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Agrarian Law and Social Legislation
Atty. Steve Paolo Arellano Mercano

I. Definition
COMPREHENSIVE AGRARIAN REFORM LAW OF 1988
REPUBLIC ACT NO. 6657
SECTION 3. Definitions. - For the purpose of this Act, unless the context
indicates otherwise:
(a) Agrarian Reform means the redistribution of lands, regardless of
crops or fruits produced, to farmers and regular farm workers who
are landless, irrespective of tenurial arrangement, to include the
totality of factors and support services designed to lift the economic
status of the beneficiaries and all other arrangements alternative to
the physical redistribution of lands, such as production or profit-
sharing, labor administration, and the distribution of shares of stock
which will allow beneficiaries to receive a just share of the fruits of
the lands they work.
b.) 1987 Constitution Article 13
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 right of small
landowners. The State shall further provide incentives for voluntary land-sharing.
Section 5. The State shall recognize the right of farmers, farmworkers, and landowners, as well
as cooperatives, and other independent farmers' organizations 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.
Section 6. 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


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ancestral lands. The State may resettle landless farmers and farmworkers in its own agricultural
estates which shall be distributed to them in the manner provided by law.
Section 7. The State shall protect the rights of subsistence fishermen, especially of local
communities, to the preferential use of the 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.
Section 8. The State shall provide incentives to landowners to invest the proceeds of the agrarian
reform program to promote industrialization, employment creation, and privatization of public
sector enterprises. Financial instruments used as payment for their lands shall be honored as
equity in enterprises of their choice.
C. Other Important Definitions
(b) Agriculture, Agricultural Enterprise or Agricultural Activity means the
cultivation of the soil, planting of crops, growing of fruit trees, including the
harvesting of such farm products, and other farm activities and practices
performed by a farmer in conjunction with such farming operations done by
persons whether natural of juridical. (As amended by R. A. 7881)chan robles virtual
law library
(c) Agricultural Land refers to land devoted to agricultural activity as defined
in this Act and not classified as mineral, forest, residential, commercial or
industrial land.
(d) Agrarian Dispute refers to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship or otherwise, over
lands devoted to agriculture, including disputes concerning farm workers'
associations or representation of persons in negotiating, fixing, maintaining,
changing or seeking to arrange terms or conditions of such tenurial
arrangements.
It includes any controversy relating to compensation of lands acquired under
this Act and other terms and conditions of transfer of ownership from
landowners to farm workers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm
operator and beneficiary, landowner and tenant, or lessor and lessee.
(f) Farmer refers to a natural person whose primary livelihood is cultivation
of land or the production of agricultural crops either by himself, or primarily
with the assistance of his immediate farm household, whether the land is


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owned by him, or by another person under a leasehold or share tenancy
agreement or arrangement with the owner thereof.
(g) Farmworker is a natural person who renders service for value as an
employee or laborer in an agricultural enterprise or farm regardless of
whether his compensation is paid on a daily, weekly, monthly or "pakyaw"
basis. The term includes an individual whose work has ceased as a
consequence of, or in connection with, a pending agrarian dispute who has
not obtained a substantially equivalent and regular farm employment.
(h) Regular Farmworker is a natural person who is employed on a
permanent basis by an agricultural enterprise or farm.
(i) Seasonal Farmworker is a natural person who is employed on a recurrent,
periodic or intermittent basis by an agricultural enterprise or farm, whether
as a permanent or a non-permanent laborer, such as "dumaan", "sacada",
and the like.
(j) Other Farmworker is a farmworker who does not fall under paragraphs
(g), (h) and (i).
(k) Cooperatives shall refer to organizations composed primarily of small
agricultural producers, farmers, farm workers, or other agrarian reform
beneficiaries who voluntarily organize themselves for the purpose of pooling
land, human, technological, financial or other economic resources, and
operated on the principle of one member, one vote. A juridical person may
be a member of a cooperative, with the same rights and duties as a natural
person.
D. CARL applicability depends on the existence of an agrarian dispute;
elements of an agrarian tenancy relationship:
Cases:









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STANFILCO EMPLOYEES AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE
COOPERATIVE vs. DOLE PHILIPPINES, INC., GR 154048

FACTS:

On January 29, 1998, petitioner as seller, and respondent as buyer, entered into a Banana
Production and Purchase Agreement

(BPPA). The BPPA provided that SEARBEMCO shall sell
exclusively to DOLE, and the latter shall buy from the former, all Cavendish bananas of required
specifications to be planted on the land owned by SEARBEMCO.

