Republic of the Philippines INOCENTES PABICO, petitioner,
SUPREME COURT vs.
Manila
EN BANC
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE
PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M.
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA,
REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C.
ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN
REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO
FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO,
PAULINO D. TOLENTINO and PLANTERS' COMMITTEE,
INC., Victorias Mill District, Victorias, Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL
AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
HON. PHILIP E. JUICO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF
THE PRESIDENT, and Messrs. SALVADOR TALENTO,
JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO,
JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian
Reform, and LAND BANK OF THE
PHILIPPINES, respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who
blocked and challenged Hercules for his life on his way to
Mycenae after performing his eleventh labor. The two
wrestled mightily and Hercules flung his adversary to the
ground thinking him dead, but Antaeus rose even stronger to
resume their struggle. This happened several times to
Hercules' increasing amazement. Finally, as they continued
grappling, it dawned on Hercules that Antaeus was the son of
Gaea and could never die as long as any part of his body was
touching his Mother Earth. Thus forewarned, Hercules then
held Antaeus up in the air, beyond the reach of the sustaining
soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without
whose invigorating touch even the powerful Antaeus
weakened and died.
The cases before us are not as fanciful as the foregoing tale.
But they also tell of the elemental forces of life and death, of
men and women who, like Antaeus need the sustaining
strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the
acute imbalance in the distribution of this precious resource
among our people. But it is more than a slogan. Through the
brooding centuries, it has become a battle-cry dramatizing the
increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the
policy of social justice to "insure the well-being and economic
security of all the people," 1 especially the less privileged. In
1973, the new Constitution affirmed this goal adding
specifically that "the State shall regulate the acquisition,
ownership, use, enjoyment and disposition of private property
and equitably diffuse property ownership and
profits." 2 Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed
at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides
echoing these sentiments, it also adopted one whole and
separate Article XIII on Social Justice and Human Rights,
containing grandiose but undoubtedly sincere provisions for
the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian
reform program:
SEC. 4. The State shall, by law, undertake an
agrarian reform program founded on the right of
farmers and regular farmworkers, who are
landless, to own directly or collectively the lands
they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this
end, the State shall encourage and undertake
the just distribution of all agricultural lands,
subject to such priorities and reasonable
retention limits as the Congress may prescribe,
taking into account ecological, developmental,
or equity considerations and subject to the
payment of just compensation. In determining
retention limits, the State shall respect the right
of small landowners. The State shall further
provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the
Agricultural Land Reform Code, had already been enacted by
the Congress of the Philippines on August 8, 1963, in line with
the above-stated principles. This was substantially
superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to
provide for the compulsory acquisition of private lands for
distribution among tenant-farmers and to specify maximum
retention limits for landowners.
The people power revolution of 1986 did not change and
indeed even energized the thrust for agrarian reform. Thus,
on July 17, 1987, President Corazon C. Aquino issued E.O.
No. 228, declaring full land ownership in favor of the
beneficiaries of P.D. No. 27 and providing for the valuation of
still unvalued lands covered by the decree as well as the
manner of their payment. This was followed on July 22, 1987
by Presidential Proclamation No. 131, instituting a
comprehensive agrarian reform program (CARP), and E.O.
No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived
Congress of the Philippines took over legislative power from
the President and started its own deliberations, including
extensive public hearings, on the improvement of the interests
of farmers. The result, after almost a year of spirited debate,
was the enactment of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, which
President Aquino signed on June 10, 1988. This law, while
considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are
not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because
they involve common legal questions, including serious
challenges to the constitutionality of the several measures
mentioned above. They will be the subject of one common
discussion and resolution, The different antecedents of each
case will require separate treatment, however, and will first be
explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D.
No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked
by four tenants and owned by petitioner Nicolas Manaay and
his wife and a 5-hectare riceland worked by four tenants and
owned by petitioner Augustin Hermano, Jr. The tenants were
declared full owners of these lands by E.O. No. 228 as
qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos.
228 and 229 on grounds inter alia of separation of powers,
due process, equal protection and the constitutional limitation
that no private property shall be taken for public use without
just compensation.
They contend that President Aquino usurped legislative power
when she promulgated E.O. No. 228. The said measure is
invalid also for violation of Article XIII, Section 4, of the
Constitution, for failure to provide for retention limits for small
landowners. Moreover, it does not conform to Article VI,
Section 25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the
petitioners argue that the same may be made only by a court
of justice and not by the President of the Philippines. They
invoke the recent cases of EPZA v. Dulay 5and Manotok v.
National Food Authority. 6 Moreover, the just compensation
contemplated by the Bill of Rights is payable in money or in
cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land,
the executive order also deprives the petitioners of their
property rights as protected by due process. The equal
protection clause is also violated because the order places
the burden of solving the agrarian problems on the owners
only of agricultural lands. No similar obligation is imposed on
the owners of other properties.
The petitioners also maintain that in declaring the
beneficiaries under P.D. No. 27 to be the owners of the lands
occupied by them, E.O. No. 228 ignored judicial prerogatives
and so violated due process. Worse, the measure would not
solve the agrarian problem because even the small farmers
are deprived of their lands and the retention rights guaranteed
by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No.
27 has already been upheld in the earlier cases of Chavez v.
Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and
Corn Producers of the Philippines, Inc. v. The National Land
Reform Council. 9 The determination of just compensation by
the executive authorities conformably to the formula
prescribed under the questioned order is at best initial or
preliminary only. It does not foreclose judicial intervention
whenever sought or warranted. At any rate, the challenge to
the order is premature because no valuation of their property
has as yet been made by the Department of Agrarian Reform.
The petitioners are also not proper parties because the lands
owned by them do not exceed the maximum retention limit of
7 hectares.
Replying, the petitioners insist they are proper parties
because P.D. No. 27 does not provide for retention limits on
tenanted lands and that in any event their petition is a class
suit brought in behalf of landowners with landholdings below
24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final
ascertainment. As for the cases invoked by the public
respondent, the constitutionality of P.D. No. 27 was merely
assumed in Chavez, while what was decided in Gonzales was
the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is
contended that P.D. No. 27, E.O. Nos. 228 and 229 (except
Sections 20 and 21) have been impliedly repealed by R.A.
No. 6657. Nevertheless, this statute should itself also be
declared unconstitutional because it suffers from substantially
the same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June
1, 1988 by Vicente Cruz, owner of a 1. 83- hectare land, who
complained that the DAR was insisting on the implementation
of P.D. No. 27 and E.O. No. 228 despite a compromise
agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he
adopted the allegations in the basic amended petition that the
above- mentioned enactments have been impliedly repealed
by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in
the Victorias Mill District, Victorias, Negros Occidental. Co-
petitioner Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This petition seeks to
prohibit the implementation of Proc. No. 131 and E.O. No.
229.
The petitioners claim that the power to provide for a
Comprehensive Agrarian Reform Program as decreed by the
Constitution belongs to Congress and not the President.
Although they agree that the President could exercise
legislative power until the Congress was convened, she could
do so only to enact emergency measures during the transition
period. At that, even assuming that the interim legislative
power of the President was properly exercised, Proc. No. 131
and E.O. No. 229 would still have to be annulled for violating
the constitutional provisions on just compensation, due
process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which
provides:
Agrarian Reform Fund.-There is hereby created a special
fund, to be known as the Agrarian Reform Fund, an initial
amount of FIFTY BILLION PESOS (P50,000,000,000.00) to
cover the estimated cost of the Comprehensive Agrarian
Reform Program from 1987 to 1992 which shall be sourced
from the receipts of the sale of the assets of the Asset
Privatization Trust and Receipts of sale of ill-gotten wealth
received through the Presidential Commission on Good
Government and such other sources as government may
deem appropriate. The amounts collected and accruing to this
special fund shall be considered automatically appropriated
for the purpose authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The money needed to
cover the cost of the contemplated expropriation has yet to be
raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous
with payment of just compensation as it is traditionally
understood, i.e., with money and in full, but no such payment
is contemplated in Section 5 of the E.O. No. 229. On the
contrary, Section 6, thereof provides that the Land Bank of the
Philippines "shall compensate the landowner in an amount to
be established by the government, which shall be based on
the owner's declaration of current fair market value as
provided in Section 4 hereof, but subject to certain controls to
be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in
money but in any of several modes that may consist of part
cash and part bond, with interest, maturing periodically, or
direct payment in cash or bond as may be mutually agreed
upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two
measures, no effort was made to make a careful study of the
sugar planters' situation. There is no tenancy problem in the
sugar areas that can justify the application of the CARP to
them. To the extent that the sugar planters have been lumped
in the same legislation with other farmers, although they are a
separate group with problems exclusively their own, their right
to equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the
National Federation of Sugarcane Planters (NASP) which
claims a membership of at least 20,000 individual sugar
planters all over the country. On September 10, 1987, another
motion for intervention was filed, this time by Manuel
Barcelona, et al., representing coconut and riceland owners.
Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund
the Agrarian Reform Program and that, in any event, the
appropriation is invalid because of uncertainty in the amount
appropriated. Section 2 of Proc. No. 131 and Sections 20 and
21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the
maximum authorized amount. This is not allowed.
Furthermore, the stated initial amount has not been certified
to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the
failure to establish by clear and convincing evidence the
necessity for the exercise of the powers of eminent domain,
and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of
the lands, which is the expropriation of the said land for an
amount equal to the government assessor's valuation of the
land for tax purposes. On the other hand, if the landowner
declares his own valuation he is unjustly required to
immediately pay the corresponding taxes on the land, in
violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first
invokes the presumption of constitutionality in favor of Proc.
No. 131 and E.O. No. 229. He also justifies the necessity for
the expropriation as explained in the "whereas" clauses of the
Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP
and a general survey on the people's opinion thereon are not
indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the
sugar planters have failed to show that they belong to a
different class and should be differently treated. The
Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the
expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional
prohibition is against the payment of public money without the
corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation
law. Finally, the earmarking of fifty billion pesos as Agrarian
Reform Fund, although denominated as an initial amount, is
actually the maximum sum appropriated. The word "initial"
simply means that additional amounts may be appropriated
later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed
a petition on his own behalf, assailing the constitutionality of
E.O. No. 229. In addition to the arguments already raised,
Serrano contends that the measure is unconstitutional
because:
(1) Only public lands should be included in the
CARP;
(2) E.O. No. 229 embraces more than one
subject which is not expressed in the title;
(3) The power of the President to legislate was
terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special
fund from the National Treasury did not originate
from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department
of Agrarian Reform, in violation of due process and the
requirement for just compensation, placed his landholding
under the coverage of Operation Land Transfer. Certificates of
Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to
him.
On September 3, 1986, the petitioner protested the erroneous
inclusion of his small landholding under Operation Land
transfer and asked for the recall and cancellation of the
Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his
petition was denied without hearing. On February 17, 1987,
he filed a motion for reconsideration, which had not been
acted upon when E.O. Nos. 228 and 229 were issued. These
orders rendered his motion moot and academic because they
directly effected the transfer of his land to the private
respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued
by the President of the Philippines.
(2) The said executive orders are violative of the
constitutional provision that no private property
shall be taken without due process or just
compensation.
(3) The petitioner is denied the right of
maximum retention provided for under the 1987
Constitution.
The petitioner contends that the issuance of E.0. Nos. 228
and 229 shortly before Congress convened is anomalous and
arbitrary, besides violating the doctrine of separation of
powers. The legislative power granted to the President under
the Transitory Provisions refers only to emergency measures
that may be promulgated in the proper exercise of the police
power.
The petitioner also invokes his rights not to be deprived of his
property without due process of law and to the retention of his
small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides
denying him just compensation for his land, the provisions of
E.O. No. 228 declaring that:
 Lease rentals paid to the landowner by the
farmer-beneficiary after October 21, 1972 shall
be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is
also his contention that the inclusion of even small
landowners in the program along with other landowners with
lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition
is premature because the motion for reconsideration filed with
the Minister of Agrarian Reform is still unresolved. As for the
validity of the issuance of E.O. Nos. 228 and 229, he argues
that they were enacted pursuant to Section 6, Article XVIII of
the Transitory Provisions of the 1987 Constitution which
reads:
The incumbent president shall continue to exercise legislative
powers until the first Congress is convened.
On the issue of just compensation, his position is that when
P.D. No. 27 was promulgated on October 21. 1972, the
tenant-farmer of agricultural land was deemed the owner of
the land he was tilling. The leasehold rentals paid after that
date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner
maintains that the motion he filed was resolved on December
14, 1987. An appeal to the Office of the President would be
useless with the promulgation of E.O. Nos. 228 and 229,
which in effect sanctioned the validity of the public
respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention
granted by P.D. No. 27 to owners of rice and corn lands not
exceeding seven hectares as long as they are cultivating or
intend to cultivate the same. Their respective lands do not
exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands.
According to P.D. No. 316, which was promulgated in
implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily
devoted to rice and corn shall be ejected or
removed from his farmholding until such time as
the respective rights of the tenant- farmers and
the landowner shall have been determined in
accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so
are unable to enjoy their right of retention because the
Department of Agrarian Reform has so far not issued the
implementing rules required under the above-quoted decree.
They therefore ask the Court for a writ of mandamus to
compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No.
27 has been amended by LOI 474 removing any right of
retention from persons who own other agricultural lands of
more than 7 hectares in aggregate area or lands used for
residential, commercial, industrial or other purposes from
which they derive adequate income for their family. And even
assuming that the petitioners do not fall under its terms, the
regulations implementing P.D. No. 27 have already been
issued, to wit, the Memorandum dated July 10, 1975 (Interim
Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular
No. 11 dated April 21, 1978, (Implementation Guidelines of
LOI No. 474), Memorandum Circular No. 18-81 dated
December 29,1981 (Clarificatory Guidelines on Coverage of
P.D. No. 27 and Retention by Small Landowners), and DAR
Administrative Order No. 1, series of 1985 (Providing for a
Cut-off Date for Landowners to Apply for Retention and/or to
Protest the Coverage of their Landholdings under Operation
Land Transfer pursuant to P.D. No. 27). For failure to file the
corresponding applications for retention under these
measures, the petitioners are now barred from invoking this
right.
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency
of their appeal to the President of the Philippines. Moreover,
the issuance of the implementing rules, assuming this has not
yet been done, involves the exercise of discretion which
cannot be controlled through the writ of mandamus. This is
especially true if this function is entrusted, as in this case, to a
separate department of the government.
In their Reply, the petitioners insist that the above-cited
measures are not applicable to them because they do not
own more than seven hectares of agricultural land. Moreover,
assuming arguendo that the rules were intended to cover
them also, the said measures are nevertheless not in force
because they have not been published as required by law and
the ruling of this Court in Tanada v. Tuvera. 10 As for LOI 474,
the same is ineffective for the additional reason that a mere
letter of instruction could not have repealed the presidential
decree.
I injury as a result of the acts or measures complained
Although holding neither purse nor sword and so regarded as
the weakest of the three departments of the government, the
judiciary is nonetheless vested with the power to annul the
acts of either the legislative or the executive or of both when
not conformable to the fundamental law. This is the reason for
what some quarters call the doctrine of judicial supremacy.
Even so, this power is not lightly assumed or readily
exercised. The doctrine of separation of powers imposes
upon the courts a proper restraint, born of the nature of their
functions and of their respect for the other departments, in
striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and
caution. To doubt is to sustain. The theory is that before the
act was done or the law was enacted, earnest studies were
made by Congress or the President, or both, to insure that the
Constitution would not be breached.
In addition, the Constitution itself lays down stringent
conditions for a declaration of unconstitutionality, requiring
therefor the concurrence of a majority of the members of the
Supreme Court who took part in the deliberations and voted
on the issue during their session en banc. 11 And as
established by judge made doctrine, the Court will assume
jurisdiction over a constitutional question only if it is shown
that the essential requisites of a judicial inquiry into such a
question are first satisfied. Thus, there must be an actual
case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional
question must have been opportunely raised by the proper
party, and the resolution of the question is unavoidably
necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as
applied in the cases before us, we hold that the same is
satisfied by the petitioners and intervenors because each of
them has sustained or is in danger of sustaining an immediate
of. 13 And even if, strictly speaking, they are not covered by
the definition, it is still within the wide discretion of the Court to
waive the requirement and so remove the impediment to its
addressing and resolving the serious constitutional questions
raised.
In the first Emergency Powers Cases, 14 ordinary citizens and
taxpayers were allowed to question the constitutionality of
several executive orders issued by President Quirino although
they were invoking only an indirect and general interest
shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that "the
transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing
aside, if we must, technicalities of procedure." We have since
then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in
the present petitions.
In must be stressed that despite the inhibitions pressing upon
the Court when confronted with constitutional issues like the
ones now before it, it will not hesitate to declare a law or act
invalid when it is convinced that this must be done. In arriving
at this conclusion, its only criterion will be the Constitution as
God and its conscience give it the light to probe its meaning
and discover its purpose. Personal motives and political
considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the
Executive, the Court will not hesitate to "make the hammer
fall, and heavily," to use Justice Laurel's pithy language,
where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice
Laurel, that
... when the judiciary mediates to allocate
constitutional boundaries, it does not assert any
superiority over the other departments; it does
not in reality nullify or invalidate an act of the
Legislature, but only asserts the solemn and
sacred obligation assigned to it by the
Constitution to determine conflicting claims of
authority under the Constitution and to establish
for the parties in an actual controversy the rights
which that instrument secures and guarantees
to them. This is in truth all that is involved in
what is termed "judicial supremacy" which
properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional
questions that this Court must categorically resolve. And so
we shall.
II
We proceed first to the examination of the preliminary issues
before resolving the more serious challenges to the
constitutionality of the several measures involved in these
petitions.
