a land area of 112hec.
Under the tax declaration, the
Section 9. Ancestral Lands
“Ancestral Land”
 Lands of public domain that have been in
open, continuous, exclusive and notorious
occupation and cultivation under a bona fide
claim of acquisition of ownership or at least a
period of 30 years before PD 410’s approval, by
members of the National Cultural Communities
by themselves or through their ancestors
 Lands occupied, possessed and utilized by
indigenous cultural communities since time
immemorial by themselves or through their
predecessors-in-interest under claims of
individual or traditional group ownership
continuously to the present
Why Ancestral Lands are exempted from Agrarian
Reform Law?
In line with the principles of self-determination and
autonomy, CARL recognizes and respects the systems of
land ownership, land use, and modes of settling disputes
of all indigenous cultural communities
For Autonomous Regions:
Their respective legislatures may enact their own laws on
ancestral domain subject to the provisions of the
Constitution, and principles enunciated in the CARL and
other national laws
Section 10. Exemptions and Exclusions
1. Lands actually, directly and exclusively used
and found to be necessary for parks, wildlife,
forest reserves, reforestation, fish sanctuaries
and breeding grounds, watersheds, and
mangroves;
2. Private lands actually, directly and exclusively
used for prawn farms and fishponds –– so long
as the same are not distributed and a CLOA on
the land has not been issued to a beneficiary
3. Lands actually, directly and exclusively used for
national defense, school sites and campuses
including experimental farm stations operated
by public or private schools for educational
purposes, seeds and seedlings research and
pilot production centers, church sites and
convents appurtenant thereto, mosque sites
and Islamic centers appurtenant thereto,
communal burial grounds and cemeteries,
penal colonies and penal farms actually
worked by the inmates, government and
private research and quarantine centers and
all lands with eighteen percent (18%) slope and
over, except those already developed
NB: Land classification in tax declaration is not
conclusive
Tax declarations are not the sole basis of land
classification. Thus, even if it classifies a land as
agricultural, such classification is not irrefutable. As
discussed in the case of Republic vs. Court of Appeals:
Green City Estate & Development Corp. is the
owner of a parcel of land located in Jala-Jala, Rizal with
land is agricultural. Hence, the DAR subjected the land
to compulsory acquisition under ARL.
Thereafter, GCEDC filed an application for the
exemption from agrarian reform on the ground that the
land is not agricultural for being within the residential
and forest conservation zones of the town plan or zoning
ordinance. However, this was denied by DAR on the
basis of the tax declaration’s designation of the land.
Issue: WON DAR was correct in denying the application
for exemption
Held: NO. DAR was correct in denying the application
for exemption by the mere fact that the tax declaration
classified the land as agricultural. There is no law that
holds that classifications embodied in tax declarations
are conclusive and final nor would proscribe further
inquiry. Furthermore, tax declarations are clearly not the
sole basis of a land’s classification.
Lands classified as non-agricultural prior to the effectivity
of the CARL are not covered.
As enunciated in Natalia Realty vs. DAR:
“Based on the foregoing, it is clear that the undeveloped
portions of the Antipolo Hills Subdivision cannot in any
language be considered as "agricultural lands." These
lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the
Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost
housing subdivision, albeit at a snail's pace. This can
readily be gleaned from the fact that SAMBA members
even instituted an action to restrain petitioners from
continuing with such development. The enormity of the
resources needed for developing a subdivision may
have delayed its completion, but this does not detract
from the fact that these lands are still residential lands
and outside the ambit of the CARL. Indeed, lands not
devoted to agricultural activity are outside the
coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the effectivity
of CARL by government agencies other than
respondent DAR.
Since the NATALIA lands were converted prior to 15 June
1988, respondent DAR is bound by such conversion. It
was therefore error to include the undeveloped portions
of the Antipolo Hills Subdivision within the coverage of
CARL.”
Lands with at least 18% Slope
 Exemption is to prevent adverse effects on the
lowlands and streams resulting from soil erosion
regardless of the condition of the vegetative
cover, occupancy, or use of any kind –– not
alienable and disposable
 If previously classified as alienable and
disposable, but not yet titled, it shall be
reverted to public forest.
 If covered by an approved public land
application or occupied openly, continuously,
adversely and publicly for a period of not less
than 30yrs as of the effectivity of FRC, it shall
remain as alienable and disposable BUT must
be kept in a vegetation state sufficient to
 prevent adverse effects on the lowlands and
streams

