60% weight originally assigned to CNI is added to the
weight assigned to Comparable Sales (CS).
To illustrate how the formula is used and given the following values
Capitalized Net Income is computed as follows:
Givens:
Number of coconut trees : 95 trees/hectare
Selling Price : Php 6.74/kg (12 month) average prior to receipt of
claimfolder by Land Bank if possible gathered from the area where the
property is located)
Number of nuts/kg : 4.5
Net income : Assumed value in case Cost of operation could not be
obtained. The value is established from joint studies on the Indus try
conducted by DAR and LBP (NIR for landholdings planted coconut during the
time of the field Investigation is 70%
Computation: AGP= 95 trees/ha x 30 nuts/tree
= 633.33kg
CNI = 633.33kgx 6.74/kgx70%
12%
= Php 24, 900.56/hectare

Formula 2:
LV= (CSx0.9)+(MVx0.1)
If comparable Sales factor is not available, Land Value is equivalent to the
sum of Capitalized Net Income (CNI) and Market Value (MV) weighted at 90%
and 10% respectively. While the first formula in the computation of Land
Value uses all the three factors; the second formula uses the Comparable
Sales as a substitute for the Capitalized Net Income. This third formula now
uses the Capitalized Net Income as a substitute for the Comparable Sales
factor in the computation of Land Value.
Formula 3:
LV= (CNIx0.9)+(MVx0.1)

If only the market value factor is available, land value is equivalent to twice
the market value.
Formula 4:
LV=MVx2
How is land value computed under PD 27?
The land value under PD 27 is computed as the product of Average Gross
Production (AGP), the Fixed Factor which is 2.5 and the Government Support
Price (GSP) for rice and corn respectively; or
LV (Rice Land) = AGP x 2.5 x GSP (Rice)
LV (Rice Land) = AGP x 2.5 x GSP (Rice)
Where:
AGP is determined by the Barangay Committee for Land Production (EO
228, s. 1988)
GSP is determined based on the following:
GSP as of October 21, 1972
RiceP 35 per cavan of 50kg. palay
CornP 31 per cavan of 50kg. Corn
GSP as of December 29, 1999
RiceP 300
CornP 250
What measures were adopted to ensure that PD 27 lands are not
undervalued?
AO 13 s 1994 provided for an increment of 6% yearly interest compounded
annually on lands covered by PD 27 and EO 228.
Thus, the formula was revised as: the product of Average Gross Production
(AGP), the Fixed Factor which is 2.5, the Government Support Price (GSP) for
the crop planted on the land, and the 6% yearly interest compounded
annually to be multiplied by the number of years (n) from the date of
tenancy up to the effectivity date.
LV (Rice Land) = AGP x 2.5 x GSP (Rice) x (1.06)n
LV (Corn Land)= AGP x 2.5 x GSP (Corn) x (1.06)n

Section 2 of R.A. 6657 states that It is the policy of the State to

pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of
the landless farmers and farmworkers will receive the highest consideration
to promote social justice and to move the nation toward sound
rural development and industrialization, and the establishment of owner
cultivatorship of economic-size farms as the basis of Philippine agriculture.
a more equitable distribution and ownership of land, with due regard to the
rights of landowners to just compensation and to the ecological needs of the
nation, shall be undertaken to provide farmers and farmworkers with
the opportunity to enhance their dignity and improve the quality of their lives
through greater productivity of agricultural lands
It is true that those who have less in life should have more in law.
However, landowners should also enjoy their right by receiving the fair
amount of the just compensation they receive from the taking of their
property. The formula for the computation of the land value by the Land Bank
of the Philippines is not just with the landowners. Just compensation is
defined as the full and fair equivalent of the property taken away from its
owner by expropriation.1 Taking the property of the landowners in an unfair
equivalent of their said properties would tantamount to violation of two
sections in Article III of the 1987 Constitution: Sec 1. No person shall be
deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws and Sec. 9. Private
property shall not be taken for public use without just compensation.
There are factors that are considered in the determination of just
compensation. The following are: 1. Current value of like properties; Cost of
acquisition Official assessment by government assessors Nature of land;
Non-payment of taxes or loans secured from government financing
institutions; Sworn value by landowner Income Declaration of taxes
Economic and social benefits contributed by farmers Real/actual use. These
factors are considered as standards to guide officials in determining just
compensation but these should not control or limit such determination. 2
While the courts should be mindful of the different formulae created by the
DAR in arriving at just compensation, they are not strictly bound to adhere
thereto if the situations before them do not warrant it[T] he basic formula
and its alternatives administratively determined (as it is not found in
Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998)
although referred to and even applied by the courts in certain instances,
does not and cannot strictly bind the courts. To insist that the formula must
be applied with utmost rigidity whereby the valuation is drawn following a
strict mathematical computation goes beyond the intent and spirit of the

1 (Manila Railroad Co. v. Velasquez, 32 Phil.286

2 Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian
Reform, 175 SCRA 343 (1989)

law.The suggested interpretation is strained and would render the law inutile.
Statutory construction should not kill but give life to the law. 3
While the agrarian reform program was undertaken primarily for the
benefit of our landless farmers, this undertaking should, however, not result
in the oppression of landowners by pegging the cheapest value for their
lands. Indeed, although the taking of properties for agrarian reform purposes
is a revolutionary kind of expropriation, it should not be carried out at the
undue expense of landowners who are also entitled to protection under the
Constitution and agrarian reform laws. ( LBP v. Spouses Chico, 600 Phil. 272,
291 (2009))

3 LBP vs. Lajom, G.R. No. 184982 , August 20, 2014