The promulgation of P.D. No. 27 by President Marcos in the
exercise of his powers under martial law has already been
sustained in Gonzales v. Estrella and we find no reason to
modify or reverse it on that issue. As for the power of
President Aquino to promulgate Proc. No. 131 and E.O. Nos.
228 and 229, the same was authorized under Section 6 of the
Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before
July 27, 1987, when the Congress of the Philippines was
formally convened and took over legislative power from her.
They are not "midnight" enactments intended to pre-empt the
legislature because E.O. No. 228 was issued on July 17,
1987, and the other measures, i.e., Proc. No. 131 and E.O.
No. 229, were both issued on July 22, 1987. Neither is it
correct to say that these measures ceased to be valid when
she lost her legislative power for, like any statute, they
continue to be in force unless modified or repealed by
subsequent law or declared invalid by the courts. A statute
does not ipso facto become inoperative simply because of the
dissolution of the legislature that enacted it. By the same
token, President Aquino's loss of legislative power did not
have the effect of invalidating all the measures enacted by her
when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut
has not rejected but in fact substantially affirmed the
challenged measures and has specifically provided that they
shall be suppletory to R.A. No. 6657 whenever not
inconsistent with its provisions. 17 Indeed, some portions of
the said measures, like the creation of the P50 billion fund in
Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O.
No. 229, have been incorporated by reference in the CARP
Law. 18
That fund, as earlier noted, is itself being questioned on the
ground that it does not conform to the requirements of a valid
appropriation as specified in the Constitution. Clearly,
however, Proc. No. 131 is not an appropriation measure even
if it does provide for the creation of said fund, for that is not its
principal purpose. An appropriation law is one the primary and
specific purpose of which is to authorize the release of public
funds from the treasury. 19 The creation of the fund is only
incidental to the main objective of the proclamation, which is
agrarian reform.
It should follow that the specific constitutional provisions
invoked, to wit, Section 24 and Section 25(4) of Article VI, are
not applicable. With particular reference to Section 24, this
obviously could not have been complied with for the simple
reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not
yet been convened when the proclamation was issued. The
legislative power was then solely vested in the President of
the Philippines, who embodied, as it were, both houses of
Congress.
The argument of some of the petitioners that Proc. No. 131
and E.O. No. 229 should be invalidated because they do not
provide for retention limits as required by Article XIII, Section
4 of the Constitution is no longer tenable. R.A. No. 6657 does
provide for such limits now in Section 6 of the law, which in
fact is one of its most controversial provisions. This section
declares:
Retention Limits. Except as otherwise
provided in this Act, no person may own or
retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary
according to factors governing a viable family-
sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform
Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed
five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject
to the following qualifications: (1) that he is at
least fifteen (15) years of age; and (2) that he is
actually tilling the land or directly managing the
farm; Provided, That landowners whose lands
have been covered by Presidential Decree No.
27 shall be allowed to keep the area originally
retained by them thereunder, further, That
original homestead grantees or direct
compulsory heirs who still own the original
homestead at the time of the approval of this Act
shall retain the same areas as long as they
continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional
requirement that a bill shall have only one subject, to be
expressed in its title, deserves only short attention. It is settled
that the title of the bill does not have to be a catalogue of its
contents and will suffice if the matters embodied in the text
are relevant to each other and may be inferred from the
title. 20
The Court wryly observes that during the past dictatorship,
every presidential issuance, by whatever name it was called,
had the force and effect of law because it came from
President Marcos. Such are the ways of despots. Hence, it is
futile to argue, as the petitioners do in G.R. No. 79744, that
LOI 474 could not have repealed P.D. No. 27 because the
former was only a letter of instruction. The important thing is
that it was issued by President Marcos, whose word was law
during that time.
But for all their peremptoriness, these issuances from the
President Marcos still had to comply with the requirement for
publication as this Court held in Tanada v. Tuvera. 21 Hence,
unless published in the Official Gazette in accordance with
Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully
challenged in that case. LOI 474 was published, though, in
the Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in
G.R. No. 78742 that the writ of mandamus cannot issue to
compel the performance of a discretionary act, especially by a
specific department of the government. That is true as a
general proposition but is subject to one important
qualification. Correctly and categorically stated, the rule is that
mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be
exercised. In other words, mandamus can issue to require
action only but not specific action.
Whenever a duty is imposed upon a public
official and an unnecessary and unreasonable
delay in the exercise of such duty occurs, if it is
a clear duty imposed by law, the courts will
intervene by the extraordinary legal remedy of
mandamus to compel action. If the duty is purely
ministerial, the courts will require specific action.
If the duty is purely discretionary, the courts
by mandamus will require action only. For
example, if an inferior court, public official, or
board should, for an unreasonable length of
time, fail to decide a particular question to the
great detriment of all parties concerned, or a
court should refuse to take jurisdiction of a
cause when the law clearly gave it jurisdiction
mandamus will issue, in the first case to require
a decision, and in the second to require that
jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as
long as there is still a plain, speedy and adequate remedy
available from the administrative authorities, resort to the
courts may still be permitted if the issue raised is a question
of law. 23
III
There are traditional distinctions between the police power
and the power of eminent domain that logically preclude the
application of both powers at the same time on the same
subject. In the case of City of Baguio v. NAWASA, 24 for
example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its
assets of equivalent value, the Court held that the power
being exercised was eminent domain because the property
involved was wholesome and intended for a public use.
Property condemned under the police power is noxious or
intended for a noxious purpose, such as a building on the
verge of collapse, which should be demolished for the public
safety, or obscene materials, which should be destroyed in
the interest of public morals. The confiscation of such
property is not compensable, unlike the taking of property
under the power of expropriation, which requires the payment
of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice
Holmes laid down the limits of the police power in a famous
aphorism: "The general rule at least is that while property may
be regulated to a certain extent, if regulation goes too far it
will be recognized as a taking." The regulation that went "too
far" was a law prohibiting mining which might cause the
subsidence of structures for human habitation constructed on
the land surface. This was resisted by a coal company which
had earlier granted a deed to the land over its mine but
reserved all mining rights thereunder, with the grantee
assuming all risks and waiving any damage claim. The Court
held the law could not be sustained without compensating the
grantor. Justice Brandeis filed a lone dissent in which he
argued that there was a valid exercise of the police power. He
said:
Every restriction upon the use of property
imposed in the exercise of the police power
deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by
the State of rights in property without making
compensation. But restriction imposed to protect
the public health, safety or morals from dangers
threatened is not a taking. The restriction here in
question is merely the prohibition of a noxious
use. The property so restricted remains in the
possession of its owner. The state does not
appropriate it or make any use of it. The state
merely prevents the owner from making a use
which interferes with paramount rights of the
public. Whenever the use prohibited ceases to
be noxious as it may because of further
changes in local or social conditions the
restriction will have to be removed and the
owner will again be free to enjoy his property as
heretofore.
Recent trends, however, would indicate not a polarization but
a mingling of the police power and the power of eminent
domain, with the latter being used as an implement of the
former like the power of taxation. The employment of the
taxing power to achieve a police purpose has long been
accepted. 26 As for the power of expropriation, Prof. John J.
Costonis of the University of Illinois College of Law (referring
to the earlier case of Euclid v. Ambler Realty Co., 272 US
365, which sustained a zoning law under the police power)
makes the following significant remarks:
Euclid, moreover, was decided in an era when
judges located the Police and eminent domain
powers on different planets. Generally speaking,
they viewed eminent domain as encompassing
public acquisition of private property for
improvements that would be available for public
use," literally construed. To the police power, on
the other hand, they assigned the less intrusive
task of preventing harmful externalities a point
reflected in the Euclid opinion's reliance on an
analogy to nuisance law to bolster its support of
zoning. So long as suppression of a privately
authored harm bore a plausible relation to some
legitimate "public purpose," the pertinent
measure need have afforded no compensation
whatever. With the progressive growth of
government's involvement in land use, the
distance between the two powers has
contracted considerably. Today government
often employs eminent domain interchangeably
with or as a useful complement to the police
power-- a trend expressly approved in the
Supreme Court's 1954 decision in Berman v.
Parker, which broadened the reach of eminent
domain's "public use" test to match that of the
police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the
improvement of blighted areas in the District of Columbia as a
proper exercise of the police power. On the role of eminent
domain in the attainment of this purpose, Justice Douglas
declared:
If those who govern the District of Columbia
decide that the Nation's Capital should be
beautiful as well as sanitary, there is nothing in
the Fifth Amendment that stands in the way.
Once the object is within the authority of
Congress, the right to realize it through the
exercise of eminent domain is clear.
For the power of eminent domain is merely the
means to the end. 28
In Penn Central Transportation Co. v. New York
City, 29 decided by a 6-3 vote in 1978, the U.S Supreme Court
sustained the respondent's Landmarks Preservation Law
under which the owners of the Grand Central Terminal had
not been allowed to construct a multi-story office building over
the Terminal, which had been designated a historic landmark.
Preservation of the landmark was held to be a valid objective
of the police power. The problem, however, was that the
owners of the Terminal would be deprived of the right to use
the airspace above it although other landowners in the area
could do so over their respective properties. While insisting
that there was here no taking, the Court nonetheless
recognized certain compensatory rights accruing to Grand
Central Terminal which it said would "undoubtedly mitigate"
the loss caused by the regulation. This "fair compensation,"
as he called it, was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark
status, Penn Central was authorized to transfer to neighboring
properties the authorized but unused rights accruing to the
site prior to the Terminal's designation as a landmark the
rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the
Terminal. Prevailing bulk restrictions on neighboring sites
were proportionately relaxed, theoretically enabling Penn
Central to recoup its losses at the Terminal site by
constructing or selling to others the right to construct larger,
hence more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as
the question of compensable taking is concerned. To the
extent that the measures under challenge merely prescribe
retention limits for landowners, there is an exercise of the
police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such
regulation, it becomes necessary to deprive such owners of
whatever lands they may own in excess of the maximum area
allowed, there is definitely a taking under the power of
eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation
of the use of the land. What is required is the surrender of the
title to and the physical possession of the said excess and all
beneficial rights accruing to the owner in favor of the farmer-
beneficiary. This is definitely an exercise not of the police
power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of
eminent domain, the several measures before us are
challenged as violative of the due process and equal
protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299
on the ground that no retention limits are prescribed has
already been discussed and dismissed. It is noted that
although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention limits
finally agreed upon are, curiously enough, not being
questioned in these petitions. We therefore do not discuss
them here. The Court will come to the other claimed violations
of due process in connection with our examination of the
adequacy of just compensation as required under the power
of expropriation.
The argument of the small farmers that they have been
denied equal protection because of the absence of retention
limits has also become academic under Section 6 of R.A. No.
6657. Significantly, they too have not questioned the area of
such limits. There is also the complaint that they should not
be made to share the burden of agrarian reform, an objection
also made by the sugar planters on the ground that they
belong to a particular class with particular interests of their
own. However, no evidence has been submitted to the Court
that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or
things similar to each other in certain particulars and different
from each other in these same particulars. 31 To be valid, it
must conform to the following requirements: (1) it must be
based on substantial distinctions; (2) it must be germane to
the purposes of the law; (3) it must not be limited to existing
conditions only; and (4) it must apply equally to all the
members of the class. 32 The Court finds that all these
requisites have been met by the measures here challenged
as arbitrary and discriminatory.
Equal protection simply means that all persons or things
similarly situated must be treated alike both as to the rights
conferred and the liabilities imposed. 33 The petitioners have
not shown that they belong to a different class and entitled to
a different treatment. The argument that not only landowners
but also owners of other properties must be made to share
the burden of implementing land reform must be rejected.
There is a substantial distinction between these two classes
of owners that is clearly visible except to those who will not
see. There is no need to elaborate on this matter. In any
event, the Congress is allowed a wide leeway in providing for
a valid classification. Its decision is accorded recognition and
respect by the courts of justice except only where its
discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be
sustained under the police power only if there is a
concurrence of the lawful subject and the lawful method. Put
otherwise, the interests of the public generally as
distinguished from those of a particular class require the
interference of the State and, no less important, the means
employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive
upon individuals. 34 As the subject and purpose of agrarian
reform have been laid down by the Constitution itself, we may
say that the first requirement has been satisfied. What
remains to be examined is the validity of the method
employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that
where the rights of the individual are concerned, the end does
not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to
pursue it be in keeping with the Constitution. Mere
expediency will not excuse constitutional shortcuts. There is
no question that not even the strongest moral conviction or
the most urgent public need, subject only to a few notable
exceptions, will excuse the bypassing of an individual's rights.
It is no exaggeration to say that a, person invoking a right
guaranteed under Article III of the Constitution is a majority of
one even as against the rest of the nation who would deny
him that right.
That right covers the person's life, his liberty and his property
under Section 1 of Article III of the Constitution. With regard to
his property, the owner enjoys the added protection of Section
9, which reaffirms the familiar rule that private property shall
not be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the
State that enables it to forcibly acquire private
lands intended for public use upon payment of
just compensation to the owner. Obviously,
there is no need to expropriate where the owner
is willing to sell under terms also acceptable to
the purchaser, in which case an ordinary deed
of sale may be agreed upon by the parties. 35 It
is only where the owner is unwilling to sell, or
cannot accept the price or other conditions
offered by the vendee, that the power of
eminent domain will come into play to assert the
paramount authority of the State over the
interests of the property owner. Private rights
must then yield to the irresistible demands of the
public interest on the time-honored justification,
as in the case of the police power, that the
welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation
is by no means absolute (as indeed no power is absolute).
The limitation is found in the constitutional injunction that
"private property shall not be taken for public use without just
compensation" and in the abundant jurisprudence that has
evolved from the interpretation of this principle. Basically, the
requirements for a proper exercise of the power are: (1) public
use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners
in G.R. No. 79310 that the State should first distribute public
agricultural lands in the pursuit of agrarian reform instead of
immediately disturbing property rights by forcibly acquiring
private agricultural lands. Parenthetically, it is not correct to
say that only public agricultural lands may be covered by the
CARP as the Constitution calls for "the just distribution of all
agricultural lands." In any event, the decision to redistribute
private agricultural lands in the manner prescribed by the
CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not
justified in reviewing that discretion in the absence of a clear
showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions
of the political departments when they decide what is known
as the political question. As explained by Chief Justice
Concepcion in the case of Taada v. Cuenco: 36
The term "political question" connotes what it
means in ordinary parlance, namely, a question
of policy. It refers to "those questions which,
under the Constitution, are to be decided by the
people in their sovereign capacity; or in regard
to which full discretionary authority has been
delegated to the legislative or executive branch
of the government." It is concerned with issues
dependent upon the wisdom, not legality, of a
particular measure.
It is true that the concept of the political question has been
constricted with the enlargement of judicial power, which now
includes the authority of the courts "to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government." 37 Even so, this should not
be construed as a license for us to reverse the other
departments simply because their views may not coincide
with ours.
The legislature and the executive have been seen fit, in their
wisdom, to include in the CARP the redistribution of private
landholdings (even as the distribution of public agricultural
lands is first provided for, while also continuing apace under
the Public Land Act and other cognate laws). The Court sees
no justification to interpose its authority, which we may assert
only if we believe that the political decision is not unwise, but
illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was
held:
Congress having determined, as it did by the Act
of March 3,1909 that the entire St. Mary's river
between the American bank and the
international line, as well as all of the upland
north of the present ship canal, throughout its
entire length, was "necessary for the purpose of
navigation of said waters, and the waters
connected therewith," that determination is
conclusive in condemnation proceedings
instituted by the United States under that Act,
and there is no room for judicial review of the
judgment of Congress ... .
As earlier observed, the requirement for public use has
already been settled for us by the Constitution itself No less
than the 1987 Charter calls for agrarian reform, which is the
reason why private agricultural lands are to be taken from
their owners, subject to the prescribed maximum retention
limits. The purposes specified in P.D. No. 27, Proc. No. 131
and R.A. No. 6657 are only an elaboration of the
constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of
all agricultural lands to enable farmers who are landless to
own directly or collectively the lands they till." That public use,
as pronounced by the fundamental law itself, must be binding
on us.
The second requirement, i.e., the payment of just
compensation, needs a longer and more thoughtful
examination.
Just compensation is defined as the full and fair equivalent of
the property taken from its owner by the expropriator. 39 It has
been repeatedly stressed by this Court that the measure is
not the taker's gain but the owner's loss. 40 The word "just" is
used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the
property to be taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these
petitions contemplate more than a mere regulation of the use
of private lands under the police power. We deal here with an
actual taking of private agricultural lands that has
dispossessed the owners of their property and deprived them
of all its beneficial use and enjoyment, to entitle them to the
just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is
compensable taking when the following conditions concur: (1)
the expropriator must enter a private property; (2) the entry
must be for more than a momentary period; (3) the entry must
be under warrant or color of legal authority; (4) the property
must be devoted to public use or otherwise informally
appropriated or injuriously affected; and (5) the utilization of
the property for public use must be in such a way as to oust
the owner and deprive him of beneficial enjoyment of the
property. All these requisites are envisioned in the measures
before us.
Where the State itself is the expropriator, it is not necessary
for it to make a deposit upon its taking possession of the
condemned property, as "the compensation is a public
charge, the good faith of the public is pledged for its payment,
and all the resources of taxation may be employed in raising
the amount." 43 Nevertheless, Section 16(e) of the CARP Law
provides that:
Upon receipt by the landowner of the
corresponding payment or, in case of rejection
 or no response from the landowner, upon the
deposit with an accessible bank designated by
the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall
take immediate possession of the land and shall
request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of
the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the
land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just
compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial prerogatives.