On December 11, 2000, DOLE filed a complaint with the RTC against SEARBEMCO, the
spouses Elly and Myrna Abujos (spouses Abujos), and Oribanex Services, Inc. (Oribanex) for
specific performance and damages, with a prayer for the issuance of a writ of preliminary
injunction and of a temporary restraining order. DOLE alleged that SEARBEMCO sold and
delivered to Oribanex, through the spouses Abujos, the bananas rejected by DOLE, in violation
of paragraph 5(p), Article V of the BPPA which limited the sale of rejected bananas for
"domestic non-export consumption." DOLE further alleged that Oribanex is likewise an exporter
of bananas and is its direct competitor.

ISSUE:

Whether or not RTC has jurisdiction over the subject matter of the complaint of DOLE,
considering that the case involves an agrarian dispute within the exclusive jurisdiction of the
DARAB.

HELD:

DOLE’s complaint falls within the jurisdiction of the regular courts, not the DARAB.
SEARBEMCO mainly relies on Section 50

of RA No. 6657 and the characterization of the
controversy as an agrarian dispute or as an agrarian reform matter in contending that the
present controversy falls within the competence of the DARAB and not of the regular courts.

The BPPA, SEARBEMCO claims, is a joint venture and a production, processing and marketing
agreement, as defined under Section 5 (c) (i) and (ii) of DAR AO No. 2-99; hence, any dispute
arising from the BPPA is within the exclusive jurisdiction of the DARAB. SEARBEMCO also
asserts that the parties’ relationship in the present case is not only that of buyer and seller, but
also that of supplier of land covered by the CARP and of manpower on the part of
SEARBEMCO, and supplier of agricultural inputs, financing and technological expertise on the


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part of DOLE. Therefore, SEARBEMCO concludes that the BPPA is not an ordinary contract,
but one that involves an agrarian element and, as such, is imbued with public interest.

Additionally, the inclusion of third parties in the complaint supports our declaration that the
present case does not fall under DARAB’s jurisdiction. DARAB’s quasi-judicial powers under
Section 50 of RA No. 6657 may be invoked only when there is prior certification from
the Barangay Agrarian Reform Committee (or BARC) that the dispute has been submitted to it
for mediation and conciliation, without any success of settlement. Since the present dispute
need not be referred to arbitration (including mediation or conciliation) because of the inclusion
of third parties, neither SEARBEMCO nor DOLE will be able to present the requisite BARC
certification that is necessary to invoke DARAB’s jurisdiction; hence, there will be no compliance
with Section 53 of RA No. 6657.
MENDOZA vs. GERMINO, GR 165676

FACTS:

THE petitioner filed a complaint with the (MTC) of Sta. Rosa, Nueva Ecija against respondent
Narciso Germino for forcible entry, claiming that they were the registered owners of a five-
hectare parcel of land in Soledad, Sta. Rosa, Nueva Ecija (subject property). On his answer,
respondent claimed, among others, that his brother, was the plaintiffs' agricultural lessee and he
merely helped the latter in the cultivation as a member of the immediate farm household. After
several postponements, the plaintiffs filed a motion to remand the case to the Department of
Agrarian Reform Adjudication Board (DARAB), in view of the tenancy issue raised by
respondent Narciso. The MTC issued an order remanding the case to the DARAB for further
proceedings. PARAD found that the respondents were mere usurpers of the subject property,
and ordered the respondents to vacate the subject property, and pay the plaintiffs 500 cavans of
palay as actual damages. On appeal to DARAB, respondent argued that the case should have
been dismissed because the MTC's referral to the DARAB was void with the enactment of
Republic Act (R.A.) No. 6657. DARAB affirmed the PARAD decision. CA, however, set aside
the DARAB decision and remanded the case to the MTC for further proceedings.

ISSUE:

Whether the MTC or the DARAB has jurisdiction over the case.

HELD:



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The CA committed no reversible error in setting aside the DARAB decision. While we lament the
lapse of time this forcible entry case has been pending resolution, we are not in a position to
resolve the dispute between the parties since the evidence required in courts is different from
that of administrative agencies.

