(AGRICULTURAL LAND – arable ad suitable for farming)

Luz Farms v. Secretary of DAR

G.R. No. 86889 December 4, 1990

Facts:

On 10 June 1988, RA 6657 was approved by the President of the Philippines, which includes, among
others, the raising of livestock, poultry and swine in its coverage.

Petitioner Luz Farms, a corporation engaged in the livestock and poultry business, avers that it would be
adversely affected by the enforcement of sections 3(b), 11, 13, 16 (d), 17 and 32 of the said law. Hence,
it prayed that the said law be declared unconstitutional. The mentioned sections of the law provies,
among others, the product-sharing plan, including those engaged in livestock and poultry business.

Luz Farms further argued that livestock or poultry raising is not similar with crop or tree farming. That
the land is not the primary resource in this undertaking and represents no more than 5% of the total
investments of commercial livestock and poultry raisers. That the land is incidental but not the principal
factor or consideration in their industry. Hence, it argued that it should not be included in the coverage
of RA 6657 which covers “agricultural lands”.

Issue: Whether or not certain provisions of RA 6657 is unconstitutional for including in its definition of
“Agriculture” the livestock and poultyr industry?

Ruling:

The Court held YES.

Looking into the transcript of the Constitutional Commission on the meaning of the word “agriculture”,
it showed that the framers never intended to include livestock and poultry industry in the coverage of
the constitutionally mandated agrarian reform program of the government.

Further, Commissioner Tadeo pointed out that the reasin why they used the term “farmworkers” rather
than “agricultural workers” in the said law is because “agricultural workers” includes the livestock and
poultry industry, hence, since they do not intend to include the latter, they used “farmworkers” to have
distinction.

Hence, there is merit on the petitioner’s argument that the product-sharing plan applied to “corporate
farms” in the contested provisions is unreasonable for being consficatory and violative of the due
process of law.
De Guzman v. CA

Facts:

Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he
gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent
would load his vehicle with cargo which various merchants wanted delivered, charging fee lower than
the commercial rates. Sometime in November 1970, petitioner Pedro de Guzman contracted with
respondent for the delivery of 750 cartons of Liberty Milk. On December 1, 1970, respondent loaded the
cargo. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked
along the way. Petitioner commenced an action claiming the value of the lost merchandise. Petitioner
argues that respondent, being a common carrier, is bound to exercise extraordinary diligence, which it
failed to do. Private respondent denied that he was a common carrier, and so he could not be held liable
for force majeure. The trial court ruled against the respondent, but such was reversed by the Court of
Appeals.

Issues:

(1) Whether or not private respondent is a common carrier

(2) Whether private respondent is liable for the loss of the goods

Held:

(1) Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity. Article 1732 also
carefully avoids making any distinction between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or solicits business only
from a narrow segment of the general population. It appears to the Court that private respondent is
properly characterized as a common carrier even though he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although such backhauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private respondent's principal occupation
was not the carriage of goods for others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not
relevant here. A certificate of public convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers.

(2) Article 1734 establishes the general rule that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, "unless the same is due to any of the
following causes only:

a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;

b. Act of the public enemy in war, whether international or civil;

c. Act or omission of the shipper or owner of the goods;

d. The character of the goods or defects in the packing or in the containers; and

e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting
causes listed in Article 1734. Private respondent as common carrier is presumed to have been at fault or
to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary
diligence on the part of private respondent. We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by "grave or irresistible threat, violence or force." we hold that the
occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier
and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not
made absolute insurers against all risks of travel and of transport of goods, and are not held liable for
acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with
the rigorous standard of extraordinary diligence.
(Valid exercise of police power – constitutionality of Comprehensive Agrarian Reform Law)

Association of Small Landowners VS Secretary of Agrarian Reform

Facts: RA No. 6657 also known as Comprehensive Agrarian Reform Law was enacted. The Association of
Small Landowners in the Philippines, Inc. sought exception from the land distribution scheme provided
for in R.A. 6657. The Association is comprised of landowners of ricelands and cornlands whose
landholdings do not exceed 7 hectares. They invoke that since their landholdings are less than 7
hectares, they should not be forced to distribute their land to their tenants under R.A. 6657 for they
themselves have shown willingness to till their own land. In short, they want to be exempted from
agrarian reform program because they claim to belong to a different class.