Specific reference is made to Section 16(d), which provides
that in case of the rejection or disregard by the owner of the
offer of the government to buy his land-
... the DAR shall conduct summary
administrative proceedings to determine the
compensation for the land by requiring the
landowner, the LBP and other interested parties
to submit evidence as to the just compensation
for the land, within fifteen (15) days from the
receipt of the notice. After the expiration of the
above period, the matter is deemed submitted
for decision. The DAR shall decide the case
within thirty (30) days after it is submitted for
decision.
To be sure, the determination of just compensation is a
function addressed to the courts of justice and may not be
usurped by any other branch or official of the
government. EPZA v. Dulay 44 resolved a challenge to several
decrees promulgated by President Marcos providing that the
just compensation for property under expropriation should be
either the assessment of the property by the government or
the sworn valuation thereof by the owner, whichever was
lower. In declaring these decrees unconstitutional, the Court
held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation
under the aforecited decrees constitutes
impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile
in a matter which under this Constitution is
reserved to it for final determination.
Thus, although in an expropriation proceeding
the court technically would still have the power
to determine the just compensation for the
property, following the applicable decrees, its
task would be relegated to simply stating the
lower value of the property as declared either by
the owner or the assessor. As a necessary
consequence, it would be useless for the court
to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the
due process clause in the taking of private
property is seemingly fulfilled since it cannot be
said that a judicial proceeding was not had
before the actual taking. However, the strict
application of the decrees during the
proceedings would be nothing short of a mere
formality or charade as the court has only to
choose between the valuation of the owner and
that of the assessor, and its choice is always
limited to the lower of the two. The court cannot
exercise its discretion or independence in
determining what is just or fair. Even a grade
school pupil could substitute for the judge
insofar as the determination of constitutional just
compensation is concerned.
xxx
 In the present petition, we are once again
confronted with the same question of whether
the courts under P.D. No. 1533, which contains
the same provision on just compensation as its
predecessor decrees, still have the power and
authority to determine just compensation,
independent of what is stated by the decree and
to this effect, to appoint commissioners for such
purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner
the opportunity to prove that the valuation in the
tax documents is unfair or wrong. And it is
repulsive to the basic concepts of justice and
fairness to allow the haphazard work of a minor
bureaucrat or clerk to absolutely prevail over the
judgment of a court promulgated only after
expert commissioners have actually viewed the
property, after evidence and arguments pro and
con have been presented, and after all factors
and considerations essential to a fair and just
determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that
it does not suffer from the arbitrariness that rendered the
challenged decrees constitutionally objectionable. Although
the proceedings are described as summary, the landowner
and other interested parties are nevertheless allowed an
opportunity to submit evidence on the real value of the
property. But more importantly, the determination of the just
compensation by the DAR is not by any means final and
conclusive upon the landowner or any other interested party,
for Section 16(f) clearly provides:
Any party who disagrees with the decision may
bring the matter to the court of proper
jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary
unless accepted by all parties concerned. Otherwise, the
courts of justice will still have the right to review with finality
the said determination in the exercise of what is admittedly a
judicial function.
The second and more serious objection to the provisions on
just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as
follows:
SEC. 18. Valuation and Mode of Compensation.
The LBP shall compensate the landowner in
such amount as may be agreed upon by the
landowner and the DAR and the LBP, in
accordance with the criteria provided for in
Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally
determined by the court, as the just
compensation for the land.
The compensation shall be paid in one of the
following modes, at the option of the landowner:
(1) Cash payment, under the following terms
and conditions:
(a) For lands above fifty (50) hectares,
insofar as the excess hectarage is
concerned Twenty-five percent (25%)
cash, the balance to be paid in
 government financial instruments
negotiable at any time.
(b) For lands above twenty-four (24)
hectares and up to fifty (50) hectares
Thirty percent (30%) cash, the balance to
be paid in government financial
instruments negotiable at any time.
(c) For lands twenty-four (24) hectares
and below Thirty-five percent (35%)
cash, the balance to be paid in
government financial instruments
negotiable at any time.
(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, which shall have the following
features:
(a) Market interest rates aligned
with 91-day treasury bill rates. Ten
percent (10%) of the face value of
the bonds shall mature every year
from the date of issuance until the
tenth (10th) year: Provided, That
should the landowner choose to
forego the cash portion, whether in
full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such
LBP bonds may be used by the
landowner, his successors-in- interest or
his assigns, up to the amount of their
face value, for any of the following:
(i) Acquisition of land or other real
properties of the government,
including assets under the Asset
Privatization Program and other
assets foreclosed by government
financial institutions in the same
province or region where the lands
for which the bonds were paid are
situated;
(ii) Acquisition of shares of stock of
government-owned or controlled
corporations or shares of stock
owned by the government in
private corporations;
(iii) Substitution for surety or bail
bonds for the provisional release
of accused persons, or for
performance bonds;
(iv) Security for loans with any
government financial institution,
provided the proceeds of the loans
shall be invested in an economic
enterprise, preferably in a small
and medium- scale industry, in the
same province or region as the
land for which the bonds are paid;
(v) Payment for various taxes and
fees to government: Provided,
 That the use of these bonds for
these purposes will be limited to a
certain percentage of the
outstanding balance of the
financial instruments; Provided,
further, That the PARC shall
determine the percentages
mentioned above;
(vi) Payment for tuition fees of the
immediate family of the original
bondholder in government
universities, colleges, trade
schools, and other institutions;
(vii) Payment for fees of the
immediate family of the original
bondholder in government
hospitals; and
(viii) Such other uses as the PARC
may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the
above provision is unconstitutional insofar as it requires the
owners of the expropriated properties to accept just
compensation therefor in less than money, which is the only
medium of payment allowed. In support of this contention,
they cite jurisprudence holding that:
The fundamental rule in expropriation matters is
that the owner of the property expropriated is
entitled to a just compensation, which should be
neither more nor less, whenever it is possible to
make the assessment, than the money
equivalent of said property. Just compensation
has always been understood to be the just and
complete equivalent of the loss which the owner
of the thing expropriated has to suffer by reason
of the expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46
this
Court held:
It is well-settled that just compensation means
the equivalent for the value of the property at
the time of its taking. Anything beyond that is
more, and anything short of that is less, than
just compensation. It means a fair and full
equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain
would accrue to the expropriating entity. The
market value of the land taken is the just
compensation to which the owner of condemned
property is entitled, the market value being that
sum of money which a person desirous, but not
compelled to buy, and an owner, willing, but not
compelled to sell, would agree on as a price to
be given and received for such property.
(Emphasis supplied.)
In the United States, where much of our jurisprudence on the
subject has been derived, the weight of authority is also to the
effect that just compensation for property expropriated is
payable only in money and not otherwise. Thus
The medium of payment of compensation is
ready money or cash. The condemnor cannot
compel the owner to accept anything but money,
nor can the owner compel or require the
condemnor to pay him on any other basis than
the value of the property in money at the time
and in the manner prescribed by the
Constitution and the statutes. When the power
of eminent domain is resorted to, there must be
a standard medium of payment, binding upon
 both parties, and the law has fixed that standard
as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and
cannot, in the nature of things, be regarded as a
reliable and constant standard of
compensation. 48
"Just compensation" for property taken by
condemnation means a fair equivalent in money,
which must be paid at least within a reasonable
time after the taking, and it is not within the
power of the Legislature to substitute for such
payment future obligations, bonds, or other
valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional
medium for the payment of just compensation is money and
no other. And so, conformably, has just compensation been
paid in the past solely in that medium. However, we do not
deal here with the traditional excercise of the power of
eminent domain. This is not an ordinary expropriation where
only a specific property of relatively limited area is sought to
be taken by the State from its owner for a specific and
perhaps local purpose.
What we deal with here is a revolutionary kind of
expropriation.
The expropriation before us affects all private agricultural
lands whenever found and of whatever kind as long as they
are in excess of the maximum retention limits allowed their
owners. This kind of expropriation is intended for the benefit
not only of a particular community or of a small segment of
the population but of the entire Filipino nation, from all levels
of our society, from the impoverished farmer to the land-
glutted owner. Its purpose does not cover only the whole
territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the
vision and the sacrifice of the present generation of Filipinos.
Generations yet to come are as involved in this program as
we are today, although hopefully only as beneficiaries of a
richer and more fulfilling life we will guarantee to them
tomorrow through our thoughtfulness today. And, finally, let it
not be forgotten that it is no less than the Constitution itself
that has ordained this revolution in the farms, calling for "a
just distribution" among the farmers of lands that have
heretofore been the prison of their dreams but can now
become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The
cost will be tremendous. Considering the vast areas of land
subject to expropriation under the laws before us, we estimate
that hundreds of billions of pesos will be needed, far more
indeed than the amount of P50 billion initially appropriated,
which is already staggering as it is by our present standards.
Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of
this difficulty when they called for agrarian reform as a top
priority project of the government. It is a part of this
assumption that when they envisioned the expropriation that
would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way
but a less conventional if more practical method. There can
be no doubt that they were aware of the financial limitations of
the government and had no illusions that there would be
enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. We may
therefore assume that their intention was to allow such
manner of payment as is now provided for by the CARP Law,
particularly the payment of the balance (if the owner cannot
be paid fully with money), or indeed of the entire amount of
the just compensation, with other things of value. We may
also suppose that what they had in mind was a similar
scheme of payment as that prescribed in P.D. No. 27, which
was the law in force at the time they deliberated on the new
Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian
reform program being contemplated. There was the
suggestion to "fine tune" the requirement to suit the demands
of the project even as it was also felt that they should "leave it
to Congress" to determine how payment should be made to
the landowner and reimbursement required from the farmer-
beneficiaries. Such innovations as "progressive
compensation" and "State-subsidized compensation" were
also proposed. In the end, however, no special definition of
the just compensation for the lands to be expropriated was
reached by the Commission. 50
On the other hand, there is nothing in the records either that
militates against the assumptions we are making of the
general sentiments and intention of the members on the
content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and
the limitations of the expropriator.
With these assumptions, the Court hereby declares that the
content and manner of the just compensation provided for in
the afore- quoted Section 18 of the CARP Law is not violative
of the Constitution. We do not mind admitting that a certain
degree of pragmatism has influenced our decision on this
issue, but after all this Court is not a cloistered institution
removed from the realities and demands of society or
oblivious to the need for its enhancement. The Court is as
acutely anxious as the rest of our people to see the goal of
agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these
disappointing decades. We are aware that invalidation of the
said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization
and resurrecting the spectre of discontent and dissent in the
restless countryside. That is not in our view the intention of
the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is
not always required to be made fully in money, we find further
that the proportion of cash payment to the other things of
value constituting the total payment, as determined on the
basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller
the land, the bigger the payment in money, primarily because
the small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government
financial instruments making up the balance of the payment
are "negotiable at any time." The other modes, which are
likewise available to the landowner at his option, are also not
unreasonable because payment is made in shares of stock,
LBP bonds, other properties or assets, tax credits, and other
things of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will
cause the landowners, big and small, not a little
inconvenience. As already remarked, this cannot be avoided.
Nevertheless, it is devoutly hoped that these countrymen of
ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their
indispensable share in the attainment of the ideal of agrarian
reform. Otherwise, our pursuit of this elusive goal will be like
the quest for the Holy Grail.
The complaint against the effects of non-registration of the
land under E.O. No. 229 does not seem to be viable any more
as it appears that Section 4 of the said Order has been
superseded by Section 14 of the CARP Law. This repeats the
requisites of registration as embodied in the earlier measure
but does not provide, as the latter did, that in case of failure or
refusal to register the land, the valuation thereof shall be that
given by the provincial or city assessor for tax purposes. On
the contrary, the CARP Law says that the just compensation
shall be ascertained on the basis of the factors mentioned in
its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is
divested of his property even before actual payment to him in
full of just compensation, in contravention of a well- accepted
principle of eminent domain.
The recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here
and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation
proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the
condemnor's title relates back to the date on which the
petition under the Eminent Domain Act, or the commissioner's
report under the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a
canal is complete at the time of entry, title to the property
taken remains in the owner until payment is actually
made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited
several cases holding that title to property does not pass to
the condemnor until just compensation had actually been
made. In fact, the decisions appear to be uniformly to this
effect. As early as 1838, in Rubottom v. McLure, 54 it was held
that "actual payment to the owner of the condemned property
was a condition precedent to the investment of the title to the
property in the State" albeit "not to the appropriation of it to
public use." In Rexford v. Knight, 55 the Court of Appeals of
New York said that the construction upon the statutes was
that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and
appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and authority the
rule is ... that the right to enter on and use the property is
complete, as soon as the property is actually appropriated
under the authority of law for a public use, but that the title
does not pass from the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v.
Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in
the preceding discussion are attentively
examined it will be apparent that the method of
expropriation adopted in this jurisdiction is such
as to afford absolute reassurance that no piece
of land can be finally and irrevocably taken from
an unwilling owner until compensation is paid ...
. (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation
of tenant-farmer as October 21, 1972 and declared that he
shall "be deemed the owner" of a portion of land consisting of
a family-sized farm except that "no title to the land owned by
him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers'
cooperative." It was understood, however, that full payment of
the just compensation also had to be made first, conformably
to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now
deemed full owners as of October 21, 1972 of
 the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired
under the said decree, after proof of full-fledged membership
in the farmers' cooperatives and full payment of just
compensation. Hence, it was also perfectly proper for the
Order to also provide in its Section 2 that the "lease rentals
paid to the landowner by the farmer- beneficiary after October
21, 1972 (pending transfer of ownership after full payment of
just compensation), shall be considered as advance payment
for the land."
The CARP Law, for its part, conditions the transfer of
possession and ownership of the land to the government on
receipt by the landowner of the corresponding payment or the
deposit by the DAR of the compensation in cash or LBP
bonds with an accessible bank. Until then, title also remains
with the landowner. 57 No outright change of ownership is
contemplated either.
Hence, the argument that the assailed measures violate due
process by arbitrarily transferring title before the land is fully
paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the
tenant-farmer under P.D. No. 27, as recognized under E.O.
No. 228, are retained by him even now under R.A. No. 6657.
This should counter-balance the express provision in Section
6 of the said law that "the landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to
keep the area originally retained by them thereunder, further,
That original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in
G.R. No. 78742 that the appeal filed by the petitioners with
the Office of the President has already been resolved.
Although we have said that the doctrine of exhaustion of
administrative remedies need not preclude immediate resort
to judicial action, there are factual issues that have yet to be
examined on the administrative level, especially the claim that
the petitioners are not covered by LOI 474 because they do
not own other agricultural lands than the subjects of their
petition.
Obviously, the Court cannot resolve these issues. In any
event, assuming that the petitioners have not yet exercised
their retention rights, if any, under P.D. No. 27, the Court holds
that they are entitled to the new retention rights provided for
by R.A. No. 6657, which in fact are on the whole more liberal
than those granted by the decree.
V
The CARP Law and the other enactments also involved in
these cases have been the subject of bitter attack from those
who point to the shortcomings of these measures and ask
that they be scrapped entirely. To be sure, these enactments
are less than perfect; indeed, they should be continuously re-
examined and rehoned, that they may be sharper instruments
for the better protection of the farmer's rights. But we have to
start somewhere. In the pursuit of agrarian reform, we do not
tread on familiar ground but grope on terrain fraught with
pitfalls and expected difficulties. This is inevitable. The CARP
Law is not a tried and tested project. On the contrary, to use
Justice Holmes's words, "it is an experiment, as all life is an
experiment," and so we learn as we venture forward, and, if
necessary, by our own mistakes. We cannot expect perfection
although we should strive for it by all means. Meantime, we
struggle as best we can in freeing the farmer from the iron
shackles that have unconscionably, and for so long, fettered
his soul to the soil.
By the decision we reach today, all major legal obstacles to SO ORDERED.
the comprehensive agrarian reform program are removed, to
clear the way for the true freedom of the farmer. We may now Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr.,
glimpse the day he will be released not only from want but Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
also from the exploitation and disdain of the past and from his Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.
own feelings of inadequacy and helplessness. At last his
servitude will be ended forever. At last the farm on which he
toils will be his farm. It will be his portion of the Mother Earth
that will give him not only the staff of life but also the joy of
living. And where once it bred for him only deep despair, now
can he see in it the fruition of his hopes for a more fulfilling
future. Now at last can he banish from his small plot of earth
his insecurities and dark resentments and "rebuild in it the
music and the dream."

WHEREFORE, the Court holds as follows:

1. R.A. No. 6657, P.D. No. 27, Proc. No. 131,

and E.O. Nos. 228 and 229 are SUSTAINED
against all the constitutional objections raised in
the herein petitions.

2. Title to all expropriated properties shall be

transferred to the State only upon full payment
of compensation to their respective owners.

3. All rights previously acquired by the tenant-

farmers under P.D. No. 27 are retained and
recognized.

4. Landowners who were unable to exercise

their rights of retention under P.D. No. 27 shall
enjoy the retention rights granted by R.A. No.
6657 under the conditions therein prescribed.

5. Subject to the above-mentioned rulings all the

petitions are DISMISSED, without
pronouncement as to costs.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 156965 October 12, 2006
FROILAN DE GUZMAN, ANGEL MARCELO and NICASIO
MAGBITANG, petitioners,
vs.
THE COURT OF APPEALS, OFFICE OF THE PRESIDENT,
and the MUNICIPALITY OF BALIUAG,
BULACAN, respondents.
DECISION
Tinga, J.:
On appeal via a petition for review on certiorari under Rule 45
of the 1997 Rules of Civil Procedure are the Decision 1 and
Resolution2 of the Court of Appeals in CA-G.R. SP No. 55710.
