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Republic of the Philippines HON. PHILIP E.

JUICO, SECRETARY OF THE


SUPREME COURT DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
Manila ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF
THE PRESIDENT, and Messrs. SALVADOR TALENTO,
EN BANC JAIME ABOGADO, CONRADO AVANCENA and
ROBERTO TAAY, respondents.
G.R. No. 78742 July 14, 1989
G.R. No. 79777 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE
PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B. NICOLAS S. MANAAY and AGUSTIN HERMANO,
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. JR., petitioners,
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. vs.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, HON. PHILIP ELLA JUICO, as Secretary of Agrarian
REYNALDO G. ESTRADA, FELISA C. BAUTISTA, Reform, and LAND BANK OF THE
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J. PHILIPPINES, respondents.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C.
ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners, CRUZ, J.:
vs.
HONORABLE SECRETARY OF AGRARIAN In ancient mythology, Antaeus was a terrible giant who
REFORM, respondent. blocked and challenged Hercules for his life on his way to
Mycenae after performing his eleventh labor. The two
G.R. No. 79310 July 14, 1989 wrestled mightily and Hercules flung his adversary to the
ground thinking him dead, but Antaeus rose even stronger to
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO resume their struggle. This happened several times to
FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO, Hercules' increasing amazement. Finally, as they continued
PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, grappling, it dawned on Hercules that Antaeus was the son of
INC., Victorias Mill District, Victorias, Negros Gaea and could never die as long as any part of his body was
Occidental, petitioners, touching his Mother Earth. Thus forewarned, Hercules then
vs. held Antaeus up in the air, beyond the reach of the sustaining
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL soil, and crushed him to death.
AGRARIAN REFORM COUNCIL, respondents.
Mother Earth. The sustaining soil. The giver of life, without
G.R. No. 79744 July 14, 1989 whose invigorating touch even the powerful Antaeus
weakened and died.
INOCENTES PABICO, petitioner,
vs.
The cases before us are not as fanciful as the foregoing tale. end, the State shall encourage and undertake
But they also tell of the elemental forces of life and death, of the just distribution of all agricultural lands,
men and women who, like Antaeus need the sustaining subject to such priorities and reasonable
strength of the precious earth to stay alive. retention limits as the Congress may prescribe,
taking into account ecological, developmental,
"Land for the Landless" is a slogan that underscores the or equity considerations and subject to the
acute imbalance in the distribution of this precious resource payment of just compensation. In determining
among our people. But it is more than a slogan. Through the retention limits, the State shall respect the right
brooding centuries, it has become a battle-cry dramatizing the of small landowners. The State shall further
increasingly urgent demand of the dispossessed among us provide incentives for voluntary land-sharing.
for a plot of earth as their place in the sun.
Earlier, in fact, R.A. No. 3844, otherwise known as the
Recognizing this need, the Constitution in 1935 mandated the Agricultural Land Reform Code, had already been enacted by
policy of social justice to "insure the well-being and economic the Congress of the Philippines on August 8, 1963, in line with
security of all the people," 1 especially the less privileged. In the above-stated principles. This was substantially
1973, the new Constitution affirmed this goal adding superseded almost a decade later by P.D. No. 27, which was
specifically that "the State shall regulate the acquisition, promulgated on October 21, 1972, along with martial law, to
ownership, use, enjoyment and disposition of private property provide for the compulsory acquisition of private lands for
and equitably diffuse property ownership and distribution among tenant-farmers and to specify maximum
profits." 2 Significantly, there was also the specific injunction retention limits for landowners.
to "formulate and implement an agrarian reform program
aimed at emancipating the tenant from the bondage of the The people power revolution of 1986 did not change and
soil." 3 indeed even energized the thrust for agrarian reform. Thus,
on July 17, 1987, President Corazon C. Aquino issued E.O.
The Constitution of 1987 was not to be outdone. Besides No. 228, declaring full land ownership in favor of the
echoing these sentiments, it also adopted one whole and beneficiaries of P.D. No. 27 and providing for the valuation of
separate Article XIII on Social Justice and Human Rights, still unvalued lands covered by the decree as well as the
containing grandiose but undoubtedly sincere provisions for manner of their payment. This was followed on July 22, 1987
the uplift of the common people. These include a call in the by Presidential Proclamation No. 131, instituting a
following words for the adoption by the State of an agrarian comprehensive agrarian reform program (CARP), and E.O.
reform program: No. 229, providing the mechanics for its implementation.

SEC. 4. The State shall, by law, undertake an Subsequently, with its formal organization, the revived
agrarian reform program founded on the right of Congress of the Philippines took over legislative power from
farmers and regular farmworkers, who are the President and started its own deliberations, including
landless, to own directly or collectively the lands extensive public hearings, on the improvement of the interests
they till or, in the case of other farmworkers, to of farmers. The result, after almost a year of spirited debate,
receive a just share of the fruits thereof. To this was the enactment of R.A. No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, which In connection with the determination of just compensation, the
President Aquino signed on June 10, 1988. This law, while petitioners argue that the same may be made only by a court
considerably changing the earlier mentioned enactments, of justice and not by the President of the Philippines. They
nevertheless gives them suppletory effect insofar as they are invoke the recent cases of EPZA v. Dulay 5and Manotok v.
not inconsistent with its provisions. 4 National Food Authority. 6 Moreover, the just compensation
contemplated by the Bill of Rights is payable in money or in
The above-captioned cases have been consolidated because cash and not in the form of bonds or other things of value.
they involve common legal questions, including serious
challenges to the constitutionality of the several measures In considering the rentals as advance payment on the land,
mentioned above. They will be the subject of one common the executive order also deprives the petitioners of their
discussion and resolution, The different antecedents of each property rights as protected by due process. The equal
case will require separate treatment, however, and will first be protection clause is also violated because the order places
explained hereunder. the burden of solving the agrarian problems on the owners
only of agricultural lands. No similar obligation is imposed on
G.R. No. 79777 the owners of other properties.

Squarely raised in this petition is the constitutionality of P.D. The petitioners also maintain that in declaring the
No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657. beneficiaries under P.D. No. 27 to be the owners of the lands
occupied by them, E.O. No. 228 ignored judicial prerogatives
The subjects of this petition are a 9-hectare riceland worked and so violated due process. Worse, the measure would not
by four tenants and owned by petitioner Nicolas Manaay and solve the agrarian problem because even the small farmers
his wife and a 5-hectare riceland worked by four tenants and are deprived of their lands and the retention rights guaranteed
owned by petitioner Augustin Hermano, Jr. The tenants were by the Constitution.
declared full owners of these lands by E.O. No. 228 as
qualified farmers under P.D. No. 27. In his Comment, the Solicitor General stresses that P.D. No.
27 has already been upheld in the earlier cases of Chavez v.
The petitioners are questioning P.D. No. 27 and E.O. Nos. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and
228 and 229 on grounds inter alia of separation of powers, Corn Producers of the Philippines, Inc. v. The National Land
due process, equal protection and the constitutional limitation Reform Council. 9 The determination of just compensation by
that no private property shall be taken for public use without the executive authorities conformably to the formula
just compensation. prescribed under the questioned order is at best initial or
preliminary only. It does not foreclose judicial intervention
They contend that President Aquino usurped legislative power whenever sought or warranted. At any rate, the challenge to
when she promulgated E.O. No. 228. The said measure is the order is premature because no valuation of their property
invalid also for violation of Article XIII, Section 4, of the has as yet been made by the Department of Agrarian Reform.
Constitution, for failure to provide for retention limits for small The petitioners are also not proper parties because the lands
landowners. Moreover, it does not conform to Article VI, owned by them do not exceed the maximum retention limit of
Section 25(4) and the other requisites of a valid appropriation. 7 hectares.
Replying, the petitioners insist they are proper parties The petitioners claim that the power to provide for a
because P.D. No. 27 does not provide for retention limits on Comprehensive Agrarian Reform Program as decreed by the
tenanted lands and that in any event their petition is a class Constitution belongs to Congress and not the President.
suit brought in behalf of landowners with landholdings below Although they agree that the President could exercise
24 hectares. They maintain that the determination of just legislative power until the Congress was convened, she could
compensation by the administrative authorities is a final do so only to enact emergency measures during the transition
ascertainment. As for the cases invoked by the public period. At that, even assuming that the interim legislative
respondent, the constitutionality of P.D. No. 27 was merely power of the President was properly exercised, Proc. No. 131
assumed in Chavez, while what was decided in Gonzales was and E.O. No. 229 would still have to be annulled for violating
the validity of the imposition of martial law. the constitutional provisions on just compensation, due
process, and equal protection.
In the amended petition dated November 22, 1588, it is
contended that P.D. No. 27, E.O. Nos. 228 and 229 (except They also argue that under Section 2 of Proc. No. 131 which
Sections 20 and 21) have been impliedly repealed by R.A. provides:
No. 6657. Nevertheless, this statute should itself also be
declared unconstitutional because it suffers from substantially Agrarian Reform Fund.-There is hereby created a special
the same infirmities as the earlier measures. fund, to be known as the Agrarian Reform Fund, an initial
amount of FIFTY BILLION PESOS (P50,000,000,000.00) to
A petition for intervention was filed with leave of court on June cover the estimated cost of the Comprehensive Agrarian
1, 1988 by Vicente Cruz, owner of a 1. 83- hectare land, who Reform Program from 1987 to 1992 which shall be sourced
complained that the DAR was insisting on the implementation from the receipts of the sale of the assets of the Asset
of P.D. No. 27 and E.O. No. 228 despite a compromise Privatization Trust and Receipts of sale of ill-gotten wealth
agreement he had reached with his tenant on the payment of received through the Presidential Commission on Good
rentals. In a subsequent motion dated April 10, 1989, he Government and such other sources as government may
adopted the allegations in the basic amended petition that the deem appropriate. The amounts collected and accruing to this
above- mentioned enactments have been impliedly repealed special fund shall be considered automatically appropriated
by R.A. No. 6657. for the purpose authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The money needed to
G.R. No. 79310 cover the cost of the contemplated expropriation has yet to be
raised and cannot be appropriated at this time.
The petitioners herein are landowners and sugar planters in
the Victorias Mill District, Victorias, Negros Occidental. Co- Furthermore, they contend that taking must be simultaneous
petitioner Planters' Committee, Inc. is an organization with payment of just compensation as it is traditionally
composed of 1,400 planter-members. This petition seeks to understood, i.e., with money and in full, but no such payment
prohibit the implementation of Proc. No. 131 and E.O. No. is contemplated in Section 5 of the E.O. No. 229. On the
229. 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 Two additional arguments are made by Barcelona, to wit, the
as provided in Section 4 hereof, but subject to certain controls failure to establish by clear and convincing evidence the
to be defined and promulgated by the Presidential Agrarian necessity for the exercise of the powers of eminent domain,
Reform Council." This compensation may not be paid fully in and the violation of the fundamental right to own property.
money but in any of several modes that may consist of part
cash and part bond, with interest, maturing periodically, or The petitioners also decry the penalty for non-registration of
direct payment in cash or bond as may be mutually agreed the lands, which is the expropriation of the said land for an
upon by the beneficiary and the landowner or as may be amount equal to the government assessor's valuation of the
prescribed or approved by the PARC. land for tax purposes. On the other hand, if the landowner
declares his own valuation he is unjustly required to
The petitioners also argue that in the issuance of the two immediately pay the corresponding taxes on the land, in
measures, no effort was made to make a careful study of the violation of the uniformity rule.
sugar planters' situation. There is no tenancy problem in the
sugar areas that can justify the application of the CARP to In his consolidated Comment, the Solicitor General first
them. To the extent that the sugar planters have been lumped invokes the presumption of constitutionality in favor of Proc.
in the same legislation with other farmers, although they are a No. 131 and E.O. No. 229. He also justifies the necessity for
separate group with problems exclusively their own, their right the expropriation as explained in the "whereas" clauses of the
to equal protection has been violated. Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP
A motion for intervention was filed on August 27,1987 by the and a general survey on the people's opinion thereon are not
National Federation of Sugarcane Planters (NASP) which indispensable prerequisites to its promulgation.
claims a membership of at least 20,000 individual sugar
planters all over the country. On September 10, 1987, another On the alleged violation of the equal protection clause, the
motion for intervention was filed, this time by Manuel sugar planters have failed to show that they belong to a
Barcelona, et al., representing coconut and riceland owners. different class and should be differently treated. The
Both motions were granted by the Court. Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the
NASP alleges that President Aquino had no authority to fund expropriation of private agricultural lands later. From this
the Agrarian Reform Program and that, in any event, the viewpoint, the petition for prohibition would be premature.
appropriation is invalid because of uncertainty in the amount
appropriated. Section 2 of Proc. No. 131 and Sections 20 and The public respondent also points out that the constitutional
21 of E.O. No. 229 provide for an initial appropriation of fifty prohibition is against the payment of public money without the
billion pesos and thus specifies the minimum rather than the corresponding appropriation. There is no rule that only money
maximum authorized amount. This is not allowed. already in existence can be the subject of an appropriation
Furthermore, the stated initial amount has not been certified law. Finally, the earmarking of fifty billion pesos as Agrarian
to by the National Treasurer as actually available. 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 he filed a motion for reconsideration, which had not been
later when necessary. acted upon when E.O. Nos. 228 and 229 were issued. These
orders rendered his motion moot and academic because they
On April 11, 1988, Prudencio Serrano, a coconut planter, filed directly effected the transfer of his land to the private
a petition on his own behalf, assailing the constitutionality of respondents.
E.O. No. 229. In addition to the arguments already raised,
Serrano contends that the measure is unconstitutional The petitioner now argues that:
because:
(1) E.O. Nos. 228 and 229 were invalidly issued
(1) Only public lands should be included in the by the President of the Philippines.
CARP;
(2) The said executive orders are violative of the
(2) E.O. No. 229 embraces more than one constitutional provision that no private property
subject which is not expressed in the title; shall be taken without due process or just
compensation.
(3) The power of the President to legislate was
terminated on July 2, 1987; and (3) The petitioner is denied the right of
maximum retention provided for under the 1987
(4) The appropriation of a P50 billion special Constitution.
fund from the National Treasury did not originate
from the House of Representatives. The petitioner contends that the issuance of E.0. Nos. 228
and 229 shortly before Congress convened is anomalous and
G.R. No. 79744 arbitrary, besides violating the doctrine of separation of
powers. The legislative power granted to the President under
The petitioner alleges that the then Secretary of Department the Transitory Provisions refers only to emergency measures
of Agrarian Reform, in violation of due process and the that may be promulgated in the proper exercise of the police
requirement for just compensation, placed his landholding power.
under the coverage of Operation Land Transfer. Certificates
of Land Transfer were subsequently issued to the private The petitioner also invokes his rights not to be deprived of his
respondents, who then refused payment of lease rentals to property without due process of law and to the retention of his
him. small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides
On September 3, 1986, the petitioner protested the erroneous denying him just compensation for his land, the provisions of
inclusion of his small landholding under Operation Land E.O. No. 228 declaring that:
transfer and asked for the recall and cancellation of the
Certificates of Land Transfer in the name of the private Lease rentals paid to the landowner by the
respondents. He claims that on December 24, 1986, his farmer-beneficiary after October 21, 1972 shall
petition was denied without hearing. On February 17, 1987, be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is According to P.D. No. 316, which was promulgated in
also his contention that the inclusion of even small implementation of P.D. No. 27:
landowners in the program along with other landowners with
lands consisting of seven hectares or more is undemocratic. No tenant-farmer in agricultural lands primarily
devoted to rice and corn shall be ejected or
In his Comment, the Solicitor General submits that the petition removed from his farmholding until such time as
is premature because the motion for reconsideration filed with the respective rights of the tenant- farmers and
the Minister of Agrarian Reform is still unresolved. As for the the landowner shall have been determined in
validity of the issuance of E.O. Nos. 228 and 229, he argues accordance with the rules and regulations
that they were enacted pursuant to Section 6, Article XVIII of implementing P.D. No. 27.
the Transitory Provisions of the 1987 Constitution which
reads: The petitioners claim they cannot eject their tenants and so
are unable to enjoy their right of retention because the
The incumbent president shall continue to exercise legislative Department of Agrarian Reform has so far not issued the
powers until the first Congress is convened. implementing rules required under the above-quoted decree.
They therefore ask the Court for a writ of mandamus to
On the issue of just compensation, his position is that when compel the respondent to issue the said rules.
P.D. No. 27 was promulgated on October 21. 1972, the
tenant-farmer of agricultural land was deemed the owner of In his Comment, the public respondent argues that P.D. No.
the land he was tilling. The leasehold rentals paid after that 27 has been amended by LOI 474 removing any right of
date should therefore be considered amortization payments. retention from persons who own other agricultural lands of
more than 7 hectares in aggregate area or lands used for
In his Reply to the public respondents, the petitioner residential, commercial, industrial or other purposes from
maintains that the motion he filed was resolved on December which they derive adequate income for their family. And even
14, 1987. An appeal to the Office of the President would be assuming that the petitioners do not fall under its terms, the
useless with the promulgation of E.O. Nos. 228 and 229, regulations implementing P.D. No. 27 have already been
which in effect sanctioned the validity of the public issued, to wit, the Memorandum dated July 10, 1975 (Interim
respondent's acts. Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum
G.R. No. 78742 Circular No. 11 dated April 21, 1978, (Implementation
Guidelines of LOI No. 474), Memorandum Circular No. 18-81
The petitioners in this case invoke the right of retention dated December 29,1981 (Clarificatory Guidelines on
granted by P.D. No. 27 to owners of rice and corn lands not Coverage of P.D. No. 27 and Retention by Small
exceeding seven hectares as long as they are cultivating or Landowners), and DAR Administrative Order No. 1, series of
intend to cultivate the same. Their respective lands do not 1985 (Providing for a Cut-off Date for Landowners to Apply for
exceed the statutory limit but are occupied by tenants who are Retention and/or to Protest the Coverage of their
actually cultivating such lands. Landholdings under Operation Land Transfer pursuant to P.D.
No. 27). For failure to file the corresponding applications for
retention under these measures, the petitioners are now the act was done or the law was enacted, earnest studies
barred from invoking this right. were made by Congress or the President, or both, to insure
that the Constitution would not be breached.
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency In addition, the Constitution itself lays down stringent
of their appeal to the President of the Philippines. Moreover, conditions for a declaration of unconstitutionality, requiring
the issuance of the implementing rules, assuming this has not therefor the concurrence of a majority of the members of the
yet been done, involves the exercise of discretion which Supreme Court who took part in the deliberations and voted
cannot be controlled through the writ of mandamus. This is on the issue during their session en banc. 11 And as
especially true if this function is entrusted, as in this case, to a established by judge made doctrine, the Court will assume
separate department of the government. jurisdiction over a constitutional question only if it is shown
that the essential requisites of a judicial inquiry into such a
In their Reply, the petitioners insist that the above-cited question are first satisfied. Thus, there must be an actual
measures are not applicable to them because they do not case or controversy involving a conflict of legal rights
own more than seven hectares of agricultural land. Moreover, susceptible of judicial determination, the constitutional
assuming arguendo that the rules were intended to cover question must have been opportunely raised by the proper
them also, the said measures are nevertheless not in force party, and the resolution of the question is unavoidably
because they have not been published as required by law and necessary to the decision of the case itself. 12
the ruling of this Court in Tanada v. Tuvera. 10 As for LOI 474,
the same is ineffective for the additional reason that a mere With particular regard to the requirement of proper party as
letter of instruction could not have repealed the presidential applied in the cases before us, we hold that the same is
decree. satisfied by the petitioners and intervenors because each of
them has sustained or is in danger of sustaining an immediate
I injury as a result of the acts or measures complained
of. 13 And even if, strictly speaking, they are not covered by
Although holding neither purse nor sword and so regarded as the definition, it is still within the wide discretion of the Court to
the weakest of the three departments of the government, the waive the requirement and so remove the impediment to its
judiciary is nonetheless vested with the power to annul the addressing and resolving the serious constitutional questions
acts of either the legislative or the executive or of both when raised.
not conformable to the fundamental law. This is the reason for
what some quarters call the doctrine of judicial supremacy. In the first Emergency Powers Cases, 14 ordinary citizens and
Even so, this power is not lightly assumed or readily taxpayers were allowed to question the constitutionality of
exercised. The doctrine of separation of powers imposes several executive orders issued by President Quirino although
upon the courts a proper restraint, born of the nature of their they were invoking only an indirect and general interest
functions and of their respect for the other departments, in shared in common with the public. The Court dismissed the
striking down the acts of the legislative and the executive as objection that they were not proper parties and ruled that "the
unconstitutional. The policy, indeed, is a blend of courtesy transcendental importance to the public of these cases
and caution. To doubt is to sustain. The theory is that before demands that they be settled promptly and definitely,
brushing aside, if we must, technicalities of procedure." We properly is the power of judicial review under the
have since then applied this exception in many other cases. 15 Constitution. 16

The other above-mentioned requisites have also been met in The cases before us categorically raise constitutional
the present petitions. questions that this Court must categorically resolve. And so
we shall.
In must be stressed that despite the inhibitions pressing upon
the Court when confronted with constitutional issues like the II
ones now before it, it will not hesitate to declare a law or act
invalid when it is convinced that this must be done. In arriving We proceed first to the examination of the preliminary issues
at this conclusion, its only criterion will be the Constitution as before resolving the more serious challenges to the
God and its conscience give it the light to probe its meaning constitutionality of the several measures involved in these
and discover its purpose. Personal motives and political petitions.
considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation. The promulgation of P.D. No. 27 by President Marcos in the
exercise of his powers under martial law has already been
For all the awesome power of the Congress and the sustained in Gonzales v. Estrella and we find no reason to
Executive, the Court will not hesitate to "make the hammer modify or reverse it on that issue. As for the power of
fall, and heavily," to use Justice Laurel's pithy language, President Aquino to promulgate Proc. No. 131 and E.O. Nos.
where the acts of these departments, or of any public official, 228 and 229, the same was authorized under Section 6 of the
betray the people's will as expressed in the Constitution. Transitory Provisions of the 1987 Constitution, quoted above.