It is a basic rule that jurisdiction over the subject matter is determined by the allegations in the
complaint. It is determined exclusively by the Constitution and the law. It cannot be conferred by
the voluntary act or agreement of the parties, or acquired through or waived, enlarged or
diminished by their act or omission, nor conferred by the acquiescence of the court. Well to
emphasize, it is neither for the court nor the parties to violate or disregard the rule, this matter
being legislative in character. Under Batas Pambansa Blg. 129, as amended by R.A. No. 7691,
the MTC shall have exclusive original jurisdiction over cases of forcible entry and unlawful
detainer. Furthermore, allegation of tenancy does not divest the MTC of jurisdiction.

Under Section 50 of R.A. No. 6657, as well as Section 34 of Executive Order No. 129-A, the
DARAB has primary and exclusive jurisdiction, both original and appellate, to determine and
adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian
Reform Program, and other agrarian laws and their implementing rules and regulations.

An agrarian dispute refers to any controversy relating to, among others, tenancy over lands
devoted to agriculture. For a case to involve an agrarian dispute, the following essential
requisites of an agricultural tenancy relationship must be present: (1) the parties are the
landowner and the tenant; (2) the subject is agricultural land; (3) there is consent; (4) the
purpose is agricultural production; (5) there is personal cultivation; and (6) there is sharing of
harvest or payment of rental.













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E. Constitutionality of the CARL
Association of Small Landowners vs Sec. of Dar
“Equal Protection”
These are 3 cases consolidated questioning the constitutionality of the Agrarian Reform Act.
Article XIII on Social Justice and Human Rights includes a call for the adoption by the State of
an agrarian reform program. 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. RA 3844, Agricultural Land Reform Code, had already been enacted by Congress
on August 8, 1963. This was substantially superseded almost a decade later by PD 27, which was
promulgated on Oct 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. On July 17, 1987, Cory issued EO 228, declaring full land ownership in favor of
the beneficiaries of PD 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 PP 131,
instituting a comprehensive agrarian reform program (CARP), and EO 229, providing the
mechanics for its implementation. Afterwhich is the enactment of RA 6657, Comprehensive
Agrarian Reform Law of 1988, which Cory signed on June 10. This law, while considerably
changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar as
they are not inconsistent with its provisions.
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 maintain that in declaring the beneficiaries under PD 27 to be the owners of the
lands occupied by them, EO 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 Sol-Gen asserted that 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.
ISSUE: Whether or not there was a violation of the equal protection clause.
HELD: The SC ruled affirming the Sol-Gen. 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 Sec 6 of RA 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


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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. 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.
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. 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.











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Luz Farms v. DAR
Secretary
GR No. 86889
4 December 1990
Paras, J.
In 1988, RA 6657 was
approved by the
President of the
Philippines. It includes
the raising of livestock,
poultry, and swine in its
coverage.

In 1989, the Secretary
of Agrarian Reform
promulgated the IRR of
Secs. 11, 13, and 39 of
the said law.

Luz Farms, a
corporation engaged in
the livestock and
poultry business,
allegedly stands to be
adversely affected by
the enforcement of
certain sections of RA
6657, of the Guidelines
and Procedures
Implementing
Production and Profit
Sharing under RA 6657,
and of the IRR of
Section 11. It prays that
the aforesaid statutes be
declared
unconstitutional.
W/N the CARL
should include the
raising of livestock,
poultry and swine in
its coverage.

















W/N the requirement
in Sections 13 and 32
of RA 6657 directing
“corporate farms” to
execute and
implement
“production-sharing
plans” is unreasonable
for being confiscatory
and violative of due
process, with respect
to livestock and
poultry raisers.

Separate Opinion:
Sarmiento, J.
W/N the assailed
provisions violate the
equal protection
clause of the
Constitution.
NO. It was never the
intention of the framers of
the Constitution to include
the livestock and poultry
industry in the coverage of
the agrarian reform program
of the government. The
intention of the Committee
was to limit the application
of the word “agriculture”.
Thus, Section II of RA 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.

YES. As there is no reason
to include livestock and
poultry lands in the
coverage of agrarian reform,
there is no need to call upon
them to distribute from 3%
of their gross sales and 10%
of their net profits to their
workers as additional
compensation.