The Decision affirmed the Resolution dated 4 October 1999 of
the Office of the President dismissing petitioners' appeal from
the Order of the Secretary of Agrarian Reform declaring that
the disputed property cannot be placed under the coverage of
the agrarian reform program or the Operation Land Transfer.
The following factual antecedents are matters of record.
Petitioners Froilan De Guzman, Angel Marcelo and Nicasio
Magbitang were among the tenants of a parcel of land
situated at Barangay Pagala, Baliuag, Bulacan. The land,
measuring six (6) hectares, was formerly owned by the Vergel
De Dios family. Sometime in 1979, respondent Municipality of
Baliuag, Bulacan (municipality) sought the expropriation of the
land before the now defunct Court of Agrarian Relations.
During the pendency of the expropriation proceedings, the
municipality and petitioners entered into a compromise
agreement, whereby petitioners irrevocably withdrew their
opposition to the expropriation of the land in consideration of
the payment of a disturbance compensation of P25,000.00
per hectare or P2.50 per square meter. Petitioners also
waived "all claims and demands" against the municipality. The
Court of Agrarian Relations approved said compromise
agreement in its decisions dated 16 April 1979 and 9 August
1979.3
From the records, it can be gathered that the municipality
eventually acquired ownership of the land through
expropriation but allowed petitioners to continue cultivating
their lots pending the construction of the Baliuag Wholesale
Complex Market. For this arrangement, petitioners remitted
rentals to the municipal treasurer. Despite the lapse of several
years, construction of the market did not push through. This
prompted petitioners, who had continually occupied and
cultivated the land, to file in 1996 a petition with the Municipal
Agrarian Reform Office (MARO) of Baliuag, praying that the
land be placed under the Operation Land Transfer (OLT) in
accordance with Presidential Decree (P.D.) No. 27.4
Following the filing of their petition for CARP coverage before
the MARO, petitioners filed a complaint on 13 May 1997 with
the Department of Agrarian Reform Adjudication Board
(DARAB) against the municipality. In their complaint docketed
as DARAB Case No. 03-02-5054'97, petitioners prayed for
the issuance of a preliminary injunction or temporary
restraining order to secure their peaceful possession over the
land. The Provincial Adjudicator rendered judgment in favor of by the Housing and Land Use Regulatory Board (HLURB)
petitioners on 17 July 1997. The dispositive portion of the classifying the land as commercial. They also argued that
decision reads: under the provisions of Administrative Order (A.O.) No. 20,
series of 1992, the conversion of the land for non-agricultural
WHEREFORE, premises considered, the Board finds the
purposes was disallowed.
plaintiffs a [sic] bona-fide farmer[-]beneficiaries of agrarian
reform[.] [A]ccordingly, judgment is hereby rendered as On 30 January, 2002, the Court of Appeals rendered the
follows: assailed Decision, dismissing petitioners' appeal. Upholding
the non-agricultural classification of the land, the Court of
1. Directing the the [sic] respondent, Municipality of Baliuag,
Appeals ruled that the land could no longer be subject of the
Bulacan[,] represented by Honorable Mayor Edilberto Tengco
comprehensive agrarian reform law (CARL). The Court of
and all other persons acting in their behalf to permanently
Appeals also denied petitioners' motion for reconsideration in
cease and desist from dumping garbage in the premises in
the assailed Resolution dated January 20, 2003.
question;
Hence, the instant petition, imputing the following errors to the
2. Directing the respondent to maintain petitioners in peaceful
Court of Appeals:
possession over the disputed property.
I.
SO ORDERED.5
WITH ALL DUE RESPECT, THE COURT OF APPEALS
On 6 January 1997, the Regional Director of the Department
COMMITTED GRAVE AND MANIFEST ERROR IN LAW
of Agrarian Reform (DAR) issued an order granting the
WHEN IT FAILED TO CONSIDER THAT THE SUBJECT
petition and declaring the land as covered by OLT. 6 The
LANDHOLDING SHOULD HAVE BEEN COVERED BY
municipality moved for its reconsideration in vain. Following
OPERATION LAND TRANSFER PURSUANT TO P.D. NO. 27
the denial of its motion for reconsideration, the municipality
DUE TO THE FAILURE OF THE LANDOWNER TO CARRY
elevated the matter to the DAR Secretary who, in his Order
OUT ITS CONVERSION FROM AGRICULTURAL LAND FOR
dated 8 August 1997, reversed the Order of 6 January 1997
A LONG PERIOD OF TIME.
of the Regional Director.7Petitioners, aggrieved this time, filed
an appeal with the Office of the President. On 1 July 1999, II.
Executive Secretary Ronaldo B. Zamora, by authority of the
THE COURT OF APPEALS COMMITTED SERIOUS ERROR
President, dismissed petitioners' appeal and affirmed the
WHEN IT UPHOLD (sic) THE RECLASSIFICATION OF THE
order of the DAR Secretary.8
SUBJECT LANDHOLDING.
Undaunted, petitioners filed a petition for review with the
III.
Court of Appeals, which prayed for the reversal of the Order
of 1 July 1999 issued by the Office of the President on the THE COURT OF APPEALS COMMITTED GRAVE ABUSE
grounds that the land remained agricultural and that the Office OF DISCRETION WHEN IT DISREGARDED THE
of the President erred in relying upon the certification issued PROVISIONS OF THE O.P. ADMINISTRATIVE ORDER NO.
20 SERIES OF 1992 WHICH CLEARLY PROVIDES THE
NON NEGOTIABILITY OF IRRIGATED PRIME
AGRICULTURAL LANDS TO NON-AGRICULTURAL
PURPOSES.9
Essentially, the main issue to be resolved is whether the
subject land can be reclassified to agricultural after the
purpose of its conversion to a non-agricultural land had not
materialized.
Petitioners contend that despite the conversion of the land for
a commercial purpose, they have remained tenants of the
land devoting it for agricultural production. Though the earlier
tenancy relationship had been terminated upon the payment
of disturbance compensation pursuant to the 1979
compromise agreement, petitioners posit that a tenancy
relationship was created anew between them and the
municipality when the latter allowed petitioners to cultivate the
land after the expropriation proceeding.
The petition has no merit.
Under Section 3(c) of Republic Act (R.A.) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL),
an agricultural land refers to land devoted to agricultural
activity as defined therein and not classified as mineral,
forest, residential, commercial or industrial land. The
deliberations of the Constitutional Commission confirm this
limitation. "Agricultural lands" are only those lands which are
"arable and suitable agricultural lands" and "do not include
commercial, industrial and residential lands."10
In Natalia Realty, Inc. vs. Department of Agrarian Reform,11 it
was held that lands not devoted to agricultural activity are
outside the coverage of CARL including lands previously
converted to non-agricultural uses prior to the effectivity of
CARL by government agencies other than the DAR. This rule
has been reiterated in a number of subsequent cases.
Despite claims that the areas have been devoted for
agricultural production, the Court has upheld the "non-
agricultural" classification made by the NHA over housing and
resettlements projects,12 zoning ordinances passed by local
government units classifying residential areas, 13 and
certifications over watershed areas issued by the Department
of Environment and Natural Resources (DENR).14
The DAR itself has recognized the prospective application of
R.A. No. 6657, insofar as it provides under Section 3(c)
thereof that lands classified as non-agricultural prior to the
effectivity of the CARL are not covered by the CARL. Thus,
DAR Administrative Order No. 1, series of 1990 provides:
Agricultural land refers to those devoted to agricultural activity
as defined in R.A. [No.] 6657 and not classified as mineral or
forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not
classified in town plans and zoning ordinances as approved
by the Housing Land Use Regulatory Board (HLURB) and its
preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use. (Emphasis supplied.}
That the subject land had been reclassified from agricultural
to non-agricultural is not disputed. The records reveal that as
early as 1980, the municipality had passed a zoning
ordinance which identified the subject land as the site of the
wholesale market complex. As per certification issued by the
HLURB, the land is within the zoning plan approved by the
National Coordinating Council for Town Planning, Housing
and Zoning.
Petitioners also theorize that they earned a vested right over
the land when a tenancy relationship was established anew
between them and the municipality subsequent to the latter's
acquisition of the land. In support of this theory, petitioners
cite minutes of meetings and resolutions passed by the
municipality's Sanggunian, purportedly indicating the
municipality's recognition of their status as tenants of the
subject landholding.
Petitioners' theory does not persuade the Court.
A segment of the minutes of the meeting of the
municipality's Sanggunian dated 27 May 1988, which
petitioners cite to bolster their theory, is quoted below:
Tumindig din at namahayag ang ating Punong Bayan Kgg.
Reynaldo S. del Rosario at sinabing sa kasulukuyan ay hindi
pa naman kailangan ng Pamahalaang Bayan ang nasabing
lupa ngunit kung ito ay kakailangan na ay kinakailangang
umalis sila dito ng mahinusay, walang pasubali at maluwag sa
kanilang kalooban, kung kaya't iminungkahi niya na gumawa
ng isang nakasulat na kasunduan na ang nakasaad ay
kusang-loob silang aalis sa nasabing lupa pagdating ng
panahon na ito ay kailanganin na ng Pamahalaang Bayan. 15
The aforequoted minutes clearly show that petitioners' use
and possession of the land was by mere tolerance of the
municipality and subject to the condition that petitioners would
voluntarily vacate the land when the need would arise. In the
same minutes, the Sanggunian resolved to authorize then
Mayor Reynaldo S. del Rosario to enter into an agreement in
writing with petitioners concerning the
latter's temporary cultivation of the land as hired labor.
As discussed earlier, the land had ceased to be classified as
agricultural when the municipality extended petitioners'
occupation of the land. After the municipality acquired
ownership over the land through expropriation and passed the
ordinance converting said land into a commercial area, any
transaction entered into by the municipality involving the land
was governed by the applicable civil law in relation to laws on
local government. At this point, agrarian laws no longer
governed the relationship between petitioners and the
municipality. While it was not established whether the
relationship between petitioners and the municipality was that
of a lessor and lessee or that of an employer and laborer, as
the supposed written agreement was not offered in evidence,
the fact remains that the subject land had already been
identified as commercial in the zoning ordinance.
Certainly, petitioners' occupation of the land, made possible
as it was by the tolerance of the municipality, was subject to
its peremptory right to terminate. As absolute owner of the
land, the municipality is entitled to devote the land for
purposes it deems appropriate.
It is noteworthy that even prior to its expropriation and
reclassification, the land was never placed under the
coverage of the agrarian reform program. Although it appears
that petitioners had been tilling the land as tenants of the
Vergel De Dios family, the municipality's predecessor-in-
interest, the records do not show that petitioners had applied
for coverage of the land under the agrarian reform program.
Before a claimant becomes a qualified beneficiary of agrarian
reform, the administrative process for coverage under the
CARP must be initiated. The mere fact of cultivating an
agricultural land does not ipso jure vest ownership right in
favor of the tiller. Since petitioners had not applied for CARP
coverage prior to the reclassification of the land to
commercial, their occupation by mere tolerance cannot ripen
into absolute ownership.
Petitioners further argue that the municipality's failure to
realize the commercial project operates to reinstate the
original status of the land as agricultural. In support of this
theory, petitioners cite Section 36 (1) of R.A. No. 3844, or the
Agriculture Land Reform Code, unaware that the provision
had been amended by R.A. 6389, entitled, "An Act Amending With the enactment of the amendatory law, the condition
Republic Act Numbered Thirty Eight Hundred and Forty Four, imposed on the landowner to implement the conversion of the
As Amended, Otherwise Known As the Agricultural Land agricultural land to a non-agricultural purpose within a certain
Reform Code and For Other Purposes." period was deleted. Section 36 (1), R.A. No. 3844, as
amended, now reads:
Before its amendment, Section 36 (1), R.A. No. 3844
provided: Sec. 36. Possession of Landholding; Exceptions.
Notwithstanding any agreement as to the period or future
Sec. 36. Possession of Landholding; Exceptions.
surrender, of the land, an agricultural lessee shall continue in
Notwithstanding any agreement as to the period or future
the enjoyment and possession of his landholding except when
surrender, of the land, an agricultural lessee shall continue in
his dispossession has been authorized by the Court in a
the enjoyment and possession of his landholding except when
judgment that is final and executory if after due hearing it is
his dispossession has been authorized by the Court in a
shown that:
judgment that is final and executory if after due hearing it is
shown that: (1) The landholding is declared by the department head upon
recommendation of the National Planning Commission to be
(1) The agricultural lessor-owner or a member of his
suited for residential, commercial, industrial or some other
immediate family will personally cultivate the landholding or
urban purposes: Provided, That the agricultural lessee shall
will convert the landholding, if suitably located, into
be entitled to disturbance compensation equivalent to five
residential, factory, hospital or school site or other useful non-
times the average of gross harvests on his landholding during
agricultural purposes: Provided, That the agricultural lessee
the last five preceding calendar years;
shall be entitled to disturbance compensation equivalent to
five years rental on his landholding in addition to his rights x x x x16
under Sections twenty-five and thirty-four, except when the
The amendment is the Legislature's recognition that the
land owned and leased by the agricultural lessor, is not more
optimal use of some lands may not necessarily be for
than five hectares, in which case instead of disturbance
agriculture. Thus, discretion is vested on the appropriate
compensation the lessee may be entitled to an advanced
government agencies to determine the suitability of a land for
notice of at least one agricultural year before ejectment
residential, commercial, industrial or other purposes. With the
proceedings are filed against him: Provided, further, That
passage of the CARL, the conversion of agricultural lands to
should the landholder not cultivate the land himself for three
non-agricultural uses was retained and the imposition on the
years or fail to substantially carry out such conversion within
landowner to implement within a time frame the proposed
one year after the dispossession of the tenant, it shall be
non-agricultural use of the land was done away with.
presumed that he acted in bad faith and the tenant shall have
the right to demand possession of the land and recover Moreover, in Pasong Bayabas Farmers Association, Inc. v.
damages for any loss incurred by him because of said Court of Appeals,17 the Court declared categorically that the
dispossessions. failure of the landowner therein to complete the housing
project did not have the effect of reverting the property to its apply to agricultural lands already converted as residential
classification as agricultural land, although the order of lands prior to the passage of Rep. Act No. 6657. 21
conversion issued by the then Minister of Agrarian Reform
Thus, the zoning ordinance passed by the municipality
obliged the landowner to commence the physical
sometime in 1980 reclassifying the subject land as
development of the housing project within one year from
commercial and future site of a market complex operated to
receipt of the order of conversion.18 In said case, a vast tract
take away the "agricultural" status of the subject property.
of land claimed to be cultivated by its tenants formed part of
Subsequent events cited by petitioners such as their
the subdivision plan of a housing project approved by the
continuous tillage of the land and the non-commencement of
National Planning Commission and Municipal Council of
the construction of the market complex did not strip the land
Carmona and subsequently declared by the Provincial Board
of its classification as commercial.
of Cavite as composite of the industrial areas of Carmona,
Dasmarias, Silang and Trece Martirez. Because the Petitioners' reliance on the provisions of A.O. No. 20, series of
reclassification of the property by the Municipal Council of 1992, issued by then President Fidel Ramos is misplaced.
Carmona to non-agricultural land took place before the A.O. No. 20, which sets forth the guidelines to be observed by
effectivity of the CARL, the Court held that Section 65 of R.A. local government units and government agencies on
No. 6657 cannot be applied retroactively. 19 agricultural land use conversion, cannot be applied to the
subject land for the reason that the land had already been
More importantly, the Court in Pasong Bayabas recognized
classified as commercial long before its issuance. Indeed,
the power of local government units to adopt zoning
A.O. No. 20 cannot be applied retroactively.
ordinances, citing Section 3 of R.A. No. 2264,20 to wit:
WHEREFORE, the instant petition for review on certiorari
Section 3 of Rep. Act No. 2264, amending the Local
is DENIED. The Decision and Resolution of the Court of
Government Code, specifically empowers municipal and/or
Appeals in CA-G.R. SP No. 55710 are AFFIRMED. Costs
city councils to adopt zoning and subdivision ordinances or
against petitioners.
regulations in consultation with the National Planning
Commission. A zoning ordinance prescribes, defines, and SO ORDERED.
apportions a given political subdivision into specific land uses
as present and future projection of needs. The power of the Quisumbing, J., Chairperson, Carpio, Carpio Morales, and
local government to convert or reclassify lands to residential Velasco, Jr., JJ., concur.
lands to non-agricultural lands reclassified is not subject to
the approval of the Department of Agrarian Reform. Section
65 of Rep. Act No. 6657 relied upon by the petitioner applies EN BANC
only to applications by the landlord or the beneficiary for the [G.R. No. 86889 : December 4, 1990.]
conversion of lands previously placed under agrarian reform
law after the lapse of five years from its award. It does not 192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE
SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, Respondent.
DECISION
PARAS, J.:
This is a petition for prohibition with prayer for restraining
order and/or preliminary and permanent injunction against the
Honorable Secretary of the Department of Agrarian Reform
for acting without jurisdiction in enforcing the assailed
provisions of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988 and in
promulgating the Guidelines and Procedure Implementing
Production and Profit Sharing under R.A. No. 6657, insofar as
the same apply to herein petitioner, and further from
performing an act in violation of the constitutional rights of the
petitioner.