It need only be added, to borrow again the words of Justice The said measures were issued by President Aquino before
Laurel, that July 27, 1987, when the Congress of the Philippines was
formally convened and took over legislative power from her.
... when the judiciary mediates to allocate They are not "midnight" enactments intended to pre-empt the
constitutional boundaries, it does not assert any legislature because E.O. No. 228 was issued on July 17,
superiority over the other departments; it does 1987, and the other measures, i.e., Proc. No. 131 and E.O.
not in reality nullify or invalidate an act of the No. 229, were both issued on July 22, 1987. Neither is it
Legislature, but only asserts the solemn and correct to say that these measures ceased to be valid when
sacred obligation assigned to it by the she lost her legislative power for, like any statute, they
Constitution to determine conflicting claims of continue to be in force unless modified or repealed by
authority under the Constitution and to establish subsequent law or declared invalid by the courts. A statute
for the parties in an actual controversy the rights does not ipso facto become inoperative simply because of the
which that instrument secures and guarantees dissolution of the legislature that enacted it. By the same
to them. This is in truth all that is involved in token, President Aquino's loss of legislative power did not
what is termed "judicial supremacy" which have the effect of invalidating all the measures enacted by her
when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut fact is one of its most controversial provisions. This section
has not rejected but in fact substantially affirmed the declares:
challenged measures and has specifically provided that they
shall be suppletory to R.A. No. 6657 whenever not Retention Limits. Except as otherwise
inconsistent with its provisions. 17 Indeed, some portions of provided in this Act, no person may own or
the said measures, like the creation of the P50 billion fund in retain, directly or indirectly, any public or private
Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. agricultural land, the size of which shall vary
No. 229, have been incorporated by reference in the CARP according to factors governing a viable family-
Law. 18 sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as
That fund, as earlier noted, is itself being questioned on the determined by the Presidential Agrarian Reform
ground that it does not conform to the requirements of a valid Council (PARC) created hereunder, but in no
appropriation as specified in the Constitution. Clearly, case shall retention by the landowner exceed
however, Proc. No. 131 is not an appropriation measure even five (5) hectares. Three (3) hectares may be
if it does provide for the creation of said fund, for that is not its awarded to each child of the landowner, subject
principal purpose. An appropriation law is one the primary and to the following qualifications: (1) that he is at
specific purpose of which is to authorize the release of public least fifteen (15) years of age; and (2) that he is
funds from the treasury. 19 The creation of the fund is only actually tilling the land or directly managing the
incidental to the main objective of the proclamation, which is farm; Provided, That landowners whose lands
agrarian reform. have been covered by Presidential Decree No.
27 shall be allowed to keep the area originally
It should follow that the specific constitutional provisions retained by them thereunder, further, That
invoked, to wit, Section 24 and Section 25(4) of Article VI, are original homestead grantees or direct
not applicable. With particular reference to Section 24, this compulsory heirs who still own the original
obviously could not have been complied with for the simple homestead at the time of the approval of this Act
reason that the House of Representatives, which now has the shall retain the same areas as long as they
exclusive power to initiate appropriation measures, had not continue to cultivate said homestead.
yet been convened when the proclamation was issued. The
legislative power was then solely vested in the President of The argument that E.O. No. 229 violates the constitutional
the Philippines, who embodied, as it were, both houses of requirement that a bill shall have only one subject, to be
Congress. 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
The argument of some of the petitioners that Proc. No. 131 contents and will suffice if the matters embodied in the text
and E.O. No. 229 should be invalidated because they do not are relevant to each other and may be inferred from the
provide for retention limits as required by Article XIII, Section title. 20
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 The Court wryly observes that during the past dictatorship,
every presidential issuance, by whatever name it was called,
had the force and effect of law because it came from board should, for an unreasonable length of
President Marcos. Such are the ways of despots. Hence, it is time, fail to decide a particular question to the
futile to argue, as the petitioners do in G.R. No. 79744, that great detriment of all parties concerned, or a
LOI 474 could not have repealed P.D. No. 27 because the court should refuse to take jurisdiction of a
former was only a letter of instruction. The important thing is cause when the law clearly gave it jurisdiction
that it was issued by President Marcos, whose word was law mandamus will issue, in the first case to require
during that time. a decision, and in the second to require that
jurisdiction be taken of the cause. 22
But for all their peremptoriness, these issuances from the
President Marcos still had to comply with the requirement for And while it is true that as a rule the writ will not be proper as
publication as this Court held in Tanada v. Tuvera. 21 Hence, long as there is still a plain, speedy and adequate remedy
unless published in the Official Gazette in accordance with available from the administrative authorities, resort to the
Article 2 of the Civil Code, they could not have any force and courts may still be permitted if the issue raised is a question
effect if they were among those enactments successfully of law. 23
challenged in that case. LOI 474 was published, though, in
the Official Gazette dated November 29,1976.) III

Finally, there is the contention of the public respondent in There are traditional distinctions between the police power
G.R. No. 78742 that the writ of mandamus cannot issue to and the power of eminent domain that logically preclude the
compel the performance of a discretionary act, especially by a application of both powers at the same time on the same
specific department of the government. That is true as a subject. In the case of City of Baguio v. NAWASA, 24 for
general proposition but is subject to one important example, where a law required the transfer of all municipal
qualification. Correctly and categorically stated, the rule is that waterworks systems to the NAWASA in exchange for its
mandamus will lie to compel the discharge of the assets of equivalent value, the Court held that the power
discretionary duty itself but not to control the discretion to be being exercised was eminent domain because the property
exercised. In other words, mandamus can issue to require involved was wholesome and intended for a public use.
action only but not specific action. Property condemned under the police power is noxious or
intended for a noxious purpose, such as a building on the
Whenever a duty is imposed upon a public verge of collapse, which should be demolished for the public
official and an unnecessary and unreasonable safety, or obscene materials, which should be destroyed in
delay in the exercise of such duty occurs, if it is the interest of public morals. The confiscation of such
a clear duty imposed by law, the courts will property is not compensable, unlike the taking of property
intervene by the extraordinary legal remedy of under the power of expropriation, which requires the payment
mandamus to compel action. If the duty is purely of just compensation to the owner.
ministerial, the courts will require specific action.
If the duty is purely discretionary, the courts In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice
by mandamus will require action only. For Holmes laid down the limits of the police power in a famous
example, if an inferior court, public official, or aphorism: "The general rule at least is that while property may
be regulated to a certain extent, if regulation goes too far it taxing power to achieve a police purpose has long been
will be recognized as a taking." The regulation that went "too accepted. 26 As for the power of expropriation, Prof. John J.
far" was a law prohibiting mining which might cause the Costonis of the University of Illinois College of Law (referring
subsidence of structures for human habitation constructed on to the earlier case of Euclid v. Ambler Realty Co., 272 US
the land surface. This was resisted by a coal company which 365, which sustained a zoning law under the police power)
had earlier granted a deed to the land over its mine but makes the following significant remarks:
reserved all mining rights thereunder, with the grantee
assuming all risks and waiving any damage claim. The Court Euclid, moreover, was decided in an era when
held the law could not be sustained without compensating the judges located the Police and eminent domain
grantor. Justice Brandeis filed a lone dissent in which he powers on different planets. Generally speaking,
argued that there was a valid exercise of the police power. He they viewed eminent domain as encompassing
said: public acquisition of private property for
improvements that would be available for public
Every restriction upon the use of property use," literally construed. To the police power, on
imposed in the exercise of the police power the other hand, they assigned the less intrusive
deprives the owner of some right theretofore task of preventing harmful externalities a point
enjoyed, and is, in that sense, an abridgment by reflected in the Euclid opinion's reliance on an
the State of rights in property without making analogy to nuisance law to bolster its support of
compensation. But restriction imposed to protect zoning. So long as suppression of a privately
the public health, safety or morals from dangers authored harm bore a plausible relation to some
threatened is not a taking. The restriction here in legitimate "public purpose," the pertinent
question is merely the prohibition of a noxious measure need have afforded no compensation
use. The property so restricted remains in the whatever. With the progressive growth of
possession of its owner. The state does not government's involvement in land use, the
appropriate it or make any use of it. The state distance between the two powers has
merely prevents the owner from making a use contracted considerably. Today government
which interferes with paramount rights of the often employs eminent domain interchangeably
public. Whenever the use prohibited ceases to with or as a useful complement to the police
be noxious as it may because of further power-- a trend expressly approved in the
changes in local or social conditions the Supreme Court's 1954 decision in Berman v.
restriction will have to be removed and the Parker, which broadened the reach of eminent
owner will again be free to enjoy his property as domain's "public use" test to match that of the
heretofore. police power's standard of "public purpose." 27

Recent trends, however, would indicate not a polarization but The Berman case sustained a redevelopment project and the
a mingling of the police power and the power of eminent improvement of blighted areas in the District of Columbia as a
domain, with the latter being used as an implement of the proper exercise of the police power. On the role of eminent
former like the power of taxation. The employment of the
domain in the attainment of this purpose, Justice Douglas Terminal. Prevailing bulk restrictions on neighboring sites
declared: were proportionately relaxed, theoretically enabling Penn
Central to recoup its losses at the Terminal site by
If those who govern the District of Columbia constructing or selling to others the right to construct larger,
decide that the Nation's Capital should be hence more profitable buildings on the transferee sites. 30
beautiful as well as sanitary, there is nothing in
the Fifth Amendment that stands in the way. The cases before us present no knotty complication insofar as
the question of compensable taking is concerned. To the
Once the object is within the authority of extent that the measures under challenge merely prescribe
Congress, the right to realize it through the retention limits for landowners, there is an exercise of the
exercise of eminent domain is clear. police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such
For the power of eminent domain is merely the regulation, it becomes necessary to deprive such owners of
means to the end. 28 whatever lands they may own in excess of the maximum area
allowed, there is definitely a taking under the power of
In Penn Central Transportation Co. v. New York eminent domain for which payment of just compensation is
City, 29 decided by a 6-3 vote in 1978, the U.S Supreme Court imperative. The taking contemplated is not a mere limitation
sustained the respondent's Landmarks Preservation Law of the use of the land. What is required is the surrender of the
under which the owners of the Grand Central Terminal had title to and the physical possession of the said excess and all
not been allowed to construct a multi-story office building over beneficial rights accruing to the owner in favor of the farmer-
the Terminal, which had been designated a historic landmark. beneficiary. This is definitely an exercise not of the police
Preservation of the landmark was held to be a valid objective power but of the power of eminent domain.
of the police power. The problem, however, was that the
owners of the Terminal would be deprived of the right to use Whether as an exercise of the police power or of the power of
the airspace above it although other landowners in the area eminent domain, the several measures before us are
could do so over their respective properties. While insisting challenged as violative of the due process and equal
that there was here no taking, the Court nonetheless protection clauses.
recognized certain compensatory rights accruing to Grand
Central Terminal which it said would "undoubtedly mitigate" The challenge to Proc. No. 131 and E.O. Nos. 228 and 299
the loss caused by the regulation. This "fair compensation," on the ground that no retention limits are prescribed has
as he called it, was explained by Prof. Costonis in this wise: already been discussed and dismissed. It is noted that
although they excited many bitter exchanges during the
In return for retaining the Terminal site in its pristine landmark deliberation of the CARP Law in Congress, the retention limits
status, Penn Central was authorized to transfer to neighboring finally agreed upon are, curiously enough, not being
properties the authorized but unused rights accruing to the questioned in these petitions. We therefore do not discuss
site prior to the Terminal's designation as a landmark the them here. The Court will come to the other claimed violations
rights which would have been exhausted by the 59-story of due process in connection with our examination of the
building that the city refused to countenance atop the
adequacy of just compensation as required under the power respect by the courts of justice except only where its
of expropriation. discretion is abused to the detriment of the Bill of Rights.