NO. 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:
1. There are no
tenants nor
landlords in
livestock and
poultry
businesses;
2. Livestock and
poultry do not
sprout from land;
3. Land is not a
primary resource;
4. Livestock and
poultry production
are industrial
activities;
5. Livestock and
poultry
farmworkers are
covered by
Raising of livestock,
poultry, and swine
are excluded from
the coverage of the
CARL.


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minimum wage
law rather than by
tenancy law.























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


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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.
1. 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
2.
3. 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.
Laws involved
1. 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.
2. R.A. No. 3844, otherwise known as the Agricultural Land Reform Code
3. E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27
4. Presidential Proclamation No. 131, instituting a comprehensive agrarian reform program
5. and E.O. No. 229, providing the mechanics for its implementation.
6. R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988
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.
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.
1
ST
CASE G.R. No. 79777 -9 hectare and 5 hectare
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.
Separation of powers
They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228.


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No retention limits
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.
Does not conform with valid requisites of Special appropriation
Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a valid appropriation.
( A special appropriations bill shall specify the purpose for which it is intended, and shall be
supported by funds actually available as certified by the National Treasurer, or to be raised by a
corresponding revenue proposal therein.)
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.
DUE PROCESS
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 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.
Equal protection
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.
Create more problems
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.

Class suit
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.


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Determination of just compensation FINAL
They maintain that the determination of just compensation by the administrative authorities is a final
ascertainment.
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 National Federation of Sugarcane Planters (NASP)
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.
seeks to prohibit the implementation of Proc. No. 131 and E.O. No. 229.
Special Appropriation
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
Separation of powers
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.
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.
Just Compensation
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.
Equal Protection


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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.
Answer by solicitor general
the Solicitor General first invokes the presumption of constitutionality in favor of Proc. No. 131 and E.O.
No. 229.
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.
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.
G.R. No. 79744 – Small land owner
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.
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.
Separation of Powers
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.
Due Process
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.
Just Compensation
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.


Kitem Duque Kadatuan Jr. 15 | P a g e

is an unconstitutional taking of a vested property right.
Reply
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.
G.R. No. 78742 Right of retention less than seven hectares
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.
Reply
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
even assuming that the petitioners do not fall under its terms, the regulations implementing P.D. No. 27
have already been issued
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.



Answer of petitioner


Kitem Duque Kadatuan Jr. 16 | P a g e

No publication
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
Supreme Court discussion
Power of the court
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.
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 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.
Issues:
Proper party
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 injury as a result of the acts or measures complained of
PD no 27 sustained and E.O 228 and E.O 229
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
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.
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.


Valid Appropriation
on the ground that it does not conform to the requirements of a valid appropriation as specified in the
Constitution


Kitem Duque Kadatuan Jr. 17 | P a g e

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.
Retention Limits
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
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.
Mandamus
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.
Second Discussion
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.
In the case of Pennsylvania Coal Co. v. Mahon,
25
Justice HolmesThe 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


Kitem Duque Kadatuan Jr. 18 | P a g e

Police Power
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.
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.
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.
Just compensation
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.
Equal protection
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.
There is a substantial distinction between these two classes of owners
Eminent Domain/Due Process/Judicial Prerogative
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. *unwilling to sell
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."
Why public and private agricultural lands? Well that is a political question
The term "political question" connotes what it means in ordinary parlance, namely, a question of policy.


Kitem Duque Kadatuan Jr. 19 | P a g e

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.
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.
Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator.
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.
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
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.
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.
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.
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.
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.


Kitem Duque Kadatuan Jr. 20 | P a g e

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.
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:
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.
just compensation for property expropriated is payable only in money and not otherwise.\
"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.
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.


Kitem Duque Kadatuan Jr. 21 | P a g e

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.
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.
We may therefore assume that their intention was to allow such manner of payment as is now
provided for by the CARP Law
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 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.
Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail.
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.
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


Kitem Duque Kadatuan Jr. 22 | P a g e

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.
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.
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 the comprehensive agrarian reform program
are removed, to clear the way for the true freedom of the farmer. We may now glimpse the day he will be
released not only from want but also from the exploitation and disdain of the past and from his 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.


Kitem Duque Kadatuan Jr. 23 | P a g e

Luz farms vs Sec. of DAR
Facts: 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
this petition praying that the laws, guidelines and rules be declared unconstitutional.
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.