As gathered from the records, the factual background of this
case, is as follows:
On June 10, 1988, the President of the Philippines approved
R.A. No. 6657, which includes the raising of livestock, poultry
and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform
promulgated the Guidelines and Procedures Implementing
Production and Profit Sharing as embodied in Sections 13
and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform
promulgated its Rules and Regulations implementing Section
11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in
the livestock and poultry business and together with others in
the same business allegedly stands to be adversely affected
by the enforcement of Section 3(b), Section 11, Section 13,
Section 16(d) and 17 and Section 32 of R.A. No. 6657
otherwise known as Comprehensive Agrarian Reform Law
and of the Guidelines and Procedures Implementing
Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and
Regulations Implementing Section 11 thereof as promulgated
by the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines
and rules be declared unconstitutional. Meanwhile, it is also
prayed that a writ of preliminary injunction or restraining order
be issued enjoining public respondents from enforcing the
same, insofar as they are made to apply to Luz Farms and
other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to
deny, among others, Luz Farms' prayer for the issuance of a
preliminary injunction in its Manifestation dated May 26, and
31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24,
1989 resolved to grant said Motion for Reconsideration
regarding the injunctive relief, after the filing and approval by
this Court of an injunction bond in the amount of P100,000.00.
This Court also gave due course to the petition and required
the parties to file their respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989
(Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his
Comment to the petition as his Memorandum (Rollo, pp. 186-
187).
Luz Farms questions the following provisions of R.A. 6657,
insofar as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and
poultry)" in the definition of "Agricultural, Agricultural
Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private
agricultural lands devoted to commercial, livestock, poultry
and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a
production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of
Agrarian Reform the authority to summarily determine the just
compensation to be paid for lands covered by the
Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan
mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from the
production of such lands are distributed within sixty (60) days
of the end of the fiscal year as compensation to regular and
other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these
individuals or entities realize gross sales in excess of five
million pesos per annum unless the DAR, upon proper
application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety
(90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of
Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the
said law includes the raising of livestock, poultry and swine in
its coverage as well as the Implementing Rules and
Guidelines promulgated in accordance therewith.:-cralaw
The constitutional provision under consideration reads as
follows:
ARTICLE XIII
x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations,
and subject to the payment of just compensation. In
determining retention limits, the State shall respect the rights
of small landowners. The State shall further provide
incentives for voluntary land-sharing.
x x x"
Luz Farms contended that it does not seek the nullification of
R.A. 6657 in its entirety. In fact, it acknowledges the
correctness of the decision of this Court in the case of the
Association of Small Landowners in the Philippines, Inc.
vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989)
affirming the constitutionality of the Comprehensive Agrarian
Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the Constitution,
in including land devoted to the raising of livestock, poultry
and swine in its coverage (Rollo, p. 131). Livestock or poultry
raising is not similar to crop or tree farming. Land is not the
primary resource in this undertaking and represents no more
than five percent (5%) of the total investment of commercial
livestock and poultry raisers. Indeed, there are many owners
of residential lands all over the country who use available
space in their residence for commercial livestock and raising
purposes, under "contract-growing arrangements," whereby
processing corporations and other commercial livestock and
poultry raisers (Rollo, p. 10). Lands support the buildings and
other amenities attendant to the raising of animals and birds.
The use of land is incidental to but not the principal factor or
consideration in productivity in this industry. Including
backyard raisers, about 80% of those in commercial livestock
and poultry production occupy five hectares or less. The
remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that
livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under
Section 3(b) of R.A. 6657 is proper. He cited that Webster's
International Dictionary, Second Edition (1954), defines the
following words:
"Agriculture the art or science of cultivating the ground and
raising and harvesting crops, often, including also, feeding,
breeding and management of livestock, tillage, husbandry,
farming.
It includes farming, horticulture, forestry, dairying,
sugarmaking . . .
Livestock domestic animals used or raised on a farm,
especially for profit.
Farm a plot or tract of land devoted to the raising of
domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The
primary task in constitutional construction is to ascertain and
thereafter assure the realization of the purpose of the framers
in the adoption of the Constitution (J.M. Tuazon & Co.
vs. Land Tenure Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution
begins with the language of the document itself. The words
used in the Constitution are to be given their ordinary
meaning except where technical terms are employed in which
case the significance thus attached to them prevails (J.M.
Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413
[1970]).
It is generally held that, in construing constitutional provisions
which are ambiguous or of doubtful meaning, the courts may
consider the debates in the constitutional convention as
throwing light on the intent of the framers of the Constitution.
It is true that the intent of the convention is not controlling by
itself, but as its proceeding was preliminary to the adoption by
the people of the Constitution the understanding of the
convention as to what was meant by the terms of the
constitutional provision which was the subject of the
deliberation, goes a long way toward explaining the
understanding of the people when they ratified it (Aquino, Jr.
v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional
Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention of
the framers of the Constitution to include livestock and poultry
industry in the coverage of the constitutionally-mandated
agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as
defined under Section 166 of R.A. 3844, as laud devoted to
any growth, including but not limited to crop lands, saltbeds,
fishponds, idle and abandoned land (Record, CONCOM,
August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the
word "agriculture." Commissioner Jamir proposed to insert the
word "ARABLE" to distinguish this kind of agricultural land
from such lands as commercial and industrial lands and
residential properties because all of them fall under the
general classification of the word "agricultural". This proposal,
however, was not considered because the Committee
contemplated that agricultural lands are limited to arable and
suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record,
CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a
Supreme Court Justice), posed several questions, among
others, quoted as follows:
x x x
"Line 19 refers to genuine reform program founded on the
primary right of farmers and farmworkers. I wonder if it means
that leasehold tenancy is thereby proscribed under this
provision because it speaks of the primary right of farmers
and farmworkers to own directly or collectively the lands they
till. As also mentioned by Commissioner Tadeo, farmworkers
include those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if
somebody puts up a piggery or a poultry project and for that
purpose hires farmworkers therein, these farmworkers will
automatically have the right to own eventually, directly or
ultimately or collectively, the land on which the piggeries and
poultry projects were constructed. (Record, CONCOM,
August 2, 1986, p. 618).
x x x
The questions were answered and explained in the statement
of then Commissioner Tadeo, quoted as follows:
x x x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami
nagkaunawaan. Ipinaaalam ko kay Commissioner Regalado
na hindi namin inilagay ang agricultural worker sa
kadahilanang kasama rito ang piggery, poultry at livestock
workers. Ang inilagay namin dito ay farm worker kaya hindi
kasama ang piggery, poultry at livestock workers (Record,
CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of
R.A. 6657 which includes "private agricultural lands devoted
to commercial livestock, poultry and swine raising" in the
definition of "commercial farms" is invalid, to the extent that
the aforecited agro-industrial activities are made to be
covered by the agrarian reform program of the State. There is
simply no reason to include livestock and poultry lands in the
coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the
requirement in Sections 13 and 32 of R.A. 6657 directing
"corporate farms" which include livestock and poultry raisers
to execute and implement "production-sharing plans"
(pending final redistribution of their landholdings) whereby
they are called upon to distribute from three percent (3%) of
their gross sales and ten percent (10%) of their net profits to
their workers as additional compensation is unreasonable for
being confiscatory, and therefore violative of due process Thus, where the legislature or the executive acts beyond the
(Rollo, p. 21).:-cralaw scope of its constitutional powers, it becomes the duty of the
judiciary to declare what the other branches of the
It has been established that this Court will assume jurisdiction
government had assumed to do, as void. This is the essence
over a constitutional question only if it is shown that the
of judicial power conferred by the Constitution "(I)n one
essential requisites of a judicial inquiry into such a question
Supreme Court and in such lower courts as may be
are first satisfied. Thus, there must be an actual case or
established by law" (Art. VIII, Section 1 of the 1935
controversy involving a conflict of legal rights susceptible of
Constitution; Article X, Section I of the 1973 Constitution and
judicial determination, the constitutional question must have
which was adopted as part of the Freedom Constitution, and
been opportunely raised by the proper party, and the
Article VIII, Section 1 of the 1987 Constitution) and which
resolution of the question is unavoidably necessary to the
power this Court has exercised in many instances (Demetria
decision of the case itself (Association of Small Landowners
v. Alba, 148 SCRA 208 [1987]).
of the Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. PREMISES CONSIDERED, the instant petition is hereby
79744; Manaay v. Juico, G.R. 79777, 14 July 1989, 175 GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No. 6657
SCRA 343). insofar as the inclusion of the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules and
However, despite the inhibitions pressing upon the Court
Guidelines promulgated in accordance therewith, are hereby
when confronted with constitutional issues, it will not hesitate
DECLARED null and void for being unconstitutional and the
to declare a law or act invalid when it is convinced that this
writ of preliminary injunction issued is hereby MADE
must be done. In arriving at this conclusion, its only criterion
permanent.
will be the Constitution and God as its conscience gives it in
the light to probe its meaning and discover its purpose. SO ORDERED.
Personal motives and political considerations are
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr.,
irrelevancies that cannot influence its decisions. Blandishment
Cruz, Gancayco, Padilla, Bidin, Grio-Aquino, Medialdea
is as ineffectual as intimidation, for all the awesome power of
and Regalado, JJ., concur.
the Congress and Executive, the Court will not hesitate "to
make the hammer fall heavily," where the acts of these Feliciano, J., is on leave.
departments, or of any official, betray the people's will as
expressed in the Constitution (Association of Small
Landowners of the Philippines, Inc. v. Secretary of Agrarian Separate Opinions
Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v.
Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July
1989). SARMIENTO, J., concurring:
I agree that the petition be granted.
It is my opinion however that the main issue on the validity of
the assailed provisions of R.A. 6657 (the Comprehensive
Agrarian Reform Law of 1988) and its Implementing Rules
and Guidelines insofar as they include the raising of livestock,
poultry, and swine in their coverage cannot be simplistically
reduced to a question of constitutional construction.
It is a well-settled rule that construction and interpretation
come only after it has been demonstrated that application is
impossible or inadequate without them. A close reading
however of the constitutional text in point, specifically, Sec. 4,
Art. XIII, particularly the phrase, ". . . in case of other
farmworkers, to receive a just share of the fruits thereof,"
provides a basis for the clear and possible coverage of
livestock, poultry, and swine raising within the ambit of the
comprehensive agrarian reform program. This accords with
the principle that every presumption should be indulged in
favor of the constitutionality of a statute and the court in
considering the validity of a statute should give it such
reasonable construction as can be reached to bring it within
the fundamental law. 1
The presumption against unconstitutionality, I must say,
assumes greater weight when a ruling to the contrary would,
in effect, defeat the laudable and noble purpose of the law,
i.e., the welfare of the landless farmers and farmworkers in
the promotion of social justice, by the expedient conversion of
agricultural lands into livestock, poultry, and swine raising by
scheming landowners, thus, rendering the comprehensive
nature of the agrarian program merely illusory.
The instant controversy, I submit, boils down to the question
of whether or not the assailed provisions violate the equal
protection clause of the Constitution (Article II, section 1)
which teaches simply that all persons or things similarly
situated should be treated alike, both as to rights conferred
and responsibilities imposed. 2
There is merit in the contention of the petitioner that
substantial distinctions exist between land directed purely to
cultivation and harvesting of fruits or crops and land
exclusively used for livestock, poultry and swine raising, that
make real differences, to wit:
x x x
No land is tilled and no crop is harvested in livestock and
poultry farming. There are no tenants nor landlords, only
employers and employees.
Livestock and poultry do not sprout from land nor are they
"fruits of the land."
Land is not even a primary resource in this industry. The land
input is inconsequential that all the commercial hog and
poultry farms combined occupy less than one percent (1%)
(0.4% for piggery, 0.2% for poultry) of the 5.45 million
hectares of land supposedly covered by the CARP. And most
farms utilize only 2 to 5 hectares of land.: nad
In every respect livestock and poultry production is an
industrial activity. Its use of an inconsequential portion of land
is a mere incident of its operation, as in any other
undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an
agricultural enterprise is nowhere more evident when one
considers that at least 95% of total investment in these farms
is in the form of fixed assets which are industrial in nature.
These include (1) animal housing structures and facilities
complete with drainage, waterers, blowers, misters and in
some cases even piped-in music; (2) feedmills complete with
grinders, mixers, conveyors, exhausts, generators, etc.; (3)
extensive warehousing facilities for feeds and other supplies; x x x
(4) anti-pollution equipment such as bio-gas and digester
In view of the foregoing, it is clear that both kinds of lands are
plants augmented by lagoons and concrete ponds; (5)
not similarly situated and hence, cannot be treated alike.
deepwells, elevated water tanks, pumphouses and accessory
Therefore, the assailed provisions which allow for the
facilities; (6) modern equipment such as sprayers, pregnancy
inclusion of livestock and poultry industry within the coverage
testers, etc.; (7) laboratory facilities complete with expensive
of the agrarian reform program constitute invalid classification
tools and equipment; and a myriad other such technologically
and must accordingly be struck down as repugnant to the
advanced appurtances.
equal protection clause of the Constitution.chanrobles virtual
How then can livestock and poultry farmlands be arable when law library
such are almost totally occupied by these structures?
The fallacy of equating the status of livestock and poultry
farmworkers with that of agricultural tenants surfaces when
one considers contribution to output. Labor cost of livestock
and poultry farms is no more than 4% of total operating cost.
The 98% balance represents inputs not obtained from the
land nor provided by the farmworkers inputs such as feeds
and biochemicals (80% of the total cost), power cost, cost of
money and several others.
Moreover, livestock and poultry farmworkers are covered by
minimum wage law rather than by tenancy law. They are
entitled to social security benefits where tenant-farmers are
not. They are paid fixed wages rather than crop shares. And
as in any other industry, they receive additional benefits such
as allowances, bonuses, and other incentives such as free
housing privileges, light and water.
Equating livestock and poultry farming with other agricultural
activities is also fallacious in the sense that like the
manufacturing sector, it is a market for, rather than a source
of agricultural output. At least 60% of the entire domestic
supply of corn is absorbed by livestock and poultry farms. So
are the by-products of rice (rice-bran), coconut (copra meal),
banana (banana pulp meal), and fish (fish meal). 3
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 103302 August 12, 1993
NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND
INVESTORS CORP., petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN
T. LEONG and DIR. WILFREDO LEANO, DAR REGION
IV, respondents.
Lino M. Patajo for petitioners.
The Solicitor General for respondents.
BELLOSILLO, J.:
Are lands already classified for residential, commercial or
industrial use, as approved by the Housing and Land Use
Regulatory Board and its precursor agencies 1 prior to 15
June 1988, 2 covered by R.A. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988? This is the
pivotal issue in this petition for certiorari assailing the Notice
of Coverage 3 of the Department of Agrarian Reform over
parcels of land already reserved as townsite areas before the
enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the
owner of three (3) contiguous parcels of land located in
Banaba, Antipolo, Rizal, with areas of 120.9793 hectares,
1.3205 hectares and 2.7080 hectares, or a total of 125.0078
hectares, and embraced in Transfer Certificate of Title No.
31527 of the Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set
aside 20,312 hectares of land located in the Municipalities of
Antipolo, San Mateo and Montalban as townsite areas to
absorb the population overspill in the metropolis which were
designated as the Lungsod Silangan Townsite. The NATALIA
properties are situated within the areas proclaimed as
townsite reservation.
Since private landowners were allowed to develop their
properties into low-cost housing subdivisions within the
reservation, petitioner Estate Developers and Investors
Corporation (EDIC, for brevity), as developer of NATALIA
properties, applied for and was granted preliminary approval
and locational clearances by the Human Settlements
Regulatory Commission. The necessary permit for Phase I of
the subdivision project, which consisted of 13.2371 hectares,
was issued sometime in 1982; 4 for Phase II, with an area of
80,000 hectares, on 13 October 1983; 5 and for Phase III,
which consisted of the remaining 31.7707 hectares, on 25
April 1986. 6 Petitioner were likewise issued development
permits 7 after complying with the requirements. Thus the
NATALIA properties later became the Antipolo Hills
Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the
"Comprehensive Agrarian Reform Law of 1988" (CARL, for
brevity), went into effect. Conformably therewith, respondent
Department of Agrarian Reform (DAR, for brevity), through its
Municipal Agrarian Reform Officer, issued on 22 November
1990 a Notice of Coverage on the undeveloped portions of
the Antipolo Hills Subdivision which consisted of roughly
90.3307 hectares. NATALIA immediately registered its
objection to the notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of
the DAR Region IV Office and twice wrote him requesting the
cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng
Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for the brevity),
filed a complaint against NATALIA and EDIC before the DAR
Regional Adjudicator to restrain petitioners from developing
areas under cultivation by SAMBA members. 8 The Regional
Adjudicator temporarily restrained petitioners from proceeding
with the development of the subdivision. Petitioners then
moved to dismiss the complaint; it was denied. Instead, the
Regional Adjudicator issued on 5 March 1991 a Writ of
Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the
DAR Adjudication Board (DARAB); however, on 16 December
1991 the DARAB merely remanded the case to the Regional
Adjudicator for further proceedings. 9
In the interim, NATALIA wrote respondent Secretary of
Agrarian Reform reiterating its request to set aside the Notice
of Coverage. Neither respondent Secretary nor respondent
Director took action on the protest-letters, thus compelling
petitioners to institute this proceeding more than a year
thereafter.
NATALIA and EDIC both impute grave abuse of discretion to
respondent DAR for including undedeveloped portions of the
Antipolo Hills Subdivision within the coverage of the CARL.
They argue that NATALIA properties already ceased to be
agricultural lands when they were included in the areas
reserved by presidential fiat for the townsite reservation.
Public respondents through the Office of the Solicitor General
dispute this contention. They maintain that the permits
granted petitioners were not valid and binding because they
did not comply with the implementing Standards, Rules and
Regulations of P.D. 957, otherwise known as "The
Subdivision and Condominium Buyers Protective Decree," in
that no application for conversion of the NATALIA lands from
agricultural residential was ever filed with the DAR. In other
words, there was no valid conversion. Moreover, public
respondents allege that the instant petition was prematurely
filed because the case instituted by SAMBA against
petitioners before the DAR Regional Adjudicator has not yet
terminated. Respondents conclude, as a consequence, that
petitioners failed to fully exhaust administrative remedies
available to them before coming to court.
