Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 103302 August 12, 1993

NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP., petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR. WILFREDO LEANO, DAR
REGION IV, respondents.
Lino M. Patajo for petitioners.
The Solicitor General for respondents.

BELLOSILLO, J.:
Are lands already classified for residential, commercial or industrial use, as approved by the Housing and Land Use
1
2
Regulatory Board and its precursor agencies prior to 15 June 1988, covered by R.A. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this petition for certiorari assailing the
3
Notice of Coverage of the Department of Agrarian Reform over parcels of land already reserved as townsite areas
before the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels of land located in
Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and 2.7080 hectares, or a total of
125.0078 hectares, and embraced in Transfer Certificate of Title No. 31527 of the Register of Deeds of the Province
of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located in the Municipalities
of Antipolo, San Mateo and Montalban as townsite areas to absorb the population overspill in the metropolis which
were designated as the Lungsod Silangan Townsite. The NATALIA properties are situated within the areas
proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing subdivisions within the
reservation, petitioner Estate Developers and Investors Corporation (EDIC, for brevity), as developer of NATALIA
properties, applied for and was granted preliminary approval and locational clearances by the Human Settlements
Regulatory Commission. The necessary permit for Phase I of the subdivision project, which consisted of 13.2371
4
5
hectares, was issued sometime in 1982; for Phase II, with an area of 80,000 hectares, on 13 October 1983; and for
6
Phase III, which consisted of the remaining 31.7707 hectares, on 25 April 1986. Petitioner were likewise issued
7
development permits after complying with the requirements. Thus the NATALIA properties later became the Antipolo
Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of 1988" (CARL, for
brevity), went into effect. Conformably therewith, respondent Department of Agrarian Reform (DAR, for brevity),
through its Municipal Agrarian Reform Officer, issued on 22 November 1990 a Notice of Coverage on the
undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly 90.3307 hectares. NATALIA
immediately registered its objection to the notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice wrote him
requesting the cancellation of the Notice of Coverage.

On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for the brevity),
filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to restrain petitioners from
8
developing areas under cultivation by SAMBA members. The Regional Adjudicator temporarily restrained petitioners
from proceeding with the development of the subdivision. Petitioners then moved to dismiss the complaint; it was
denied. Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB); however, on 16
9
December 1991 the DARAB merely remanded the case to the Regional Adjudicator for further proceedings.
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set aside the Notice
of Coverage. Neither respondent Secretary nor respondent Director took action on the protest-letters, thus compelling
petitioners to institute this proceeding more than a year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including undedeveloped portions
of the Antipolo Hills Subdivision within the coverage of the CARL. They argue that NATALIA properties already
ceased to be agricultural lands when they were included in the areas reserved by presidential fiat for the townsite
reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They maintain that the permits
granted petitioners were not valid and binding because they did not comply with the implementing Standards, Rules
and Regulations of P.D. 957, otherwise known as "The Subdivision and Condominium Buyers Protective Decree," in
that no application for conversion of the NATALIA lands from agricultural residential was ever filed with the DAR. In
other words, there was no valid conversion. Moreover, public respondents allege that the instant petition was
prematurely filed because the case instituted by SAMBA against petitioners before the DAR Regional Adjudicator has
not yet terminated. Respondents conclude, as a consequence, that petitioners failed to fully exhaust administrative
remedies available to them before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational Clearances as well
as the Development Permits granted petitioners for Phases I, II and III of the Antipolo Hills Subdivision reveals that
contrary to the claim of public respondents, petitioners NATALIA and EDIC did in fact comply with all the
requirements of law.
Petitioners first secured favorable recommendations from the Lungsod Silangan Development Corporation, the
agency tasked to oversee the implementation of the development of the townsite reservation, before applying for the
necessary permits from the Human Settlements Regulatory
10
Commission. And, in all permits granted to petitioners, the Commission
11
12
13
stated invariably therein that the applications were in "conformance" or "conformity" or "conforming" with the
implementing Standards, Rules and Regulations of P.D. 957. Hence, the argument of public respondents that not all
of the requirements were complied with cannot be sustained.
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval from DAR. The
NATALIA properties were within the areas set aside for the Lungsod Silangan Reservation. Since Presidential
Proclamation No. 1637 created the townsite reservation for the purpose of providing additional housing to the
burgeoning population of Metro Manila, it in effect converted for residential use what were erstwhile agricultural lands
provided all requisites were met. And, in the case at bar, there was compliance with all relevant rules and
requirements. Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the requirements prescribed by P.D.
957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and condominiums in
general. On the other hand, Presidential Proclamation No. 1637 referred only to the Lungsod Silangan Reservation,
which makes it a special law. It is a basic tenet in statutory construction that between a general law and a special law,
14
the latter prevails.
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the Antipolo Hills
15
Subdivision which have already been developed. Of course, this is contrary to its earlier position that there was no
valid conversion. The applications for the developed and undeveloped portions of subject subdivision were similarly
situated. Consequently, both did not need prior DAR approval.

We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the CARL
shall "cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands."
As to what constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as defined in this Act
16
and not classified as mineral, forest, residential, commercial or industrial land." The deliberations of the
Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and
17
suitable agricultural lands" and "do not include commercial, industrial and residential lands."
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
language be considered as "agricultural lands." These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost housing subdivision, albeit at a snail's pace. This can readily be
gleaned from the fact that SAMBA members even instituted an action to restrain petitioners from continuing with such
development. The enormity of the resources needed for developing a subdivision may have delayed its completion
but this does not detract from the fact that these lands are still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than respondent
DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural
18
Uses, DAR itself defined "agricultural land" thus
. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and not
classified as mineral or forest by the Department of Environment and Natural Resources (DENR)
and its predecessor agencies, and not classified in town plans and zoning ordinances as approved
by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities
prior to 15 June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. It
was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted in an
19
Opinion 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,
20
petitioners had to act to assert and protect their interests.
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in issuing the assailed
Notice of Coverage of 22 November 1990 by of lands over which they no longer have jurisdiction.
WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November 1990 by virtue of
which undeveloped portions of the Antipolo Hills Subdivision were placed under CARL coverage is hereby SET
ASIDE.
SO ORDERED.
Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo, Quiason,
Puno and Vitug, JJ., concur.