The argument of the small farmers that they have been It is worth remarking at this juncture that a statute may be
denied equal protection because of the absence of retention sustained under the police power only if there is a
limits has also become academic under Section 6 of R.A. No. concurrence of the lawful subject and the lawful method. Put
6657. Significantly, they too have not questioned the area of otherwise, the interests of the public generally as
such limits. There is also the complaint that they should not distinguished from those of a particular class require the
be made to share the burden of agrarian reform, an objection interference of the State and, no less important, the means
also made by the sugar planters on the ground that they employed are reasonably necessary for the attainment of the
belong to a particular class with particular interests of their purpose sought to be achieved and not unduly oppressive
own. However, no evidence has been submitted to the Court upon individuals. 34 As the subject and purpose of agrarian
that the requisites of a valid classification have been violated. reform have been laid down by the Constitution itself, we may
say that the first requirement has been satisfied. What
Classification has been defined as the grouping of persons or remains to be examined is the validity of the method
things similar to each other in certain particulars and different employed to achieve the constitutional goal.
from each other in these same particulars. 31 To be valid, it
must conform to the following requirements: (1) it must be One of the basic principles of the democratic system is that
based on substantial distinctions; (2) it must be germane to where the rights of the individual are concerned, the end does
the purposes of the law; (3) it must not be limited to existing not justify the means. It is not enough that there be a valid
conditions only; and (4) it must apply equally to all the objective; it is also necessary that the means employed to
members of the class. 32 The Court finds that all these pursue it be in keeping with the Constitution. Mere
requisites have been met by the measures here challenged expediency will not excuse constitutional shortcuts. There is
as arbitrary and discriminatory. no question that not even the strongest moral conviction or
the most urgent public need, subject only to a few notable
Equal protection simply means that all persons or things exceptions, will excuse the bypassing of an individual's rights.
similarly situated must be treated alike both as to the rights It is no exaggeration to say that a, person invoking a right
conferred and the liabilities imposed. 33 The petitioners have guaranteed under Article III of the Constitution is a majority of
not shown that they belong to a different class and entitled to one even as against the rest of the nation who would deny
a different treatment. The argument that not only landowners him that right.
but also owners of other properties must be made to share
the burden of implementing land reform must be rejected. That right covers the person's life, his liberty and his property
There is a substantial distinction between these two classes under Section 1 of Article III of the Constitution. With regard to
of owners that is clearly visible except to those who will not his property, the owner enjoys the added protection of Section
see. There is no need to elaborate on this matter. In any 9, which reaffirms the familiar rule that private property shall
event, the Congress is allowed a wide leeway in providing for not be taken for public use without just compensation.
a valid classification. Its decision is accorded recognition and
This brings us now to the power of eminent domain.
IV private agricultural lands in the manner prescribed by the
CARP was made by the legislative and executive
Eminent domain is an inherent power of the departments in the exercise of their discretion. We are not
State that enables it to forcibly acquire private justified in reviewing that discretion in the absence of a clear
lands intended for public use upon payment of showing that it has been abused.
just compensation to the owner. Obviously,
there is no need to expropriate where the owner A becoming courtesy admonishes us to respect the decisions
is willing to sell under terms also acceptable to of the political departments when they decide what is known
the purchaser, in which case an ordinary deed as the political question. As explained by Chief Justice
of sale may be agreed upon by the parties. 35 It Concepcion in the case of Taada v. Cuenco: 36
is only where the owner is unwilling to sell, or
cannot accept the price or other conditions The term "political question" connotes what it
offered by the vendee, that the power of means in ordinary parlance, namely, a question
eminent domain will come into play to assert the of policy. It refers to "those questions which,
paramount authority of the State over the under the Constitution, are to be decided by the
interests of the property owner. Private rights people in their sovereign capacity; or in regard
must then yield to the irresistible demands of the to which full discretionary authority has been
public interest on the time-honored justification, delegated to the legislative or executive branch
as in the case of the police power, that the of the government." It is concerned with issues
welfare of the people is the supreme law. dependent upon the wisdom, not legality, of a
particular measure.
But for all its primacy and urgency, the power of expropriation
is by no means absolute (as indeed no power is absolute). It is true that the concept of the political question has been
The limitation is found in the constitutional injunction that constricted with the enlargement of judicial power, which now
"private property shall not be taken for public use without just includes the authority of the courts "to determine whether or
compensation" and in the abundant jurisprudence that has not there has been a grave abuse of discretion amounting to
evolved from the interpretation of this principle. Basically, the lack or excess of jurisdiction on the part of any branch or
requirements for a proper exercise of the power are: (1) public instrumentality of the Government." 37 Even so, this should
use and (2) just compensation. not be construed as a license for us to reverse the other
departments simply because their views may not coincide
Let us dispose first of the argument raised by the petitioners with ours.
in G.R. No. 79310 that the State should first distribute public
agricultural lands in the pursuit of agrarian reform instead of The legislature and the executive have been seen fit, in their
immediately disturbing property rights by forcibly acquiring wisdom, to include in the CARP the redistribution of private
private agricultural lands. Parenthetically, it is not correct to landholdings (even as the distribution of public agricultural
say that only public agricultural lands may be covered by the lands is first provided for, while also continuing apace under
CARP as the Constitution calls for "the just distribution of all the Public Land Act and other cognate laws). The Court sees
agricultural lands." In any event, the decision to redistribute no justification to interpose its authority, which we may assert
only if we believe that the political decision is not unwise, but Just compensation is defined as the full and fair equivalent of
illegal. We do not find it to be so. the property taken from its owner by the expropriator. 39 It has
been repeatedly stressed by this Court that the measure is
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was not the taker's gain but the owner's loss. 40 The word "just" is
held: used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the
Congress having determined, as it did by the property to be taken shall be real, substantial, full, ample. 41
Act of March 3,1909 that the entire St. Mary's
river between the American bank and the It bears repeating that the measures challenged in these
international line, as well as all of the upland petitions contemplate more than a mere regulation of the use
north of the present ship canal, throughout its of private lands under the police power. We deal here with an
entire length, was "necessary for the purpose of actual taking of private agricultural lands that has
navigation of said waters, and the waters dispossessed the owners of their property and deprived them
connected therewith," that determination is of all its beneficial use and enjoyment, to entitle them to the
conclusive in condemnation proceedings just compensation mandated by the Constitution.
instituted by the United States under that Act,
and there is no room for judicial review of the As held in Republic of the Philippines v. Castellvi, 42 there is
judgment of Congress ... . compensable taking when the following conditions concur: (1)
the expropriator must enter a private property; (2) the entry
As earlier observed, the requirement for public use has must be for more than a momentary period; (3) the entry must
already been settled for us by the Constitution itself No less be under warrant or color of legal authority; (4) the property
than the 1987 Charter calls for agrarian reform, which is the must be devoted to public use or otherwise informally
reason why private agricultural lands are to be taken from appropriated or injuriously affected; and (5) the utilization of
their owners, subject to the prescribed maximum retention the property for public use must be in such a way as to oust
limits. The purposes specified in P.D. No. 27, Proc. No. 131 the owner and deprive him of beneficial enjoyment of the
and R.A. No. 6657 are only an elaboration of the property. All these requisites are envisioned in the measures
constitutional injunction that the State adopt the necessary before us.
measures "to encourage and undertake the just distribution of
all agricultural lands to enable farmers who are landless to Where the State itself is the expropriator, it is not necessary
own directly or collectively the lands they till." That public use, for it to make a deposit upon its taking possession of the
as pronounced by the fundamental law itself, must be binding condemned property, as "the compensation is a public
on us. charge, the good faith of the public is pledged for its payment,
and all the resources of taxation may be employed in raising
The second requirement, i.e., the payment of just the amount." 43 Nevertheless, Section 16(e) of the CARP Law
compensation, needs a longer and more thoughtful provides that:
examination.
Upon receipt by the landowner of the
corresponding payment or, in case of rejection
or no response from the landowner, upon the the sworn valuation thereof by the owner, whichever was
deposit with an accessible bank designated by lower. In declaring these decrees unconstitutional, the Court
the DAR of the compensation in cash or in LBP held through Mr. Justice Hugo E. Gutierrez, Jr.:
bonds in accordance with this Act, the DAR
shall take immediate possession of the land and The method of ascertaining just compensation
shall request the proper Register of Deeds to under the aforecited decrees constitutes
issue a Transfer Certificate of Title (TCT) in the impermissible encroachment on judicial
name of the Republic of the Philippines. The prerogatives. It tends to render this Court inutile
DAR shall thereafter proceed with the in a matter which under this Constitution is
redistribution of the land to the qualified reserved to it for final determination.
beneficiaries.
Thus, although in an expropriation proceeding
Objection is raised, however, to the manner of fixing the just the court technically would still have the power
compensation, which it is claimed is entrusted to the to determine the just compensation for the
administrative authorities in violation of judicial prerogatives. property, following the applicable decrees, its
Specific reference is made to Section 16(d), which provides task would be relegated to simply stating the
that in case of the rejection or disregard by the owner of the lower value of the property as declared either by
offer of the government to buy his land- the owner or the assessor. As a necessary
consequence, it would be useless for the court
... the DAR shall conduct summary to appoint commissioners under Rule 67 of the
administrative proceedings to determine the Rules of Court. Moreover, the need to satisfy
compensation for the land by requiring the the due process clause in the taking of private
landowner, the LBP and other interested parties property is seemingly fulfilled since it cannot be
to submit evidence as to the just compensation said that a judicial proceeding was not had
for the land, within fifteen (15) days from the before the actual taking. However, the strict
receipt of the notice. After the expiration of the application of the decrees during the
above period, the matter is deemed submitted proceedings would be nothing short of a mere
for decision. The DAR shall decide the case formality or charade as the court has only to
within thirty (30) days after it is submitted for choose between the valuation of the owner and
decision. that of the assessor, and its choice is always
limited to the lower of the two. The court cannot
To be sure, the determination of just compensation is a exercise its discretion or independence in
function addressed to the courts of justice and may not be determining what is just or fair. Even a grade
usurped by any other branch or official of the school pupil could substitute for the judge
government. EPZA v. Dulay 44 resolved a challenge to several insofar as the determination of constitutional just
decrees promulgated by President Marcos providing that the compensation is concerned.
just compensation for property under expropriation should be
either the assessment of the property by the government or xxx
In the present petition, we are once again Any party who disagrees with the decision may
confronted with the same question of whether bring the matter to the court of proper
the courts under P.D. No. 1533, which contains jurisdiction for final determination of just
the same provision on just compensation as its compensation.
predecessor decrees, still have the power and
authority to determine just compensation, The determination made by the DAR is only preliminary
independent of what is stated by the decree and unless accepted by all parties concerned. Otherwise, the
to this effect, to appoint commissioners for such courts of justice will still have the right to review with finality
purpose. the said determination in the exercise of what is admittedly a
judicial function.
This time, we answer in the affirmative.
The second and more serious objection to the provisions on
xxx just compensation is not as easily resolved.

It is violative of due process to deny the owner This refers to Section 18 of the CARP Law providing in full as
the opportunity to prove that the valuation in the follows:
tax documents is unfair or wrong. And it is
repulsive to the basic concepts of justice and SEC. 18. Valuation and Mode of Compensation.
fairness to allow the haphazard work of a minor The LBP shall compensate the landowner in
bureaucrat or clerk to absolutely prevail over the such amount as may be agreed upon by the
judgment of a court promulgated only after landowner and the DAR and the LBP, in
expert commissioners have actually viewed the accordance with the criteria provided for in
property, after evidence and arguments pro and Sections 16 and 17, and other pertinent
con have been presented, and after all factors provisions hereof, or as may be finally
and considerations essential to a fair and just determined by the court, as the just
determination have been judiciously evaluated. compensation for the land.

A reading of the aforecited Section 16(d) will readily show that The compensation shall be paid in one of the
it does not suffer from the arbitrariness that rendered the following modes, at the option of the landowner:
challenged decrees constitutionally objectionable. Although
the proceedings are described as summary, the landowner (1) Cash payment, under the following terms
and other interested parties are nevertheless allowed an and conditions:
opportunity to submit evidence on the real value of the
property. But more importantly, the determination of the just (a) For lands above fifty (50) hectares,
compensation by the DAR is not by any means final and insofar as the excess hectarage is
conclusive upon the landowner or any other interested party, concerned Twenty-five percent (25%)
for Section 16(f) clearly provides: cash, the balance to be paid in
government financial instruments (b) Transferability and negotiability. Such
negotiable at any time. LBP bonds may be used by the
landowner, his successors-in- interest or
(b) For lands above twenty-four (24) his assigns, up to the amount of their
hectares and up to fifty (50) hectares face value, for any of the following:
Thirty percent (30%) cash, the balance to
be paid in government financial (i) Acquisition of land or other real
instruments negotiable at any time. properties of the government,
including assets under the Asset
(c) For lands twenty-four (24) hectares Privatization Program and other
and below Thirty-five percent (35%) assets foreclosed by government
cash, the balance to be paid in financial institutions in the same
government financial instruments province or region where the lands
negotiable at any time. for which the bonds were paid are
situated;
(2) Shares of stock in government-owned or
controlled corporations, LBP preferred shares, (ii) Acquisition of shares of stock of
physical assets or other qualified investments in government-owned or controlled
accordance with guidelines set by the PARC; corporations or shares of stock
owned by the government in
(3) Tax credits which can be used against any private corporations;
tax liability;
(iii) Substitution for surety or bail
(4) LBP bonds, which shall have the following bonds for the provisional release
features: of accused persons, or for
performance bonds;
(a) Market interest rates aligned
with 91-day treasury bill rates. Ten (iv) Security for loans with any
percent (10%) of the face value of government financial institution,
the bonds shall mature every year provided the proceeds of the loans
from the date of issuance until the shall be invested in an economic
tenth (10th) year: Provided, That enterprise, preferably in a small
should the landowner choose to and medium- scale industry, in the
forego the cash portion, whether in same province or region as the
full or in part, he shall be paid land for which the bonds are paid;
correspondingly in LBP bonds;
(v) Payment for various taxes and
fees to government: Provided,
That the use of these bonds for of the thing expropriated has to suffer by reason
these purposes will be limited to a of the expropriation . 45 (Emphasis supplied.)
certain percentage of the
outstanding balance of the In J.M. Tuazon Co. v. Land Tenure Administration, 46 this
financial instruments; Provided, Court held:
further, That the PARC shall
determine the percentages It is well-settled that just compensation means
mentioned above; the equivalent for the value of the property at
the time of its taking. Anything beyond that is
(vi) Payment for tuition fees of the more, and anything short of that is less, than
immediate family of the original just compensation. It means a fair and full
bondholder in government equivalent for the loss sustained, which is the
universities, colleges, trade measure of the indemnity, not whatever gain
schools, and other institutions; would accrue to the expropriating entity. The
market value of the land taken is the just
(vii) Payment for fees of the compensation to which the owner of condemned
immediate family of the original property is entitled, the market value being that
bondholder in government sum of money which a person desirous, but not
hospitals; and compelled to buy, and an owner, willing, but not
compelled to sell, would agree on as a price to
(viii) Such other uses as the PARC be given and received for such property.
may from time to time allow. (Emphasis supplied.)

The contention of the petitioners in G.R. No. 79777 is that the In the United States, where much of our jurisprudence on the
above provision is unconstitutional insofar as it requires the subject has been derived, the weight of authority is also to the
owners of the expropriated properties to accept just effect that just compensation for property expropriated is
compensation therefor in less than money, which is the only payable only in money and not otherwise. Thus
medium of payment allowed. In support of this contention,
they cite jurisprudence holding that: The medium of payment of compensation is
ready money or cash. The condemnor cannot
The fundamental rule in expropriation matters is compel the owner to accept anything but
that the owner of the property expropriated is money, nor can the owner compel or require the
entitled to a just compensation, which should be condemnor to pay him on any other basis than
neither more nor less, whenever it is possible to the value of the property in money at the time
make the assessment, than the money and in the manner prescribed by the
equivalent of said property. Just compensation Constitution and the statutes. When the power
has always been understood to be the just and of eminent domain is resorted to, there must be
complete equivalent of the loss which the owner a standard medium of payment, binding upon
both parties, and the law has fixed that standard territory of this country but goes beyond in time to the
as money in cash. 47 (Emphasis supplied.) foreseeable future, which it hopes to secure and edify with the
vision and the sacrifice of the present generation of Filipinos.
Part cash and deferred payments are not and Generations yet to come are as involved in this program as
cannot, in the nature of things, be regarded as a we are today, although hopefully only as beneficiaries of a
reliable and constant standard of richer and more fulfilling life we will guarantee to them
compensation. 48 tomorrow through our thoughtfulness today. And, finally, let it
not be forgotten that it is no less than the Constitution itself
"Just compensation" for property taken by that has ordained this revolution in the farms, calling for "a
condemnation means a fair equivalent in just distribution" among the farmers of lands that have
money, which must be paid at least within a heretofore been the prison of their dreams but can now
reasonable time after the taking, and it is not become the key at least to their deliverance.
within the power of the Legislature to substitute
for such payment future obligations, bonds, or Such a program will involve not mere millions of pesos. The
other valuable advantage. 49 (Emphasis cost will be tremendous. Considering the vast areas of land
supplied.) subject to expropriation under the laws before us, we estimate
that hundreds of billions of pesos will be needed, far more
It cannot be denied from these cases that the traditional indeed than the amount of P50 billion initially appropriated,
medium for the payment of just compensation is money and which is already staggering as it is by our present standards.
no other. And so, conformably, has just compensation been Such amount is in fact not even fully available at this time.
paid in the past solely in that medium. However, we do not
deal here with the traditional excercise of the power of We assume that the framers of the Constitution were aware of
eminent domain. This is not an ordinary expropriation where this difficulty when they called for agrarian reform as a top
only a specific property of relatively limited area is sought to priority project of the government. It is a part of this
be taken by the State from its owner for a specific and assumption that when they envisioned the expropriation that
perhaps local purpose. would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way
What we deal with here is a revolutionary kind of but a less conventional if more practical method. There can
expropriation. be no doubt that they were aware of the financial limitations of
the government and had no illusions that there would be
The expropriation before us affects all private agricultural enough money to pay in cash and in full for the lands they
lands whenever found and of whatever kind as long as they wanted to be distributed among the farmers. We may
are in excess of the maximum retention limits allowed their therefore assume that their intention was to allow such
owners. This kind of expropriation is intended for the benefit manner of payment as is now provided for by the CARP Law,
not only of a particular community or of a small segment of particularly the payment of the balance (if the owner cannot
the population but of the entire Filipino nation, from all levels be paid fully with money), or indeed of the entire amount of
of our society, from the impoverished farmer to the land- the just compensation, with other things of value. We may
glutted owner. Its purpose does not cover only the whole also suppose that what they had in mind was a similar
scheme of payment as that prescribed in P.D. No. 27, which said section will result in the nullification of the entire program,
was the law in force at the time they deliberated on the new killing the farmer's hopes even as they approach realization
Charter and with which they presumably agreed in principle. and resurrecting the spectre of discontent and dissent in the
restless countryside. That is not in our view the intention of
The Court has not found in the records of the Constitutional the Constitution, and that is not what we shall decree today.
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just Accepting the theory that payment of the just compensation is
compensation as applied to the comprehensive agrarian not always required to be made fully in money, we find further
reform program being contemplated. There was the that the proportion of cash payment to the other things of
suggestion to "fine tune" the requirement to suit the demands value constituting the total payment, as determined on the
of the project even as it was also felt that they should "leave it basis of the areas of the lands expropriated, is not unduly
to Congress" to determine how payment should be made to oppressive upon the landowner. It is noted that the smaller
the landowner and reimbursement required from the farmer- the land, the bigger the payment in money, primarily because
beneficiaries. Such innovations as "progressive the small landowner will be needing it more than the big
compensation" and "State-subsidized compensation" were landowners, who can afford a bigger balance in bonds and
also proposed. In the end, however, no special definition of other things of value. No less importantly, the government
the just compensation for the lands to be expropriated was financial instruments making up the balance of the payment
reached by the Commission. 50 are "negotiable at any time." The other modes, which are
likewise available to the landowner at his option, are also not
On the other hand, there is nothing in the records either that unreasonable because payment is made in shares of stock,
militates against the assumptions we are making of the LBP bonds, other properties or assets, tax credits, and other
general sentiments and intention of the members on the things of value equivalent to the amount of just compensation.
content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and Admittedly, the compensation contemplated in the law will
the limitations of the expropriator. cause the landowners, big and small, not a little
inconvenience. As already remarked, this cannot be avoided.
With these assumptions, the Court hereby declares that the Nevertheless, it is devoutly hoped that these countrymen of
content and manner of the just compensation provided for in ours, conscious as we know they are of the need for their
the afore- quoted Section 18 of the CARP Law is not violative forebearance and even sacrifice, will not begrudge us their
of the Constitution. We do not mind admitting that a certain indispensable share in the attainment of the ideal of agrarian
degree of pragmatism has influenced our decision on this reform. Otherwise, our pursuit of this elusive goal will be like
issue, but after all this Court is not a cloistered institution the quest for the Holy Grail.
removed from the realities and demands of society or
oblivious to the need for its enhancement. The Court is as The complaint against the effects of non-registration of the
acutely anxious as the rest of our people to see the goal of land under E.O. No. 229 does not seem to be viable any more
agrarian reform achieved at last after the frustrations and as it appears that Section 4 of the said Order has been
deprivations of our peasant masses during all these superseded by Section 14 of the CARP Law. This repeats the
disappointing decades. We are aware that invalidation of the requisites of registration as embodied in the earlier measure
but does not provide, as the latter did, that in case of failure or public use." In Rexford v. Knight, 55 the Court of Appeals of
refusal to register the land, the valuation thereof shall be that New York said that the construction upon the statutes was
given by the provincial or city assessor for tax purposes. On that the fee did not vest in the State until the payment of the
the contrary, the CARP Law says that the just compensation compensation although the authority to enter upon and
shall be ascertained on the basis of the factors mentioned in appropriate the land was complete prior to the payment.
its Section 17 and in the manner provided for in Section 16. Kennedy further said that "both on principle and authority the
rule is ... that the right to enter on and use the property is
The last major challenge to CARP is that the landowner is complete, as soon as the property is actually appropriated
divested of his property even before actual payment to him in under the authority of law for a public use, but that the title
full of just compensation, in contravention of a well- accepted does not pass from the owner without his consent, until just
principle of eminent domain. compensation has been made to him."