School sites and Campuses 1)Voluntar

The school is in the best position to determine whether y Offer to
the land is necessary for use as school site or campuses. Sell (VOS)
The DAR has no right to substitute its judgment or
discretion for that of the school. In Central Mindanao
University vs. Darab:
CMU is an agricultural institution which owns 3k
hectares of land. In 1984, it adopted a livelihood
program under which its land resources were leased to Modes of
its faculty and employees to enable each group to Acquisition
cultivate 4-5hec of land for lowland rice project. Later, of
these employees filed a complaint praying that they be
declared as tenants under CARL.
Commercial
DAR found that the faculty and employees farms
were not tenants and therefore cannot be beneficiaries.
1)Direct 1)Compulso
However, DAR segregated 400hec of CMU land and
Payment ry
subjected it to agrarian reform coverage on the ground Scheme Acquisition
that it is not used directly, actually and exclusively for (DPS) (CA)
school site.
Issue: WON the segregation was valid
Held: NO. The construction of Section 10 by DAR restricts
the land area of CMU to its present needs or to land area
presently, actively exploited and utilized by the university
in carrying out its educational program; overlooking the
very significant factor of growth of the university in years Manner of Distribution of Commercial Farms
to come. By the very nature of CMU, a school Individually or collectively; individual beneficiaries are
established to promote agriculture and industry, the entitled to 3hec each or a min of 1hec each if land is not
need for vast tract of agricultural land for future sufficient to accommodate them
expansion is obvious.

Who has jurisdiction to exempt property from AR

Coverage?
Secretary of Agrarian Reform.

Section 11. Commercial Farming Order of Priority in the Distribution:

Commercial farms are land devoted to:

a) Saltbeds; Agricultural
b) Fruit farms; Regular farm
lessees and
c) Orchards; workers
share tenants
d) Vegetable and cut-flower farms; and
e) Cacao, coffee and rubber plantations.

Compulsory Acquisition and Distribution of Commercial

Farms has been deferred for 10 years: Seasonal farm Other farm
a) For farms already existing when law took workers workers
effect–– from the effectivity of CARL (June 15,
1988)
b) For new farms–– from the first year of
commercial production and operation Collectives or
Actual Tillers or
Cooperatives
Occupants of
of Above
Public Lands
Beneficiaries

Others directly
working on the
land
If NOT economically feasible and sound to divide the
land, the beneficiaries will be obliged to form a workers’ Joint Venture Agreement
cooperative or association.

Qualifications of commercial Farm Beneficiaries: •Here, a company is organized and co-

1) At least 18y/o at the time of filing of app;
2) Has willingness, aptitude and ability to cultivate
and make land productive;
3) Must have been employed in commercial farm
between June 15, 1988-June 15, 1998 or upon
expiration of deferment
NB: Farm workers with who worked longest on the land
continuously will be given priority
Disqualifications
1) Retired from service
2) Resigned from employment with farm
3) Dismissed for cause
4) Lessees, tenants or workers who waived or
refuse to be beneficiaries
5) Farm workers, lessees or tenants who have
committed a violation of AR laws
Beneficiaries of Commercial Farms shall have the Full
Freedom to:
a) Choose the type of agribusiness venture
arrangement that will maintain the economic
viability of the farm;
b) Market their products or enter into marketing
arrangements;
c) Avail services or assistance of individuals,
associations or non-government organizations
in negotiating for most advantageous venture
agreement
owned by an investor and AR
beneficiaries thru their cooperative and
association
Lease Agreement
•Whereby the reform beneficiaries thru
their cooperative or association, enter
into a contract of lease with the
landowner/investor
Contract Growing/Growership
Arrangement
•The beneficiaries or their cooperative
produce certain crops for an investor or
agribusiness firm which buys the
produce at pre-arranged terms
Management Contract
•Beneficiaries or their association hire the
services of a landowner to manage and
operate the farm in exchange for fixed
wages or commission

Types of Agribusiness Venture Agreements Build-Operate-Transfer Scheme

•Project proponent undetrakes rhe

financing and construction of a given
infrastracture facility and the operation
and maintenance thereof for not more
than 25yrs subject to extension