The petition is impressed with merit. A cursory reading of the
Preliminary Approval and Locational Clearances as well as
the Development Permits granted petitioners for Phases I, II
and III of the Antipolo Hills Subdivision reveals that contrary to
the claim of public respondents, petitioners NATALIA and
EDIC did in fact comply with all the requirements of law.
Petitioners first secured favorable recommendations from the
Lungsod Silangan Development Corporation, the agency
tasked to oversee the implementation of the development of
the townsite reservation, before applying for the necessary
permits from the Human Settlements Regulatory
Commission. 10 And, in all permits granted to petitioners, the
Commission
stated invariably therein that the applications were in
"conformance" 11 or "conformity" 12 or "conforming" 13 with the
implementing Standards, Rules and Regulations of P.D. 957.
Hence, the argument of public respondents that not all of the
requirements were complied with cannot be sustained.
As a matter of fact, there was even no need for petitioners to
secure a clearance or prior approval from DAR. The NATALIA
properties were within the areas set aside for the Lungsod
Silangan Reservation. Since Presidential Proclamation No.
1637 created the townsite reservation for the purpose of
providing additional housing to the burgeoning population of
Metro Manila, it in effect converted for residential use what
were erstwhile agricultural lands provided all requisites were
met. And, in the case at bar, there was compliance with all
relevant rules and requirements. Even in their applications for
the development of the Antipolo Hills Subdivision, the
predecessor agency of HLURB noted that petitioners
NATALIA and EDIC complied with all the requirements
prescribed by P.D. 957.
The implementing Standards, Rules and Regulations of P.D.
957 applied to all subdivisions and condominiums in general.
On the other hand, Presidential Proclamation No. 1637
referred only to the Lungsod Silangan Reservation, which
makes it a special law. It is a basic tenet in statutory
construction that between a general law and a special law, the
latter prevails. 14
Interestingly, the Office of the Solicitor General does not
contest the conversion of portions of the Antipolo Hills
Subdivision which have already been developed. 15 Of course,
this is contrary to its earlier position that there was no valid
conversion. The applications for the developed and
undeveloped portions of subject subdivision were similarly
situated. Consequently, both did not need prior DAR approval.
We now determine whether such lands are covered by the
CARL. Section 4 of R.A. 6657 provides that the CARL shall
"cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands." As to what
constitutes "agricultural land," it is referred to as "land devoted
to agricultural activity as defined in this Act and not classified
as mineral, forest, residential, commercial or industrial
land." 16 The deliberations of the Constitutional Commission
confirm this limitation. "Agricultural lands" are only those
lands which are "arable and suitable agricultural lands" and
"do not include commercial, industrial and residential
lands." 17
Based on the foregoing, it is clear that the undeveloped
portions of the Antipolo Hills Subdivision cannot in any
language be considered as "agricultural lands." These lots
were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the
Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost housing
subdivision, albeit at a snail's pace. This can readily be
gleaned from the fact that SAMBA members even instituted
an action to restrain petitioners from continuing with such
development. The enormity of the resources needed for
developing a subdivision may have delayed its completion but
this does not detract from the fact that these lands are still
residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside
the coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the effectivity of
CARL by government agencies other than respondent DAR.
In its Revised Rules and Regulations Governing Conversion
of Private Agricultural Lands to Non-Agricultural Uses, 18 DAR
itself defined "agricultural land" thus
. . . Agricultural lands refers to those devoted to agricultural
activity as defined in R.A. 6657 and not classified as mineral
or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not
classified in town plans and zoning ordinances as approved
by the Housing and Land Use Regulatory Board (HLURB)
and its preceding competent authorities prior to 15 June 1988
for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June undeveloped portions of the Antipolo Hills Subdivision were
1988, respondent DAR is bound by such conversion. It was placed under CARL coverage is hereby SET ASIDE.
therefore error to include the undeveloped portions of the
SO ORDERED.
Antipolo Hills Subdivision within the coverage of CARL.
Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino,
Be that as it may, the Secretary of Justice, responding to a
Regalado, Davide, Jr., Romero, Nocon, Melo, Quiason, Puno
query by the Secretary of Agrarian Reform, noted in an
and Vitug, JJ., concur.
Opinion 19 that lands covered by Presidential Proclamation
No. 1637, inter alia, of which the NATALIA lands are part,
having been reserved for townsite purposes "to be developed
as human settlements by the proper land and housing
agency," are "not deemed 'agricultural lands' within the
meaning and intent of Section 3 (c) of R.A. No. 6657. " Not
being deemed "agricultural lands," they are outside the
coverage of CARL.
Anent the argument that there was failure to exhaust
administrative remedies in the instant petition, suffice it to say
that the issues raised in the case filed by SAMBA members
differ from those of petitioners. The former involve
possession; the latter, the propriety of including under the
operation of CARL lands already converted for residential use
prior to its effectivity.
Besides, petitioners were not supposed to wait until public
respondents acted on their letter-protests, this after sitting it
out for almost a year. Given the official indifference, which
under the circumstances could have continued forever,
petitioners had to act to assert and protect their interests. 20
In fine, we rule for petitioners and hold that public
respondents gravely abused their discretion in issuing the
assailed Notice of Coverage of 22 November 1990 by of
lands over which they no longer have jurisdiction.
WHEREFORE, the petition for Certiorari is GRANTED. The
Notice of Coverage of 22 November 1990 by virtue of which
Republic of the Philippines
SUPREME COURT
Baguio
EN BANC
G.R. No. 171101 April 24, 2012
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL
COMMERCIAL BANKING CORPORATION, Petitioners-in-
Intervention,
vs.
PRESIDENTIAL AGRARIAN REFORM COUNCIL;
SECRETARY NASSER PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG
MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA,
RENE GALANG, NOEL MALLARI, and JULIO SUNIGA1
and his SUPERVISORY GROUP OF THE HACIENDA
LUISITA, INC. and WINDSOR ANDAYA, Respondents.
RESOLUTION
VELASCO, JR., J.:
Before the Court are the Motion to Clarify and Reconsider
Resolution of November 22, 2011 dated December 16, 2011
filed by petitioner Hacienda Luisita, Inc. (HLI) and the Motion
for Reconsideration/Clarification dated December 9, 2011
filed by private respondents Noel Mallari, Julio Suniga,
Supervisory Group of Hacienda Luisita, Inc. and Windsor
Andaya (collectively referred to as "Mallari, et al.").
In Our July 5, 2011 Decision2 in the above-captioned case,
this Court denied the petition for review filed by HLI and
affirmed the assailed Presidential Agrarian Reform Council
(PARC) Resolution No. 2005-32-01 dated December 22, 2005
and PARC Resolution No. 2006-34-01 dated May 3, 2006
with the modification that the original 6,296 qualified
farmworker-beneficiaries of Hacienda Luisita (FWBs) shall
have the option to remain as stockholders of HLI.
Upon separate motions of the parties for reconsideration, the
Court, by Resolution3 of November 22, 2011, recalled and set
aside the option thus granted to the original FWBs to remain
as stockholders of HLI, while maintaining that all the benefits
and homelots received by all the FWBs shall be respected
with no obligation to refund or return them.
HLI invokes the following grounds in support of its instant
Motion to Clarify and Reconsider Resolution of November 22,
2011 dated December 16, 2011:
A
WITH DUE RESPECT, THE HONORABLE COURT ERRED
IN RULING THAT IN DETERMINING THE JUST
COMPENSATION, THE DATE OF "TAKING" IS NOVEMBER
21, 1989, WHEN PARC APPROVED HLIs SDP [STOCK
DISPTRIBUTION PLAN] "IN VIEW OF THE FACT THAT THIS
IS THE TIME THAT THE FWBs WERE CONSIDERED TO
OWN AND POSSESS THE AGRICULTURAL LANDS IN
HACIENDA LUISITA" BECAUSE:
(1) THE SDP IS PRECISELY A MODALITY WHICH THE
AGRARIAN LAW GIVES THE LANDOWNER AS
ALTERNATIVE TO COMPULSORY COVERAGE IN WHICH
CASE, THEREFORE, THE FWBs CANNOT BE
CONSIDERED AS OWNERS AND POSSESSORS OF THE
AGRICULTURAL LANDS AT THE TIME THE SDP WAS
APPROVED BY PARC;
(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A
NOTICE OF COVERAGE IN COMPULSORY COVERAGE
OR ACQUISITION BECAUSE SDP AND COMPULSORY
COVERAGE ARE TWO DIFFERENT MODALITIES WITH
INDEPENDENT AND SEPARATE RULES AND
MECHANISMS;
(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006
MAY, AT THE VERY LEAST, BE CONSIDERED AS THE
TIME WHEN THE FWBs CAN BE CONSIDERED TO OWN
AND POSSESS THE AGRICULTURAL LANDS OF
HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME
WHEN HACIENDA LUISITA WAS PLACED UNDER
COMPULSORY ACQUISITION IN VIEW OF FAILURE OF
HLI TO PERFORM CERTAIN OBLIGATIONS OF THE SDP,
OR SDOA [STOCK DISTRIBUTION OPTION AGREEMENT];
(4) INDEED, THE IMMUTABLE RULE AND THE
UNBENDING JURISPRUDENCE IS THAT "TAKING" TAKES
PLACE WHEN THE OWNER IS ACTUALLY DEPRIVED OR
DISPOSSESSED OF HIS PROPERTY;
(5) TO INSIST THAT THE "TAKING" IS WHEN THE SDP
WAS APPROVED BY PARC ON NOVEMBER 21, 1989 AND
THAT THE SAME BE CONSIDERED AS THE RECKONING
PERIOD TO DETERMINE THE JUST COMPENSATION IS
DEPRIVATION OF LANDOWNERS PROPERTY WITHOUT
DUE PROCESS OF LAW;
(6) HLI SHOULD BE ENTITLED TO PAYMENT OF
INTEREST ON THE JUST COMPENSATION.
B
WITH DUE RESPECT, THE HONORABLE COURT ERRED
WHEN IT REVERSED ITS DECISION GIVING THE FWBs
THE OPTION TO REMAIN AS HLI STOCKHOLDERS OR
NOT, BECAUSE:
(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH
THE HONORABLE COURT HAS DECLARED IN ITS
DECISION AND EVEN IN ITS RESOLUTION AND THAT
HAS TO BE RESPECTED AND IMPLEMENTED;
(2) NEITHER THE CONSTITUTION NOR THE CARL
[COMPREHENSIVE AGRARIAN REFORM LAW] REQUIRES
THAT THE FWBs SHOULD HAVE CONTROL OVER THE
AGRICULTURAL LANDS;
(3) THE OPTION HAS NOT BEEN SHOWN TO BE
DETRIMENTAL BUT INSTEAD BENEFICIAL TO THE FWBs
AS FOUND BY THE HONORABLE COURT.
C
WITH DUE RESPECT, THE HONORABLE COURT ERRED
IN RULING THAT THE PROCEEDS FROM THE SALES OF
THE 500-HECTARE CONVERTED LOT AND THE 80.51-
HECTARE SCTEX CANNOT BE RETAINED BY HLI BUT
RETURNED TO THE FWBs AS BY SUCH MANNER; HLI IS
USING THE CORPORATION CODE TO AVOID ITS
LIABILITY TO THE FWBs FOR THE PRICE IT RECEIVED
FROM THE SALES, BECAUSE:
(1) THE PROCEEDS OF THE SALES BELONG TO THE
CORPORATION AND NOT TO EITHER HLI/TADECO OR
THE FWBs, BOTH OF WHICH ARE STOCKHOLDERS
ENTITLED TO THE EARNINGS OF THE CORPORATION
AND TO THE NET ASSETS UPON LIQUIDATION;
(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE
SALES TO FWBs IS TO IMPOSE ALL LIABILITIES OF THE
CORPORATION ON HLI/TADECO WHICH IS UNFAIR AND
VIOLATIVE OF THE CORPORATION CODE.
Mallari, et al. similarly put forth the following issues in its
Motion for Reconsideration/Clarification dated December 9,
2011:
I
REPUBLIC ACT NO. 6657 [RA 6657] OR THE
COMPREHENSIVE AGRARIAN REFORM LAW [CARL]
DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR
STOCK DISTRIBUTION OPTION SHOULD RETAIN
MAJORITY SHAREHOLDING OF THE COMPANY TO
WHICH THE AGRICULTURAL LAND WAS GIVEN.
II
IF THE NOVEMBER 22, 2011 DECISION OF THIS
HONORABLE COURT ORDERING LAND DISTRIBUTION
WOULD BE FOLLOWED, THIS WOULD CAUSE MORE
HARM THAN GOOD TO THE LIVES OF THOSE PEOPLE
LIVING IN THE HACIENDA, AND MORE PARTICULARLY TO
THE WELFARE OF THE FWBs.
III
ON THE CONCLUSION BY THIS HONORABLE COURT
THAT THE OPERATIVE FACT DOCTRINE IS APPLICABLE
TO THE CASE AT BAR, THEN FWBs WHO MERELY
RELIED ON THE PARC APPROVAL SHOULD NOT BE
PREJUDICED BY ITS SUBSEQUENT NULLIFICATION.
IV
THOSE WHO CHOOSE LAND SHOULD RETURN
WHATEVER THEY GOT FROM THE SDOA [STOCK
DISTRIBUTION OPTION AGREEMENT] AND TURN OVER
THE SAME TO HLI FOR USE IN THE OPERATIONS OF
THE COMPANY, WHICH IN TURN WILL REDOUND TO THE
BENEFIT OF THOSE WHO WILL OPT TO STAY WITH THE
SDO.
V view of its failure to perform certain obligations under the
FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING
FOR PURPOSES OF JUST COMPENSATION SHOULD BE
AT THE TIME HLI WAS DISPOSSESSED OF CONTROL
OVER THE PROPERTY, AND THAT PAYMENT BY [THE
GOVERNMENT] OF THE LAND SHOULD BE TURNED
OVER TO HLI FOR THE BENEFIT AND USE OF THE
COMPANYS OPERATIONS THAT WILL, IN TURN,
REDOUND TO THE BENEFIT OF FWBs WHO WILL OPT TO
STAY WITH THE COMPANY.
Basically, the issues raised by HLI and Mallari, et al. boil
down to the following: (1) determination of the date of
"taking"; (2) propriety of the revocation of the option on the
part of the original FWBs to remain as stockholders of HLI; (3)
propriety of distributing to the qualified FWBs the proceeds
from the sale of the converted land and of the 80.51-hectare
Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just
compensation for the homelots given to the FWBs.
Payment of just compensation
HLI contends that since the SDP is a modality which the
agrarian reform law gives the landowner as alternative to
compulsory coverage, then the FWBs cannot be considered
as owners and possessors of the agricultural lands of
Hacienda Luisita at the time the SDP was approved by
PARC.4 It further claims that the approval of the SDP is not
akin to a Notice of Coverage in compulsory coverage
situations because stock distribution option and compulsory
acquisition are two (2) different modalities with independent
and separate rules and mechanisms. Concomitantly, HLI
maintains that the Notice of Coverage issued on January 2,
2006 may, at the very least, be considered as the date of
"taking" as this was the only time that the agricultural lands of
Hacienda Luisita were placed under compulsory acquisition in
SDP.5
Mallari, et al. are of a similar view. They contend that Tarlac
Development Corporation (Tadeco), having as it were majority
control over HLI, was never deprived of the use and benefit of
the agricultural lands of Hacienda Luisita. Upon this premise,
Mallari, et al. claim the "date of taking" could not be at the
time of the approval of the SDP.6
A view has also been advanced that the date of the "taking"
should be left to the determination of the Department of
Agrarian Reform (DAR) in conjunction with its authority to
preliminarily determine the just compensation for the land
made subject of CARP.
Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita
(AMBALA), in its Comment/Opposition (to the Motion to
Clarify and Reconsider Resolution of November 22, 2011)
dated January 30, 2012, on the other hand, alleges that HLI
should not be paid just compensation altogether. 7 It argues
that when the Court of Appeals (CA) dismissed the case 8 the
government of then President Ferdinand E. Marcos initially
instituted and won against Tadeco, the CA allegedly imposed
as a condition for its dismissal of the action that should the
stock distribution program fail, the lands should be distributed
to the FWBs, with Tadeco receiving by way of compensation
only the amount of PhP 3,988,000.9
AMBALA further contends that if HLI or Tadeco is, at all,
entitled to just compensation, the "taking" should be reckoned
as of November 21, 1989, the date when the SDP was
approved, and the amount of compensation should be PhP
40,000 per hectare as this was the same value declared in
1989 by Tadeco to ensure that the FWBs will not control the
majority stockholdings in HLI.10
At the outset, it should be noted that Section 2, Rule 52 of the
Rules of Court states, "No second motion for reconsideration
of a judgment or final resolution by the same party shall be
entertained." A second motion for reconsideration, as a rule,
is prohibited for being a mere reiteration of the issues
assigned and the arguments raised by the parties. 11
In the instant case, the issue on just compensation and the
grounds HLI and Mallari, et al. rely upon in support of their
respective stance on the matter had been previously raised
by them in their first motion for reconsideration and fully
passed upon by the Court in its November 22, 2011
Resolution. The similarities in the issues then and now
presented and the grounds invoked are at once easily
discernible from a perusal of the November 22, 2011
Resolution, the pertinent portions of which read:
In Our July 5, 2011 Decision, We stated that "HLI shall be
paid just compensation for the remaining agricultural land that
will be transferred to DAR for land distribution to the FWBs."
We also ruled that the date of the "taking" is November 21,
1989, when PARC approved HLIs SDP per PARC Resolution
No. 89-12-2.