THIRD DIVISION

FROILAN DE GUZMAN, G.R. No. 156965

ANGEL MARCELO and
NICASIO MAGBITANG, Present:
Petitioners,
QUISUMBING, J.,
Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
THE COURT OF APPEALS,
OFFICE OF THE PRESIDENT,
and the MUNICIPALITY OF Promulgated:
BALIUAG, BULACAN,
Respondents. October 12, 2006
x -------------------------------------------------------------------------------x

DECISION
TINGA, J.:
On appeal via a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure are the
Decision

[1]

and Resolution

[2]

of the Court of Appeals in CA-G.R. SP No. 55710. The Decision affirmed the Resolution

dated 4 October 1999 of the Office of the President dismissing petitioners appeal from the Order of the Secretary of
Agrarian Reform declaring that the disputed property cannot be placed under the coverage of the agrarian reform
program or the Operation Land Transfer.
The following factual antecedents are matters of record.
Petitioners Froilan De Guzman, Angel Marcelo and Nicasio Magbitang were among the tenants of a parcel of land
situated at Barangay Pagala, Baliuag, Bulacan. The land, measuring six (6) hectares, was formerly owned by the
Vergel De Dios family. Sometime in 1979, respondent Municipality of Baliuag, Bulacan (municipality) sought the
expropriation of the land before the now defunct Court of Agrarian Relations. During the pendency of the
expropriation proceedings, the municipality and petitioners entered into a compromise agreement, whereby
petitioners irrevocably withdrew their opposition to the expropriation of the land in consideration of the payment of a
disturbance compensation of P25,000.00 per hectare or P2.50 per square meter. Petitioners also waived all claims
and demands against the municipality. The Court of Agrarian Relations approved said compromise agreement in its
[3]

decisions dated 16 April 1979 and 9 August 1979.

From the records, it can be gathered that the municipality eventually acquired ownership of the land through
expropriation but allowed petitioners to continue cultivating their lots pending the construction of the Baliuag
Wholesale Complex Market. For this arrangement, petitioners remitted rentals to the municipal treasurer. Despite the

lapse of several years, construction of the market did not push through. This prompted petitioners, who had
continually occupied and cultivated the land, to file in 1996 a petition with the Municipal Agrarian Reform Office
(MARO) of Baliuag, praying that the land be placed under the Operation Land Transfer (OLT) in accordance with
Presidential Decree (P.D.) No. 27.

[4]

Following the filing of their petition for CARP coverage before the MARO, petitioners filed a complaint on 13 May
1997 with the Department of Agrarian Reform Adjudication Board (DARAB) against the municipality. In their
complaint docketed as DARAB Case No. 03-02-505497, petitioners prayed for the issuance of a preliminary
injunction or temporary restraining order to secure their peaceful possession over the land. The Provincial Adjudicator
rendered judgment in favor of petitioners on 17 July 1997. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the Board finds the plaintiffs a [sic] bona-fide farmer[]beneficiaries of agrarian reform[.] [A]ccordingly, judgment is hereby rendered as follows:
1. Directing the the [sic] respondent, Municipality of Baliuag, Bulacan[,] represented by Honorable
Mayor Edilberto Tengco and all other persons acting in their behalf to permanently cease and
desist from dumping garbage in the premises in question;
2. Directing the respondent to maintain petitioners in peaceful possession over the disputed
property.
[5]

SO ORDERED.

On 6 January 1997, the Regional Director of the Department of Agrarian Reform (DAR) issued an order granting the
petition and declaring the land as covered by OLT.

[6]

The municipality moved for its reconsideration in vain. Following

the denial of its motion for reconsideration, the municipality elevated the matter to the DAR Secretary who, in his
Order dated 8 August 1997, reversed the Order of 6 January 1997 of the Regional Director.

[7]

Petitioners, aggrieved

this time, filed an appeal with the Office of the President. On 1 July 1999, Executive Secretary Ronaldo B. Zamora, by
authority of the President, dismissed petitioners appeal and affirmed the order of the DAR Secretary.

[8]

Undaunted, petitioners filed a petition for review with the Court of Appeals, which prayed for the reversal of the Order
of 1 July 1999 issued by the Office of the President on the grounds that the land remained agricultural and that the
Office of the President erred in relying upon the certification issued by the Housing and Land Use Regulatory Board
(HLURB) classifying the land as commercial. They also argued that under the provisions of Administrative Order
(A.O.) No. 20, series of 1992, the conversion of the land for non-agricultural purposes was disallowed.