The recognized rule, indeed, is that title to the property Our own Supreme Court has held in Visayan Refining Co. v.
expropriated shall pass from the owner to the expropriator Camus and Paredes, 56 that:
only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here If the laws which we have exhibited or cited in
and in other democratic jurisdictions. Thus: the preceding discussion are attentively
examined it will be apparent that the method of
Title to property which is the subject of condemnation expropriation adopted in this jurisdiction is such
proceedings does not vest the condemnor until the judgment as to afford absolute reassurance that no piece
fixing just compensation is entered and paid, but the of land can be finally and irrevocably taken from
condemnor's title relates back to the date on which the an unwilling owner until compensation is paid ...
petition under the Eminent Domain Act, or the commissioner's . (Emphasis supplied.)
report under the Local Improvement Act, is filed. 51
It is true that P.D. No. 27 expressly ordered the emancipation
... although the right to appropriate and use land taken for a of tenant-farmer as October 21, 1972 and declared that he
canal is complete at the time of entry, title to the property shall "be deemed the owner" of a portion of land consisting of
taken remains in the owner until payment is actually a family-sized farm except that "no title to the land owned by
made. 52 (Emphasis supplied.) him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers'
In Kennedy v. Indianapolis, 53 the US Supreme Court cited cooperative." It was understood, however, that full payment of
several cases holding that title to property does not pass to the just compensation also had to be made first, conformably
the condemnor until just compensation had actually been to the constitutional requirement.
made. In fact, the decisions appear to be uniformly to this
effect. As early as 1838, in Rubottom v. McLure, 54 it was held When E.O. No. 228, categorically stated in its Section 1 that:
that "actual payment to the owner of the condemned property
was a condition precedent to the investment of the title to the All qualified farmer-beneficiaries are now
property in the State" albeit "not to the appropriation of it to deemed full owners as of October 21, 1972 of
the land they acquired by virtue of Presidential In connection with these retained rights, it does not appear in
Decree No. 27. (Emphasis supplied.) G.R. No. 78742 that the appeal filed by the petitioners with
the Office of the President has already been resolved.
it was obviously referring to lands already validly acquired Although we have said that the doctrine of exhaustion of
under the said decree, after proof of full-fledged membership administrative remedies need not preclude immediate resort
in the farmers' cooperatives and full payment of just to judicial action, there are factual issues that have yet to be
compensation. Hence, it was also perfectly proper for the examined on the administrative level, especially the claim that
Order to also provide in its Section 2 that the "lease rentals the petitioners are not covered by LOI 474 because they do
paid to the landowner by the farmer- beneficiary after October not own other agricultural lands than the subjects of their
21, 1972 (pending transfer of ownership after full payment of petition.
just compensation), shall be considered as advance payment
for the land." Obviously, the Court cannot resolve these issues. In any
event, assuming that the petitioners have not yet exercised
The CARP Law, for its part, conditions the transfer of their retention rights, if any, under P.D. No. 27, the Court
possession and ownership of the land to the government on holds that they are entitled to the new retention rights
receipt by the landowner of the corresponding payment or the provided for by R.A. No. 6657, which in fact are on the whole
deposit by the DAR of the compensation in cash or LBP more liberal than those granted by the decree.
bonds with an accessible bank. Until then, title also remains
with the landowner. 57 No outright change of ownership is V
contemplated either.
The CARP Law and the other enactments also involved in
Hence, the argument that the assailed measures violate due these cases have been the subject of bitter attack from those
process by arbitrarily transferring title before the land is fully who point to the shortcomings of these measures and ask
paid for must also be rejected. that they be scrapped entirely. To be sure, these enactments
are less than perfect; indeed, they should be continuously re-
It is worth stressing at this point that all rights acquired by the examined and rehoned, that they may be sharper instruments
tenant-farmer under P.D. No. 27, as recognized under E.O. for the better protection of the farmer's rights. But we have to
No. 228, are retained by him even now under R.A. No. 6657. start somewhere. In the pursuit of agrarian reform, we do not
This should counter-balance the express provision in Section tread on familiar ground but grope on terrain fraught with
6 of the said law that "the landowners whose lands have been pitfalls and expected difficulties. This is inevitable. The CARP
covered by Presidential Decree No. 27 shall be allowed to Law is not a tried and tested project. On the contrary, to use
keep the area originally retained by them thereunder, further, Justice Holmes's words, "it is an experiment, as all life is an
That original homestead grantees or direct compulsory heirs experiment," and so we learn as we venture forward, and, if
who still own the original homestead at the time of the necessary, by our own mistakes. We cannot expect perfection
approval of this Act shall retain the same areas as long as although we should strive for it by all means. Meantime, we
they continue to cultivate said homestead." struggle as best we can in freeing the farmer from the iron
shackles that have unconscionably, and for so long, fettered
his soul to the soil.
By the decision we reach today, all major legal obstacles to SO ORDERED.
the comprehensive agrarian reform program are removed, to
clear the way for the true freedom of the farmer. We may now Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr.,
glimpse the day he will be released not only from want but Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes,
also from the exploitation and disdain of the past and from his Grio-Aquino, Medialdea and Regalado, JJ., concur.
own feelings of inadequacy and helplessness. At last his
servitude will be ended forever. At last the farm on which he
toils will be his farm. It will be his portion of the Mother Earth
that will give him not only the staff of life but also the joy of
living. And where once it bred for him only deep despair, now
can he see in it the fruition of his hopes for a more fulfilling
future. Now at last can he banish from his small plot of earth
his insecurities and dark resentments and "rebuild in it the
music and the dream."

WHEREFORE, the Court holds as follows:

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


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

2. Title to all expropriated properties shall be


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

3. All rights previously acquired by the tenant-


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

4. Landowners who were unable to exercise


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

5. Subject to the above-mentioned rulings all the


petitions are DISMISSED, without
pronouncement as to costs.
Petitioners Froilan De Guzman, Angel Marcelo and Nicasio
Magbitang were among the tenants of a parcel of land
Republic of the Philippines situated at Barangay Pagala, Baliuag, Bulacan. The land,
SUPREME COURT measuring six (6) hectares, was formerly owned by the Vergel
Manila De Dios family. Sometime in 1979, respondent Municipality of
THIRD DIVISION Baliuag, Bulacan (municipality) sought the expropriation of the
land before the now defunct Court of Agrarian Relations.
G.R. No. 156965 October 12, 2006 During the pendency of the expropriation proceedings, the
municipality and petitioners entered into a compromise
FROILAN DE GUZMAN, ANGEL MARCELO and NICASIO
agreement, whereby petitioners irrevocably withdrew their
MAGBITANG, petitioners,
opposition to the expropriation of the land in consideration of
vs.
the payment of a disturbance compensation of P25,000.00
THE COURT OF APPEALS, OFFICE OF THE PRESIDENT,
per hectare or P2.50 per square meter. Petitioners also
and the MUNICIPALITY OF BALIUAG,
waived "all claims and demands" against the municipality.
BULACAN, respondents.
The Court of Agrarian Relations approved said compromise
agreement in its decisions dated 16 April 1979 and 9 August
1979.3
DECISION From the records, it can be gathered that the municipality
eventually acquired ownership of the land through
expropriation but allowed petitioners to continue cultivating
their lots pending the construction of the Baliuag Wholesale
Tinga, J.: Complex Market. For this arrangement, petitioners remitted
rentals to the municipal treasurer. Despite the lapse of several
On appeal via a petition for review on certiorari under Rule 45 years, construction of the market did not push through. This
of the 1997 Rules of Civil Procedure are the Decision1 and prompted petitioners, who had continually occupied and
Resolution2 of the Court of Appeals in CA-G.R. SP No. cultivated the land, to file in 1996 a petition with the Municipal
55710. The Decision affirmed the Resolution dated 4 October Agrarian Reform Office (MARO) of Baliuag, praying that the
1999 of the Office of the President dismissing petitioners' land be placed under the Operation Land Transfer (OLT) in
appeal from the Order of the Secretary of Agrarian Reform accordance with Presidential Decree (P.D.) No. 27.4
declaring that the disputed property cannot be placed under
the coverage of the agrarian reform program or the Operation Following the filing of their petition for CARP coverage before
Land Transfer. the MARO, petitioners filed a complaint on 13 May 1997 with
the Department of Agrarian Reform Adjudication Board
The following factual antecedents are matters of record. (DARAB) against the municipality. In their complaint docketed
as DARAB Case No. 03-02-5054'97, petitioners prayed for
the issuance of a preliminary injunction or temporary grounds that the land remained agricultural and that the Office
restraining order to secure their peaceful possession over the of the President erred in relying upon the certification issued
land. The Provincial Adjudicator rendered judgment in favor of by the Housing and Land Use Regulatory Board (HLURB)
petitioners on 17 July 1997. The dispositive portion of the classifying the land as commercial. They also argued that
decision reads: under the provisions of Administrative Order (A.O.) No. 20,
series of 1992, the conversion of the land for non-agricultural
WHEREFORE, premises considered, the Board finds the
purposes was disallowed.
plaintiffs a [sic] bona-fide farmer[-]beneficiaries of agrarian
reform[.] [A]ccordingly, judgment is hereby rendered as On 30 January, 2002, the Court of Appeals rendered the
follows: assailed Decision, dismissing petitioners' appeal. Upholding
the non-agricultural classification of the land, the Court of
1. Directing the the [sic] respondent, Municipality of Baliuag,
Appeals ruled that the land could no longer be subject of the
Bulacan[,] represented by Honorable Mayor Edilberto Tengco
comprehensive agrarian reform law (CARL). The Court of
and all other persons acting in their behalf to permanently
Appeals also denied petitioners' motion for reconsideration in
cease and desist from dumping garbage in the premises in
the assailed Resolution dated January 20, 2003.
question;
Hence, the instant petition, imputing the following errors to the
2. Directing the respondent to maintain petitioners in peaceful
Court of Appeals:
possession over the disputed property.
I.
SO ORDERED.5
WITH ALL DUE RESPECT, THE COURT OF APPEALS
On 6 January 1997, the Regional Director of the Department
COMMITTED GRAVE AND MANIFEST ERROR IN LAW
of Agrarian Reform (DAR) issued an order granting the
WHEN IT FAILED TO CONSIDER THAT THE SUBJECT
petition and declaring the land as covered by OLT.6 The
LANDHOLDING SHOULD HAVE BEEN COVERED BY
municipality moved for its reconsideration in vain. Following
OPERATION LAND TRANSFER PURSUANT TO P.D. NO.
the denial of its motion for reconsideration, the municipality
27 DUE TO THE FAILURE OF THE LANDOWNER TO
elevated the matter to the DAR Secretary who, in his Order
CARRY OUT ITS CONVERSION FROM AGRICULTURAL
dated 8 August 1997, reversed the Order of 6 January 1997
LAND FOR A LONG PERIOD OF TIME.
of the Regional Director.7Petitioners, aggrieved this time, filed
an appeal with the Office of the President. On 1 July 1999, II.
Executive Secretary Ronaldo B. Zamora, by authority of the
THE COURT OF APPEALS COMMITTED SERIOUS ERROR
President, dismissed petitioners' appeal and affirmed the
WHEN IT UPHOLD (sic) THE RECLASSIFICATION OF THE
order of the DAR Secretary.8
SUBJECT LANDHOLDING.
Undaunted, petitioners filed a petition for review with the
III.
Court of Appeals, which prayed for the reversal of the Order
of 1 July 1999 issued by the Office of the President on the
THE COURT OF APPEALS COMMITTED GRAVE ABUSE outside the coverage of CARL including lands previously
OF DISCRETION WHEN IT DISREGARDED THE converted to non-agricultural uses prior to the effectivity of
PROVISIONS OF THE O.P. ADMINISTRATIVE ORDER NO. CARL by government agencies other than the DAR. This rule
20 SERIES OF 1992 WHICH CLEARLY PROVIDES THE has been reiterated in a number of subsequent cases.
NON NEGOTIABILITY OF IRRIGATED PRIME Despite claims that the areas have been devoted for
AGRICULTURAL LANDS TO NON-AGRICULTURAL agricultural production, the Court has upheld the "non-
PURPOSES.9 agricultural" classification made by the NHA over housing and
resettlements projects,12 zoning ordinances passed by local
Essentially, the main issue to be resolved is whether the
government units classifying residential areas,13 and
subject land can be reclassified to agricultural after the
certifications over watershed areas issued by the Department
purpose of its conversion to a non-agricultural land had not
of Environment and Natural Resources (DENR).14
materialized.
The DAR itself has recognized the prospective application of
Petitioners contend that despite the conversion of the land for
R.A. No. 6657, insofar as it provides under Section 3(c)
a commercial purpose, they have remained tenants of the
thereof that lands classified as non-agricultural prior to the
land devoting it for agricultural production. Though the earlier
effectivity of the CARL are not covered by the CARL. Thus,
tenancy relationship had been terminated upon the payment
DAR Administrative Order No. 1, series of 1990 provides:
of disturbance compensation pursuant to the 1979
compromise agreement, petitioners posit that a tenancy Agricultural land refers to those devoted to agricultural activity
relationship was created anew between them and the as defined in R.A. [No.] 6657 and not classified as mineral or
municipality when the latter allowed petitioners to cultivate the forest by the Department of Environment and Natural
land after the expropriation proceeding. Resources (DENR) and its predecessor agencies, and not
classified in town plans and zoning ordinances as approved
The petition has no merit.
by the Housing Land Use Regulatory Board (HLURB) and its
Under Section 3(c) of Republic Act (R.A.) No. 6657, otherwise preceding competent authorities prior to 15 June 1988 for
known as the Comprehensive Agrarian Reform Law (CARL), residential, commercial or industrial use. (Emphasis supplied.}
an agricultural land refers to land devoted to agricultural
That the subject land had been reclassified from agricultural
activity as defined therein and not classified as mineral,
to non-agricultural is not disputed. The records reveal that as
forest, residential, commercial or industrial land. The
early as 1980, the municipality had passed a zoning
deliberations of the Constitutional Commission confirm this
ordinance which identified the subject land as the site of the
limitation. "Agricultural lands" are only those lands which are
wholesale market complex. As per certification issued by the
"arable and suitable agricultural lands" and "do not include
HLURB, the land is within the zoning plan approved by the
commercial, industrial and residential lands."10
National Coordinating Council for Town Planning, Housing
In Natalia Realty, Inc. vs. Department of Agrarian Reform,11 it and Zoning.
was held that lands not devoted to agricultural activity are
Petitioners also theorize that they earned a vested right over ownership over the land through expropriation and passed the
the land when a tenancy relationship was established anew ordinance converting said land into a commercial area, any
between them and the municipality subsequent to the latter's transaction entered into by the municipality involving the land
acquisition of the land. In support of this theory, petitioners was governed by the applicable civil law in relation to laws on
cite minutes of meetings and resolutions passed by the local government. At this point, agrarian laws no longer
municipality's Sanggunian, purportedly indicating the governed the relationship between petitioners and the
municipality's recognition of their status as tenants of the municipality. While it was not established whether the
subject landholding. relationship between petitioners and the municipality was that
of a lessor and lessee or that of an employer and laborer, as
Petitioners' theory does not persuade the Court.
the supposed written agreement was not offered in evidence,
A segment of the minutes of the meeting of the the fact remains that the subject land had already been
municipality's Sanggunian dated 27 May 1988, which identified as commercial in the zoning ordinance.
petitioners cite to bolster their theory, is quoted below:
Certainly, petitioners' occupation of the land, made possible
Tumindig din at namahayag ang ating Punong Bayan Kgg. as it was by the tolerance of the municipality, was subject to
Reynaldo S. del Rosario at sinabing sa kasulukuyan ay hindi its peremptory right to terminate. As absolute owner of the
pa naman kailangan ng Pamahalaang Bayan ang nasabing land, the municipality is entitled to devote the land for
lupa ngunit kung ito ay kakailangan na ay kinakailangang purposes it deems appropriate.
umalis sila dito ng mahinusay, walang pasubali at maluwag
It is noteworthy that even prior to its expropriation and
sa kanilang kalooban, kung kaya't iminungkahi niya na
reclassification, the land was never placed under the
gumawa ng isang nakasulat na kasunduan na ang nakasaad
coverage of the agrarian reform program. Although it appears
ay kusang-loob silang aalis sa nasabing lupa pagdating ng
that petitioners had been tilling the land as tenants of the
panahon na ito ay kailanganin na ng Pamahalaang Bayan. 15
Vergel De Dios family, the municipality's predecessor-in-
The aforequoted minutes clearly show that petitioners' use interest, the records do not show that petitioners had applied
and possession of the land was by mere tolerance of the for coverage of the land under the agrarian reform program.
municipality and subject to the condition that petitioners would Before a claimant becomes a qualified beneficiary of agrarian
voluntarily vacate the land when the need would arise. In the reform, the administrative process for coverage under the
same minutes, the Sanggunian resolved to authorize then CARP must be initiated. The mere fact of cultivating an
Mayor Reynaldo S. del Rosario to enter into an agreement in agricultural land does not ipso jure vest ownership right in
writing with petitioners concerning the favor of the tiller. Since petitioners had not applied for CARP
latter's temporary cultivation of the land as hired labor. coverage prior to the reclassification of the land to
commercial, their occupation by mere tolerance cannot ripen
As discussed earlier, the land had ceased to be classified as into absolute ownership.
agricultural when the municipality extended petitioners'
occupation of the land. After the municipality acquired
Petitioners further argue that the municipality's failure to one year after the dispossession of the tenant, it shall be
realize the commercial project operates to reinstate the presumed that he acted in bad faith and the tenant shall have
original status of the land as agricultural. In support of this the right to demand possession of the land and recover
theory, petitioners cite Section 36 (1) of R.A. No. 3844, or the damages for any loss incurred by him because of said
Agriculture Land Reform Code, unaware that the provision dispossessions.
had been amended by R.A. 6389, entitled, "An Act Amending
With the enactment of the amendatory law, the condition
Republic Act Numbered Thirty Eight Hundred and Forty Four,
imposed on the landowner to implement the conversion of the
As Amended, Otherwise Known As the Agricultural Land
agricultural land to a non-agricultural purpose within a certain
Reform Code and For Other Purposes."
period was deleted. Section 36 (1), R.A. No. 3844, as
Before its amendment, Section 36 (1), R.A. No. 3844 amended, now reads:
provided:
Sec. 36. Possession of Landholding; Exceptions.
Sec. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to the period or future
Notwithstanding any agreement as to the period or future surrender, of the land, an agricultural lessee shall continue in
surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when
the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a
his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is
judgment that is final and executory if after due hearing it is shown that:
shown that:
(1) The landholding is declared by the department head upon
(1) The agricultural lessor-owner or a member of his recommendation of the National Planning Commission to be
immediate family will personally cultivate the landholding or suited for residential, commercial, industrial or some other
will convert the landholding, if suitably located, into urban purposes: Provided, That the agricultural lessee shall
residential, factory, hospital or school site or other useful non- be entitled to disturbance compensation equivalent to five
agricultural purposes: Provided, That the agricultural lessee times the average of gross harvests on his landholding during
shall be entitled to disturbance compensation equivalent to the last five preceding calendar years;
five years rental on his landholding in addition to his rights
x x x x16
under Sections twenty-five and thirty-four, except when the
land owned and leased by the agricultural lessor, is not more The amendment is the Legislature's recognition that the
than five hectares, in which case instead of disturbance optimal use of some lands may not necessarily be for
compensation the lessee may be entitled to an advanced agriculture. Thus, discretion is vested on the appropriate
notice of at least one agricultural year before ejectment government agencies to determine the suitability of a land for
proceedings are filed against him: Provided, further, That residential, commercial, industrial or other purposes. With the
should the landholder not cultivate the land himself for three passage of the CARL, the conversion of agricultural lands to
years or fail to substantially carry out such conversion within non-agricultural uses was retained and the imposition on the
landowner to implement within a time frame the proposed the approval of the Department of Agrarian Reform. Section
non-agricultural use of the land was done away with. 65 of Rep. Act No. 6657 relied upon by the petitioner applies
only to applications by the landlord or the beneficiary for the
Moreover, in Pasong Bayabas Farmers Association, Inc. v.
conversion of lands previously placed under agrarian reform
Court of Appeals,17 the Court declared categorically that the
law after the lapse of five years from its award. It does not
failure of the landowner therein to complete the housing
apply to agricultural lands already converted as residential
project did not have the effect of reverting the property to its
lands prior to the passage of Rep. Act No. 6657.21
classification as agricultural land, although the order of
conversion issued by the then Minister of Agrarian Reform Thus, the zoning ordinance passed by the municipality
obliged the landowner to commence the physical sometime in 1980 reclassifying the subject land as
development of the housing project within one year from commercial and future site of a market complex operated to
receipt of the order of conversion.18 In said case, a vast tract take away the "agricultural" status of the subject property.
of land claimed to be cultivated by its tenants formed part of Subsequent events cited by petitioners such as their
the subdivision plan of a housing project approved by the continuous tillage of the land and the non-commencement of
National Planning Commission and Municipal Council of the construction of the market complex did not strip the land
Carmona and subsequently declared by the Provincial Board of its classification as commercial.
of Cavite as composite of the industrial areas of Carmona,
Petitioners' reliance on the provisions of A.O. No. 20, series of
Dasmarias, Silang and Trece Martirez. Because the
1992, issued by then President Fidel Ramos is misplaced.
reclassification of the property by the Municipal Council of
A.O. No. 20, which sets forth the guidelines to be observed by
Carmona to non-agricultural land took place before the
local government units and government agencies on
effectivity of the CARL, the Court held that Section 65 of R.A.
agricultural land use conversion, cannot be applied to the
No. 6657 cannot be applied retroactively.19
subject land for the reason that the land had already been
More importantly, the Court in Pasong Bayabas recognized classified as commercial long before its issuance. Indeed,
the power of local government units to adopt zoning A.O. No. 20 cannot be applied retroactively.
ordinances, citing Section 3 of R.A. No. 2264,20 to wit:
WHEREFORE, the instant petition for review on certiorari
Section 3 of Rep. Act No. 2264, amending the Local is DENIED. The Decision and Resolution of the Court of
Government Code, specifically empowers municipal and/or Appeals in CA-G.R. SP No. 55710 are AFFIRMED. Costs
city councils to adopt zoning and subdivision ordinances or against petitioners.
regulations in consultation with the National Planning
SO ORDERED.
Commission. A zoning ordinance prescribes, defines, and
apportions a given political subdivision into specific land uses Quisumbing, J., Chairperson, Carpio, Carpio Morales, and
as present and future projection of needs. The power of the Velasco, Jr., JJ., concur.
local government to convert or reclassify lands to residential
lands to non-agricultural lands reclassified is not subject to
EN BANC Production and Profit Sharing as embodied in Sections 13
and 32 of R.A. No. 6657 (Rollo, p. 80).
[G.R. No. 86889 : December 4, 1990.]
On January 9, 1989, the Secretary of Agrarian Reform
192 SCRA 51
promulgated its Rules and Regulations implementing Section
LUZ FARMS, Petitioner, vs. THE HONORABLE 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
SECRETARY OF THE DEPARTMENT OF AGRARIAN
Luz Farms, petitioner in this case, is a corporation engaged in
REFORM, Respondent.
the livestock and poultry business and together with others in
the same business allegedly stands to be adversely affected
by the enforcement of Section 3(b), Section 11, Section 13,
DECISION Section 16(d) and 17 and Section 32 of R.A. No. 6657
otherwise known as Comprehensive Agrarian Reform Law
and of the Guidelines and Procedures Implementing
PARAS, J.: Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and
Regulations Implementing Section 11 thereof as promulgated
This is a petition for prohibition with prayer for restraining by the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
order and/or preliminary and permanent injunction against the
Honorable Secretary of the Department of Agrarian Reform Hence, this petition praying that aforesaid laws, guidelines
for acting without jurisdiction in enforcing the assailed and rules be declared unconstitutional. Meanwhile, it is also
provisions of R.A. No. 6657, otherwise known as the prayed that a writ of preliminary injunction or restraining order
Comprehensive Agrarian Reform Law of 1988 and in be issued enjoining public respondents from enforcing the
promulgating the Guidelines and Procedure Implementing same, insofar as they are made to apply to Luz Farms and
Production and Profit Sharing under R.A. No. 6657, insofar as other livestock and poultry raisers.
the same apply to herein petitioner, and further from This Court in its Resolution dated July 4, 1939 resolved to
performing an act in violation of the constitutional rights of the deny, among others, Luz Farms' prayer for the issuance of a
petitioner. preliminary injunction in its Manifestation dated May 26, and
As gathered from the records, the factual background of this 31, 1989. (Rollo, p. 98).
case, is as follows: Later, however, this Court in its Resolution dated August 24,
On June 10, 1988, the President of the Philippines approved 1989 resolved to grant said Motion for Reconsideration
R.A. No. 6657, which includes the raising of livestock, poultry regarding the injunctive relief, after the filing and approval by
and swine in its coverage (Rollo, p. 80). this Court of an injunction bond in the amount of P100,000.00.
This Court also gave due course to the petition and required
On January 2, 1989, the Secretary of Agrarian Reform the parties to file their respective memoranda (Rollo, p. 119).
promulgated the Guidelines and Procedures Implementing
The petitioner filed its Memorandum on September 6, 1989 In the event that the individual or entity realizes a profit, an
(Rollo, pp. 131-168). additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety
On December 22, 1989, the Solicitor General adopted his
(90) days of the end of the fiscal year . . ."
Comment to the petition as his Memorandum (Rollo, pp. 186-
187). The main issue in this petition is the constitutionality of
Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Luz Farms questions the following provisions of R.A. 6657,
Comprehensive Agrarian Reform Law of 1988), insofar as the
insofar as they are made to apply to it:
said law includes the raising of livestock, poultry and swine in
(a) Section 3(b) which includes the "raising of livestock (and its coverage as well as the Implementing Rules and
poultry)" in the definition of "Agricultural, Agricultural Guidelines promulgated in accordance therewith.:-cralaw
Enterprise or Agricultural Activity."
The constitutional provision under consideration reads as
(b) Section 11 which defines "commercial farms" as "private follows:
agricultural lands devoted to commercial, livestock, poultry
ARTICLE XIII
and swine raising . . ."
x x x
(c) Section 13 which calls upon petitioner to execute a
production-sharing plan. AGRARIAN AND NATURAL RESOURCES REFORM
(d) Section 16(d) and 17 which vest on the Department of Section 4. The State shall, by law, undertake an agrarian
Agrarian Reform the authority to summarily determine the just reform program founded on the right of farmers and regular
compensation to be paid for lands covered by the farmworkers, who are landless, to own directly or collectively
Comprehensive Agrarian Reform Law. 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
(e) Section 32 which spells out the production-sharing plan
shall encourage and undertake the just distribution of all
mentioned in Section 13
agricultural lands, subject to such priorities and reasonable
". . . (W)hereby three percent (3%) of the gross sales from the retention limits as the Congress may prescribe, taking into
production of such lands are distributed within sixty (60) days account ecological, developmental, or equity considerations,
of the end of the fiscal year as compensation to regular and and subject to the payment of just compensation. In
other farmworkers in such lands over and above the determining retention limits, the State shall respect the rights
compensation they currently receive: Provided, That these of small landowners. The State shall further provide
individuals or entities realize gross sales in excess of five incentives for voluntary land-sharing.
million pesos per annum unless the DAR, upon proper
x x x"
application, determine a lower ceiling.
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 It includes farming, horticulture, forestry, dairying,
Association of Small Landowners in the Philippines, Inc. sugarmaking . . .
vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989)
Livestock domestic animals used or raised on a farm,
affirming the constitutionality of the Comprehensive Agrarian
especially for profit.
Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the Constitution, Farm a plot or tract of land devoted to the raising of
in including land devoted to the raising of livestock, poultry domestic or other animals." (Rollo, pp. 82-83).
and swine in its coverage (Rollo, p. 131). Livestock or poultry
raising is not similar to crop or tree farming. Land is not the The petition is impressed with merit.
primary resource in this undertaking and represents no more The question raised is one of constitutional construction. The
than five percent (5%) of the total investment of commercial primary task in constitutional construction is to ascertain and
livestock and poultry raisers. Indeed, there are many owners thereafter assure the realization of the purpose of the framers
of residential lands all over the country who use available in the adoption of the Constitution (J.M. Tuazon & Co.
space in their residence for commercial livestock and raising vs. Land Tenure Administration, 31 SCRA 413 [1970]).: rd
purposes, under "contract-growing arrangements," whereby
processing corporations and other commercial livestock and Ascertainment of the meaning of the provision of Constitution
poultry raisers (Rollo, p. 10). Lands support the buildings and begins with the language of the document itself. The words
other amenities attendant to the raising of animals and birds. used in the Constitution are to be given their ordinary
The use of land is incidental to but not the principal factor or meaning except where technical terms are employed in which
consideration in productivity in this industry. Including case the significance thus attached to them prevails (J.M.
backyard raisers, about 80% of those in commercial livestock Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413
and poultry production occupy five hectares or less. The [1970]).
remaining 20% are mostly corporate farms (Rollo, p. 11). It is generally held that, in construing constitutional provisions
On the other hand, the public respondent argued that which are ambiguous or of doubtful meaning, the courts may
livestock and poultry raising is embraced in the term consider the debates in the constitutional convention as
"agriculture" and the inclusion of such enterprise under throwing light on the intent of the framers of the Constitution.
Section 3(b) of R.A. 6657 is proper. He cited that Webster's It is true that the intent of the convention is not controlling by
International Dictionary, Second Edition (1954), defines the itself, but as its proceeding was preliminary to the adoption by
following words: the people of the Constitution the understanding of the
convention as to what was meant by the terms of the
"Agriculture the art or science of cultivating the ground and constitutional provision which was the subject of the
raising and harvesting crops, often, including also, feeding, deliberation, goes a long way toward explaining the
breeding and management of livestock, tillage, husbandry, understanding of the people when they ratified it (Aquino, Jr.
farming. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional till. As also mentioned by Commissioner Tadeo, farmworkers
Commission of 1986 on the meaning of the word include those who work in piggeries and poultry projects.
"agricultural," clearly show that it was never the intention of
I was wondering whether I am wrong in my appreciation that if
the framers of the Constitution to include livestock and poultry
somebody puts up a piggery or a poultry project and for that
industry in the coverage of the constitutionally-mandated
purpose hires farmworkers therein, these farmworkers will
agrarian reform program of the Government.
automatically have the right to own eventually, directly or
The Committee adopted the definition of "agricultural land" as ultimately or collectively, the land on which the piggeries and
defined under Section 166 of R.A. 3844, as laud devoted to poultry projects were constructed. (Record, CONCOM,
any growth, including but not limited to crop lands, saltbeds, August 2, 1986, p. 618).
fishponds, idle and abandoned land (Record, CONCOM,
x x x
August 7, 1986, Vol. III, p. 11).
The questions were answered and explained in the statement
The intention of the Committee is to limit the application of the
of then Commissioner Tadeo, quoted as follows:
word "agriculture." Commissioner Jamir proposed to insert the
word "ARABLE" to distinguish this kind of agricultural land x x x
from such lands as commercial and industrial lands and
residential properties because all of them fall under the "Sa pangalawang katanungan ng Ginoo ay medyo hindi kami
general classification of the word "agricultural". This proposal, nagkaunawaan. Ipinaaalam ko kay Commissioner Regalado
however, was not considered because the Committee na hindi namin inilagay ang agricultural worker sa
contemplated that agricultural lands are limited to arable and kadahilanang kasama rito ang piggery, poultry at livestock
suitable agricultural lands and therefore, do not include workers. Ang inilagay namin dito ay farm worker kaya hindi
commercial, industrial and residential lands (Record, kasama ang piggery, poultry at livestock workers (Record,
CONCOM, August 7, 1986, Vol. III, p. 30). CONCOM, August 2, 1986, Vol. II, p. 621).