In its Motion for Clarification and Partial Reconsideration, HLI
disagrees with the foregoing ruling and contends that the
"taking" should be reckoned from finality of the Decision of
this Court, or at the very least, the reckoning period may be
tacked to January 2, 2006, the date when the Notice of
Coverage was issued by the DAR pursuant to PARC
Resolution No. 2006-34-01 recalling/revoking the approval of
the SDP.
For their part, Mallari, et al. argue that the valuation of the
land cannot be based on November 21, 1989, the date of
approval of the SDP. Instead, they aver that the date of
"taking" for valuation purposes is a factual issue best left to
the determination of the trial courts.
At the other end of the spectrum, AMBALA alleges that HLI
should no longer be paid just compensation for the
agricultural land that will be distributed to the FWBs, since the
Manila Regional Trial Court (RTC) already rendered a
decision ordering the Cojuangcos to transfer the control of
Hacienda Luisita to the Ministry of Agrarian Reform, which will
distribute the land to small farmers after compensating the
landowners P3.988 million. In the event, however, that this
Court will rule that HLI is indeed entitled to compensation,
AMBALA contends that it should be pegged at forty thousand
pesos (PhP 40,000) per hectare, since this was the same
value that Tadeco declared in 1989 to make sure that the
farmers will not own the majority of its stocks.
Despite the above propositions, We maintain that the date of
"taking" is November 21, 1989, the date when PARC
approved HLIs SDP per PARC Resolution No. 89-12-2, in
view of the fact that this is the time that the FWBs were
considered to own and possess the agricultural lands in
Hacienda Luisita. To be precise, these lands became subject
of the agrarian reform coverage through the stock distribution
scheme only upon the approval of the SDP, that is, November
21, 1989. Thus, such approval is akin to a notice of coverage
ordinarily issued under compulsory acquisition. Further, any
doubt should be resolved in favor of the FWBs. As this Court
held in Perez-Rosario v. CA:
It is an established social and economic fact that the
escalation of poverty is the driving force behind the political
disturbances that have in the past compromised the peace
and security of the people as well as the continuity of the
national order. To subdue these acute disturbances, the
legislature over the course of the history of the nation passed
a series of laws calculated to accelerate agrarian reform,
ultimately to raise the material standards of living and
eliminate discontent. Agrarian reform is a perceived solution
to social instability. The edicts of social justice found in the
Constitution and the public policies that underwrite them, the
extraordinary national experience, and the prevailing national
consciousness, all command the great departments of
government to tilt the balance in favor of the poor and
underprivileged whenever reasonable doubt arises in the
interpretation of the law. But annexed to the great and sacred
charge of protecting the weak is the diametric function to put
every effort to arrive at an equitable solution for all parties
concerned: the jural postulates of social justice cannot shield
illegal acts, nor do they sanction false sympathy towards a
certain class, nor yet should they deny justice to the
landowner whenever truth and justice happen to be on her
side. In the occupation of the legal questions in all agrarian
disputes whose outcomes can significantly affect societal
harmony, the considerations of social advantage must be
weighed, an inquiry into the prevailing social interests is
necessary in the adjustment of conflicting demands and
expectations of the people, and the social interdependence of
these interests, recognized. (Emphasis and citations omitted.)
Considering that the issue on just compensation has already
been passed upon and denied by the Court in its November
22, 2011 Resolution, a subsequent motion touching on the
same issue undeniably partakes of a second motion for
reconsideration, hence, a prohibited pleading, and as such,
the motion or plea must be denied. Sec. 3 of Rule 15 of the
Internal Rules of the Supreme Court is clear:
SEC. 3. Second motion for reconsideration. The Court shall
not entertain a second motion for reconsideration, and any
exception to this rule can only be granted in the higher
interest of justice by the Court en banc upon a vote of at least
two-thirds of its actual membership. There is reconsideration
"in the higher interest of justice" when the assailed decision is
not only legally erroneous, but is likewise patently unjust and
potentially capable of causing unwarranted and irremediable
injury or damage to the parties. A second motion for
reconsideration can only be entertained before the ruling
sought to be reconsidered becomes final by operation of law
or by the Courts declaration.
In the Division, a vote of three Members shall be required to
elevate a second motion for reconsideration to the Court En
Banc.
Nonetheless, even if we entertain said motion and examine
the arguments raised by HLI and Mallari, et al. one last time,
the result will be the same.
Sec. 4, Article XIII of the 1987 Constitution expressly provides
that the taking of land for use in the agrarian reform program
of the government is conditioned on the payment of just
compensation. As stated:
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farm workers, who are landless, to own directly or collectively
the lands they till or, in the case of other farm workers, to
receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations,
and subject to the payment of just compensation. (Emphasis
supplied.)
Just compensation has been defined as "the full and fair
equivalent of the property taken from its owner by the
expropriator."12 The measure is not the takers gain, but the
owners loss.13 In determining just compensation, the price or
value of the property at the time it was taken from the owner
and appropriated by the government shall be the basis. If the
government takes possession of the land before the institution
of expropriation proceedings, the value should be fixed as of
the time of the taking of said possession, not of the filing of
the complaint.14
In Land Bank of the Philippines v. Livioco, the Court held that
"the time of taking is the time when the landowner was
deprived of the use and benefit of his property, such as when
title is transferred to the Republic."15 It should be noted,
however, that "taking" does not only take place upon the
issuance of title either in the name of the Republic or the
beneficiaries of the Comprehensive Agrarian Reform Program
(CARP). "Taking" also occurs when agricultural lands are
voluntarily offered by a landowner and approved by PARC for
CARP coverage through the stock distribution scheme, as in
the instant case. Thus, HLIs submitting its SDP for approval
is an acknowledgment on its part that the agricultural lands of
Hacienda Luisita are covered by CARP. However, it was the
PARC approval which should be considered as the effective
date of "taking" as it was only during this time that the
government officially confirmed the CARP coverage of these
lands.
Indeed, stock distribution option and compulsory land
acquisition are two (2) different modalities under the agrarian
reform program. Nonetheless, both share the same end goal,
that is, to have "a more equitable distribution and ownership
of land, with due regard to the rights of landowners to just
compensation."16
The fact that Sec. 31 of Republic Act No. 6657 (RA 6657)
gives corporate landowners the option to give qualified
beneficiaries the right to avail of a stock distribution or, in the
phraseology of the law, "the right to purchase such proportion
of the capital stock of the corporation that the agricultural
land, actually devoted to agricultural activities, bears in
relation to the companys total assets," does not detract from
the avowed policy of the agrarian reform law of equitably
distributing ownership of land. The difference lies in the fact
that instead of actually distributing the agricultural lands to the
farmer-beneficiaries, these lands are held by the corporation
as part of the capital contribution of the farmer-beneficiaries,
not of the landowners, under the stock distribution scheme.
The end goal of equitably distributing ownership of land is,
therefore, undeniable. And since it is only upon the approval
of the SDP that the agricultural lands actually came under
CARP coverage, such approval operates and takes the place
of a notice of coverage ordinarily issued under compulsory
acquisition.
Moreover, precisely because due regard is given to the rights
of landowners to just compensation, the law on stock
distribution option acknowledges that landowners can require
payment for the shares of stock corresponding to the value of
the agricultural lands in relation to the outstanding capital
stock of the corporation.
Although Tadeco did not require compensation for the shares
of stock corresponding to the value of the agricultural lands in
relation to the outstanding capital stock of HLI, its inability to
receive compensation cannot be attributed to the government.
The second paragraph of Sec. 31 of RA 6657 explicitly states
that "[u]pon certification by DAR, corporations owning
agricultural lands may give their qualified beneficiaries the
right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the companys total
assets, under such terms and conditions as may be agreed
upon by them. x x x"17 On the basis of this statutory provision,
Tadeco could have exacted payment for such shares of stock
corresponding to the value of the agricultural lands of
Hacienda Luisita in relation to the outstanding capital stock of
HLI, but it did not do so.
What is notable, however, is that the divestment by Tadeco of
the agricultural lands of Hacienda Luisita and the giving of the
shares of stock for free is nothing but an enticement or
incentive for the FWBs to agree with the stock distribution
option scheme and not further push for land distribution. And
the stubborn fact is that the "man days" scheme of HLI
impelled the FWBs to work in the hacienda in exchange for
such shares of stock.
Notwithstanding the foregoing considerations, the suggestion
that there is "taking" only when the landowner is deprived of
the use and benefit of his property is not incompatible with
Our conclusion that "taking" took place on November 21,
1989. As mentioned in Our July 5, 2011 Decision, even from
the start, the stock distribution scheme appeared to be
Tadecos preferred option in complying with the CARP when it
organized HLI as its spin-off corporation in order to facilitate
stock acquisition by the FWBs. For this purpose, Tadeco
assigned and conveyed to HLI the agricultural lands of
Hacienda Luisita, set at 4,915.75 hectares, among others.
These agricultural lands constituted as the capital contribution
of the FWBs in HLI. In effect, Tadeco deprived itself of the
ownership over these lands when it transferred the same to
HLI.
While it is true that Tadeco has majority control over HLI, the
Court cannot subscribe to the view Mallari, et al. espouse
that, on the basis of such majority stockholding, Tadeco was
never deprived of the use and benefit of the agricultural lands
of Hacienda Luisita it divested itself in favor of HLI.
It bears stressing that "[o]wnership is defined as a relation in
law by virtue of which a thing pertaining to one person is
completely subjected to his will in everything not prohibited by
law or the concurrence with the rights of another." 18 The
attributes of ownership are: jus utendi or the right to possess
and enjoy, jus fruendi or the right to the fruits, jus abutendi or
the right to abuse or consume, jus disponendi or the right to
dispose or alienate, and jus vindicandi or the right to recover
or vindicate.19
When the agricultural lands of Hacienda Luisita were
transferred by Tadeco to HLI in order to comply with CARP
through the stock distribution option scheme, sealed with the
imprimatur of PARC under PARC Resolution No. 89-12-2
dated November 21, 1989, Tadeco was consequently
dispossessed of the afore-mentioned attributes of ownership.
Notably, Tadeco and HLI are two different entities with
separate and distinct legal personalities. Ownership by one
cannot be considered as ownership by the other.
Corollarily, it is the official act by the government, that is, the
PARCs approval of the SDP, which should be considered as
the reckoning point for the "taking" of the agricultural lands of
Hacienda Luisita. Although the transfer of ownership over the
agricultural lands was made prior to the SDPs approval, it is
this Courts consistent view that these lands officially became
subject of the agrarian reform coverage through the stock
distribution scheme only upon the approval of the SDP. And
as We have mentioned in Our November 22, 2011 Resolution,
such approval is akin to a notice of coverage ordinarily issued
under compulsory acquisition.
Further, if We adhere to HLIs view that the Notice of
Coverage issued on January 2, 2006 should, at the very least,
be considered as the date of "taking" as this was the only time
that the agricultural portion of the hacienda was placed under
compulsory acquisition in view of HLIs failure to perform
certain obligations under the SDP, this Court would, in effect,
be penalizing the qualified FWBs twice for acceding to the
adoption of the stock distribution scheme: first, by depriving
the qualified FWBs of the agricultural lands that they should
have gotten early on were it not for the adoption of the stock
distribution scheme of which they only became minority
stockholders; and second, by making them pay higher
amortizations for the agricultural lands that should have been
given to them decades ago at a much lower cost were it not
for the landowners initiative of adopting the stock distribution
scheme "for free."
Reiterating what We already mentioned in Our November 22,
2011 Resolution, "[e]ven if it is the government which will pay
the just compensation to HLI, this will also affect the FWBs as
they will be paying higher amortizations to the government if
the taking will be considered to have taken place only on
January 2, 2006." As aptly observed by Justice Leonardo-De
Castro in her Concurring Opinion, "this will put the land
beyond the capacity of the [FWBs] to pay," which this Court
should not countenance.
Considering the above findings, it cannot be gainsaid that
effective "taking" took place in the case at bar upon the
approval of the SDP, that is, on November 21, 1989.
HLI postulates that just compensation is a question of fact
that should be left to the determination by the DAR, Land
Bank of the Philippines (LBP) or even the special agrarian
court (SAC).20 As a matter of fact, the Court, in its November
22, 2011 Resolution, dispositively ordered the DAR and the
LBP to determine the compensation due to HLI. And as
indicated in the body of said Resolution:
The foregoing notwithstanding, it bears stressing that the
DARs land valuation is only preliminary and is not, by any
means, final and conclusive upon the landowner. The
landowner can file an original action with the RTC acting as a
special agrarian court to determine just compensation. The
court has the right to review with finality the determination in
the exercise of what is admittedly a judicial function.
As regards the issue on when "taking" occurred with respect
to the agricultural lands in question, We, however, maintain
that this Court can rule, as it has in fact already ruled on its
reckoning date, that is, November 21, 1989, the date of
issuance of PARC Resolution No. 89-12-2, based on the
above-mentioned disquisitions. The investment on SACs of
original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners 21 will not
preclude the Court from ruling upon a matter that may already
be resolved based on the records before Us. By analogy, Our
ruling in Heirs of Dr. Jose Deleste v. LBP is applicable:
Indeed, it is the Office of the DAR Secretary which is vested
with the primary and exclusive jurisdiction over all matters
involving the implementation of the agrarian reform program.
However, this will not prevent the Court from assuming
jurisdiction over the petition considering that the issues raised
in it may already be resolved on the basis of the records
before Us. Besides, to allow the matter to remain with the
Office of the DAR Secretary would only cause unnecessary
delay and undue hardship on the parties. Applicable, by
analogy, is Our ruling in the recent Bagong Pagkakaisa ng
Manggagawa ng Triumph International v. Department of
Labor and Employment Secretary, where We held:
But as the CA did, we similarly recognize that undue hardship,
to the point of injustice, would result if a remand would be
ordered under a situation where we are in the position to
resolve the case based on the records before us. As we said
in Roman Catholic Archbishop of Manila v. Court of Appeals:
[w]e have laid down the rule that the remand of the case to
the lower court for further reception of evidence is not
necessary where the Court is in a position to resolve the
dispute based on the records before it. On many occasions,
the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits
instead of remanding them to the trial court for further
proceedings, such as where the ends of justice, would not be
subserved by the remand of the case.22 (Emphasis supplied;
citations omitted.)
Even though the compensation due to HLI will still be
preliminarily determined by DAR and LBP, subject to review
by the RTC acting as a SAC, the fact that the reckoning point
of "taking" is already fixed at a certain date should already
hasten the proceedings and not further cause undue hardship
on the parties, especially the qualified FWBs.
By a vote of 8-6, the Court affirmed its ruling that the date of
"taking" in determining just compensation is November 21,
1989 when PARC approved HLIs stock option plan.
As regards the issue of interest on just compensation, We
also leave this matter to the DAR and the LBP, subject to
review by the RTC acting as a SAC.
Option will not ensure
control over agricultural lands
In Our November 22, 2011 Resolution, this Court held:
After having discussed and considered the different
contentions raised by the parties in their respective motions,
We are now left to contend with one crucial issue in the case
at bar, that is, control over the agricultural lands by the
qualified FWBs.
Upon a review of the facts and circumstances, We realize that
the FWBs will never have control over these agricultural lands
for as long as they remain as stockholders of HLI. In Our July
5, 2011 Decision, this Court made the following observations:
There is, thus, nothing unconstitutional in the formula
prescribed by RA 6657. The policy on agrarian reform is that
control over the agricultural land must always be in the hands
of the farmers. Then it falls on the shoulders of DAR and
PARC to see to it the farmers should always own majority of
the common shares entitled to elect the members of the
board of directors to ensure that the farmers will have a clear
majority in the board. Before the SDP is approved, strict
scrutiny of the proposed SDP must always be undertaken by
the DAR and PARC, such that the value of the agricultural
land contributed to the corporation must always be more than
50% of the total assets of the corporation to ensure that the
majority of the members of the board of directors are
composed of the farmers. The PARC composed of the
President of the Philippines and cabinet secretaries must see
to it that control over the board of directors rests with the
farmers by rejecting the inclusion of non-agricultural assets
which will yield the majority in the board of directors to non-
farmers. Any deviation, however, by PARC or DAR from the
correct application of the formula prescribed by the second
paragraph of Sec. 31 of RA 6675 does not make said
provision constitutionally infirm. Rather, it is the application of
said provision that can be challenged. Ergo, Sec. 31 of RA
6657 does not trench on the constitutional policy of ensuring
control by the farmers.
In line with Our finding that control over agricultural lands
must always be in the hands of the farmers, We reconsider
our ruling that the qualified FWBs should be given an option
to remain as stockholders of HLI, inasmuch as these qualified
FWBs will never gain control given the present proportion of
shareholdings in HLI.
A revisit of HLIs Proposal for Stock Distribution under CARP
and the Stock Distribution Option Agreement (SDOA) upon
which the proposal was based reveals that the total assets of
HLI is PhP 590,554,220, while the value of the 4,915.7466
hectares is PhP 196,630,000. Consequently, the share of the
farmer-beneficiaries in the HLI capital stock is 33.296%
(196,630,000 divided by 590,554.220); 118,391,976.85 HLI
shares represent 33.296%. Thus, even if all the holders of the
118,391,976.85 HLI shares unanimously vote to remain as
HLI stockholders, which is unlikely, control will never be
placed in the hands of the farmer-beneficiaries. Control, of
course, means the majority of 50% plus at least one share of
the common shares and other voting shares. Applying the
formula to the HLI stockholdings, the number of shares that
will constitute the majority is 295,112,101 shares
(590,554,220 divided by 2 plus one [1] HLI share). The
118,391,976.85 shares subject to the SDP approved by PARC
substantially fall short of the 295,112,101 shares needed by
the FWBs to acquire control over HLI. Hence, control can
NEVER be attained by the FWBs. There is even no
assurance that 100% of the 118,391,976.85 shares issued to
the FWBs will all be voted in favor of staying in HLI, taking
into account the previous referendum among the farmers
where said shares were not voted unanimously in favor of
retaining the SDP. In light of the foregoing consideration, the
option to remain in HLI granted to the individual FWBs will
have to be recalled and revoked.
