A.

Preliminaries
Just Compensation - the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the taker's gain but the owner's loss
Two Concepts behind Just Compensation

Correct determination of amount and

Prompt payment

B. Land Valuation according to Articles 17 and 18 of R.A. 6657

Factors used in the Valuation of Land:

Capitalized Net Income (CNI)

Comparable Sales (CS)

Market Value (MV)

Formulae:

CNIx0.6 + CSx0.3 +MVx0.1 = Land Value

CSx0.9 + MVx0.1 = Land Value

CNIx0.9 + MVx0.1 = Land Value

MVx2 = Land Value

Value of property at the time it was taken and appropriated by the government shall be the basis of
determining just compensation
Modes of Compensation.

Land > 50 hectares:

25% cash and 75% in government financial instruments

50 hectares < Land < 24 hectares:

30% cash and 70% in government financial instruments

Land < 24 hectares:

35% cash and 65% in government financial instruments

Government Financial Instruments

Shares of stock in government owned or controlled corporations, Land Bank shares, physical
assets or other qualified investments

Tax Credits

Land Bank of the Philippines bonds

Features of Landbank of the Philippines bonds

10% face value shall mature per year until the 10th year transferable and negotiable, may be
used for:

Acquisition of land and other real properties of government

Acquisition of land shares of stock of GOCCs or shares of stock owned by the government in
private institutions

Bail bonds or performance bonds

Security of loans from government financial institutions provided that loans be invested in an
economic enterprise

Payment for taxes and fees to the government

Payment for tuition fees of the immediate family of original bondholder in government
educational institutions

Payment for fees of the immediate family of the original bondholder in government hospitals

C. Presidential Decree 27
It is applied to tenant farmers of rice and corn under a system of share crop or system of lease tenancy
Formula:

Land Value = Two and one-half (2 1/2) times the average harvest of three normal crop years

D. Executive Order No. 228

Section 1: Who are the owners?
All qualified farmer beneficiaries are now deemed full owners of the land they acquired by virtue of
Presidential Decree No. 27.
Section 2: How to compute for the valuation of the land?
The valuation of rice and corn lands covered by P.D. No. 27 shall be based on the average gross
production (determined by the Barangay Committee on Land Production in accordance with Department

Memorandum Circular No. 26, Series of 1973 and related issuances and regulations of the Department of
Agrarian Reform).
Formula: Ave Gross Prod per Hectare X 2.5 X 35 (palay) = value of the rice land
Ave Gross Prod per Hectare X 2.5 X 31 (corn) = value of the corn land
35PHP = price for one cavan of 50 kilos of palay on October 21, 1972
31PHP = price for one cavan of 50 kilos of corn on October 21, 1972
Lease rentals paid to the landowner by the farmer beneficiary after October 21, 1972, shall be
considered as advance payment for the land.
Section 3: What are the Modes of Payment?
Compensation shall be paid to the landowners in any of the following modes, at the option of the
landowners:
a. Bond payment over ten (10) years, with ten percent (10%) of the value of the land payable
immediately in cash, and the balance in the form of LBP bonds bearing market rates of interest
that are aligned with 90-day treasury bills rates, net of applicable final withholding tax. Onetenth of the face value of the bonds shall mature every year from the date of issuance until the
tenth year.
The LBP bonds issued hereunder shall be eligible for the purchase of government assets to be
privatized.
b. Direct payment in cash or in kind by the farmer-beneficiaries with the terms to be mutually
agreed upon by the beneficiaries and landowners and subject to the approval of the
Department of Agrarian Reform; and
c. Other modes of payment as may be prescribed or approved by the Presidential Agrarian Reform
Council.
Section 4: What will be the treatment of outstanding Land Bank bonds?
All outstanding Land Bank bonds that are retained by the original landowners-payee or by their heirs,
are deemed matured up to on-twenty fifth (1/25) of their yearly face value from their date of issue to
the date of this Executive Order and may be claimed by the original landowner-payee by surrendering
the bonds to the Land Bank.
The original landowner-payee may claim payment for the remaining unmatured period of the
surrendered bonds under any of the modes of compensation provided in Section 3, subsections (a) (b)
or (c) hereof.
The landowner is exempt from capital gains tax on the compensation paid to him under this Executive
Order.

Section 6: For how long the beneficiary can pay the total cost of the land?
The total costs 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 up to twenty (20) years in twenty (20) equal annual
amortizations.
Lands already valued and financed by the Land Bank are likewise extended a 20-year period of
payment of twenty (20) equal annual amortizations.

E. Cases
G.R. No. 118712 | October 6, 1995 |
LAND BANK OF THE PHILIPPINES, petitioner vs.COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO
F. SANTIAGO,AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP.,respondents
FACTS
The nature of the case is the consolidation of two separate petitions for review filed by Department of
Agrarian Reform and Land Bank of the Philippines, assailing the Court of Appeals decision, which
granted private respondents' petition for Certiorari and Mandamus.
Pedro Yap, Heirs of Emiliano Santiago, Agricultural Management and Development Corporation or
AMADC R (private respondents) are landowners whose landholdings wereacquired by the DAR and
subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law
(RA 6657). Aggrieved by the alleged lapses of the DA Rand the Land bank with respect to the valuation
and payment of compensation for their land, private respondents filed with the Supreme Court a
petition questioning the validity of DAR Administrative Order No. 6 (1992) and No. 9 (1990),and sought t
compel the DAR toexpedite the pending summary administrative proceedings to finally determine the
justcompensation of their properties, and the Landbank to deposit in cash and bonds theamounts
respectively "earmarked", "reserved" and "deposited in trust accounts" for private respondents, and to
allow them to withdraw the same. The Supreme Court referred the petition to CA for proper
determination and disposition.
ISSUE
Whether or not Court of Appeals erred in holding that private respondents are entitled as a matter of
right to theimmediate and provisional release of the amounts deposited in trust pending the
finalresolution of the cases it has filed for just compensation.
RULING
YES. To withhold the right of the landowners to appropriate the amounts already deposited in their
behalf as compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and use of such properties, is