Kitem Duque Kadatuan Jr. 24 | P a g e

(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. 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
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
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)


Kitem Duque Kadatuan Jr. 25 | P a g e

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
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


Kitem Duque Kadatuan Jr. 26 | P a g e

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
"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).
xxx xxx xxx
The questions were answered and explained in the statement of then Commissioner
Tadeo, quoted as follows:
xxx xxx xxx
"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
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.


Kitem Duque Kadatuan Jr. 27 | P a g e

here 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 (Rollo, p. 21).
It has been established that this 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
Thus, where the legislature or the executive acts beyond the scope of its constitutional
powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do, as void.
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13
and 32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules and Guidelines promulgated in
accordance therewith, are hereby DECLARED null and void for being unconstitutional
and the writ of preliminary injunction issued is hereby MADE permanent.












Kitem Duque Kadatuan Jr. 28 | P a g e

SEC. 31. Corporate Landowners. - Corporate landowners may voluntarily
transfer ownership over their agricultural landholdings to the Republic of the
Philippines pursuant to Section 20 hereof or to qualified beneficiaries, under
such terms and conditions consistent with this Act, as they may agree upon,
subject to confirmation by the DAR.
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 company's 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.
Corporations or associations which voluntarily divest a proportion of their
capital stock, equity or participation in favor of their workers or other
qualified beneficiaries under this section shall be deemed to have complied
with the provisions of this Act: Provided, That the following condition are
complied with:
(a) In order to safeguard the right of beneficiaries who own shares of
stocks to dividends and other financial benefits, the books of the
corporation or association shall be subject to periodic audit by certified
public accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or
association, the beneficiaries shall be assured of at least one (1)
representative in the board of directors, or in a management or
executive committee, if one exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have
the same rights and features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall
be void ab initio unless said transaction is in favor of a qualified and
registered beneficiary within the same corporation.
If within two (2) years from the approval of this Act, the land or stock
transfer envisioned above is not made or realized or the plan for such stock
distribution approved by the PARC within the same period, the agricultural
land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act.




Kitem Duque Kadatuan Jr. 29 | P a g e

Hacienda Luisita vs PARC
Facts: THE FACTS

In 1958, the Spanish owners of Compañia General de Tabacos de Filipinas
(Tabacalera) sold Hacienda Luisita and the Central Azucarera de Tarlac, the sugar mill
of the hacienda, to the Tarlac Development Corporation (Tadeco), then owned and
controlled by the Jose Cojuangco Sr. Group. The Central Bank of the Philippines
assisted Tadeco in obtaining a dollar loan from a US bank. Also, the GSIS extended a
PhP5.911 million loan in favor of Tadeco to pay the peso price component of the sale,
with the condition that “the lots comprising the Hacienda Luisita be subdivided by the
applicant-corporation and sold at cost to the tenants, should there be any, and
whenever conditions should exist warranting such action under the provisions of the
Land Tenure Act.” Tadeco however did not comply with this condition.

On May 7, 1980, the martial law administration filed a suit before the Manila RTC
against Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of
Agrarian Reform (MAR) so that the land can be distributed to farmers at cost.
Responding, Tadeco alleged that Hacienda Luisita does not have tenants, besides
which sugar lands – of which the hacienda consisted – are not covered by existing
agrarian reform legislations. The Manila RTC rendered judgment ordering Tadeco to
surrender Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the CA.

On March 17, 1988, during the administration of President Corazon Cojuangco
Aquino, the Office of the Solicitor General moved to withdraw the government’s case
against Tadeco, et al. The CA dismissed the case, subject to the PARC’s approval of
Tadeco’s proposed stock distribution plan (SDP) in favor of its farmworkers. [Under EO
229 and later RA 6657, Tadeco had the option of availing stock distribution as an
alternative modality to actual land transfer to the farmworkers.] On August 23,
1988, Tadeco organized a spin-off corporation, herein petitioner HLI, as vehicle to
facilitate stock acquisition by the farmworkers. For this purpose, Tadeco conveyed to
HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of
Hacienda Luisita in exchange for HLI shares of stock.

On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs)
complement of Hacienda Luisita signified in a referendum their acceptance of the
proposed HLI’s Stock Distribution Option Plan (SODP). On May 11, 1989, the SDOA
was formally entered into by Tadeco, HLI, and the 5,848 qualified FWBs. This attested
to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics
of HLI’s SDP, which was eventually approved by the PARC after a follow-up referendum
conducted by the DAR on October 14, 1989, in which 5,117 FWBs, out of 5,315 who
participated, opted to receive shares in HLI.