Section 12. Determination of Lease Rentals

Power of DAR to Fix Rentals

DAR is empowered to determine and fix lease rentals in
this wise:
a) Lands devoted to rice and other crops
– 25% of the average normal harvest less the
amount used for seeds, and other costs of
harvesting.
– If there are no normal harvests: 25% of
estimated normal harvest during 3 years
immediately preceding the date leasehold
was established
b) For sugar cane lands
– 25% of the average normal harvest less the
amount used for seeds, and other costs of
harvesting, loading, hauling, trucking and
processing
c) For coconut lands
 – 25% of average normal harvest for a specific
area for the preceding 3 years less value of
production costs.
Section 13. Production-Sharing Plan
The Establishment of Production-Sharing Plan applies
only to:
a) Farms operating under a production venture,
lease management contract or other similar
arrangement;
b) Farms leased or operated by multinational
corporations;
c) Commercial Farms
Section 14. Registration of Landowners
Purpose: Help the DAR identify the lands and their
owners for effective implementation of the Agrarian
Reform Program.
What the sworn statement should contain:
a) the description and area of the property;
b) the average gross income from the property
for at least three (3) years;
c) the names of all tenants and farmworkers
therein;
d) the crops planted in the property and the area
covered by each crop as of June 1, 1987;
e) the terms of mortgages, leases, and
management contracts subsisting as of June 1,
1987, and
f) the latest declared market value of the land as
determined by the city or provincial assessor.
Section 14. Registration of Beneficiaries
Purpose: Develop a data bank of potential and qualified
beneficiaries for the effective implementation of the
ARP.
What the sworn statement should contain:
a) names and members of their immediate farm
household;
b) owners or administrators of the lands they work
on and the length of tenurial relationship;
c) location and area of the land they work;
d) crops planted; and
e) their share in the harvest or amount of rental
paid or wages received.
NB: A copy of the registry or list of all potential CARP
beneficiaries in the barangay shall be posted in the
barangay hall, school or other public buildings in the
barangay where it shall be open to inspection by the
public at all reasonable hours.
CHAPTER V.
LAND ACQUISITION
Section 16. Procedure for Acquisition and Distribution
of Private Lands
This provision outlines the procedure to be followed in
the compulsory acquisition of agricultural lands. Simply
stated, the procedure is as follows:
1) Identification by DAR of the land, landowner (LO)
and beneficiary
2) Notice by DAR to LO about the compulsory
acquisition and price offer thru:
a) Personal notice or registered mail;
b) Posting of notice in conspicuous places in the
barangay hall where land is located
3) Reply by the LO about his acceptance or rejection
of offer price:
a) Accepts –– LBP will pay LO within 30days from
execution and delivery of Deed of transfer
b) Rejects –– DAR will determine just
compensation thru summary administrative
proceedings
c) LO disagrees with decision of DAR –– may bring
matter to court of justice for final determination
of just compensation
4) Taking of immediate possession of land by DAR:
a) If LO receives payment; or
b) If LO does not respond to Notice of acquisition
5) Request by DAR to ROD to issue TCT to Republic of
the Philippines
6) Distribution to beneficiaries
Notices Required for Validity of Implementation
1) Notice of Coverage –– in compliance with
administrative due process considering that
implementation of the ARL is an exercise of
police power and eminent domain
2) Notice of Acquisition
When Title or Ownership of the Land is transferred to the
State
o Only upon full payment of the just
compensation
o Until JC is determined and paid, the title and
ownership remain to LO; this is so even if DAR
has deposited the offered price with LBP.
o Deposit of offered price ≠ cancellation of
owner’s title
o Opening trust account ≠ payment; because
law requires JC to be in a form of cash and LB
bonds.
Section 17. Determination of Just Compensation
“Just compensation”
 “full and fair equivalent of the property taken
from its owner by the expropriator”
 Measure: not taker’s gain but owner’s loss
 Must be real, substantial, full and ample
 Also means “prompt payment” –– does not
only contemplate the immediate deposit and
release of the provisional compensation but
also encompasses the full payment of the
finally adjudged JC.
 No prompt payment when there is only partial
payment
Factors used in Valuation of Lands
1) Capitalized Net Income (CNI) –– based on land use
and productivity
2) Comparable Sales (CS) –– based 70% of BIR zonal
value
3) Market Value (MV) –– on tax declaration