On 30 January, 2002, the Court of Appeals rendered the assailed Decision, dismissing petitioners appeal. Upholding
the non-agricultural classification of the land, the Court of Appeals ruled that the land could no longer be subject of
the comprehensive agrarian reform law (CARL). The Court of Appeals also denied petitioners motion for
reconsideration in the assailed Resolution dated January 20, 2003.
Hence, the instant petition, imputing the following errors to the Court of Appeals:
I.
WITH ALL DUE RESPECT, THE COURT OF APPEALS COMMITTED GRAVE AND MANIFEST
ERROR IN LAW WHEN IT FAILED TO CONSIDER THAT THE SUBJECT LANDHOLDING
SHOULD HAVE BEEN COVERED BY OPERATION LAND TRANSFER PURSUANT TO P.D. NO.
27 DUE TO THE FAILURE OF THE LANDOWNER TO CARRY OUT ITS CONVERSION FROM
AGRICULTURAL LAND FOR A LONG PERIOD OF TIME.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT UPHOLD (sic) THE
RECLASSIFICATION OF THE SUBJECT LANDHOLDING.
III.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT
DISREGARDED THE PROVISIONS OF THE O.P. ADMINISTRATIVE ORDER NO. 20 SERIES OF
1992 WHICH CLEARLY PROVIDES THE NON NEGOTIABILITY OF IRRIGATED PRIME
[9]
AGRICULTURAL LANDS TO NON-AGRICULTURAL PURPOSES.

Essentially, the main issue to be resolved is whether the subject land can be reclassified to agricultural after the
purpose of its conversion to a non-agricultural land had not materialized.

Petitioners contend that despite the conversion of the land for a commercial purpose, they have remained tenants of
the land devoting it for agricultural production. Though the earlier tenancy relationship had been terminated upon the
payment of disturbance compensation pursuant to the 1979 compromise agreement, petitioners posit that a tenancy
relationship was created anew between them and the municipality when the latter allowed petitioners to cultivate the
land after the expropriation proceeding.
The petition has no merit.
Under Section 3(c) of Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL), an agricultural land refers to land devoted to agricultural activity as defined therein and not classified as
mineral, forest, residential, commercial or industrial land. The deliberations of the Constitutional Commission confirm

this limitation. Agricultural lands are only those lands which are arable and suitable agricultural lands and do not
include commercial, industrial and residential lands.

[10]

In Natalia Realty, Inc. vs. Department of Agrarian Reform,

[11]

it was held that lands not devoted to

agricultural activity are outside the coverage of CARL including lands previously converted to non-agricultural uses
prior to the effectivity of CARL by government agencies other than the DAR. This rule has been reiterated in a
number of subsequent cases. Despite claims that the areas have been devoted for agricultural production, the Court
has upheld the non-agricultural classification made by the NHA over housing and resettlements projects,
ordinances passed by local government units classifying residential areas,
issued by the Department of Environment and Natural Resources (DENR).

[13]

[12]

zoning

and certifications over watershed areas

[14]

The DAR itself has recognized the prospective application of R.A. No. 6657, insofar as it provides under
Section 3(c) thereof that lands classified as non-agricultural prior to the effectivity of the CARL are not covered by the
CARL. Thus, DAR Administrative Order No. 1, series of 1990 provides:
Agricultural land refers to those devoted to agricultural activity as defined in R.A. [No.]
6657 and not classified as mineral or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing Land Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential, commercial or industrial use. (Emphasis
supplied.}

That the subject land had been reclassified from agricultural to non-agricultural is not disputed. The records
reveal that as early as 1980, the municipality had passed a zoning ordinance which identified the subject land as the
site of the wholesale market complex. As per certification issued by the HLURB, the land is within the zoning plan
approved by the National Coordinating Council for Town Planning, Housing and Zoning.
Petitioners also theorize that they earned a vested right over the land when a tenancy relationship was
established anew between them and the municipality subsequent to the latters acquisition of the land. In support of
this theory, petitioners cite minutes of meetings and resolutions passed by the municipalitys Sanggunian, purportedly
indicating the municipalitys recognition of their status as tenants of the subject landholding.
Petitioners theory does not persuade the Court.
A segment of the minutes of the meeting of the municipalitys Sanggunian dated 27 May 1988, which
petitioners cite to bolster their theory, is quoted below:

sinabing

Tumindig din at namahayag ang ating Punong Bayan Kgg. Reynaldo S. del Rosario at
sa
kasulukuyan
ay
hindi
pa
naman
kailangan ng Pamahalaang Bayan

ang nasabing lupa ngunit kung ito ay kakailangan na aykinakailangang umalis sila dito ng mahinus
ay, walang pasubali at maluwag sa kanilang kalooban,
kung kayat iminungkahi niya na gumawa ng isang nakasulat na kasunduan na ang nakasaad ay ku
sangloob silang aalis sanasabing lupa pagdating ng panahon na ito ay kailanganin na ng Pamahalaang
[15]
Bayan.

The aforequoted minutes clearly show that petitioners use and possession of the land was by mere
tolerance of the municipality and subject to the condition that petitioners would voluntarily vacate the land when the
need would arise. In the same minutes, the Sanggunian resolved to authorize then Mayor Reynaldo S. del Rosario to
enter into an agreement in writing with petitioners concerning the latterstemporary cultivation of the land as hired
labor.
As discussed earlier, the land had ceased to be classified as agricultural when the municipality extended
petitioners occupation of the land. After the municipality acquired ownership over the land through expropriation and
passed the ordinance converting said land into a commercial area, any transaction entered into by the municipality
involving the land was governed by the applicable civil law in relation to laws on local government. At this point,
agrarian laws no longer governed the relationship between petitioners and the municipality. While it was not
established whether the relationship between petitioners and the municipality was that of a lessor and lessee or that
of an employer and laborer, as the supposed written agreement was not offered in evidence, the fact remains that the
subject land had already been identified as commercial in the zoning ordinance.
Certainly, petitioners occupation of the land, made possible as it was by the tolerance of the municipality,
was subject to its peremptory right to terminate. As absolute owner of the land, the municipality is entitled to devote
the land for purposes it deems appropriate.