an oppressive exercise of eminent domain. It is unnecessary to distinguish between provisional

compensation under Section 16(e) and final compensation under Section 18 for purposes of exercising
the landowners' right to appropriate the same. The immediate effect in both situations is the same; the
landowner is deprived of the use and possession of his property for which he should be fairly and
immediately compensated .Wherefore, petition is denied for lack of merit. Appealed decision is
affirmed.
Important points: PD27
For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant to
this Decree, 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) per centum per annum, shall be paid by the
tenant in fifteen (15) years of fifteen (15) equal annual amortizations; In case of default, the
amortization due shall be paid by the farmers' cooperative in which the defaulting tenant-farmer is a
member, with the cooperative having a right of recourse against him; The government shall guaranty
such amortizations with shares of stock in government-owned and government-controlled corporations.

G.R. No. 170220 |November 20, 2006|

JOSEFINA S. LUBRICA, in her capacity as Assignee of FEDERICO C. SUNTAY, NENITA SUNTAY TAEDO
and EMILIO A.M. SUNTAY III, petitioners vs. LAND BANK OF THE PHILIPPINES, respondent.
FACTS
Petitioner Josefina S. Lubrica is the assignee of Federico C. Suntay over certain parcels of agricultural
land located at Sta. Lucia, Sablayan, Occidental Mindoro. In 1972, a portion of the said property was
placed under the land reform program pursuant to Presidential Decree No. 27 and Executive Order No.
228 (1987). 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. 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 Court of Appeals held that the immediate deposit of the preliminary value of the expropriated
properties is improper because it was erroneously computed. Specifically, it held that the value of the
government support price for the corresponding agricultural produce (rice and corn) should be
computed at the time of the legal taking of the subject agricultural land, that is, on October 21, 1972
when landowners were effectively deprived of ownership over their properties by virtue of P.D. No. 27.
ISSUE
Whether the use of PD 27 to determine the value of the land is valid.

RULING
NO, We also note that the expropriation proceedings in the instant case was initiated under P.D. No. 27
but the agrarian reform process is still incomplete considering that the just compensation to be paid to
petitioners has yet to be settled. Considering the passage of R.A. No. 6657 before the completion of this
process, the just compensation should be determined and the process concluded under the said law.
Indeed, R.A. No. 6657 is the applicable law, with P.D. No. 27 and E.O. No. 228 having only suppletory
effect.
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.

G.R. No. 127198 | May 16, 2005 |

LAND BANK OF THE PHILIPPINES, petitioner, vs. HON. ELI G. C. NATIVIDAD, Presiding Judge of the
Regional Trial Court, Branch 48, San Fernando, Pampanga, and JOSE R. CAGUIAT represented by
Attorneys-in-fact JOSE T. BARTOLOME and VICTORIO MANGALINDAN, respondents.
FACTS
On May 14, 1993, private respondents filed a petition before the trial court for the determination of just
compensation for their agricultural lands situated in Arayat, Pampanga, which were acquired by the
government pursuant to Presidential Decree No. 27 (PD 27). The trial court ruled in favor of respondents
ordering LBP to pay 30 PhP following guidelines set under R.A 6657.
Land Bank contends that the property was acquired for purposes of agrarian reform on October 21,
1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value of the
property as of that time and not at the time of possession in 1993.
ISSUE
Whether the determination of just compensation used by the trial court following guidelines set in RA
6657 is valid.
RULING
YES, In Office of the President, Malacaang, Manila v. Court of Appeals, we ruled that the seizure of the
landholding did not take place on the date of effectivity of PD 27 but would take effect on the payment
of just compensation.

Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just
compensation to be paid private respondents has yet to be settled. Considering the passage of Republic
Act No. 6657 (RA 6657) before the completion of this process, the just compensation should be
determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with
PD 27 and EO 228 having only suppletory effect.
It would certainly be inequitable to determine just compensation based on the guideline provided by PD
27 and EO 228 considering the DARs failure to determine the just compensation for a considerable
length of time. That just compensation should be determined in accordance with RA 6657, and not
PD 27 or EO 228, is especially imperative 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.
In this case, the trial court arrived at the just compensation due private respondents for their property,
taking into account its nature as irrigated land, location along the highway, market value, assessors
value and the volume and value of its produce. This Court is convinced that the trial court correctly
determined the amount of just compensation due private respondents in accordance with, and guided
by, RA 6657 and existing jurisprudence.

Agrarian Law
Land Valuation
Group 7
Bertumen, Yzabel
Chan, Edward
Mateo, Raymond
Laygo, Erick
Raynes, Blessa