Moreover, bearing in mind that with the revocation of the
approval of the SDP, HLI will no longer be operating under
SDP and will only be treated as an ordinary private
corporation; the FWBs who remain as stockholders of HLI will
be treated as ordinary stockholders and will no longer be
under the protective mantle of RA 6657. (Emphasis in the
original.)
HLI, however, takes exception to the above-mentioned ruling
and contends that "[t]here is nothing in the Constitution nor in
the agrarian laws which require that control over the
agricultural lands must always be in the hands of the
farmers."23 Moreover, both HLI and Mallari, et al. claim that
the option given to the qualified FWBs to remain as
stockholders of HLI is neither iniquitous nor prejudicial to the
FWBs.24
The Court agrees that the option given to the qualified FWBs
whether to remain as stockholders of HLI or opt for land
distribution is neither iniquitous nor prejudicial to the FWBs.
Nonetheless, the Court is not unmindful of the policy on
agrarian reform that control over the agricultural land must
always be in the hands of the farmers. Contrary to the stance
of HLI, both the Constitution and RA 6657 intended the
farmers, individually or collectively, to have control over the
agricultural lands of HLI; otherwise, all these rhetoric about
agrarian reform will be rendered for naught. Sec. 4, Art. XIII of
the 1987 Constitution provides:
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations,
and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of
small landowners. The State shall further provide incentives
for voluntary land-sharing. (Emphasis supplied.)
Pursuant to and as a mechanism to carry out the above-
mentioned constitutional directive, RA 6657 was enacted. In
consonance with the constitutional policy on agrarian reform,
Sec. 2 of RA 6657 also states:
SECTION 2. Declaration of Principles and Policies. - It is the
policy of the State to pursue a Comprehensive Agrarian
Reform Program (CARP). The welfare of the landless farmers
and farm workers will receive the highest consideration to
promote social justice and to move the nation towards sound
rural development and industrialization, and the establishment
of owner cultivatorship of economic-sized farms as the basis
of Philippine agriculture.
To this end, a more equitable distribution and ownership of
land, with due regard to the rights of landowners to just
compensation and to the ecological needs of the nation, shall
be undertaken to provide farmers and farm workers with the
opportunity to enhance their dignity and improve the quality of
their lives through greater productivity of agricultural lands.
The agrarian reform program is founded on the right of
farmers and regular farm workers, who are landless, to own
directly or collectively the lands they till or, in the case of other
farm workers, to receive a share of the fruits thereof. To this
end, the State shall encourage the just distribution of all
agricultural lands, subject to the priorities and retention limits
set forth in this Act, having taken into account ecological,
developmental, and equity considerations, and subject to the
payment of just compensation. The State shall respect the
right of small landowners and shall provide incentives for
voluntary land-sharing.
The State shall recognize the right of farmers, farm workers
and landowners, as well as cooperatives and other
independent farmers organization, to participate in the
planning, organization, and management of the program, and
shall provide support to agriculture through appropriate
technology and research, and adequate financial, production,
marketing and other support services.
The State shall apply the principles of agrarian reform or
stewardship, whenever applicable, in accordance with law, in
the disposition or utilization of other natural resources,
including lands of the public domain, under lease or
concession, suitable to agriculture, subject to prior rights,
homestead rights of small settlers and the rights of indigenous
communities to their ancestral lands.
The State may resettle landless farmers and farm workers in
its own agricultural estates, which shall be distributed to them
in the manner provided by law.
By means of appropriate incentives, the State shall
encourage the formation and maintenance of economic-sized
family farms to be constituted by individual beneficiaries and
small landowners.
The State shall protect the rights of subsistence fishermen,
especially of local communities, to the preferential use of
communal marine and fishing resources, both inland and
offshore. It shall provide support to such fishermen through
appropriate technology and research, adequate financial,
production and marketing assistance and other services, The
State shall also protect, develop and conserve such
resources. The protection shall extend to offshore fishing
grounds of subsistence fishermen against foreign intrusion.
Fishworkers shall receive a just share from their labor in the
utilization of marine and fishing resources.
The State shall be guided by the principles that land has a
social function and land ownership has a social responsibility.
Owners of agricultural land have the obligation to cultivate
directly or through labor administration the lands they own
and thereby make the land productive.
The State shall provide incentives to landowners to invest the
proceeds of the agrarian reform program to promote
industrialization, employment and privatization of public sector
enterprises. Financial instruments used as payment for lands
shall contain features that shall enhance negotiability and
acceptability in the marketplace.
The State may lease undeveloped lands of the public domain
to qualified entities for the development of capital-intensive
farms, traditional and pioneering crops especially those for
exports subject to the prior rights of the beneficiaries under
this Act. (Emphasis supplied.)
Based on the above-quoted provisions, the notion of farmers
and regular farmworkers having the right to own directly or
collectively the lands they till is abundantly clear. We have
extensively discussed this ideal in Our July 5, 2011 Decision:
The wording of the provision is unequivocal the farmers
and regular farmworkers have a right TO OWN DIRECTLY
OR COLLECTIVELY THE LANDS THEY TILL. The basic law
allows two (2) modes of land distributiondirect and indirect
ownership. Direct transfer to individual farmers is the most
commonly used method by DAR and widely accepted.
Indirect transfer through collective ownership of the
agricultural land is the alternative to direct ownership of
agricultural land by individual farmers. The aforequoted Sec.
4 EXPRESSLY authorizes collective ownership by farmers.
No language can be found in the 1987 Constitution that
disqualifies or prohibits corporations or cooperatives of
farmers from being the legal entity through which collective
ownership can be exercised. The word collective is defined
as indicating a number of persons or things considered as
constituting one group or aggregate, while collectively is
defined as in a collective sense or manner; in a mass or
body. By using the word collectively, the Constitution allows
for indirect ownership of land and not just outright agricultural
land transfer. This is in recognition of the fact that land reform
may become successful even if it is done through the medium
of juridical entities composed of farmers.
Collective ownership is permitted in two (2) provisions of RA
6657. Its Sec. 29 allows workers cooperatives or associations
to collectively own the land, while the second paragraph of
Sec. 31 allows corporations or associations to own
agricultural land with the farmers becoming stockholders or
members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other
business associations.In the case of farms owned or
operated by corporations or other business associations, the
following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual
worker-beneficiaries.
In case it is not economically feasible and sound to divide the
land, then it shall be owned collectively by the worker
beneficiaries who shall form a workers cooperative or
association which will deal with the corporation or business
association. x x x
SEC. 31. Corporate Landowners. x x x
xxxx
Upon certification by the DAR, corporations owning
agricultural lands may give their qualified beneficiaries the
right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the companys total
assets, under such terms and conditions as may be agreed
upon by them. In no case shall the compensation received by
the workers at the time the shares of stocks are distributed be
reduced. The same principle shall be applied to associations,
with respect to their equity or participation. x x x
Clearly, workers cooperatives or associations under Sec. 29
of RA 6657 and corporations or associations under the
succeeding Sec. 31, as differentiated from individual farmers,
are authorized vehicles for the collective ownership of
agricultural land. Cooperatives can be registered with the
Cooperative Development Authority and acquire legal
personality of their own, while corporations are juridical
persons under the Corporation Code. Thus, Sec. 31 is
constitutional as it simply implements Sec. 4 of Art. XIII of the
Constitution that land can be owned COLLECTIVELY by
farmers. Even the framers of the l987 Constitution are in
unison with respect to the two (2) modes of ownership of
agricultural lands tilled by farmersDIRECT and
COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase to own
directly, we mean the principle of direct ownership by the
tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of collectively, we mean
communal ownership, stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that
is farmers cooperatives owning the land, not the State.
MR. NOLLEDO. And when we talk of collectively, referring to
farmers cooperatives, do the farmers own specific areas of
land where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two
basic systems involved: the moshave type of agriculture and
the kibbutz. So are both contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng
pagpapatupad ng tunay na reporma sa lupa ay ang
pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari directly at ang tinatawag na sama-samang
gagawin ng mga magbubukid. Tulad sa Negros, ang gusto ng
mga magbubukid ay gawin nila itong cooperative or collective
farm. Ang ibig sabihin ay sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of to own directly
or collectively the lands they till, is this land for the tillers
rather than land for the landless? Before, we used to hear
land for the landless, but now the slogan is land for the
tillers. Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for
the tillers. Ang ibig sabihin ng directly ay tulad sa
implementasyon sa rice and corn lands kung saan inaari na
ng mga magsasaka ang lupang binubungkal nila. Ang ibig
sabihin naman ng collectively ay sama-samang paggawa sa
isang lupain o isang bukid, katulad ng sitwasyon sa Negros.
As Commissioner Tadeo explained, the farmers will work on
the agricultural land sama-sama or collectively. Thus, the
main requisite for collective ownership of land is collective or
group work by farmers of the agricultural land. Irrespective of
whether the landowner is a cooperative, association or
corporation composed of farmers, as long as concerted group
work by the farmers on the land is present, then it falls within
the ambit of collective ownership scheme. (Emphasis in the
original; underscoring supplied.)
As aforequoted, there is collective ownership as long as there
is a concerted group work by the farmers on the land,
regardless of whether the landowner is a cooperative,
association or corporation composed of farmers. However,
this definition of collective ownership should be read in light of
the clear policy of the law on agrarian reform, which is to
emancipate the tiller from the bondage of the soil and
empower the common people. Worth noting too is its noble
goal of rectifying "the acute imbalance in the distribution of
this precious resource among our people." 25 Accordingly,
HLIs insistent view that control need not be in the hands of
the farmers translates to allowing it to run roughshod against
the very reason for the enactment of agrarian reform laws and
leave the farmers in their shackles with sheer lip service to
look forward to.
Notably, it has been this Courts consistent stand that control
over the agricultural land must always be in the hands of the
farmers. As We wrote in Our July 5, 2011 Decision:
There is, thus, nothing unconstitutional in the formula
prescribed by RA 6657. The policy on agrarian reform is that
control over the agricultural land must always be in the hands
of the farmers. Then it falls on the shoulders of DAR and
PARC to see to it the farmers should always own majority of
the common shares entitled to elect the members of the
board of directors to ensure that the farmers will have a clear
majority in the board. Before the SDP is approved, strict
scrutiny of the proposed SDP must always be undertaken by
the DAR and PARC, such that the value of the agricultural
land contributed to the corporation must always be more than
50% of the total assets of the corporation to ensure that the
majority of the members of the board of directors are
composed of the farmers. The PARC composed of the
President of the Philippines and cabinet secretaries must see
to it that control over the board of directors rests with the
farmers by rejecting the inclusion of non-agricultural assets
which will yield the majority in the board of directors to non-
farmers. Any deviation, however, by PARC or DAR from the
correct application of the formula prescribed by the second
paragraph of Sec. 31 of RA 6675 does not make said
provision constitutionally infirm. Rather, it is the application of
said provision that can be challenged. Ergo, Sec. 31 of RA
6657 does not trench on the constitutional policy of ensuring
control by the farmers. (Emphasis supplied.)
There is an aphorism that "what has been done can no longer
be undone." That may be true, but not in this case. The SDP
was approved by PARC even if the qualified FWBs did not
and will not have majority stockholdings in HLI, contrary to the
obvious policy by the government on agrarian reform. Such
an adverse situation for the FWBs will not and should not be
permitted to stand. For this reason, We maintain Our ruling
that the qualified FWBs will no longer have the option to
remain as stockholders of HLI.
FWBs Entitled
to Proceeds of Sale
HLI reiterates its claim over the proceeds of the sales of the
500 hectares and 80.51 hectares of the land as corporate
owner and argues that the return of said proceeds to the
FWBs is unfair and violative of the Corporation Code.
This claim is bereft of merit.
It cannot be denied that the adverted 500-hectare converted
land and the SCTEX lot once formed part of what would have
been agrarian-distributable lands, in fine subject to
compulsory CARP coverage. And, as stated in our July 5,
2011 Decision, were it not for the approval of the SDP by
PARC, these large parcels of land would have been
distributed and ownership transferred to the FWBs, subject to
payment of just compensation, given that, as of 1989, the
subject 4,915 hectares of Hacienda Luisita were already
covered by CARP. Accordingly, the proceeds realized from the
sale and/or disposition thereof should accrue for the benefit of
the FWBs, less deductions of the 3% of the proceeds of said
transfers that were paid to the FWBs, the taxes and expenses
relating to the transfer of titles to the transferees, and the
expenditures incurred by HLI and Centennary Holdings, Inc.
for legitimate corporate purposes, as prescribed in our
November 22, 2011 Resolution.
Homelots
In the present recourse, HLI also harps on the fact that since
the homelots given to the FWBs do not form part of the
4,915.75 hectares covered by the SDP, then the value of
these homelots should, with the revocation of the SDP, be
paid to Tadeco as the landowner.26
We disagree. As We have explained in Our July 5, 2011
Decision, the distribution of homelots is required under RA
6657 only for corporations or business associations owning or
operating farms which opted for land distribution. This is
provided under Sec. 30 of RA 6657. Particularly:
SEC. 30. Homelots and Farmlots for Members of
Cooperatives. The individual members of the cooperatives
or corporations mentioned in the preceding section shall be
provided with homelots and small farmlots for their family use,
to be taken from the land owned by the cooperative or
corporation. (Italics supplied.)
The "preceding section" referred to in the above-quoted
provision is Sec. 29 of RA 6657, which states:
SEC. 29. Farms Owned or Operated by Corporations or
Other Business Associations.In the case of farms owned or
operated by corporations or other business associations, the
following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual
worker-beneficiaries.
In case it is not economically feasible and sound to divide the
land, then it shall be owned collectively by the worker-
beneficiaries who shall form a workers cooperative or
association which will deal with the corporation or business
association. Until a new agreement is entered into by and
between the workers cooperative or association and the
corporation or business association, any agreement existing
at the time this Act takes effect between the former and the
previous landowner shall be respected by both the workers
cooperative or association and the corporation or business
association.
Since none of the above-quoted provisions made reference to
corporations which opted for stock distribution under Sec. 31
of RA 6657, then it is apparent that said corporations are not
obliged to provide for homelots. Nonetheless, HLI undertook
to "subdivide and allocate for free and without charge among
the qualified family-beneficiaries x x x residential or homelots
of not more than 240 sq. m. each, with each family beneficiary
being assured of receiving and owning a homelot in the barrio
or barangay where it actually resides." In fact, HLI was able to
distribute homelots to some if not all of the FWBs. Thus, in
our November 22, 2011 Resolution, We declared that the
homelots already received by the FWBs shall be respected
with no obligation to refund or to return them.
The Court, by a unanimous vote, resolved to maintain its
ruling that the FWBs shall retain ownership of the homelots
given to them with no obligation to pay for the value of said
lots. However, since the SDP was already revoked with
finality, the Court directs the government through the DAR to
pay HLI the just compensation for said homelots in
consonance with Sec. 4, Article XIII of the 1987 Constitution
that the taking of land for use in the agrarian reform program
is "subject to the payment of just compensation." Just
compensation should be paid to HLI instead of Tadeco in view
of the Deed of Assignment and Conveyance dated March 22,
1989 executed between Tadeco and HLI, where Tadeco
transferred and conveyed to HLI the titles over the lots in
question. DAR is ordered to compute the just compensation
of the homelots in accordance with existing laws, rules and
regulations.
To recapitulate, the Court voted on the following issues in this
manner:
1. In determining the date of "taking," the Court voted 8-6 to
maintain the ruling fixing November 21, 1989 as the date of
"taking," the value of the affected lands to be determined by
the LBP and the DAR;
2. On the propriety of the revocation of the option of the
FWBs to remain as HLI stockholders, the Court, by
unanimous vote, agreed to reiterate its ruling in its November
22, 2011 Resolution that the option granted to the FWBs
stays revoked;
3. On the propriety of returning to the FWBs the proceeds of
the sale of the 500-hectare converted land and of the 80.51-
hectare SCTEX land, the Court unanimously voted to
maintain its ruling to order the payment of the proceeds of the
sale of the said land to the FWBs less the 3% share, taxes
and expenses specified in the fallo of the November 22, 2011
Resolution;
4. On the payment of just compensation for the homelots to
HLI, the Court, by unanimous vote, resolved to amend its July
5, 2011 Decision and November 22, 2011 Resolution by
ordering the government, through the DAR, to pay to HLI the
just compensation for the homelots thus distributed to the
FWBS.
WHEREFORE, the Motion to Clarify and Reconsider
Resolution of November 22, 2011 dated December 16, 2011
filed by petitioner Hacienda Luisita, Inc. and the Motion for
Reconsideration/Clarification dated December 9, 2011 filed by
private respondents Noel Mallari, Julio Suniga, Supervisory
Group of Hacienda Luisita, Inc. and Windsor Andaya are
hereby DENIED with this qualification: the July 5, 2011
Decision, as modified by the November 22, 2011 Resolution,
is FURTHER MODIFIED in that the government, through
DAR, is ordered to pay Hacienda Luisita, Inc. the just
compensation for the 240-square meter homelots distributed
to the FWBs.1wphi1
The July 5, 2011 Decision, as modified by the November 22,
2011 Resolution and further modified by this Resolution is
declared FINAL and EXECUTORY. The entry of judgment of
said decision shall be made upon the time of the promulgation
of this Resolution.
No further pleadings shall be entertained in this case.
SO ORDERED.