It is noteworthy that even prior to its expropriation and reclassification, the land was never placed under the
coverage of the agrarian reform program. Although it appears that petitioners had been tilling the land as tenants of
the Vergel De Dios family, the municipalitys predecessor-in-interest, the records do not show that petitioners had
applied for coverage of the land under the agrarian reform program. Before a claimant becomes a qualified
beneficiary of agrarian reform, the administrative process for coverage under the CARP must be initiated. The mere
fact of cultivating an agricultural land does not ipso jure vest ownership right in favor of the tiller. Since petitioners had
not applied for CARP coverage prior to the reclassification of the land to commercial, their occupation by mere
tolerance cannot ripen into absolute ownership.
Petitioners further argue that the municipalitys failure to realize the commercial project operates to reinstate
the original status of the land as agricultural. In support of this theory, petitioners cite Section 36 (1) of R.A. No. 3844,
or the Agriculture Land Reform Code, unaware that the provision had been amended by R.A. 6389, entitled, An Act

Amending Republic Act Numbered Thirty Eight Hundred and Forty Four, As Amended, Otherwise Known As the
Agricultural Land Reform Code and For Other Purposes.
Before its amendment, Section 36 (1), R.A. No. 3844 provided:
SEC. 36. Possession of Landholding; Exceptions.Notwithstanding any agreement as to
the period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment
and possession of his landholding except when his dispossession has been authorized by the
Court in a judgment that is final and executory if after due hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family will personally
cultivate the landholding or will convert the landholding, if suitably located, into residential, factory,
hospital or school site or other useful non-agricultural purposes: Provided, That the agricultural
lessee shall be entitled to disturbance compensation equivalent to five years rental on his
landholding in addition to his rights under Sections twenty-five and thirty-four, except when the land
owned and leased by the agricultural lessor, is not more than five hectares, in which case instead
of disturbance compensation the lessee may be entitled to an advanced notice of at least one
agricultural year before ejectment proceedings are filed against him: Provided, further, That should
the landholder not cultivate the land himself for three years or fail to substantially carry out such
conversion within one year after the dispossession of the tenant, it shall be presumed that he acted
in bad faith and the tenant shall have the right to demand possession of the land and recover
damages for any loss incurred by him because of said dispossessions.

With the enactment of the amendatory law, the condition imposed on the landowner to implement the
conversion of the agricultural land to a non-agricultural purpose within a certain period was deleted. Section 36 (1),
R.A. No. 3844, as amended, now reads:
SEC. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to
the period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment
and possession of his landholding except when his dispossession has been authorized by the
Court in a judgment that is final and executory if after due hearing it is shown that:
(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or some other
urban purposes: Provided, That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of gross harvests on his landholding during the
last five preceding calendar years;
[16]

xxxx

The amendment is the Legislatures recognition that the optimal use of some lands may not necessarily be
for agriculture. Thus, discretion is vested on the appropriate government agencies to determine the suitability of a
land for residential, commercial, industrial or other purposes. With the passage of the CARL, the conversion of
agricultural lands to non-agricultural uses was retained and the imposition on the landowner to implement within a
time frame the proposed non-agricultural use of the land was done away with.
[17]

Moreover, in Pasong Bayabas Farmers Association, Inc. v. Court of Appeals,

the Court declared

categorically that the failure of the landowner therein to complete the housing project did not have the effect of

reverting the property to its classification as agricultural land, although the order of conversion issued by the then
Minister of Agrarian Reform obliged the landowner to commence the physical development of the housing project
within one year from receipt of the order of conversion.

[18]

In said case, a vast tract of land claimed to be cultivated by

its tenants formed part of the subdivision plan of a housing project approved by the National Planning Commission
and Municipal Council of Carmona and subsequently declared by the Provincial Board of Cavite as composite of the
industrial areas of Carmona, Dasmarias, Silang and Trece Martirez. Because the reclassification of the property by
the Municipal Council of Carmona to non-agricultural land took place before the effectivity of the CARL, the Court
held that Section 65 of R.A. No. 6657 cannot be applied retroactively.

[19]

More importantly, the Court in Pasong Bayabas recognized the power of local government units to adopt
zoning ordinances, citing Section 3 of R.A. No. 2264,

[20]

to wit:

Section 3 of Rep. Act No. 2264, amending the Local Government Code, specifically
empowers municipal and/or city councils to adopt zoning and subdivision ordinances or regulations
in consultation with the National Planning Commission. A zoning ordinance prescribes, defines,
and apportions a given political subdivision into specific land uses as present and future projection
of needs. The power of the local government to convert or reclassify lands to residential lands to
non-agricultural lands reclassified is not subject to the approval of the Department of Agrarian
Reform. Section 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to applications
by the landlord or the beneficiary for the conversion of lands previously placed under agrarian
reform law after the lapse of five years from its award. It does not apply to agricultural lands already
[21]
converted as residential lands prior to the passage of Rep. Act No. 6657.

Thus, the zoning ordinance passed by the municipality sometime in 1980 reclassifying the subject land as
commercial and future site of a market complex operated to take away the agricultural status of the subject property.
Subsequent events cited by petitioners such as their continuous tillage of the land and the non-commencement of the
construction of the market complex did not strip the land of its classification as commercial.

Petitioners reliance on the provisions of A.O. No. 20, series of 1992, issued by then President Fidel Ramos
is misplaced. A.O. No. 20, which sets forth the guidelines to be observed by local government units and government
agencies on agricultural land use conversion, cannot be applied to the subject land for the reason that the land had
already been classified as commercial long before its issuance. Indeed, A.O. No. 20 cannot be applied retroactively.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 55710 are AFFIRMED. Costs against petitioners.

SO ORDERED.

DANTE O. TINGA
Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Third Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified
that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

epublic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO,
FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE,
TEODORO B. MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO,
CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO,
PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias, Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES,respondents.

CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on his way to
Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung his adversary to the
ground thinking him dead, but Antaeus rose even stronger to resume their struggle. This happened several times to
Hercules' increasing amazement. Finally, as they continued grappling, it dawned on Hercules that Antaeus was the
son of Gaea and could never die as long as any part of his body was touching his Mother Earth. Thus forewarned,
Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the powerful Antaeus
weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces of life and
death, of men and women who, like Antaeus need the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this precious resource
among our people. But it is more than a slogan. Through the brooding centuries, it has become a battle-cry
dramatizing the increasingly urgent demand of the dispossessed among us for a plot of earth as their place in the
sun.

Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the well-being and
1
economic security of all the people," especially the less privileged. In 1973, the new Constitution affirmed this goal
adding specifically that "the State shall regulate the acquisition, ownership, use, enjoyment and disposition of private
2
property and equitably diffuse property ownership and profits." Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the
3
soil."
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one whole and
separate Article XIII on Social Justice and Human Rights, containing grandiose but undoubtedly sincere provisions for
the uplift of the common people. These include a call in the following words for the adoption by the State of an
agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till
or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small landowners.
The State shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been enacted by
the Congress of the Philippines on August 8, 1963, in line with the above-stated principles. This was substantially
superseded almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972, along with martial
law, to provide for the compulsory acquisition of private lands for distribution among tenant-farmers and to specify
maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the thrust for agrarian reform. Thus,
on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor of the
beneficiaries of P.D. No. 27 and providing for the valuation of still unvalued lands covered by the decree as well as
the manner of their payment. This was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a
comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over legislative power from
the President and started its own deliberations, including extensive public hearings, on the improvement of the
interests of farmers. The result, after almost a year of spirited debate, was the enactment of R.A. No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988, which President Aquino signed on June 10, 1988. This
law, while considerably changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar
4
as they are not inconsistent with its provisions.
The above-captioned cases have been consolidated because they involve common legal questions, including serious
challenges to the constitutionality of the several measures mentioned above. They will be the subject of one common
discussion and resolution, The different antecedents of each case will require separate treatment, however, and will
first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner Nicolas Manaay
and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner Augustin Hermano, Jr. The
tenants were declared full owners of these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of powers,
due process, equal protection and the constitutional limitation that no private property shall be taken for public use
without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The said
measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a
valid appropriation.
In connection with the determination of just compensation, the petitioners argue that the same may be made only by
a court of justice and not by the President of the Philippines. They invoke the recent cases of EPZA v.
5
6
Dulay and Manotok v. National Food Authority. Moreover, the just compensation contemplated by the Bill of Rights
is payable in money or in cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also deprives the petitioners of their
property rights as protected by due process. The equal protection clause is also violated because the order places
the burden of solving the agrarian problems on the owners only of agricultural lands. No similar obligation is imposed
on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of the lands
occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due process. Worse, the measure
would not solve the agrarian problem because even the small farmers are deprived of their lands and the retention
rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier cases
7
8
ofChavez v. Zobel, Gonzales v. Estrella, and Association of Rice and Corn Producers of the Philippines, Inc. v.
9
The National Land Reform Council. The determination of just compensation by the executive authorities
conformably to the formula prescribed under the questioned order is at best initial or preliminary only. It does not
foreclose judicial intervention whenever sought or warranted. At any rate, the challenge to the order is premature
because no valuation of their property has as yet been made by the Department of Agrarian Reform. The petitioners
are also not proper parties because the lands owned by them do not exceed the maximum retention limit of 7
hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for retention limits on
tenanted lands and that in any event their petition is a class suit brought in behalf of landowners with landholdings
below 24 hectares. They maintain that the determination of just compensation by the administrative authorities is a
final ascertainment. As for the cases invoked by the public respondent, the constitutionality of P.D. No. 27 was merely
assumed in Chavez, while what was decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228 and 229 (except
Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless, this statute should itself also be
declared unconstitutional because it suffers from substantially the same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a 1. 83- hectare
land, who complained that the DAR was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant on the payment of rentals. In a subsequent motion dated April
10, 1989, he adopted the allegations in the basic amended petition that the above- mentioned enactments have been
impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias, Negros Occidental.
Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400 planter-members. This petition seeks to
prohibit the implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as decreed by the
Constitution belongs to Congress and not the President. Although they agree that the President could exercise
legislative power until the Congress was convened, she could do so only to enact emergency measures during the
transition period. At that, even assuming that the interim legislative power of the President was properly exercised,
Proc. No. 131 and E.O. No. 229 would still have to be annulled for violating the constitutional provisions on just
compensation, due process, and equal protection.