In the interpellation, then Commissioner Regalado (now a It is evident from the foregoing discussion that Section II of
Supreme Court Justice), posed several questions, among R.A. 6657 which includes "private agricultural lands devoted
others, quoted as follows: to commercial livestock, poultry and swine raising" in the
definition of "commercial farms" is invalid, to the extent that
x x x the aforecited agro-industrial activities are made to be
covered by the agrarian reform program of the State. There is
"Line 19 refers to genuine reform program founded on the
simply no reason to include livestock and poultry lands in the
primary right of farmers and farmworkers. I wonder if it means
coverage of agrarian reform. (Rollo, p. 21).
that leasehold tenancy is thereby proscribed under this
provision because it speaks of the primary right of farmers Hence, there is merit in Luz Farms' argument that the
and farmworkers to own directly or collectively the lands they 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" Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v.
(pending final redistribution of their landholdings) whereby Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July
they are called upon to distribute from three percent (3%) of 1989).
their gross sales and ten percent (10%) of their net profits to
Thus, where the legislature or the executive acts beyond the
their workers as additional compensation is unreasonable for
scope of its constitutional powers, it becomes the duty of the
being confiscatory, and therefore violative of due process
judiciary to declare what the other branches of the
(Rollo, p. 21).:-cralaw
government had assumed to do, as void. This is the essence
It has been established that this Court will assume jurisdiction of judicial power conferred by the Constitution "(I)n one
over a constitutional question only if it is shown that the Supreme Court and in such lower courts as may be
essential requisites of a judicial inquiry into such a question established by law" (Art. VIII, Section 1 of the 1935
are first satisfied. Thus, there must be an actual case or Constitution; Article X, Section I of the 1973 Constitution and
controversy involving a conflict of legal rights susceptible of which was adopted as part of the Freedom Constitution, and
judicial determination, the constitutional question must have Article VIII, Section 1 of the 1987 Constitution) and which
been opportunely raised by the proper party, and the power this Court has exercised in many instances (Demetria
resolution of the question is unavoidably necessary to the v. Alba, 148 SCRA 208 [1987]).
decision of the case itself (Association of Small Landowners
PREMISES CONSIDERED, the instant petition is hereby
of the Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No. 6657
78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R.
insofar as the inclusion of the raising of livestock, poultry and
79744; Manaay v. Juico, G.R. 79777, 14 July 1989, 175
swine in its coverage as well as the Implementing Rules and
SCRA 343).
Guidelines promulgated in accordance therewith, are hereby
However, despite the inhibitions pressing upon the Court DECLARED null and void for being unconstitutional and the
when confronted with constitutional issues, it will not hesitate writ of preliminary injunction issued is hereby MADE
to declare a law or act invalid when it is convinced that this permanent.
must be done. In arriving at this conclusion, its only criterion
SO ORDERED.
will be the Constitution and God as its conscience gives it in
the light to probe its meaning and discover its purpose. Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr.,
Personal motives and political considerations are Cruz, Gancayco, Padilla, Bidin, Grio-Aquino, Medialdea
irrelevancies that cannot influence its decisions. Blandishment and Regalado, JJ., concur.
is as ineffectual as intimidation, for all the awesome power of
Feliciano, J., is on leave.
the Congress and Executive, the Court will not hesitate "to
make the hammer fall heavily," where the acts of these
departments, or of any official, betray the people's will as
expressed in the Constitution (Association of Small Separate Opinions
Landowners of the Philippines, Inc. v. Secretary of Agrarian
SARMIENTO, J., concurring: protection clause of the Constitution (Article II, section 1)
which teaches simply that all persons or things similarly
I agree that the petition be granted.
situated should be treated alike, both as to rights conferred
It is my opinion however that the main issue on the validity of and responsibilities imposed. 2
the assailed provisions of R.A. 6657 (the Comprehensive
There is merit in the contention of the petitioner that
Agrarian Reform Law of 1988) and its Implementing Rules
substantial distinctions exist between land directed purely to
and Guidelines insofar as they include the raising of livestock,
cultivation and harvesting of fruits or crops and land
poultry, and swine in their coverage cannot be simplistically
exclusively used for livestock, poultry and swine raising, that
reduced to a question of constitutional construction.
make real differences, to wit:
It is a well-settled rule that construction and interpretation
x x x
come only after it has been demonstrated that application is
impossible or inadequate without them. A close reading No land is tilled and no crop is harvested in livestock and
however of the constitutional text in point, specifically, Sec. 4, poultry farming. There are no tenants nor landlords, only
Art. XIII, particularly the phrase, ". . . in case of other employers and employees.
farmworkers, to receive a just share of the fruits thereof,"
Livestock and poultry do not sprout from land nor are they
provides a basis for the clear and possible coverage of
"fruits of the land."
livestock, poultry, and swine raising within the ambit of the
comprehensive agrarian reform program. This accords with Land is not even a primary resource in this industry. The land
the principle that every presumption should be indulged in input is inconsequential that all the commercial hog and
favor of the constitutionality of a statute and the court in poultry farms combined occupy less than one percent (1%)
considering the validity of a statute should give it such (0.4% for piggery, 0.2% for poultry) of the 5.45 million
reasonable construction as can be reached to bring it within hectares of land supposedly covered by the CARP. And most
the fundamental law. 1 farms utilize only 2 to 5 hectares of land.: nad
The presumption against unconstitutionality, I must say, In every respect livestock and poultry production is an
assumes greater weight when a ruling to the contrary would, industrial activity. Its use of an inconsequential portion of land
in effect, defeat the laudable and noble purpose of the law, is a mere incident of its operation, as in any other
i.e., the welfare of the landless farmers and farmworkers in undertaking, business or otherwise.
the promotion of social justice, by the expedient conversion of
agricultural lands into livestock, poultry, and swine raising by The fallacy of defining livestock and poultry production as an
scheming landowners, thus, rendering the comprehensive agricultural enterprise is nowhere more evident when one
nature of the agrarian program merely illusory. considers that at least 95% of total investment in these farms
is in the form of fixed assets which are industrial in nature.
The instant controversy, I submit, boils down to the question
of whether or not the assailed provisions violate the equal These include (1) animal housing structures and facilities
complete with drainage, waterers, blowers, misters and in
some cases even piped-in music; (2) feedmills complete with are the by-products of rice (rice-bran), coconut (copra meal),
grinders, mixers, conveyors, exhausts, generators, etc.; (3) banana (banana pulp meal), and fish (fish meal). 3
extensive warehousing facilities for feeds and other supplies;
x x x
(4) anti-pollution equipment such as bio-gas and digester
plants augmented by lagoons and concrete ponds; (5) In view of the foregoing, it is clear that both kinds of lands are
deepwells, elevated water tanks, pumphouses and accessory not similarly situated and hence, cannot be treated alike.
facilities; (6) modern equipment such as sprayers, pregnancy Therefore, the assailed provisions which allow for the
testers, etc.; (7) laboratory facilities complete with expensive inclusion of livestock and poultry industry within the coverage
tools and equipment; and a myriad other such technologically of the agrarian reform program constitute invalid classification
advanced appurtances. and must accordingly be struck down as repugnant to the
equal protection clause of the Constitution.chanrobles virtual
How then can livestock and poultry farmlands be arable when
law library
such are almost totally occupied by these structures?
The fallacy of equating the status of livestock and poultry
farmworkers with that of agricultural tenants surfaces when
one considers contribution to output. Labor cost of livestock
and poultry farms is no more than 4% of total operating cost.
The 98% balance represents inputs not obtained from the
land nor provided by the farmworkers inputs such as feeds
and biochemicals (80% of the total cost), power cost, cost of
money and several others.
Moreover, livestock and poultry farmworkers are covered by
minimum wage law rather than by tenancy law. They are
entitled to social security benefits where tenant-farmers are
not. They are paid fixed wages rather than crop shares. And
as in any other industry, they receive additional benefits such
as allowances, bonuses, and other incentives such as free
housing privileges, light and water.
Equating livestock and poultry farming with other agricultural
activities is also fallacious in the sense that like the
manufacturing sector, it is a market for, rather than a source
of agricultural output. At least 60% of the entire domestic
supply of corn is absorbed by livestock and poultry farms. So
Republic of the Philippines hectares, and embraced in Transfer Certificate of Title No.
SUPREME COURT 31527 of the Register of Deeds of the Province of Rizal.
Manila
On 18 April 1979, Presidential Proclamation No. 1637 set
EN BANC aside 20,312 hectares of land located in the Municipalities of
Antipolo, San Mateo and Montalban as townsite areas to
absorb the population overspill in the metropolis which were
G.R. No. 103302 August 12, 1993 designated as the Lungsod Silangan Townsite. The NATALIA
properties are situated within the areas proclaimed as
NATALIA REALTY, INC., AND ESTATE DEVELOPERS townsite reservation.
AND INVESTORS CORP., petitioners,
vs. Since private landowners were allowed to develop their
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN properties into low-cost housing subdivisions within the
T. LEONG and DIR. WILFREDO LEANO, DAR REGION reservation, petitioner Estate Developers and Investors
IV, respondents. Corporation (EDIC, for brevity), as developer of NATALIA
properties, applied for and was granted preliminary approval
Lino M. Patajo for petitioners. and locational clearances by the Human Settlements
The Solicitor General for respondents. Regulatory Commission. The necessary permit for Phase I of
the subdivision project, which consisted of 13.2371 hectares,
was issued sometime in 1982; 4 for Phase II, with an area of
BELLOSILLO, J.: 80,000 hectares, on 13 October 1983; 5 and for Phase III,
which consisted of the remaining 31.7707 hectares, on 25
Are lands already classified for residential, commercial or April 1986. 6 Petitioner were likewise issued development
industrial use, as approved by the Housing and Land Use permits 7 after complying with the requirements. Thus the
Regulatory Board and its precursor agencies 1 prior to 15 NATALIA properties later became the Antipolo Hills
June 1988, 2 covered by R.A. 6657, otherwise known as the Subdivision.
Comprehensive Agrarian Reform Law of 1988? This is the
pivotal issue in this petition for certiorari assailing the Notice On 15 June 1988, R.A. 6657, otherwise known as the
of Coverage 3 of the Department of Agrarian Reform over "Comprehensive Agrarian Reform Law of 1988" (CARL, for
parcels of land already reserved as townsite areas before the brevity), went into effect. Conformably therewith, respondent
enactment of the law. Department of Agrarian Reform (DAR, for brevity), through its
Municipal Agrarian Reform Officer, issued on 22 November
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the 1990 a Notice of Coverage on the undeveloped portions of
owner of three (3) contiguous parcels of land located in the Antipolo Hills Subdivision which consisted of roughly
Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 90.3307 hectares. NATALIA immediately registered its
1.3205 hectares and 2.7080 hectares, or a total of 125.0078 objection to the notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of did not comply with the implementing Standards, Rules and
the DAR Region IV Office and twice wrote him requesting the Regulations of P.D. 957, otherwise known as "The
cancellation of the Notice of Coverage. Subdivision and Condominium Buyers Protective Decree," in
that no application for conversion of the NATALIA lands from
On 17 January 1991, members of the Samahan ng
agricultural residential was ever filed with the DAR. In other
Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for the
words, there was no valid conversion. Moreover, public
brevity), filed a complaint against NATALIA and EDIC before
respondents allege that the instant petition was prematurely
the DAR Regional Adjudicator to restrain petitioners from
filed because the case instituted by SAMBA against
developing areas under cultivation by SAMBA
petitioners before the DAR Regional Adjudicator has not yet
members. 8 The Regional Adjudicator temporarily restrained
terminated. Respondents conclude, as a consequence, that
petitioners from proceeding with the development of the
petitioners failed to fully exhaust administrative remedies
subdivision. Petitioners then moved to dismiss the complaint;
available to them before coming to court.
it was denied. Instead, the Regional Adjudicator issued on 5
March 1991 a Writ of Preliminary Injunction. The petition is impressed with merit. A cursory reading of the
Preliminary Approval and Locational Clearances as well as
Petitioners NATALIA and EDIC elevated their cause to the
the Development Permits granted petitioners for Phases I, II
DAR Adjudication Board (DARAB); however, on 16 December
and III of the Antipolo Hills Subdivision reveals that contrary to
1991 the DARAB merely remanded the case to the Regional
the claim of public respondents, petitioners NATALIA and
Adjudicator for further proceedings. 9
EDIC did in fact comply with all the requirements of law.
In the interim, NATALIA wrote respondent Secretary of
Petitioners first secured favorable recommendations from the
Agrarian Reform reiterating its request to set aside the Notice
Lungsod Silangan Development Corporation, the agency
of Coverage. Neither respondent Secretary nor respondent
tasked to oversee the implementation of the development of
Director took action on the protest-letters, thus compelling
the townsite reservation, before applying for the necessary
petitioners to institute this proceeding more than a year
permits from the Human Settlements Regulatory
thereafter.
Commission. 10 And, in all permits granted to petitioners, the
NATALIA and EDIC both impute grave abuse of discretion to Commission
respondent DAR for including undedeveloped portions of the stated invariably therein that the applications were in
Antipolo Hills Subdivision within the coverage of the CARL. "conformance" 11 or "conformity" 12 or "conforming" 13 with the
They argue that NATALIA properties already ceased to be implementing Standards, Rules and Regulations of P.D. 957.
agricultural lands when they were included in the areas Hence, the argument of public respondents that not all of the
reserved by presidential fiat for the townsite reservation. requirements were complied with cannot be sustained.