On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the
hacienda from agricultural to industrial use, pursuant to Sec. 65 of RA 6657. The DAR


Kitem Duque Kadatuan Jr. 30 | P a g e

approved the application on August 14, 1996, subject to payment of three percent (3%)
of the gross selling price to the FWBs and to HLI’s continued compliance with its
undertakings under the SDP, among other conditions.

On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares
of stocks of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the
converted area to the latter. Subsequently, Centennary sold the entire 300 hectares for
PhP750 million to Luisita Industrial Park Corporation (LIPCO), which used it in
developing an industrial complex. From this area was carved out 2 parcels, for which 2
separate titles were issued in the name of LIPCO. Later, LIPCO transferred these 2
parcels to the Rizal Commercial Banking Corporation (RCBC) in payment of LIPCO’s
PhP431,695,732.10 loan obligations to RCBC. LIPCO’s titles were cancelled and new
ones were issued to RCBC. Apart from the 500 hectares, another 80.51 hectares were
later detached from Hacienda Luisita and acquired by the government as part of the
Subic-Clark-Tarlac Expressway (SCTEX) complex. Thus, 4,335.75 hectares remained
of the original 4,915 hectares Tadeco ceded to HLI.

Such, was the state of things when two separate petitions reached the DAR in
the latter part of 2003. The first was filed by the Supervisory Group of HLI (Supervisory
Group), praying for a renegotiation of the SDOA, or, in the alternative, its revocation.
The second petition, praying for the revocation and nullification of the SDOA and the
distribution of the lands in the hacienda, was filed by Alyansa ng mga Manggagawang
Bukid ng Hacienda Luisita (AMBALA). The DAR then constituted a Special Task Force
(STF) to attend to issues relating to the SDP of HLI. After investigation and evaluation,
the STF found that HLI has not complied with its obligations under RA 6657 despite the
implementation of the SDP. On December 22, 2005, the PARC issued the assailed
Resolution No. 2005-32-01, recalling/revoking the SDO plan of Tadeco/HLI. It further
resolved that the subject lands be forthwith placed under the compulsory coverage or
mandated land acquisition scheme of the CARP.

From the foregoing resolution, HLI sought reconsideration. Its motion
notwithstanding, HLI also filed a petition before the Supreme Court in light of what it
considers as the DAR’s hasty placing of Hacienda Luisita under CARP even before
PARC could rule or even read the motion for reconsideration. PARC would eventually
deny HLI’s motion for reconsideration via Resolution No. 2006-34-01 dated May 3,
2006.








Kitem Duque Kadatuan Jr. 31 | P a g e

Issues: Who can Approve and revoke stock distribution plans under the CARL?
What was the basis?
(1) THE PARC has jurisdiction to revoke HLI’s SDP under the doctrine of
necessary implication.

Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve
the plan for stock distribution of the corporate landowner belongs to PARC. Contrary to
petitioner HLI’s posture, PARC also has the power to revoke the SDP which it
previously approved. It may be, as urged, that RA 6657 or other executive issuances on
agrarian reform do not explicitly vest the PARC with the power to revoke/recall
an approved SDP. Such power or authority, however, is deemed possessed by PARC
under the principle of necessary implication, a basic postulate that what is implied in a
statute is as much a part of it as that which is expressed.

Following the doctrine of necessary implication, it may be stated that the
conferment of express power to approve a plan for stock distribution of the agricultural
land of corporate owners necessarily includes the power to revoke or recall the approval
of the plan. To deny PARC such revocatory power would reduce it into a toothless
agency of CARP, because the very same agency tasked to ensure compliance by the
corporate landowner with the approved SDP would be without authority to impose
sanctions for non-compliance with it.

Is SEC. 31 Unconstitutional?
[The Court actually refused to pass upon the constitutional question because it was not
raised at the earliest opportunity and because the resolution thereof is not the lis
mota of the case. Moreover, the issue has been rendered moot and academic since
SDO is no longer one of the modes of acquisition under RA 9700.]

When the Court is called upon to exercise its power of judicial review over, and
pass upon the constitutionality of, acts of the executive or legislative departments, it
does so only when the following essential requirements are first met, to wit: (1) there is
an actual case or controversy; (2) that the constitutional question is raised at the earliest
possible opportunity by a proper party or one with locus standi; and (3) the issue of
constitutionality must be the very lis mota of the case.