They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform Fund, an initial
amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian
Reform Program from 1987 to 1992 which shall be sourced from the receipts of the sale of the assets of the Asset
Privatization Trust and Receipts of sale of ill-gotten wealth received through the Presidential Commission on Good
Government and such other sources as government may deem appropriate. The amounts collected and accruing to
this special fund shall be considered automatically appropriated for the purpose authorized in this Proclamation the
amount appropriated is in futuro, not in esse. The money needed to cover the cost of the contemplated expropriation
has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just compensation as it is traditionally
understood, i.e., with money and in full, but no such payment is contemplated in Section 5 of the E.O. No. 229. On
the contrary, Section 6, thereof provides that the Land Bank of the Philippines "shall compensate the landowner in an
amount to be established by the government, which shall be based on the owner's declaration of current fair market
value as provided in Section 4 hereof, but subject to certain controls to be defined and promulgated by the
Presidential Agrarian Reform Council." This compensation may not be paid fully in money but in any of several
modes that may consist of part cash and part bond, with interest, maturing periodically, or direct payment in cash or
bond as may be mutually agreed upon by the beneficiary and the landowner or as may be prescribed or approved by
the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made to make a careful study of
the sugar planters' situation. There is no tenancy problem in the sugar areas that can justify the application of the
CARP to them. To the extent that the sugar planters have been lumped in the same legislation with other farmers,
although they are a separate group with problems exclusively their own, their right to equal protection has been
violated.
A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane Planters (NASP)
which claims a membership of at least 20,000 individual sugar planters all over the country. On September 10, 1987,
another motion for intervention was filed, this time by Manuel Barcelona, et al., representing coconut and riceland
owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that, in any event, the
appropriation is invalid because of uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and Sections
20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty billion pesos and thus specifies the minimum
rather than the maximum authorized amount. This is not allowed. Furthermore, the stated initial amount has not been
certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and convincing evidence the
necessity for the exercise of the powers of eminent domain, and the violation of the fundamental right to own
property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of the said land for
an amount equal to the government assessor's valuation of the land for tax purposes. On the other hand, if the
landowner declares his own valuation he is unjustly required to immediately pay the corresponding taxes on the land,
in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality in favor of Proc.
No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as explained in the "whereas" clauses
of the Proclamation and submits that, contrary to the petitioner's contention, a pilot project to determine the feasibility
of CARP and a general survey on the people's opinion thereon are not indispensable prerequisites to its
promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to show that they belong to a
different class and should be differently treated. The Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.

The public respondent also points out that the constitutional prohibition is against the payment of public money
without the corresponding appropriation. There is no rule that only money already in existence can be the subject of
an appropriation law. Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund, although denominated as
an initial amount, is actually the maximum sum appropriated. The word "initial" simply means that additional amounts
may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing the
constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends that the measure is
unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not originate from
the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due process and the
requirement for just compensation, placed his landholding under the coverage of Operation Land Transfer.
Certificates of Land Transfer were subsequently issued to the private respondents, who then refused payment of
lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding under Operation
Land transfer and asked for the recall and cancellation of the Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his petition was denied without hearing. On February 17, 1987,
he filed a motion for reconsideration, which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly effected the transfer of his land to the
private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no private property
shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the 1987
Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress convened is anomalous
and arbitrary, besides violating the doctrine of separation of powers. The legislative power granted to the President
under the Transitory Provisions refers only to emergency measures that may be promulgated in the proper exercise
of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of law and to the
retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of the Constitution. He likewise
argues that, besides denying him just compensation for his land, the provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 shall be
considered as advance payment for the land.

is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of even small
landowners in the program along with other landowners with lands consisting of seven hectares or more is
undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the motion for reconsideration
filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228 and
229, he argues that they were enacted pursuant to Section 6, Article XVIII of the Transitory Provisions of the 1987
Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October 21. 1972, the
tenant-farmer of agricultural land was deemed the owner of the land he was tilling. The leasehold rentals paid after
that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved on December
14, 1987. An appeal to the Office of the President would be useless with the promulgation of E.O. Nos. 228 and 229,
which in effect sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and corn lands not
exceeding seven hectares as long as they are cultivating or intend to cultivate the same. Their respective lands do
not exceed the statutory limit but are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or
removed from his farmholding until such time as the respective rights of the tenant- farmers and the
landowner shall have been determined in accordance with the rules and regulations implementing
P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention because the
Department of Agrarian Reform has so far not issued the implementing rules required under the above-quoted
decree. They therefore ask the Court for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474 removing any right of
retention from persons who own other agricultural lands of more than 7 hectares in aggregate area or lands used for
residential, commercial, industrial or other purposes from which they derive adequate income for their family. And
even assuming that the petitioners do not fall under its terms, the regulations implementing P.D. No. 27 have already
been issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners,
with an accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978, (Implementation
Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines on
Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR Administrative Order No. 1, series of 1985
(Providing for a Cut-off Date for Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to file the corresponding
applications for retention under these measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this case notwithstanding the
pendency of their appeal to the President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which cannot be controlled through the writ
of mandamus. This is especially true if this function is entrusted, as in this case, to a separate department of the
government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them because they do not
own more than seven hectares of agricultural land. Moreover, assuming arguendo that the rules were intended to
cover them also, the said measures are nevertheless not in force because they have not been published as required

10

by law and the ruling of this Court in Tanada v. Tuvera. As for LOI 474, the same is ineffective for the additional
reason that a mere letter of instruction could not have repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the three departments of the
government, the judiciary is nonetheless vested with the power to annul the acts of either the legislative or the
executive or of both when not conformable to the fundamental law. This is the reason for what some quarters call the
doctrine of judicial supremacy. Even so, this power is not lightly assumed or readily exercised. The doctrine of
separation of powers imposes upon the courts a proper restraint, born of the nature of their functions and of their
respect for the other departments, in striking down the acts of the legislative and the executive as unconstitutional.
The policy, indeed, is a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was
done or the law was enacted, earnest studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of unconstitutionality, requiring
therefor the concurrence of a majority of the members of the Supreme Court who took part in the deliberations and
11
voted on the issue during their session en banc. And as established by judge made doctrine, the Court will assume
jurisdiction over a constitutional question only if it is shown that the essential requisites of a judicial inquiry into such a
question are first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question must have been opportunely raised by the proper
12
party, and the resolution of the question is unavoidably necessary to the decision of the case itself.
With particular regard to the requirement of proper party as applied in the cases before us, we hold that the same is
satisfied by the petitioners and intervenors because each of them has sustained or is in danger of sustaining an
13
immediate injury as a result of the acts or measures complained of. And even if, strictly speaking, they are not
covered by the definition, it is still within the wide discretion of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious constitutional questions raised.
14

In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question the constitutionality
of several executive orders issued by President Quirino although they were invoking only an indirect and general
interest shared in common with the public. The Court dismissed the objection that they were not proper parties and
ruled that "the transcendental importance to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of procedure." We have since then applied this exception in many
15
other cases.
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with constitutional issues
like the ones now before it, it will not hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution as God and its conscience give it the light
to probe its meaning and discover its purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make the hammer fall,
and heavily," to use Justice Laurel's pithy language, where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that
... when the judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an act of the
Legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to them. This is in truth
all that is involved in what is termed "judicial supremacy" which properly is the power of judicial
16
review under the Constitution.