Public respondents through the Office of the Solicitor General As a matter of fact, there was even no need for petitioners to
dispute this contention. They maintain that the permits secure a clearance or prior approval from DAR. The NATALIA
granted petitioners were not valid and binding because they properties were within the areas set aside for the Lungsod
Silangan Reservation. Since Presidential Proclamation No. land." 16 The deliberations of the Constitutional Commission
1637 created the townsite reservation for the purpose of confirm this limitation. "Agricultural lands" are only those
providing additional housing to the burgeoning population of lands which are "arable and suitable agricultural lands" and
Metro Manila, it in effect converted for residential use what "do not include commercial, industrial and residential
were erstwhile agricultural lands provided all requisites were lands." 17
met. And, in the case at bar, there was compliance with all
Based on the foregoing, it is clear that the undeveloped
relevant rules and requirements. Even in their applications for
portions of the Antipolo Hills Subdivision cannot in any
the development of the Antipolo Hills Subdivision, the
language be considered as "agricultural lands." These lots
predecessor agency of HLURB noted that petitioners
were intended for residential use. They ceased to be
NATALIA and EDIC complied with all the requirements
agricultural lands upon approval of their inclusion in the
prescribed by P.D. 957.
Lungsod Silangan Reservation. Even today, the areas in
The implementing Standards, Rules and Regulations of P.D. question continued to be developed as a low-cost housing
957 applied to all subdivisions and condominiums in general. subdivision, albeit at a snail's pace. This can readily be
On the other hand, Presidential Proclamation No. 1637 gleaned from the fact that SAMBA members even instituted
referred only to the Lungsod Silangan Reservation, which an action to restrain petitioners from continuing with such
makes it a special law. It is a basic tenet in statutory development. The enormity of the resources needed for
construction that between a general law and a special law, developing a subdivision may have delayed its completion but
the latter prevails. 14 this does not detract from the fact that these lands are still
residential lands and outside the ambit of the CARL.
Interestingly, the Office of the Solicitor General does not
contest the conversion of portions of the Antipolo Hills Indeed, lands not devoted to agricultural activity are outside
Subdivision which have already been developed. 15 Of the coverage of CARL. These include lands previously
course, this is contrary to its earlier position that there was no converted to non-agricultural uses prior to the effectivity of
valid conversion. The applications for the developed and CARL by government agencies other than respondent DAR.
undeveloped portions of subject subdivision were similarly In its Revised Rules and Regulations Governing Conversion
situated. Consequently, both did not need prior DAR of Private Agricultural Lands to Non-Agricultural Uses, 18 DAR
approval. itself defined "agricultural land" thus
We now determine whether such lands are covered by the . . . Agricultural lands refers to those devoted to agricultural
CARL. Section 4 of R.A. 6657 provides that the CARL shall activity as defined in R.A. 6657 and not classified as mineral
"cover, regardless of tenurial arrangement and commodity or forest by the Department of Environment and Natural
produced, all public and private agricultural lands." As to what Resources (DENR) and its predecessor agencies, and not
constitutes "agricultural land," it is referred to as "land devoted classified in town plans and zoning ordinances as approved
to agricultural activity as defined in this Act and not classified by the Housing and Land Use Regulatory Board (HLURB)
as mineral, forest, residential, commercial or industrial
and its preceding competent authorities prior to 15 June 1988 WHEREFORE, the petition for Certiorari is GRANTED. The
for residential, commercial or industrial use. Notice of Coverage of 22 November 1990 by virtue of which
undeveloped portions of the Antipolo Hills Subdivision were
Since the NATALIA lands were converted prior to 15 June
placed under CARL coverage is hereby SET ASIDE.
1988, respondent DAR is bound by such conversion. It was
therefore error to include the undeveloped portions of the SO ORDERED.
Antipolo Hills Subdivision within the coverage of CARL.
Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino,
Be that as it may, the Secretary of Justice, responding to a Regalado, Davide, Jr., Romero, Nocon, Melo, Quiason, Puno
query by the Secretary of Agrarian Reform, noted in an and Vitug, JJ., concur.
Opinion 19 that lands covered by Presidential Proclamation
No. 1637, inter alia, of which the NATALIA lands are part,
having been reserved for townsite purposes "to be developed
as human settlements by the proper land and housing
agency," are "not deemed 'agricultural lands' within the
meaning and intent of Section 3 (c) of R.A. No. 6657. " Not
being deemed "agricultural lands," they are outside the
coverage of CARL.
Anent the argument that there was failure to exhaust
administrative remedies in the instant petition, suffice it to say
that the issues raised in the case filed by SAMBA members
differ from those of petitioners. The former involve
possession; the latter, the propriety of including under the
operation of CARL lands already converted for residential use
prior to its effectivity.
Besides, petitioners were not supposed to wait until public
respondents acted on their letter-protests, this after sitting it
out for almost a year. Given the official indifference, which
under the circumstances could have continued forever,
petitioners had to act to assert and protect their interests. 20
In fine, we rule for petitioners and hold that public
respondents gravely abused their discretion in issuing the
assailed Notice of Coverage of 22 November 1990 by of
lands over which they no longer have jurisdiction.
Republic of the Philippines 2006 with the modification that the original 6,296 qualified
SUPREME COURT farmworker-beneficiaries of Hacienda Luisita (FWBs) shall
Baguio have the option to remain as stockholders of HLI.
EN BANC Upon separate motions of the parties for reconsideration, the
Court, by Resolution3 of November 22, 2011, recalled and set
G.R. No. 171101 April 24, 2012
aside the option thus granted to the original FWBs to remain
HACIENDA LUISITA, INCORPORATED, Petitioner, as stockholders of HLI, while maintaining that all the benefits
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL and homelots received by all the FWBs shall be respected
COMMERCIAL BANKING CORPORATION, Petitioners-in- with no obligation to refund or return them.
Intervention,
HLI invokes the following grounds in support of its instant
vs.
Motion to Clarify and Reconsider Resolution of November 22,
PRESIDENTIAL AGRARIAN REFORM COUNCIL;
2011 dated December 16, 2011:
SECRETARY NASSER PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG A
MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA,
WITH DUE RESPECT, THE HONORABLE COURT ERRED
RENE GALANG, NOEL MALLARI, and JULIO SUNIGA1
IN RULING THAT IN DETERMINING THE JUST
and his SUPERVISORY GROUP OF THE HACIENDA
COMPENSATION, THE DATE OF "TAKING" IS NOVEMBER
LUISITA, INC. and WINDSOR ANDAYA, Respondents.
21, 1989, WHEN PARC APPROVED HLIs SDP [STOCK
RESOLUTION DISPTRIBUTION PLAN] "IN VIEW OF THE FACT THAT
THIS IS THE TIME THAT THE FWBs WERE CONSIDERED
VELASCO, JR., J.:
TO OWN AND POSSESS THE AGRICULTURAL LANDS IN
Before the Court are the Motion to Clarify and Reconsider HACIENDA LUISITA" BECAUSE:
Resolution of November 22, 2011 dated December 16, 2011
(1) THE SDP IS PRECISELY A MODALITY WHICH THE
filed by petitioner Hacienda Luisita, Inc. (HLI) and the Motion
AGRARIAN LAW GIVES THE LANDOWNER AS
for Reconsideration/Clarification dated December 9, 2011
ALTERNATIVE TO COMPULSORY COVERAGE IN WHICH
filed by private respondents Noel Mallari, Julio Suniga,
CASE, THEREFORE, THE FWBs CANNOT BE
Supervisory Group of Hacienda Luisita, Inc. and Windsor
CONSIDERED AS OWNERS AND POSSESSORS OF THE
Andaya (collectively referred to as "Mallari, et al.").
AGRICULTURAL LANDS AT THE TIME THE SDP WAS
In Our July 5, 2011 Decision2 in the above-captioned case, APPROVED BY PARC;
this Court denied the petition for review filed by HLI and
(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A
affirmed the assailed Presidential Agrarian Reform Council
NOTICE OF COVERAGE IN COMPULSORY COVERAGE
(PARC) Resolution No. 2005-32-01 dated December 22,
OR ACQUISITION BECAUSE SDP AND COMPULSORY
2005 and PARC Resolution No. 2006-34-01 dated May 3,
COVERAGE ARE TWO DIFFERENT MODALITIES WITH
INDEPENDENT AND SEPARATE RULES AND DECISION AND EVEN IN ITS RESOLUTION AND THAT
MECHANISMS; HAS TO BE RESPECTED AND IMPLEMENTED;
(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006 (2) NEITHER THE CONSTITUTION NOR THE CARL
MAY, AT THE VERY LEAST, BE CONSIDERED AS THE [COMPREHENSIVE AGRARIAN REFORM LAW] REQUIRES
TIME WHEN THE FWBs CAN BE CONSIDERED TO OWN THAT THE FWBs SHOULD HAVE CONTROL OVER THE
AND POSSESS THE AGRICULTURAL LANDS OF AGRICULTURAL LANDS;
HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME
(3) THE OPTION HAS NOT BEEN SHOWN TO BE
WHEN HACIENDA LUISITA WAS PLACED UNDER
DETRIMENTAL BUT INSTEAD BENEFICIAL TO THE FWBs
COMPULSORY ACQUISITION IN VIEW OF FAILURE OF
AS FOUND BY THE HONORABLE COURT.
HLI TO PERFORM CERTAIN OBLIGATIONS OF THE SDP,
OR SDOA [STOCK DISTRIBUTION OPTION AGREEMENT]; C
(4) INDEED, THE IMMUTABLE RULE AND THE WITH DUE RESPECT, THE HONORABLE COURT ERRED
UNBENDING JURISPRUDENCE IS THAT "TAKING" TAKES IN RULING THAT THE PROCEEDS FROM THE SALES OF
PLACE WHEN THE OWNER IS ACTUALLY DEPRIVED OR THE 500-HECTARE CONVERTED LOT AND THE 80.51-
DISPOSSESSED OF HIS PROPERTY; HECTARE SCTEX CANNOT BE RETAINED BY HLI BUT
RETURNED TO THE FWBs AS BY SUCH MANNER; HLI IS
(5) TO INSIST THAT THE "TAKING" IS WHEN THE SDP
USING THE CORPORATION CODE TO AVOID ITS
WAS APPROVED BY PARC ON NOVEMBER 21, 1989 AND
LIABILITY TO THE FWBs FOR THE PRICE IT RECEIVED
THAT THE SAME BE CONSIDERED AS THE RECKONING
FROM THE SALES, BECAUSE:
PERIOD TO DETERMINE THE JUST COMPENSATION IS
DEPRIVATION OF LANDOWNERS PROPERTY WITHOUT (1) THE PROCEEDS OF THE SALES BELONG TO THE
DUE PROCESS OF LAW; CORPORATION AND NOT TO EITHER HLI/TADECO OR
THE FWBs, BOTH OF WHICH ARE STOCKHOLDERS
(6) HLI SHOULD BE ENTITLED TO PAYMENT OF
ENTITLED TO THE EARNINGS OF THE CORPORATION
INTEREST ON THE JUST COMPENSATION.
AND TO THE NET ASSETS UPON LIQUIDATION;
B
(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE
WITH DUE RESPECT, THE HONORABLE COURT ERRED SALES TO FWBs IS TO IMPOSE ALL LIABILITIES OF THE
WHEN IT REVERSED ITS DECISION GIVING THE FWBs CORPORATION ON HLI/TADECO WHICH IS UNFAIR AND
THE OPTION TO REMAIN AS HLI STOCKHOLDERS OR VIOLATIVE OF THE CORPORATION CODE.
NOT, BECAUSE:
Mallari, et al. similarly put forth the following issues in its
(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH Motion for Reconsideration/Clarification dated December 9,
THE HONORABLE COURT HAS DECLARED IN ITS 2011:
I
REPUBLIC ACT NO. 6657 [RA 6657] OR THE OVER THE PROPERTY, AND THAT PAYMENT BY [THE
COMPREHENSIVE AGRARIAN REFORM LAW [CARL] GOVERNMENT] OF THE LAND SHOULD BE TURNED
DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR OVER TO HLI FOR THE BENEFIT AND USE OF THE
STOCK DISTRIBUTION OPTION SHOULD RETAIN COMPANYS OPERATIONS THAT WILL, IN TURN,
MAJORITY SHAREHOLDING OF THE COMPANY TO REDOUND TO THE BENEFIT OF FWBs WHO WILL OPT
WHICH THE AGRICULTURAL LAND WAS GIVEN. TO STAY WITH THE COMPANY.
II Basically, the issues raised by HLI and Mallari, et al. boil
down to the following: (1) determination of the date of
IF THE NOVEMBER 22, 2011 DECISION OF THIS
"taking"; (2) propriety of the revocation of the option on the
HONORABLE COURT ORDERING LAND DISTRIBUTION
part of the original FWBs to remain as stockholders of HLI; (3)
WOULD BE FOLLOWED, THIS WOULD CAUSE MORE
propriety of distributing to the qualified FWBs the proceeds
HARM THAN GOOD TO THE LIVES OF THOSE PEOPLE
from the sale of the converted land and of the 80.51-hectare
LIVING IN THE HACIENDA, AND MORE PARTICULARLY
Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just
TO THE WELFARE OF THE FWBs.
compensation for the homelots given to the FWBs.
III
Payment of just compensation
ON THE CONCLUSION BY THIS HONORABLE COURT
HLI contends that since the SDP is a modality which the
THAT THE OPERATIVE FACT DOCTRINE IS APPLICABLE
agrarian reform law gives the landowner as alternative to
TO THE CASE AT BAR, THEN FWBs WHO MERELY
compulsory coverage, then the FWBs cannot be considered
RELIED ON THE PARC APPROVAL SHOULD NOT BE
as owners and possessors of the agricultural lands of
PREJUDICED BY ITS SUBSEQUENT NULLIFICATION.
Hacienda Luisita at the time the SDP was approved by
IV PARC.4 It further claims that the approval of the SDP is not
akin to a Notice of Coverage in compulsory coverage
THOSE WHO CHOOSE LAND SHOULD RETURN situations because stock distribution option and compulsory
WHATEVER THEY GOT FROM THE SDOA [STOCK acquisition are two (2) different modalities with independent
DISTRIBUTION OPTION AGREEMENT] AND TURN OVER and separate rules and mechanisms. Concomitantly, HLI
THE SAME TO HLI FOR USE IN THE OPERATIONS OF maintains that the Notice of Coverage issued on January 2,
THE COMPANY, WHICH IN TURN WILL REDOUND TO 2006 may, at the very least, be considered as the date of
THE BENEFIT OF THOSE WHO WILL OPT TO STAY WITH "taking" as this was the only time that the agricultural lands of
THE SDO. Hacienda Luisita were placed under compulsory acquisition in
V view of its failure to perform certain obligations under the
SDP.5
FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING
FOR PURPOSES OF JUST COMPENSATION SHOULD BE Mallari, et al. are of a similar view. They contend that Tarlac
AT THE TIME HLI WAS DISPOSSESSED OF CONTROL Development Corporation (Tadeco), having as it were
majority control over HLI, was never deprived of the use and is prohibited for being a mere reiteration of the issues
benefit of the agricultural lands of Hacienda Luisita. Upon this assigned and the arguments raised by the parties.11
premise, Mallari, et al. claim the "date of taking" could not be
In the instant case, the issue on just compensation and the
at the time of the approval of the SDP.6
grounds HLI and Mallari, et al. rely upon in support of their
A view has also been advanced that the date of the "taking" respective stance on the matter had been previously raised
should be left to the determination of the Department of by them in their first motion for reconsideration and fully
Agrarian Reform (DAR) in conjunction with its authority to passed upon by the Court in its November 22, 2011
preliminarily determine the just compensation for the land Resolution. The similarities in the issues then and now
made subject of CARP. presented and the grounds invoked are at once easily
discernible from a perusal of the November 22, 2011
Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita
Resolution, the pertinent portions of which read:
(AMBALA), in its Comment/Opposition (to the Motion to
Clarify and Reconsider Resolution of November 22, 2011) In Our July 5, 2011 Decision, We stated that "HLI shall be
dated January 30, 2012, on the other hand, alleges that HLI paid just compensation for the remaining agricultural land that
should not be paid just compensation altogether.7 It argues will be transferred to DAR for land distribution to the FWBs."
that when the Court of Appeals (CA) dismissed the case8 the We also ruled that the date of the "taking" is November 21,
government of then President Ferdinand E. Marcos initially 1989, when PARC approved HLIs SDP per PARC Resolution
instituted and won against Tadeco, the CA allegedly imposed No. 89-12-2.
as a condition for its dismissal of the action that should the
In its Motion for Clarification and Partial Reconsideration, HLI
stock distribution program fail, the lands should be distributed
disagrees with the foregoing ruling and contends that the
to the FWBs, with Tadeco receiving by way of compensation
"taking" should be reckoned from finality of the Decision of
only the amount of PhP 3,988,000.9
this Court, or at the very least, the reckoning period may be
AMBALA further contends that if HLI or Tadeco is, at all, tacked to January 2, 2006, the date when the Notice of
entitled to just compensation, the "taking" should be reckoned Coverage was issued by the DAR pursuant to PARC
as of November 21, 1989, the date when the SDP was Resolution No. 2006-34-01 recalling/revoking the approval of
approved, and the amount of compensation should be PhP the SDP.
40,000 per hectare as this was the same value declared in
For their part, Mallari, et al. argue that the valuation of the
1989 by Tadeco to ensure that the FWBs will not control the
land cannot be based on November 21, 1989, the date of
majority stockholdings in HLI.10
approval of the SDP. Instead, they aver that the date of
At the outset, it should be noted that Section 2, Rule 52 of the "taking" for valuation purposes is a factual issue best left to
Rules of Court states, "No second motion for reconsideration the determination of the trial courts.
of a judgment or final resolution by the same party shall be
At the other end of the spectrum, AMBALA alleges that HLI
entertained." A second motion for reconsideration, as a rule,
should no longer be paid just compensation for the
agricultural land that will be distributed to the FWBs, since the extraordinary national experience, and the prevailing national
Manila Regional Trial Court (RTC) already rendered a consciousness, all command the great departments of
decision ordering the Cojuangcos to transfer the control of government to tilt the balance in favor of the poor and
Hacienda Luisita to the Ministry of Agrarian Reform, which will underprivileged whenever reasonable doubt arises in the
distribute the land to small farmers after compensating the interpretation of the law. But annexed to the great and sacred
landowners P3.988 million. In the event, however, that this charge of protecting the weak is the diametric function to put
Court will rule that HLI is indeed entitled to compensation, every effort to arrive at an equitable solution for all parties
AMBALA contends that it should be pegged at forty thousand concerned: the jural postulates of social justice cannot shield
pesos (PhP 40,000) per hectare, since this was the same illegal acts, nor do they sanction false sympathy towards a
value that Tadeco declared in 1989 to make sure that the certain class, nor yet should they deny justice to the
farmers will not own the majority of its stocks. landowner whenever truth and justice happen to be on her
side. In the occupation of the legal questions in all agrarian
Despite the above propositions, We maintain that the date of
disputes whose outcomes can significantly affect societal
"taking" is November 21, 1989, the date when PARC
harmony, the considerations of social advantage must be
approved HLIs SDP per PARC Resolution No. 89-12-2, in
weighed, an inquiry into the prevailing social interests is
view of the fact that this is the time that the FWBs were
necessary in the adjustment of conflicting demands and
considered to own and possess the agricultural lands in
expectations of the people, and the social interdependence of
Hacienda Luisita. To be precise, these lands became subject
these interests, recognized. (Emphasis and citations omitted.)
of the agrarian reform coverage through the stock distribution
scheme only upon the approval of the SDP, that is, November Considering that the issue on just compensation has already
21, 1989. Thus, such approval is akin to a notice of coverage been passed upon and denied by the Court in its November
ordinarily issued under compulsory acquisition. Further, any 22, 2011 Resolution, a subsequent motion touching on the
doubt should be resolved in favor of the FWBs. As this Court same issue undeniably partakes of a second motion for
held in Perez-Rosario v. CA: reconsideration, hence, a prohibited pleading, and as such,
the motion or plea must be denied. Sec. 3 of Rule 15 of the
It is an established social and economic fact that the
Internal Rules of the Supreme Court is clear:
escalation of poverty is the driving force behind the political
disturbances that have in the past compromised the peace SEC. 3. Second motion for reconsideration. The Court shall
and security of the people as well as the continuity of the not entertain a second motion for reconsideration, and any
national order. To subdue these acute disturbances, the exception to this rule can only be granted in the higher
legislature over the course of the history of the nation passed interest of justice by the Court en banc upon a vote of at least
a series of laws calculated to accelerate agrarian reform, two-thirds of its actual membership. There is reconsideration
ultimately to raise the material standards of living and "in the higher interest of justice" when the assailed decision is
eliminate discontent. Agrarian reform is a perceived solution not only legally erroneous, but is likewise patently unjust and
to social instability. The edicts of social justice found in the potentially capable of causing unwarranted and irremediable
Constitution and the public policies that underwrite them, the injury or damage to the parties. A second motion for
reconsideration can only be entertained before the ruling the time of the taking of said possession, not of the filing of
sought to be reconsidered becomes final by operation of law the complaint.14
or by the Courts declaration.
In Land Bank of the Philippines v. Livioco, the Court held that
In the Division, a vote of three Members shall be required to "the time of taking is the time when the landowner was
elevate a second motion for reconsideration to the Court En deprived of the use and benefit of his property, such as when
Banc. title is transferred to the Republic."15 It should be noted,
however, that "taking" does not only take place upon the
Nonetheless, even if we entertain said motion and examine
issuance of title either in the name of the Republic or the
the arguments raised by HLI and Mallari, et al. one last time,
beneficiaries of the Comprehensive Agrarian Reform Program
the result will be the same.
(CARP). "Taking" also occurs when agricultural lands are
Sec. 4, Article XIII of the 1987 Constitution expressly provides voluntarily offered by a landowner and approved by PARC for
that the taking of land for use in the agrarian reform program CARP coverage through the stock distribution scheme, as in
of the government is conditioned on the payment of just the instant case. Thus, HLIs submitting its SDP for approval
compensation. As stated: is an acknowledgment on its part that the agricultural lands of
Hacienda Luisita are covered by CARP. However, it was the
Section 4. The State shall, by law, undertake an agrarian PARC approval which should be considered as the effective
reform program founded on the right of farmers and regular date of "taking" as it was only during this time that the
farm workers, who are landless, to own directly or collectively government officially confirmed the CARP coverage of these
the lands they till or, in the case of other farm workers, to lands.
receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all Indeed, stock distribution option and compulsory land
agricultural lands, subject to such priorities and reasonable acquisition are two (2) different modalities under the agrarian
retention limits as the Congress may prescribe, taking into reform program. Nonetheless, both share the same end goal,
account ecological, developmental, or equity considerations, that is, to have "a more equitable distribution and ownership
and subject to the payment of just compensation. (Emphasis of land, with due regard to the rights of landowners to just
supplied.) compensation."16

