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Bases of Land Valuation in
Agrarian Reform
Real Property Valuation
• Land value reflects real estate’s utility, or capacity to
satisfy needs and wants
• Real Property: Rights, interests and benefits related to
the ownership of real estate.
– Real Estate: Land and all
other natural components
of the land (trees, rocks, etc.).
• Market Value of land
determined by certain
Land Valuation Process
Definition of
Preliminary Analysis and
Data Selection and
Highest and Best

Land Value Estimate

Applicable Valuation
Reconciliation of Value
Indications and Final Value
Report of Defined
Definition of Preliminary
Analysis and
Assignment Data Selection
and Collection
• Real estate
• General Economic
• Property rights Data
• Use of Valuation • Property-Specific
• Value Data
• Scope and • Supply and Demand
Limitations Data
Highest and Best Use (HABU)
Is the use:
• reasonable and likely one?
• legal?
• physically suited for use?
• financially feasible?
• most productive?
Applicable Valuation Approach(es)
• Sales Comparison Approach
– Comparison of prices between properties
competing with one another for market share
• Income Capitalization Approach
– Value defined by the expectation of future
benefits (income streams)
• Cost Approach
– Cost of acquiring land and building a new property
with equal utility
Forms and Modes of
Compensation to Land Owners
in Agrarian Reform
Just Compensation
The compensation given to the land
owner, it is just compensation if he
receives for his property a sum
equivalent to its market value.

Reason for Just Compensation

It is a requirement imposed by the
Constitution and by the democratic
set up under which agrarian reform
is being carried out. (RA 6657 Sec.
Section 17:Determination of Just
• Cost of acquisition of the
• Current value of the like
properties, its nature,
actual use and income
• Sworn valuation by the
• Tax declarations
• Assessment made by
government assessors
Section 18:Valuation and
Mode of Compensation
1. Cash payment
Land Area Balance to be Paid in Government
Lands above fifty (50) hectares Twenty-five percent (25%) cash
(financial instruments negotiable)

Lands above twenty-four (24) Thirty percent (30%) cash

hectares and up to fifty (50) (financial instruments negotiable)
Lands twenty-four (24) hectares Thirty-five percent (35%) cash
and below (financial instruments negotiable)
Section 18:Valuation and Mode of
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 (Land Bank of the

Section 19: Incentives for Voluntary
Offers for Sales
Landowners, other than banks and other
financial institutions, who voluntarily offer
their lands for sale shall be entitled to an
additional five percent (5%) cash payment
Section 20: Voluntary Land Transfer
Guidelines for Voluntary Land Transfer:
(a) All notices for voluntary land transfer must be
submitted to the DAR within the first year of the
implementation of the CARP. Negotiations of land transfer
which remain unresolved after one (1) year shall not be
recognized. The land shall be acquired by the government and
transferred pursuant.
(b) The terms and conditions of such transfer shall not
be less favorable to the transferee than those of the
government's standing offer to purchase from the land owner
and to resell to the beneficiaries, if such offers have been made
and are fully known to both parties.
(c) The voluntary agreement shall include sanctions for
non-compliance by either party and shall be duly recorded and
its implementation monitored by the DAR
Section 21: Payment of Compensation
by Beneficiaries Under Voluntary Land
● Direct payments in cash or in kind may be by the farmer-
beneficiary to the landowner under terms to be mutually agreed
upon by both parties, which shall be binding upon them, upon
registration with the approval by the DAR
○ Said approval shall be considered given, unless notice of
disapproval is received by the farmer-beneficiary within thirty
(30) days from the date of registration
● In the event they cannot agree on the price of land, the procedure
for compulsory acquisition as provided in Section 16 shall apply.
The LBP shall extend financing to the beneficiaries for purposes of
acquiring the land
Who has the primary responsibility to determine
land valuation and just compensation?
Land Bank of the Philippines (LBP)
- Responsible for the determination of land
valuation and compensation for all private
agricultural lands under Voluntary Offer to Sell
(VOS) and Compulsory Acquisition (CA) as
governed by EO 405, s. 1990
Role of Landbank in the
Brief history
• LANDBANK was established on August 8, 1963
as part of the Agricultural Land
Reform Code as part of a program of land
reform in the Philippines.
• The initial goal of this project is to help with
the purchase of agricultural estates for
division and resale to small landholders and
the purchase of land by the agricultural lessee.
Major Roles of Landbank Philippines
• An implementing agency of CARP (Comprehensive
Agrarian Reform Program) involved in land evaluation,
compensation to owners of private agricultural lands,
and collection of amortizations from CARP farmer-
• Provision of credit assistance to small farmers and
fisherfolk and ARBs (Agrarian Reform Beneficiaries).
• An official depository of government funds
• A government bank with a social mandate to spur
countryside development
Guiding Principles of Landbank
• Catalyst of countryside development and poverty
• Commitment towards the development of the
cooperative system
• Self-sustainability through cross-subsidy
operations (commercial banking profits
supporting agrarian operations)
• Self-reliant government institution with no
budgetary support
• Commitment towards environmental protection
Prohibitions on Beneficiaries
upon Land Transfer
Beneficiaries may be agricultural lessees and share tenants