Not all the foregoing requirements are satisfied in the case at bar.

While there is indeed an actual case or controversy, intervenor FARM, composed
of a small minority of 27 farmers, has yet to explain its failure to challenge the
constitutionality of Sec. 31 of RA 6657 as early as November 21, 1989 when PARC
approved the SDP of Hacienda Luisita or at least within a reasonable time thereafter,
and why its members received benefits from the SDP without so much of a protest. It
was only on December 4, 2003 or 14 years after approval of the SDP that said plan and
approving resolution were sought to be revoked, but not, to stress, by FARM or any of


Kitem Duque Kadatuan Jr. 32 | P a g e

its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT
question the constitutionality of Sec. 31 of RA 6657, but concentrated on the purported
flaws and gaps in the subsequent implementation of the SDP. Even the public
respondents, as represented by the Solicitor General, did not question the
constitutionality of the provision. On the other hand, FARM, whose 27 members
formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on May 3,
2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM some
eighteen (18) years from November 21, 1989 before it challenged the constitutionality of
Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept on their
rights and even accepted benefits from the SDP with nary a complaint on the alleged
unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot
now be goaded into resolving a constitutional issue that FARM failed to assail after the
lapse of a long period of time and the occurrence of numerous events and activities
which resulted from the application of an alleged unconstitutional legal provision.

The last but the most important requisite that the constitutional issue must be the
very lis mota of the case does not likewise obtain. The lis mota aspect is not present,
the constitutional issue tendered not being critical to the resolution of the case. The
unyielding rule has been to avoid, whenever plausible, an issue assailing the
constitutionality of a statute or governmental act. If some other grounds exist by which
judgment can be made without touching the constitutionality of a law, such recourse is
favored.

The lis mota in this case, proceeding from the basic positions originally taken by
AMBALA (to which the FARM members previously belonged) and the Supervisory
Group, is the alleged non-compliance by HLI with the conditions of the SDP to support a
plea for its revocation. And before the Court, the lis mota is whether or not PARC acted
in grave abuse of discretion when it ordered the recall of the SDP for such non-
compliance and the fact that the SDP, as couched and implemented, offends certain
constitutional and statutory provisions. To be sure, any of these key issues may be
resolved without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover,
looking deeply into the underlying petitions of AMBALA, et al., it is not the said section
per se that is invalid, but rather it is the alleged application of the said provision in the
SDP that is flawed.

It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7
of RA 6657, has all but superseded Sec. 31 of RA 6657 vis-à-vis the stock distribution
component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: ―[T]hat
after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to
sell and compulsory acquisition.‖ Thus, for all intents and purposes, the stock
distribution scheme under Sec. 31 of RA 6657 is no longer an available option under
existing law. The question of whether or not it is unconstitutional should be a moot
issue.





Kitem Duque Kadatuan Jr. 33 | P a g e




Did the Supreme Court Uphold the stock revocation of the SDP?
(3) YES, the revocation of the HLI’s SDP valid. [NO, the PARC did NOT gravely abuse
its discretion in revoking the subject SDP and placing the hacienda under CARP’s
compulsory acquisition and distribution scheme.]

The revocation of the approval of the SDP is valid: (1) the mechanics and
timelines of HLI’s stock distribution violate DAO 10 because the minimum individual
allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of
―man days‖ and the hiring of additional farmworkers; (2) the 30-year timeframe for HLI-
to-FWBs stock transfer is contrary to what Sec. 11 of DAO 10 prescribes.

In our review and analysis of par. 3 of the SDOA on the mechanics and timelines
of stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the
SDOA states:

3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall
arrange with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on
the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85
shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST
PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely acquired
and distributed to the THIRD PARTY.

