QuestionsQuestions (DAR ADMINISTRATIVE ORDER NO. 6 S. 1992)
The Constitution (Art. XIII, Sec. 4) mandates just compensation for lands covered by agrarian reform. This is implemented through Proclamation No. 131 and Republic Act (RA) No. 6657, which requires a more equitable distribution of land with due regard to landowners’ rights to just compensation.
It is generally understood as fair market value—the price that a willing buyer would pay without coercion and a willing seller would accept without compulsion.
Because land valuation involves inexact estimates and must consider variables like productivity and distance to markets; thus, integrity, conscientiousness, and prudence are required to approximate just value.
Cost of acquisition, current value of like properties, nature and actual use and income, sworn valuation by the owner, tax declarations, government assessors’ assessments; and social/economic benefits to the property and the non-payment of taxes or loans secured from government financing institutions.
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1), where LV is Land Value, CNI is Capitalized Net Income, CS is Comparable Sales, and MV is Market Value per Tax Declaration.
Use LV = (CNI x 0.9) + (MV x 0.1).
Use LV = (CS x 0.9) + (MV x 0.1).
Use LV = MV x 2.
The lower of the computed value (using the applicable formula) and DV is adopted as Land Value. For VOS, DV is the lesser of the amount in the landowner’s offer or the Listasaka declaration, grossed-up using the immediately preceding semestral RCPI from the offer/Listasaka date to receipt of claim folders by LBP. For CA, DV is the amount in the Listasaka, grossed-up similarly.
CNI is the difference between gross sales (AGP x SP) and total cost of operations (CO), capitalized at 12%: CNI = ((AGP x SP) − CO) / 12.
AGP is one year’s Average Gross Production immediately preceding the date of offer (VOS) or date of notice of coverage (CA). SP is the average selling price for the immediately preceding calendar year from the date of receipt of claim folder by LBP for processing (from DA/BAS or other sources). CO is total cost of operations.
An assumed net income rate (NIR) of 20% is used. For coconut landholdings productive at time of offer/coverage, the rules state to continue using a 70% NIR, subject to future joint industry studies by DAR and LBP.
For permanent crops introduced by farmer-beneficiaries, CNI is equal to 25% of the annual net income capitalized at 12%.
CNI uses the cumulative cost from land preparation up to the time of ocular inspection as a substitute; if production cost data can’t be verified, DAR and LBP obtain it from relevant agencies or establish it.
As a general rule, there must be at least three (3) Sales Transactions. At least one must involve land area at least 10% of the subject property but not less than one hectare; the other transaction(s) must involve land of at least one hectare each.
STs should be executed and registered between January 1, 1985 and June 15, 1988. STs are grossed-up from date of registration up to date of receipt of claim folders by LBP using the immediately preceding semestral RCPI.
MVM applies only if the property is mortgaged to a bank at the time of offer/coverage and the latest appraisal report is submitted within six weeks from LBP’s request. It is not applicable if (1) the same landowner has several CARP titles, (2) the titles are contiguous with similar topography/land use/productivity, and (3) not all properties are mortgaged.
MV refers to the market value per Tax Declaration issued before August 29, 1987, using the most recent set of unit market values from the SMV grossed up for inflation to the date of receipt of claim folders. If TD area or land classification/land use differs from OCI, OCI prevails; the unit market value is obtained based on the OCI classification from the municipal assessor’s office.