The cases before us categorically raise constitutional questions that this Court must categorically resolve. And so we
shall.
II
We proceed first to the examination of the preliminary issues before resolving the more serious challenges to the
constitutionality of the several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law has already
been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on that issue. As for the power of
President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized under Section 6
of the Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the Congress of the Philippines was
formally convened and took over legislative power from her. They are not "midnight" enactments intended to preempt the legislature because E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131
and E.O. No. 229, were both issued on July 22, 1987. Neither is it correct to say that these measures ceased to be
valid when she lost her legislative power for, like any statute, they continue to be in force unless modified or repealed
by subsequent law or declared invalid by the courts. A statute does not ipso facto become inoperative simply
because of the dissolution of the legislature that enacted it. By the same token, President Aquino's loss of legislative
power did not have the effect of invalidating all the measures enacted by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially affirmed the
challenged measures and has specifically provided that they shall be suppletory to R.A. No. 6657 whenever not
17
inconsistent with its provisions. Indeed, some portions of the said measures, like the creation of the P50 billion fund
in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in the
18
CARP Law.
That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the requirements of a
valid appropriation as specified in the Constitution. Clearly, however, Proc. No. 131 is not an appropriation measure
even if it does provide for the creation of said fund, for that is not its principal purpose. An appropriation law is one the
19
primary and specific purpose of which is to authorize the release of public funds from the treasury. The creation of
the fund is only incidental to the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section 25(4) of Article VI,
are not applicable. With particular reference to Section 24, this obviously could not have been complied with for the
simple reason that the House of Representatives, which now has the exclusive power to initiate appropriation
measures, had not yet been convened when the proclamation was issued. The legislative power was then solely
vested in the President of the Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated because they do
not provide for retention limits as required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A. No.
6657 does provide for such limits now in Section 6 of the law, which in fact is one of its most controversial provisions.
This section declares:
Retention Limits. Except as otherwise provided in this Act, no person may own or retain, directly
or indirectly, any public or private agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced, terrain, infrastructure, and soil
fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but
in no case shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1) that he is at least
fifteen (15) years of age; and (2) that he is actually tilling the land or directly managing the farm;
Provided, That landowners whose lands have been covered by Presidential Decree No. 27 shall be
allowed to keep the area originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the time of the approval
of this Act shall retain the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one subject, to be
expressed in its title, deserves only short attention. It is settled that the title of the bill does not have to be a catalogue

of its contents and will suffice if the matters embodied in the text are relevant to each other and may be inferred from
20
the title.
The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever name it was
called, had the force and effect of law because it came from President Marcos. Such are the ways of despots. Hence,
it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27
because the former was only a letter of instruction. The important thing is that it was issued by President Marcos,
whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply with the requirement
21
for publication as this Court held in Tanada v. Tuvera. Hence, unless published in the Official Gazette in
accordance with Article 2 of the Civil Code, they could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was published, though, in the Official Gazette dated
November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus cannot issue to
compel the performance of a discretionary act, especially by a specific department of the government. That is true as
a general proposition but is subject to one important qualification. Correctly and categorically stated, the rule is that
mandamus will lie to compel the discharge of the discretionary duty itself but not to control the discretion to be
exercised. In other words, mandamus can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and unreasonable delay in
the exercise of such duty occurs, if it is a clear duty imposed by law, the courts will intervene by the
extraordinary legal remedy of mandamus to compel action. If the duty is purely ministerial, the
courts will require specific action. If the duty is purely discretionary, the courts by mandamus will
require action only. For example, if an inferior court, public official, or board should, for an
unreasonable length of time, fail to decide a particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a decision, and in the second to require
22
that jurisdiction be taken of the cause.
And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy and adequate
remedy available from the administrative authorities, resort to the courts may still be permitted if the issue raised is a
23
question of law.
III
There are traditional distinctions between the police power and the power of eminent domain that logically preclude
24
the application of both powers at the same time on the same subject. In the case of City of Baguio v. NAWASA, for
example, where a law required the transfer of all municipal waterworks systems to the NAWASA in exchange for its
assets of equivalent value, the Court held that the power being exercised was eminent domain because the property
involved was wholesome and intended for a public use. Property condemned under the police power is noxious or
intended for a noxious purpose, such as a building on the verge of collapse, which should be demolished for the
public safety, or obscene materials, which should be destroyed in the interest of public morals. The confiscation of
such property is not compensable, unlike the taking of property under the power of expropriation, which requires the
payment of just compensation to the owner.
25