[I]t is clear as day that the original 6,296 FWBs, who were qualified beneficiaries
at the time of the approval of the SDP, suffered from watering down of shares. As
determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original
FWBs got less than the guaranteed 18,804.32 HLI shares per beneficiary, because the
acquisition and distribution of the HLI shares were based on ―man days‖ or ―number of
days worked‖ by the FWB in a year’s time. As explained by HLI, a beneficiary needs to
work for at least 37 days in a fiscal year before he or she becomes entitled to HLI
shares. If it falls below 37 days, the FWB, unfortunately, does not get any share at year
end. The number of HLI shares distributed varies depending on the number of days the
FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to
the original 6,296 FWBs, such that, as indicated in the Compliance dated August 2,
2010 submitted by HLI to the Court, the total number of farmworkers of HLI as of said
date stood at 10,502. All these farmworkers, which include the original 6,296 FWBs,
were given shares out of the 118,931,976.85 HLI shares representing the 33.296% of
the total outstanding capital stock of HLI. Clearly, the minimum individual allocation of
each original FWB of 18,804.32 shares was diluted as a result of the use of ―man days‖
and the hiring of additional farmworkers.

Going into another but related matter, par. 3 of the SDOA expressly providing for
a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what
Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the
approved stock distribution plan within three (3) months from receipt by the corporate


Kitem Duque Kadatuan Jr. 34 | P a g e

landowner of the approval of the plan by PARC. In fact, based on the said provision, the
transfer of the shares of stock in the names of the qualified FWBs should be recorded in
the stock and transfer books and must be submitted to the SEC within sixty (60) days
from implementation.

To the Court, there is a purpose, which is at once discernible as it is practical, for
the three-month threshold. Remove this timeline and the corporate landowner can
veritably evade compliance with agrarian reform by simply deferring to absurd limits the
implementation of the stock distribution scheme.

Evidently, the land transfer beneficiaries are given thirty (30) years within which
to pay the cost of the land thus awarded them to make it less cumbersome for them to
pay the government. To be sure, the reason underpinning the 30-year accommodation
does not apply to corporate landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much shorter period of time.

Taking into account the above discussion, the revocation of the SDP by PARC
should be upheld [because of violations of] DAO 10. It bears stressing that under Sec.
49 of RA 6657, the PARC and the DAR have the power to issue rules and regulations,
substantive or procedural. Being a product of such rule-making power, DAO 10 has the
force and effect of law and must be duly complied with. The PARC is, therefore, correct
in revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated November
21, l989 approving the HLI’s SDP is nullified and voided.

Does the Non-impairment clause bar the court from reviewing the validity of a
partially implemented SDP?
A law authorizing interference, when appropriate, in the contractual relations
between or among parties is deemed read into the contract and its implementation
cannot successfully be resisted by force of the non-impairment guarantee. There is,
in that instance, no impingement of the impairment clause, the non-impairment
protection being applicable only to laws that derogate prior acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties.
Impairment, in fine, obtains if a subsequent law changes the terms of a contract
between the parties, imposes new conditions, dispenses with those agreed upon or
withdraws existing remedies for the enforcement of the rights of the parties.
Necessarily, the constitutional proscription would not apply to laws already in


Kitem Duque Kadatuan Jr. 35 | P a g e

effect at the time of contract execution, as in the case of RA 6657, in relation to
DAO 10, vis-à-vis HLI’s SDOA. As held in Serrano v. Gallant Maritime Services,
Inc.:
The prohibition [against impairment of the obligation of contracts] is
aligned with the general principle that laws newly enacted have only a prospective
operation, and cannot affect acts or contracts already perfected; however, as to
laws already in existence, their provisions are read into contracts and deemed a
part thereof. Thus, the non-impairment clause under Section 10, Article II [of
the Constitution] is limited in application to laws about to be enacted that
would in any way derogate from existing acts or contracts by enlarging,
abridging or in any manner changing the intention of the parties thereto.
(Emphasis supplied.)

Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of
issuance within the ambit of Sec. 10, Art. III of the Constitution providing that
“[n]o law impairing the obligation of contracts shall be passed.”
Administartive Order no.2 series of 2009
5. The child of an LO shall be given preference in the distribution of his/her
parent's land pursuant to existing rules and regulations on award to children of
LOs provided he/she meets all of the following criteria:
5.1 Filipino citizen;
5.2 At least fifteen (15) years of age; and
5.3 Actual tiller or directly managing the farm as of the time of the
conduct of field investigation of the landholding under CARP.
However, only untenanted portions of the landholding may be
subject to award to qualified children of the LO and actual tenant-tillers
in the landholding shall not be ejected or removed therefrom. An LO's
child cannot claim that he/she is directly managing the farm or a
specific area of tillage, if the same has tenants or lessees, considering
that the tenants on the land have the right to directly manage the land or
area of tillage with the obligation to pay the LO lease rental therefor.