Issue: Whether or not there was a violation of the equal protection clause.

Held: No. The Association had not shown any proof that they belong to a different class exempt from
the agrarian reform program. Under the law, classification has been defined as the grouping of persons
or things similar to each other in certain particulars and different from each other in these same
particulars. To be valid, it must conform to the following requirements:

(1) it must be based on substantial distinctions;

(2) it must be germane to the purposes of the law;

(3) it must not be limited to existing conditions only; and

(4) it must apply equally to all the members of the class.

Equal protection simply means that all persons or things similarly situated must be treated alike both as
to the rights conferred and the liabilities imposed. The Association have not shown that they belong to a
different class and entitled to a different treatment. The argument that not only landowners but also
owners of other properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that is clearly visible
except to those who will not see. There is no need to elaborate on this matter. In any event, the
Congress is allowed a wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion is abused to the
detriment of the Bill of Rights. In the contrary, it appears that Congress is right in classifying small
landowners as part of the agrarian reform program.
(OBJECTIVE OF AGRARIAN REFORM)

Hacienda Luisita V. PARC

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

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

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

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

On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from
agricultural to industrial use, pursuant to Sec. 65 of RA 6657. The DAR approved the application on
August 14, 1996, subject to payment of three percent (3%) of the gross selling price to the FWBs and to
HLI’s continued compliance with its undertakings under the SDP, among other conditions.

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

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

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

Issue: Does the PARC possess jurisdiction to recall or revoke HLI’s SDP?

Held: YES, the PARC has jurisdiction to revoke HLI’s SDP under the doctrine of necessary implication.

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

Following the doctrine of necessary implication, it may be stated that the conferment of express power
to approve a plan for stock distribution of the agricultural land of corporate owners necessarily includes
the power to revoke or recall the approval of the plan. To deny PARC such revocatory power would
reduce it into a toothless agency of CARP, because the very same agency tasked to ensure compliance
by the corporate landowner with the approved SDP would be without authority to impose sanctions for
non-compliance with it.
(LANDS DEVOTED TO RAISING OF LIVESTOCK, POULTRY, AND SWINE ARE CLASSIFIED AS INDUSTRIAL.
THEREFORE, EXEMPT FROM AGRARIAN REFORM PROGRAM)

DAR VS Sutton

Facts: Sutton and her siblings inherited a parcel of land in Masbate devoted exclusively to cow and calf
breeding. Pursuant to agrarian reform, they made a voluntary offer to sell their holding to DAR to avail
of the incentives in 1987. In 1998, new law CARL took effect, which included farms used for raising
livestock under its coverage. In light of Luz Farms ruling, the Suttons filed a formal request to withdraw
their VOS as their land was outside the coverage of CARL. The DAR ignored the request.

In 1993, DAR issued AO 9-1993, which provides that only lands used for raising livestock, poultry and
swine are outside the coverage of CARL. And in 1995, DAR ordered a part of Suttons landholdings to be
segregated and placed under Compulsory Acquisition.

Issue: Constitutionality of the AO

Held: unconstitutional. Lands devoted to raising livestock, poultry, and swine have been classified as
industrial thus exempt from agrarian reform. There is no evidence that respondents have just recently
engaged in or converted to the business of breeding cattle after the enactment of CARL that may lead to
suspect that respondents evade its coverage.
(LANDOWNERS HAS THE RIGHT TO CHOOSE THE AREA TO BE RETAINED)

Daez V. CA

Facts: Eudosia Daez applied for exemption of her Riceland in Meycuayan, Bulacan, being cultivated by
herein respondents. DAR Undersecretary Jose Medina denied the application upon finding the subject
property covered by LOI 474, having exceeded the 7-hectare limit.

Scretary of DAR, CA and SC all affirmed the said order. Daez then filed an application for retention of the
same Riceland. DAR director allowed her to retain subject Riceland but denied the application of her
children to retain 3 hectares each for failure to prove actual tillage or direct management

Issue: whether or not petitioner can file a petition for retention despite the fact that a previous petition
for exemption was denied.

Held: the right to retention is a constitutionally guaranteed right, which is subject to qualification by the
legislature. It serves to mitigate the effects of compulsory land acquisition by balancing the rights of the
landowner and the tenant.