Just compensation has been defined as "the full and fair The fact that Sec. 31 of Republic Act No. 6657 (RA 6657)
equivalent of the property taken from its owner by the gives corporate landowners the option to give qualified
expropriator."12 The measure is not the takers gain, but the beneficiaries the right to avail of a stock distribution or, in the
owners loss.13 In determining just compensation, the price or phraseology of the law, "the right to purchase such proportion
value of the property at the time it was taken from the owner of the capital stock of the corporation that the agricultural
and appropriated by the government shall be the basis. If the land, actually devoted to agricultural activities, bears in
government takes possession of the land before the institution relation to the companys total assets," does not detract from
of expropriation proceedings, the value should be fixed as of the avowed policy of the agrarian reform law of equitably
distributing ownership of land. The difference lies in the fact What is notable, however, is that the divestment by Tadeco of
that instead of actually distributing the agricultural lands to the the agricultural lands of Hacienda Luisita and the giving of the
farmer-beneficiaries, these lands are held by the corporation shares of stock for free is nothing but an enticement or
as part of the capital contribution of the farmer-beneficiaries, incentive for the FWBs to agree with the stock distribution
not of the landowners, under the stock distribution scheme. option scheme and not further push for land distribution. And
The end goal of equitably distributing ownership of land is, the stubborn fact is that the "man days" scheme of HLI
therefore, undeniable. And since it is only upon the approval impelled the FWBs to work in the hacienda in exchange for
of the SDP that the agricultural lands actually came under such shares of stock.
CARP coverage, such approval operates and takes the place
Notwithstanding the foregoing considerations, the suggestion
of a notice of coverage ordinarily issued under compulsory
that there is "taking" only when the landowner is deprived of
acquisition.
the use and benefit of his property is not incompatible with
Moreover, precisely because due regard is given to the rights Our conclusion that "taking" took place on November 21,
of landowners to just compensation, the law on stock 1989. As mentioned in Our July 5, 2011 Decision, even from
distribution option acknowledges that landowners can require the start, the stock distribution scheme appeared to be
payment for the shares of stock corresponding to the value of Tadecos preferred option in complying with the CARP when it
the agricultural lands in relation to the outstanding capital organized HLI as its spin-off corporation in order to facilitate
stock of the corporation. stock acquisition by the FWBs. For this purpose, Tadeco
assigned and conveyed to HLI the agricultural lands of
Although Tadeco did not require compensation for the shares
Hacienda Luisita, set at 4,915.75 hectares, among others.
of stock corresponding to the value of the agricultural lands in
These agricultural lands constituted as the capital contribution
relation to the outstanding capital stock of HLI, its inability to
of the FWBs in HLI. In effect, Tadeco deprived itself of the
receive compensation cannot be attributed to the government.
ownership over these lands when it transferred the same to
The second paragraph of Sec. 31 of RA 6657 explicitly states
HLI.
that "[u]pon certification by DAR, corporations owning
agricultural lands may give their qualified beneficiaries the While it is true that Tadeco has majority control over HLI, the
right to purchase such proportion of the capital stock of the Court cannot subscribe to the view Mallari, et al. espouse
corporation that the agricultural land, actually devoted to that, on the basis of such majority stockholding, Tadeco was
agricultural activities, bears in relation to the companys total never deprived of the use and benefit of the agricultural lands
assets, under such terms and conditions as may be agreed of Hacienda Luisita it divested itself in favor of HLI.
upon by them. x x x"17 On the basis of this statutory provision,
It bears stressing that "[o]wnership is defined as a relation in
Tadeco could have exacted payment for such shares of stock
law by virtue of which a thing pertaining to one person is
corresponding to the value of the agricultural lands of
completely subjected to his will in everything not prohibited by
Hacienda Luisita in relation to the outstanding capital stock of
law or the concurrence with the rights of another."18 The
HLI, but it did not do so.
attributes of ownership are: jus utendi or the right to possess
and enjoy, jus fruendi or the right to the fruits, jus abutendi or have gotten early on were it not for the adoption of the stock
the right to abuse or consume, jus disponendi or the right to distribution scheme of which they only became minority
dispose or alienate, and jus vindicandi or the right to recover stockholders; and second, by making them pay higher
or vindicate.19 amortizations for the agricultural lands that should have been
given to them decades ago at a much lower cost were it not
When the agricultural lands of Hacienda Luisita were
for the landowners initiative of adopting the stock distribution
transferred by Tadeco to HLI in order to comply with CARP
scheme "for free."
through the stock distribution option scheme, sealed with the
imprimatur of PARC under PARC Resolution No. 89-12-2 Reiterating what We already mentioned in Our November 22,
dated November 21, 1989, Tadeco was consequently 2011 Resolution, "[e]ven if it is the government which will pay
dispossessed of the afore-mentioned attributes of ownership. the just compensation to HLI, this will also affect the FWBs as
Notably, Tadeco and HLI are two different entities with they will be paying higher amortizations to the government if
separate and distinct legal personalities. Ownership by one the taking will be considered to have taken place only on
cannot be considered as ownership by the other. January 2, 2006." As aptly observed by Justice Leonardo-De
Castro in her Concurring Opinion, "this will put the land
Corollarily, it is the official act by the government, that is, the
beyond the capacity of the [FWBs] to pay," which this Court
PARCs approval of the SDP, which should be considered as
should not countenance.
the reckoning point for the "taking" of the agricultural lands of
Hacienda Luisita. Although the transfer of ownership over the Considering the above findings, it cannot be gainsaid that
agricultural lands was made prior to the SDPs approval, it is effective "taking" took place in the case at bar upon the
this Courts consistent view that these lands officially became approval of the SDP, that is, on November 21, 1989.
subject of the agrarian reform coverage through the stock
HLI postulates that just compensation is a question of fact
distribution scheme only upon the approval of the SDP. And
that should be left to the determination by the DAR, Land
as We have mentioned in Our November 22, 2011
Bank of the Philippines (LBP) or even the special agrarian
Resolution, such approval is akin to a notice of coverage
court (SAC).20 As a matter of fact, the Court, in its November
ordinarily issued under compulsory acquisition.
22, 2011 Resolution, dispositively ordered the DAR and the
Further, if We adhere to HLIs view that the Notice of LBP to determine the compensation due to HLI. And as
Coverage issued on January 2, 2006 should, at the very least, indicated in the body of said Resolution:
be considered as the date of "taking" as this was the only time
The foregoing notwithstanding, it bears stressing that the
that the agricultural portion of the hacienda was placed under
DARs land valuation is only preliminary and is not, by any
compulsory acquisition in view of HLIs failure to perform
means, final and conclusive upon the landowner. The
certain obligations under the SDP, this Court would, in effect,
landowner can file an original action with the RTC acting as a
be penalizing the qualified FWBs twice for acceding to the
special agrarian court to determine just compensation. The
adoption of the stock distribution scheme: first, by depriving
court has the right to review with finality the determination in
the qualified FWBs of the agricultural lands that they should
the exercise of what is admittedly a judicial function.
As regards the issue on when "taking" occurred with respect the Court, in the public interest and for the expeditious
to the agricultural lands in question, We, however, maintain administration of justice, has resolved actions on the merits
that this Court can rule, as it has in fact already ruled on its instead of remanding them to the trial court for further
reckoning date, that is, November 21, 1989, the date of proceedings, such as where the ends of justice, would not be
issuance of PARC Resolution No. 89-12-2, based on the subserved by the remand of the case.22 (Emphasis supplied;
above-mentioned disquisitions. The investment on SACs of citations omitted.)
original and exclusive jurisdiction over all petitions for the
Even though the compensation due to HLI will still be
determination of just compensation to landowners21 will not
preliminarily determined by DAR and LBP, subject to review
preclude the Court from ruling upon a matter that may already
by the RTC acting as a SAC, the fact that the reckoning point
be resolved based on the records before Us. By analogy, Our
of "taking" is already fixed at a certain date should already
ruling in Heirs of Dr. Jose Deleste v. LBP is applicable:
hasten the proceedings and not further cause undue hardship
Indeed, it is the Office of the DAR Secretary which is vested on the parties, especially the qualified FWBs.
with the primary and exclusive jurisdiction over all matters
By a vote of 8-6, the Court affirmed its ruling that the date of
involving the implementation of the agrarian reform program.
"taking" in determining just compensation is November 21,
However, this will not prevent the Court from assuming
1989 when PARC approved HLIs stock option plan.
jurisdiction over the petition considering that the issues raised
in it may already be resolved on the basis of the records As regards the issue of interest on just compensation, We
before Us. Besides, to allow the matter to remain with the also leave this matter to the DAR and the LBP, subject to
Office of the DAR Secretary would only cause unnecessary review by the RTC acting as a SAC.
delay and undue hardship on the parties. Applicable, by
analogy, is Our ruling in the recent Bagong Pagkakaisa ng Option will not ensure
Manggagawa ng Triumph International v. Department of control over agricultural lands
Labor and Employment Secretary, where We held: In Our November 22, 2011 Resolution, this Court held:
But as the CA did, we similarly recognize that undue After having discussed and considered the different
hardship, to the point of injustice, would result if a remand contentions raised by the parties in their respective motions,
would be ordered under a situation where we are in the We are now left to contend with one crucial issue in the case
position to resolve the case based on the records before us. at bar, that is, control over the agricultural lands by the
As we said in Roman Catholic Archbishop of Manila v. Court qualified FWBs.
of Appeals:
Upon a review of the facts and circumstances, We realize that
[w]e have laid down the rule that the remand of the case to the FWBs will never have control over these agricultural lands
the lower court for further reception of evidence is not for as long as they remain as stockholders of HLI. In Our July
necessary where the Court is in a position to resolve the 5, 2011 Decision, this Court made the following observations:
dispute based on the records before it. On many occasions,
There is, thus, nothing unconstitutional in the formula HLI is PhP 590,554,220, while the value of the 4,915.7466
prescribed by RA 6657. The policy on agrarian reform is that hectares is PhP 196,630,000. Consequently, the share of the
control over the agricultural land must always be in the hands farmer-beneficiaries in the HLI capital stock is 33.296%
of the farmers. Then it falls on the shoulders of DAR and (196,630,000 divided by 590,554.220); 118,391,976.85 HLI
PARC to see to it the farmers should always own majority of shares represent 33.296%. Thus, even if all the holders of the
the common shares entitled to elect the members of the 118,391,976.85 HLI shares unanimously vote to remain as
board of directors to ensure that the farmers will have a clear HLI stockholders, which is unlikely, control will never be
majority in the board. Before the SDP is approved, strict placed in the hands of the farmer-beneficiaries. Control, of
scrutiny of the proposed SDP must always be undertaken by course, means the majority of 50% plus at least one share of
the DAR and PARC, such that the value of the agricultural the common shares and other voting shares. Applying the
land contributed to the corporation must always be more than formula to the HLI stockholdings, the number of shares that
50% of the total assets of the corporation to ensure that the will constitute the majority is 295,112,101 shares
majority of the members of the board of directors are (590,554,220 divided by 2 plus one [1] HLI share). The
composed of the farmers. The PARC composed of the 118,391,976.85 shares subject to the SDP approved by
President of the Philippines and cabinet secretaries must see PARC substantially fall short of the 295,112,101 shares
to it that control over the board of directors rests with the needed by the FWBs to acquire control over HLI. Hence,
farmers by rejecting the inclusion of non-agricultural assets control can NEVER be attained by the FWBs. There is even
which will yield the majority in the board of directors to non- no assurance that 100% of the 118,391,976.85 shares issued
farmers. Any deviation, however, by PARC or DAR from the to the FWBs will all be voted in favor of staying in HLI, taking
correct application of the formula prescribed by the second into account the previous referendum among the farmers
paragraph of Sec. 31 of RA 6675 does not make said where said shares were not voted unanimously in favor of
provision constitutionally infirm. Rather, it is the application of retaining the SDP. In light of the foregoing consideration, the
said provision that can be challenged. Ergo, Sec. 31 of RA option to remain in HLI granted to the individual FWBs will
6657 does not trench on the constitutional policy of ensuring have to be recalled and revoked.
control by the farmers.
Moreover, bearing in mind that with the revocation of the
In line with Our finding that control over agricultural lands approval of the SDP, HLI will no longer be operating under
must always be in the hands of the farmers, We reconsider SDP and will only be treated as an ordinary private
our ruling that the qualified FWBs should be given an option corporation; the FWBs who remain as stockholders of HLI will
to remain as stockholders of HLI, inasmuch as these qualified be treated as ordinary stockholders and will no longer be
FWBs will never gain control given the present proportion of under the protective mantle of RA 6657. (Emphasis in the
shareholdings in HLI. original.)
A revisit of HLIs Proposal for Stock Distribution under CARP HLI, however, takes exception to the above-mentioned ruling
and the Stock Distribution Option Agreement (SDOA) upon and contends that "[t]here is nothing in the Constitution nor in
which the proposal was based reveals that the total assets of the agrarian laws which require that control over the
agricultural lands must always be in the hands of the SECTION 2. Declaration of Principles and Policies. - It is the
farmers."23 Moreover, both HLI and Mallari, et al. claim that policy of the State to pursue a Comprehensive Agrarian
the option given to the qualified FWBs to remain as Reform Program (CARP). The welfare of the landless farmers
stockholders of HLI is neither iniquitous nor prejudicial to the and farm workers will receive the highest consideration to
FWBs.24 promote social justice and to move the nation towards sound
rural development and industrialization, and the establishment
The Court agrees that the option given to the qualified FWBs
of owner cultivatorship of economic-sized farms as the basis
whether to remain as stockholders of HLI or opt for land
of Philippine agriculture.
distribution is neither iniquitous nor prejudicial to the FWBs.
Nonetheless, the Court is not unmindful of the policy on To this end, a more equitable distribution and ownership of
agrarian reform that control over the agricultural land must land, with due regard to the rights of landowners to just
always be in the hands of the farmers. Contrary to the stance compensation and to the ecological needs of the nation, shall
of HLI, both the Constitution and RA 6657 intended the be undertaken to provide farmers and farm workers with the
farmers, individually or collectively, to have control over the opportunity to enhance their dignity and improve the quality of
agricultural lands of HLI; otherwise, all these rhetoric about their lives through greater productivity of agricultural lands.
agrarian reform will be rendered for naught. Sec. 4, Art. XIII of
The agrarian reform program is founded on the right of
the 1987 Constitution provides:
farmers and regular farm workers, who are landless, to own
Section 4. The State shall, by law, undertake an agrarian directly or collectively the lands they till or, in the case of other
reform program founded on the right of farmers and regular farm workers, to receive a share of the fruits thereof. To this
farmworkers who are landless, to own directly or collectively end, the State shall encourage the just distribution of all
the lands they till or, in the case of other farmworkers, to agricultural lands, subject to the priorities and retention limits
receive a just share of the fruits thereof. To this end, the State set forth in this Act, having taken into account ecological,
shall encourage and undertake the just distribution of all developmental, and equity considerations, and subject to the
agricultural lands, subject to such priorities and reasonable payment of just compensation. The State shall respect the
retention limits as the Congress may prescribe, taking into right of small landowners and shall provide incentives for
account ecological, developmental, or equity considerations, voluntary land-sharing.
and subject to the payment of just compensation. In
The State shall recognize the right of farmers, farm workers
determining retention limits, the State shall respect the right of
and landowners, as well as cooperatives and other
small landowners. The State shall further provide incentives
independent farmers organization, to participate in the
for voluntary land-sharing. (Emphasis supplied.)
planning, organization, and management of the program, and
Pursuant to and as a mechanism to carry out the above- shall provide support to agriculture through appropriate
mentioned constitutional directive, RA 6657 was enacted. In technology and research, and adequate financial, production,
consonance with the constitutional policy on agrarian reform, marketing and other support services.
Sec. 2 of RA 6657 also states:
The State shall apply the principles of agrarian reform or industrialization, employment and privatization of public sector
stewardship, whenever applicable, in accordance with law, in enterprises. Financial instruments used as payment for lands
the disposition or utilization of other natural resources, shall contain features that shall enhance negotiability and
including lands of the public domain, under lease or acceptability in the marketplace.
concession, suitable to agriculture, subject to prior rights,
The State may lease undeveloped lands of the public domain
homestead rights of small settlers and the rights of indigenous
to qualified entities for the development of capital-intensive
communities to their ancestral lands.
farms, traditional and pioneering crops especially those for
The State may resettle landless farmers and farm workers in exports subject to the prior rights of the beneficiaries under
its own agricultural estates, which shall be distributed to them this Act. (Emphasis supplied.)
in the manner provided by law.
Based on the above-quoted provisions, the notion of farmers
By means of appropriate incentives, the State shall and regular farmworkers having the right to own directly or
encourage the formation and maintenance of economic-sized collectively the lands they till is abundantly clear. We have
family farms to be constituted by individual beneficiaries and extensively discussed this ideal in Our July 5, 2011 Decision:
small landowners.
The wording of the provision is unequivocal the farmers
The State shall protect the rights of subsistence fishermen, and regular farmworkers have a right TO OWN DIRECTLY
especially of local communities, to the preferential use of OR COLLECTIVELY THE LANDS THEY TILL. The basic law
communal marine and fishing resources, both inland and allows two (2) modes of land distributiondirect and indirect
offshore. It shall provide support to such fishermen through ownership. Direct transfer to individual farmers is the most
appropriate technology and research, adequate financial, commonly used method by DAR and widely accepted.
production and marketing assistance and other services, The Indirect transfer through collective ownership of the
State shall also protect, develop and conserve such agricultural land is the alternative to direct ownership of
resources. The protection shall extend to offshore fishing agricultural land by individual farmers. The aforequoted Sec.
grounds of subsistence fishermen against foreign intrusion. 4 EXPRESSLY authorizes collective ownership by farmers.
Fishworkers shall receive a just share from their labor in the No language can be found in the 1987 Constitution that
utilization of marine and fishing resources. disqualifies or prohibits corporations or cooperatives of
farmers from being the legal entity through which collective
The State shall be guided by the principles that land has a
ownership can be exercised. The word collective is defined
social function and land ownership has a social responsibility.
as indicating a number of persons or things considered as
Owners of agricultural land have the obligation to cultivate
constituting one group or aggregate, while collectively is
directly or through labor administration the lands they own
defined as in a collective sense or manner; in a mass or
and thereby make the land productive.
body. By using the word collectively, the Constitution allows
The State shall provide incentives to landowners to invest the for indirect ownership of land and not just outright agricultural
proceeds of the agrarian reform program to promote land transfer. This is in recognition of the fact that land reform
may become successful even if it is done through the medium Clearly, workers cooperatives or associations under Sec. 29
of juridical entities composed of farmers. of RA 6657 and corporations or associations under the
succeeding Sec. 31, as differentiated from individual farmers,
Collective ownership is permitted in two (2) provisions of RA
are authorized vehicles for the collective ownership of
6657. Its Sec. 29 allows workers cooperatives or associations
agricultural land. Cooperatives can be registered with the
to collectively own the land, while the second paragraph of
Cooperative Development Authority and acquire legal
Sec. 31 allows corporations or associations to own
personality of their own, while corporations are juridical
agricultural land with the farmers becoming stockholders or
persons under the Corporation Code. Thus, Sec. 31 is
members. Said provisions read:
constitutional as it simply implements Sec. 4 of Art. XIII of the
SEC. 29. Farms owned or operated by corporations or other Constitution that land can be owned COLLECTIVELY by
business associations.In the case of farms owned or farmers. Even the framers of the l987 Constitution are in
operated by corporations or other business associations, the unison with respect to the two (2) modes of ownership of
following rules shall be observed by the PARC. agricultural lands tilled by farmersDIRECT and
COLLECTIVE, thus:
In general, lands shall be distributed directly to the individual
worker-beneficiaries. MR. NOLLEDO. And when we talk of the phrase to own
directly, we mean the principle of direct ownership by the
In case it is not economically feasible and sound to divide the tiller?
land, then it shall be owned collectively by the worker
beneficiaries who shall form a workers cooperative or MR. MONSOD. Yes.
association which will deal with the corporation or business
MR. NOLLEDO. And when we talk of collectively, we mean
association. x x x
communal ownership, stewardship or State ownership?
SEC. 31. Corporate Landowners. x x x
MS. NIEVA. In this section, we conceive of cooperatives; that
xxxx is farmers cooperatives owning the land, not the State.