Formulas:
When All Factors are Present
Land Value = (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 CS and CNI re not present
LV= MV x 2
Reckoning of Valuation
1. At the time it was taken form owner and
appropriated by government
2. If government takes possession of land before
the institution of expropriation proceedings: at
the time of taking of possession, not filing of
complaint.
“Time of Taking”
a) When title is transferred to RP or beneficiaries;
b) When PARC approved LO’s voluntary offer for
agrarian reform coverage thru stock
distribution scheme
NB: However, if there is undue delay in payment, the
value of the property should be determined not at the
time of the taking of the land but at the time of full
payment of just compensation. As held in Lubrica vs.
Land Bank:
“Petitioners were deprived of their properties way back
in 1972, yet to date, they have not yet received just
compensation. Thus, it would certainly be inequitable to
determine just compensation based on the guideline
provided by P.D. No. 227 and E.O. No. 228 considering
the failure to determine just compensation for a
considerable length of time. That just compensation
should be determined in accordance with R.A. No. 6657
and not P.D. No. 227 or E.O. No. 228, is important
considering that just compensation should be the full
and fair equivalent of the property taken from its owner
by the expropriator, the equivalent being real,
substantial, full and ample.”
Role of DAR Adjudication Board
DARAB or its PARAD can conduct summary
administrative proceedings for the preliminary
determination of just compensation in order to
determine whether the land valuation computations of
LB are in accord with the rules or administrative orders.
The preliminary proceedings of land valuation for the
purpose of the determination of JC for its acquisition shall
be conducted by:
PARAD –– initial land valuation is less than 10M
RARAD –– 10M-50M
DARAB –– above 50M
Section 18. Valuation and Mode of Compensation
Modes of Payment (at the option of LO):
1. Cash and financial instruments of government
payable as follows:
a. Lands above 50hec
i. 25% in cash
ii. 75% in government financial
instruments
b. Lands above 24 – 50hec
i. 30% in cash
ii. 70% in GFI
c. Lands with 24hec and below
i. 35% in cash
ii. 65% in GFI
2. Shares of stocks in GOCCs, preferred shares of
LB, physical assets or other qualified
investments
3. Tax credits
4. LB bonds which shall mature every year until
10th year
Landowner cannot insist in cash payment only
As rationalized in Association of Small Land Owners vs.
Secretary of Agrarian Reform:
“It cannot be denied from these cases that the
traditional medium for the payment of just
compensation is money and no other. And so,
conformably, has just compensation been paid in the
past solely in that medium. However, we do not deal
here with the traditional exercise of the power of
eminent domain. This is not an ordinary expropriation
where only a specific property of relatively limited area
is sought to be taken by the State from its owner for a
specific and perhaps local purpose. What we deal with
here is a revolutionary kind of expropriation.
Accepting the theory that payment of the just
compensation is not always required to be made fully in
money, we find further that the proportion of cash
payment to the other things of value constituting the
total payment, as determined on the basis of the areas
of the lands expropriated, is not unduly oppressive upon
the landowner. It is noted that the smaller the land, the
bigger the payment in money, primarily because the
small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds
and other things of value. No less importantly, the
government financial instruments making up the
balance of the payment are "negotiable at any time."
The other modes, which are likewise available to the
landowner at his option, are also not unreasonable
because payment is made in shares of stock, LBP bonds,
other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.”
Features of Land Bank Bonds:
a) 10% of the face value of bonds mature every
year until 10th year
b) Transferable and negotiable
c) Can be used for the ff:
a. Acquisition of land or other real
properties of government
b. Acquisition of land shares of stock of
GOCCs or shares of stocks owned by
government in private corporations
c. Bail bonds
 d. Security for loans with government
financial institution
e. Payment for taxes and fees to
government
f. Payment for tuition fees of immediate
family
g. Payment in government hospitals

Section 19. Incentives for Voluntary Offers for Sale

Documentary Requirements for Voluntary Offers for Sale

(attached to written offer):
a) Title of proof of ownership, if untitled;
b) Tax declaration; and
c) Approved survey plan

Failure to comply = compulsory acquisition.