-regular, seasonal, or other farm workers

-Actual tillers or occupants of public lands
-Collective or cooperatives of the beneficiaries
-Others directly working on the land
Retention and Distribution Limits

• Section 23. Distribution • Section 6. Retention Limit

Limit • No person may own or
• No qualified beneficiary may retain, directly or indirectly,
own more than three (3 ) any public or private
hectares of agricultural land agricultural land
• Landowners may only retain
up to 5 hectares of land
• Additional of 3 hectares for
each child (1) over 15 years
of age and (2) must be
personally involved in
cultivating the land
Award to Beneficiaries

Section 24. Award to Beneficiaries:

Certificate of Land Ownership Awards
- Proof that a parcel of land has been physically
distributed or transferred to them
- “Contain the restrictions and conditions provided for in this Act,
and shall be recorded in the Register of Deeds, concerned and
annotated on the Certificate of Title”
Grounds in Cancelling an awarded CLOA/ EP
Section 4, AO 6, Series of 2011
An awarded CLOA/ EP can be cancelled if the
beneficiary violates any of the following:
1. The landholding involves the retention area of the
2. The landholding is exempted from coverage
3. Defective Notice of Coverage
4. Erroneous issued titles as a result of erroneous
technical description and cancellation of Los title prior to
issuance of the Certificate of Deposit
Grounds in Cancelling an awarded CLOA/ EP
5. Misuse or diversion of financial and support
services extended to beneficiary
6. Material misrepresentation of the beneficiaries
basic qualifications under AR laws’
7. Sale, transfer, lease, or other forms of conveyance
by the beneficiary of rights over the land in circumvention
of AR laws
8. Continued neglect or abandonment of the
awarded land over a period of 2 calendar years
9. Absolute and deliberate failure to pay aggregate of
3 consecutive amortizations to the Land Bank
Grounds in Cancelling an awarded CLOA/ EP

10. Conversion to non- agricultural use

11. Waiver of rights to awarded lands;
12. Beneficiaries surrender of awarded land to LO or
other non- beneficiary
13. Misuse of the Land
14. Other acts or omissions that circumvent laws related to
AR implementation
Obligations of an ARB:
1. Fragmentation of allocated land is always
prohibited to prevent further subdivision of the
land as to make it uneconomic
2. One cannot be a recipient of land unless he
becomes a member of the cooperative
3. Land is not transferable except in cases of
4. Recipients of expropriated lands must personally
cultivate their lands and at best, they can only
hire agricultural labor. Subletting is generally
●Section 73 - Prohibited Acts and Omissions

1. The ownership or possession of agricultural lands in excess of the

total retention limits
2. Forcible entry or illegal detainer by persons not qualified
beneficiaries under this Act to avail themselves of the rights and
benefits of AR
3. Conversion by any landowner of his agricultural land into any non-
agricultural land with intent to avoid the application of this Act to:
-his/her landholdings
-dispossess his tenant farmers of the land tilled by them
4. willful prevention of any person, association, or entity of the
implementation of CARP

5. sale, transfer, conveyance, or change of the nature of lands outside

of urban centers and city limits either in whole or in part

6. sale, transfer, or conveyance of the right to use over the land

he/she acquired by being a beneficiary in order to bypass the provisions
of this Act

Section 74
●Any person who knowingly or willfully violates the provisions of
this Act is punishable by:
-Imprisonment by 1 month up to 3 years
-Fine of not less than Php. 1,000 to not more than Php. 15,000
●If the offender is a corporation or association, the officer
responsible shall be criminally liable