Upon certification by the DAR, corporations owning MR. NOLLEDO. And when we talk of collectively, referring to
agricultural lands may give their qualified beneficiaries the farmers cooperatives, do the farmers own specific areas of
right to purchase such proportion of the capital stock of the land where they only unite in their efforts?
corporation that the agricultural land, actually devoted to
MS. NIEVA. That is one way.
agricultural activities, bears in relation to the companys total
assets, under such terms and conditions as may be agreed MR. NOLLEDO. Because I understand that there are two
upon by them. In no case shall the compensation received by basic systems involved: the moshave type of agriculture and
the workers at the time the shares of stocks are distributed be the kibbutz. So are both contemplated in the report?
reduced. The same principle shall be applied to associations,
MR. TADEO. Ang dalawa kasing pamamaraan ng
with respect to their equity or participation. x x x
pagpapatupad ng tunay na reporma sa lupa ay ang
pagmamay-ari ng lupa na hahatiin sa individual na emancipate the tiller from the bondage of the soil and
pagmamay-ari directly at ang tinatawag na sama-samang empower the common people. Worth noting too is its noble
gagawin ng mga magbubukid. Tulad sa Negros, ang gusto ng goal of rectifying "the acute imbalance in the distribution of
mga magbubukid ay gawin nila itong cooperative or collective this precious resource among our people."25 Accordingly,
farm. Ang ibig sabihin ay sama-sama nilang sasakahin. HLIs insistent view that control need not be in the hands of
the farmers translates to allowing it to run roughshod against
xxxx
the very reason for the enactment of agrarian reform laws and
MR. TINGSON. x x x When we speak here of to own directly leave the farmers in their shackles with sheer lip service to
or collectively the lands they till, is this land for the tillers look forward to.
rather than land for the landless? Before, we used to hear
Notably, it has been this Courts consistent stand that control
land for the landless, but now the slogan is land for the
over the agricultural land must always be in the hands of the
tillers. Is that right?
farmers. As We wrote in Our July 5, 2011 Decision:
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for
There is, thus, nothing unconstitutional in the formula
the tillers. Ang ibig sabihin ng directly ay tulad sa
prescribed by RA 6657. The policy on agrarian reform is that
implementasyon sa rice and corn lands kung saan inaari na
control over the agricultural land must always be in the hands
ng mga magsasaka ang lupang binubungkal nila. Ang ibig
of the farmers. Then it falls on the shoulders of DAR and
sabihin naman ng collectively ay sama-samang paggawa sa
PARC to see to it the farmers should always own majority of
isang lupain o isang bukid, katulad ng sitwasyon sa Negros.
the common shares entitled to elect the members of the
As Commissioner Tadeo explained, the farmers will work on board of directors to ensure that the farmers will have a clear
the agricultural land sama-sama or collectively. Thus, the majority in the board. Before the SDP is approved, strict
main requisite for collective ownership of land is collective or scrutiny of the proposed SDP must always be undertaken by
group work by farmers of the agricultural land. Irrespective of the DAR and PARC, such that the value of the agricultural
whether the landowner is a cooperative, association or land contributed to the corporation must always be more than
corporation composed of farmers, as long as concerted group 50% of the total assets of the corporation to ensure that the
work by the farmers on the land is present, then it falls within majority of the members of the board of directors are
the ambit of collective ownership scheme. (Emphasis in the composed of the farmers. The PARC composed of the
original; underscoring supplied.) President of the Philippines and cabinet secretaries must see
to it that control over the board of directors rests with the
As aforequoted, there is collective ownership as long as there farmers by rejecting the inclusion of non-agricultural assets
is a concerted group work by the farmers on the land, which will yield the majority in the board of directors to non-
regardless of whether the landowner is a cooperative, farmers. Any deviation, however, by PARC or DAR from the
association or corporation composed of farmers. However, correct application of the formula prescribed by the second
this definition of collective ownership should be read in light of paragraph of Sec. 31 of RA 6675 does not make said
the clear policy of the law on agrarian reform, which is to provision constitutionally infirm. Rather, it is the application of
said provision that can be challenged. Ergo, Sec. 31 of RA taxes and expenses relating to the transfer of titles to the
6657 does not trench on the constitutional policy of ensuring transferees, and the expenditures incurred by HLI and
control by the farmers. (Emphasis supplied.) Centennary Holdings, Inc. for legitimate corporate purposes,
as prescribed in our November 22, 2011 Resolution.
There is an aphorism that "what has been done can no longer
be undone." That may be true, but not in this case. The SDP Homelots
was approved by PARC even if the qualified FWBs did not
In the present recourse, HLI also harps on the fact that since
and will not have majority stockholdings in HLI, contrary to the
the homelots given to the FWBs do not form part of the
obvious policy by the government on agrarian reform. Such
4,915.75 hectares covered by the SDP, then the value of
an adverse situation for the FWBs will not and should not be
these homelots should, with the revocation of the SDP, be
permitted to stand. For this reason, We maintain Our ruling
paid to Tadeco as the landowner.26
that the qualified FWBs will no longer have the option to
remain as stockholders of HLI. We disagree. As We have explained in Our July 5, 2011
Decision, the distribution of homelots is required under RA
FWBs Entitled
6657 only for corporations or business associations owning or
to Proceeds of Sale
operating farms which opted for land distribution. This is
HLI reiterates its claim over the proceeds of the sales of the provided under Sec. 30 of RA 6657. Particularly:
500 hectares and 80.51 hectares of the land as corporate
SEC. 30. Homelots and Farmlots for Members of
owner and argues that the return of said proceeds to the
Cooperatives. The individual members of the cooperatives
FWBs is unfair and violative of the Corporation Code.
or corporations mentioned in the preceding section shall be
This claim is bereft of merit. provided with homelots and small farmlots for their family use,
to be taken from the land owned by the cooperative or
It cannot be denied that the adverted 500-hectare converted
corporation. (Italics supplied.)
land and the SCTEX lot once formed part of what would have
been agrarian-distributable lands, in fine subject to The "preceding section" referred to in the above-quoted
compulsory CARP coverage. And, as stated in our July 5, provision is Sec. 29 of RA 6657, which states:
2011 Decision, were it not for the approval of the SDP by
SEC. 29. Farms Owned or Operated by Corporations or Other
PARC, these large parcels of land would have been
Business Associations.In the case of farms owned or
distributed and ownership transferred to the FWBs, subject to
operated by corporations or other business associations, the
payment of just compensation, given that, as of 1989, the
following rules shall be observed by the PARC.
subject 4,915 hectares of Hacienda Luisita were already
covered by CARP. Accordingly, the proceeds realized from In general, lands shall be distributed directly to the individual
the sale and/or disposition thereof should accrue for the worker-beneficiaries.
benefit of the FWBs, less deductions of the 3% of the
proceeds of said transfers that were paid to the FWBs, the In case it is not economically feasible and sound to divide the
land, then it shall be owned collectively by the worker-
beneficiaries who shall form a workers cooperative or Tadeco transferred and conveyed to HLI the titles over the
association which will deal with the corporation or business lots in question. DAR is ordered to compute the just
association. Until a new agreement is entered into by and compensation of the homelots in accordance with existing
between the workers cooperative or association and the laws, rules and regulations.
corporation or business association, any agreement existing
To recapitulate, the Court voted on the following issues in this
at the time this Act takes effect between the former and the
manner:
previous landowner shall be respected by both the workers
cooperative or association and the corporation or business 1. In determining the date of "taking," the Court voted 8-6 to
association. maintain the ruling fixing November 21, 1989 as the date of
"taking," the value of the affected lands to be determined by
Since none of the above-quoted provisions made reference to
the LBP and the DAR;
corporations which opted for stock distribution under Sec. 31
of RA 6657, then it is apparent that said corporations are not 2. On the propriety of the revocation of the option of the
obliged to provide for homelots. Nonetheless, HLI undertook FWBs to remain as HLI stockholders, the Court, by
to "subdivide and allocate for free and without charge among unanimous vote, agreed to reiterate its ruling in its November
the qualified family-beneficiaries x x x residential or homelots 22, 2011 Resolution that the option granted to the FWBs
of not more than 240 sq. m. each, with each family beneficiary stays revoked;
being assured of receiving and owning a homelot in the barrio
or barangay where it actually resides." In fact, HLI was able to 3. On the propriety of returning to the FWBs the proceeds of
distribute homelots to some if not all of the FWBs. Thus, in the sale of the 500-hectare converted land and of the 80.51-
our November 22, 2011 Resolution, We declared that the hectare SCTEX land, the Court unanimously voted to
homelots already received by the FWBs shall be respected maintain its ruling to order the payment of the proceeds of the
with no obligation to refund or to return them. sale of the said land to the FWBs less the 3% share, taxes
and expenses specified in the fallo of the November 22, 2011
The Court, by a unanimous vote, resolved to maintain its Resolution;
ruling that the FWBs shall retain ownership of the homelots
given to them with no obligation to pay for the value of said 4. On the payment of just compensation for the homelots to
lots. However, since the SDP was already revoked with HLI, the Court, by unanimous vote, resolved to amend its July
finality, the Court directs the government through the DAR to 5, 2011 Decision and November 22, 2011 Resolution by
pay HLI the just compensation for said homelots in ordering the government, through the DAR, to pay to HLI the
consonance with Sec. 4, Article XIII of the 1987 Constitution just compensation for the homelots thus distributed to the
FWBS.
that the taking of land for use in the agrarian reform program
is "subject to the payment of just compensation." Just WHEREFORE, the Motion to Clarify and Reconsider
compensation should be paid to HLI instead of Tadeco in Resolution of November 22, 2011 dated December 16, 2011
view of the Deed of Assignment and Conveyance dated filed by petitioner Hacienda Luisita, Inc. and the Motion for
March 22, 1989 executed between Tadeco and HLI, where Reconsideration/Clarification dated December 9, 2011 filed by
private respondents Noel Mallari, Julio Suniga, Supervisory
Group of Hacienda Luisita, Inc. and Windsor Andaya are
hereby DENIED with this qualification: the July 5, 2011
Decision, as modified by the November 22, 2011 Resolution,
is FURTHER MODIFIED in that the government, through
DAR, is ordered to pay Hacienda Luisita, Inc. the just
compensation for the 240-square meter homelots distributed
to the FWBs.1wphi1
The July 5, 2011 Decision, as modified by the November 22,
2011 Resolution and further modified by this Resolution is
declared FINAL and EXECUTORY. The entry of judgment of
said decision shall be made upon the time of the promulgation
of this Resolution.
No further pleadings shall be entertained in this case.
SO ORDERED.