Just Compensation

The full payment of just compensation to landowners of private agricultural land is a requirement imposed
by the constitution and by the democratic set up under which agrarian reform is being carried out
Does full payment mean in cash directly to landowners?
Full payment need not to be in cash neither must it be paid directly to the landowner the payments
can be made partly in cash and partly in bonds
The proportion of payment in cash to landowners depends on the total area of the land on how this land was
acquired by the government.

What is Bond?
Bond is a certificate of indebtedness fully guaranteed by the government. They are considered as certificate
of indebtedness, approved by the monetary board of the Central Bank. They are fully negotiable and
unconditionally guaranteed by the government of the Republic of the Philippines. As a matter of fact, the
bidder who offers to pay in bonds of the Landbank is entitled to preference(Maddumba v GSIS)

If the Landowner disagrees?

If the landowner disagrees with the valuation of the landholding, full payment of just compensation may
be considered achieved, upon the deposit of value of land in a land bank trust account in the name of the
landowner.
Trust account, in the event the landowners do not accept the payment of the compensation due to them
compensation shall be held in trust for them by the Trust Department of the Land Bank of the Philippines.
The cash portion and such portions that mature yearly shall be invested by the trust department only in the
government securities fully guaranteed by the Republic of the Philippines. All the net earnings of the
investment shall be for the benefit of the landowner (EO 228 sec 5)

Is there a length of time to pay just compensation?

The Constitution, laws and jurisprudence on expropriation have consistently required that just
compensation must be paid promptly.

Modes of Payment for Just Compensation

a. Direct payment to the landowner by the farmer beneficiaries in cash or in kind, on terms to be
mutually agreed upon by the beneficiaries and landowners and subject of approval of Department
of Agrarian Reform;
b. Payment by the land bank with 10% payable in cash immediately and the balance payable in the
form of Land Bank Bonds over a 10-year period, with 1/10 of the face value maturing every year
until the 10th year

Forms of Payment in Kind

Land owners maybe paid in kind through the following:
 Shares of stocks in government owned and controlled corporations, Land bank of the Philippines
preffered shared assets or qualified investment
 Tax Credits
 Land Bank Bonds

Uses of LBP bonds

 Payment for various taxes and fees to the government
  Acquisition of land or other real properties of the government
 Substitution for surety or bail bonds for provisional release of accused person for performance
bonds
 Security for loans with any government financial institution, provided the proceeds of the loan shall
be invested in an economic enterprise, preferably in a small and medium scale industy, in the same
province or region as the land which the bonds were paid.
 Such other uses as the PARC may allow from time to time

EO no.267 PROVIDING FOR THE ISSUANCE OF NATIONAL GOVERNMENT BINDS TO BE

KNOWN AS AGRARIAN REFORM(AR) BONDS

The AR bonds which shall be used bu the LBO for land transfer payments shall have the same feature as
the LBP bonds.

Features and uses of the AGRARIAN REFORM BONDS

Features of the Agrarian Reform 10-year Bond (AR Bond):

(a) Interest rate is similar to the 91-day Treasury Bills and payable after six months and every six
months thereafter;
(b) Ten percent of the Bond’s original face value matures every year and paid to the holder of the
Bond until the tenth year/maturity date;
(c) The Bond is issued by the government through Land Bank. Non-denominated amount to the
last centavo and can be as low as P500 (amount less than P500 are paid in cash;
(d) Bond transfer can be fully effected (i.e., new bond certificate already in the name of the
transferee within five (5) days from date of purchase; and
(e) It is Transferable and highly negotiable.

The AR Bond can be used as payment for goods and services, such as:

(1) Government Assets-Land and other assets of the government, including assets under theAsset
Privatization Trust (APT), National Development Company (NDC), and Presidential Commission on Good
Government (PCGG). Also, properties foreclosed by Government Financial Institutions (GFIs) either
through bidding or negotiated sale;
(2) Taxes - up to ten percent (10%) of the bond’s original face value that is maturing during the
year may be used to pay:
Income Tax (individual or corporate), Final Income Tax due from individual
taxpayers, Estate Tax, Donor’s Tax, Value Added Tax, Excise Tax, and other Percentage
Taxes;
(3) Subdivision Lots offered by accredited realty companies like Filinvest Development Company,
United Resources Realty and Development Company, Moldex Realty Inc., Active Realty and Development
Corporation;
(4) Machinery and Equipment such as agricultural and industrial machineries of Marsson Industrial
Corporation, Dynamic Power Plants Inc.;
(5) Loan obligations from PAG-IBIG and GSIS;
(6) Loan obligations with Land Bank ofthe Philippines (LBP) and Development Bank of the
Philippines (DBP), applicable only to original bondholders and their heirs;
(7) Appliances and furniture from accredited suppliers;
(8) Hardware and construction materials from accredited suppliers;
 (9) Imported trucks and heavy equipment from Pachino Motors;
(10) Tuition Fees on State Colleges and Universities (SUCs)
such as University of the Philippines (nationwide), Pamantasan ng Lungsod ng
Maynila, Polytechnic University of the Philippines, Technological University of the
Philippines, Philippine Normal University of the Philippines, Eulogio “Amang” Rodriguez
Institute of Science and Technology, Rizal Technological Colleges, other SUCs in the
provinces;
(11) Tuition Fees on private schools
such as Colegio de Sta Isabel (Naga City), MEIN College (Zamboanga City), St
Joseph College (Tacloban City), Ateneo de Naga (Naga City), Good Samaritan Colleges
(Cabanatuan City), Manuel Enverga University Foundation (Lucena City), applicable only
to original bondholders and their immediate dependents;
(12) Medical Expenses in Government Hospitals
such as UP-Philippine General Hospital, Philippine Heart Center, National
Kidney Institute, Lung Center of the Philippines, Philippine Children’s Medical Center,
All medical centers, special hospitals and sanitaria under DOH;
(13) Medical Expenses in private hospitals
such as Calbayog Sanitarium and Hospital (Calbayog City), Sacred Heart Hospital
(San Vicente, Urdaneta, Pangasinan), Dagupan Doctors-Villaflor Memorial Hospital
(Dagupan City, Pangasinan) applicable to immediate bondholders and their dependents;
(14) As security for loans with Development Bank of the Philippines (DBP) and/or Land Bank of
the Philippines (LBP);
(15) As Investment Instrument – Regardless of the amount it earns interest aligned with the 91-day
T-Bills. The Bond can be purchased from the LBP Bond Trading Board at discounted rates and with up to
five-month accrued interest waived by bondholders-sellers;
(16) As Capital and Reserve Investment – Capital and reserve investment for insurance companies
and investment for reserve funds of pre-need companies.
It can also be used as Security Deposit of foreign corporations with the Securities and
ExchangeCommission (SEC).
In addition, it can also be used as Performance Bond of housing contractors with the Housing and
Land Use Regulatory Board(HLURB).