Question & AnswerQ&A (DAR ADMINISTRATIVE ORDER NO. 6 S. 1992)
The Philippine Constitution mandates that the State shall implement agrarian reform based on the right of farmers and farmworkers to own the lands they till, subject to payment of just compensation (Article XIII, Section 4).
The three main factors are Capitalized Net Income (CNI), Comparable Sales (CS), and Market Value per Tax Declaration (MV). The formula used is LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1).
CNI is calculated as the difference between gross sales (Average Gross Production times Selling Price) and total cost of operations, all capitalized at 12%. Formula: CNI = [(AGP x SP) - CO] / 12.
They are involved in the land valuation process together with Barangay Agrarian Reform Committees, landowners, the Department of Agrarian Reform, and the Land Bank of the Philippines to institutionalize partnership in program implementation and evaluation.
MVM applies if the property is mortgaged to a bank within two years prior to offer or coverage date, provided that all properties mortgaged meet certain conditions (e.g., contiguous lands, similar productivity). It is not applicable if those conditions are not met or if appraisal is not submitted in time.
If the lease contract is not submitted within three weeks of request, CNI is computed using the formula CNI = [(AGP x SP) - CO] x 0.25 / 12, which assumes a 25% net income rate.
The landowner shall not be compensated or paid for improvements made or contributed by the government and/or the farmer-beneficiaries.
The capitalization rate used is 12%.
If CS data is unavailable, valuation formulas adjust to only use Capitalized Net Income (CNI) and Market Value per Tax Declaration (MV), or in some cases solely Market Value (MV), applying different weighted formulas.
The actual land area found via ocular inspection (OCI) prevails over the tax declaration area for valuation purposes.
DV refers to the amount indicated in the landowner's offer or Listasaka declaration, whichever is lower, and is used as a ceiling in valuation. The computed value or the DV, whichever is lower, shall be adopted as the Land Value.
It institutionalizes partnership between government and farmer/farmworker organizations in agrarian reform policy formulation, implementation, and evaluation, emphasizing inclusive processes in valuation.
Selling price is sourced from the Department of Agriculture, regulatory bodies, Bureau of Agricultural Statistics, or locally from the barangay, municipality, province, or region where the land is located.
The Land Bank of the Philippines (LBP) is authorized to value lands, compensate landowners, issue clarificatory guidelines, and process claim folders in cooperation with the Department of Agrarian Reform.
The cumulative cost from land preparation until ocular inspection is used as a substitute for Capitalized Net Income (CNI) in valuation.