In the case of Pennsylvania Coal Co. v. Mahon, Justice Holmes laid down the limits of the police power in a famous
aphorism: "The general rule at least is that while property may be regulated to a certain extent, if regulation goes too
far it will be recognized as a taking." The regulation that went "too far" was a law prohibiting mining which might
cause the subsidence of structures for human habitation constructed on the land surface. This was resisted by a coal
company which had earlier granted a deed to the land over its mine but reserved all mining rights thereunder, with the
grantee assuming all risks and waiving any damage claim. The Court held the law could not be sustained without
compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid exercise of
the police power. He said:
Every restriction upon the use of property imposed in the exercise of the police power deprives the
owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights
in property without making compensation. But restriction imposed to protect the public health,

safety or morals from dangers threatened is not a taking. The restriction here in question is merely
the prohibition of a noxious use. The property so restricted remains in the possession of its owner.
The state does not appropriate it or make any use of it. The state merely prevents the owner from
making a use which interferes with paramount rights of the public. Whenever the use prohibited
ceases to be noxious as it may because of further changes in local or social conditions the
restriction will have to be removed and the owner will again be free to enjoy his property as
heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police power and the power of
eminent domain, with the latter being used as an implement of the former like the power of taxation. The employment
26
of the taxing power to achieve a police purpose has long been accepted. As for the power of expropriation, Prof.
John J. Costonis of the University of Illinois College of Law (referring to the earlier case of Euclid v. Ambler Realty
Co., 272 US 365, which sustained a zoning law under the police power) makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and eminent domain
powers on different planets. Generally speaking, they viewed eminent domain as encompassing
public acquisition of private property for improvements that would be available for public use,"
literally construed. To the police power, on the other hand, they assigned the less intrusive task of
preventing harmful externalities a point reflected in the Euclid opinion's reliance on an analogy to
nuisance law to bolster its support of zoning. So long as suppression of a privately authored harm
bore a plausible relation to some legitimate "public purpose," the pertinent measure need have
afforded no compensation whatever. With the progressive growth of government's involvement in
land use, the distance between the two powers has contracted considerably. Today government
often employs eminent domain interchangeably with or as a useful complement to the police
power-- a trend expressly approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to match that of the police
27
power's standard of "public purpose."
The Berman case sustained a redevelopment project and the improvement of blighted areas in the District of
Columbia as a proper exercise of the police power. On the role of eminent domain in the attainment of this purpose,
Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as
well as sanitary, there is nothing in the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear.
For the power of eminent domain is merely the means to the end.

28

29

In Penn Central Transportation Co. v. New York City, decided by a 6-3 vote in 1978, the U.S Supreme Court
sustained the respondent's Landmarks Preservation Law under which the owners of the Grand Central Terminal had
not been allowed to construct a multi-story office building over the Terminal, which had been designated a historic
landmark. Preservation of the landmark was held to be a valid objective of the police power. The problem, however,
was that the owners of the Terminal would be deprived of the right to use the airspace above it although other
landowners in the area could do so over their respective properties. While insisting that there was here no taking, the
Court nonetheless recognized certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it, was explained by
Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to transfer to
neighboring properties the authorized but unused rights accruing to the site prior to the Terminal's designation as a
landmark the rights which would have been exhausted by the 59-story building that the city refused to
countenance atop the Terminal. Prevailing bulk restrictions on neighboring sites were proportionately relaxed,
theoretically enabling Penn Central to recoup its losses at the Terminal site by constructing or selling to others the
30
right to construct larger, hence more profitable buildings on the transferee sites.
The cases before us present no knotty complication insofar as the question of compensable taking is concerned. To
the extent that the measures under challenge merely prescribe retention limits for landowners, there is an exercise of

the police power for the regulation of private property in accordance with the Constitution. But where, to carry out
such regulation, it becomes necessary to deprive such owners of whatever lands they may own in excess of the
maximum area allowed, there is definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess and all beneficial rights accruing to the
owner in favor of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power of
eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the several measures before us are
challenged as violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are prescribed has
already been discussed and dismissed. It is noted that although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention limits finally agreed upon are, curiously enough, not being
questioned in these petitions. We therefore do not discuss them here. The Court will come to the other claimed
violations of due process in connection with our examination of the adequacy of just compensation as required under
the power of expropriation.
The argument of the small farmers that they have been denied equal protection because of the absence of retention
limits has also become academic under Section 6 of R.A. No. 6657. Significantly, they too have not questioned the
area of such limits. There is also the complaint that they should not be made to share the burden of agrarian reform,
an objection also made by the sugar planters on the ground that they belong to a particular class with particular
interests of their own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other in certain particulars and
31
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
32
to existing conditions only; and (4) it must apply equally to all the members of the class. The Court finds that all
these requisites have been met by the measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike both as to the rights
33
conferred and the liabilities imposed. The petitioners have not shown that they belong to a different class and
entitled to a different treatment. The argument that not only landowners but also owners of other properties must be
made to share the burden of implementing land reform must be rejected. There is a substantial distinction between
these two classes of owners that is clearly visible except to those who will not see. There is no need to elaborate on
this matter. In any event, the Congress is allowed a wide leeway in providing for a valid classification. Its decision is
accorded recognition and respect by the courts of justice except only where its discretion is abused to the detriment
of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only if there is a
concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the public generally as
distinguished from those of a particular class require the interference of the State and, no less important, the means
employed are reasonably necessary for the attainment of the purpose sought to be achieved and not unduly
34
oppressive upon individuals. As the subject and purpose of agrarian reform have been laid down by the
Constitution itself, we may say that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the individual are concerned, the end
does not justify the means. It is not enough that there be a valid objective; it is also necessary that the means
employed to pursue it be in keeping with the Constitution. Mere expediency will not excuse constitutional shortcuts.
There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a
few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a, person
invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the
nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article III of the Constitution. With
regard to his property, the owner enjoys the added protection of Section 9, which reaffirms the familiar rule that
private property shall not be taken for public use without just compensation.

This brings us now to the power of eminent domain.

IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands
intended for public use upon payment of just compensation to the owner. Obviously, there is no
need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser,
35
in which case an ordinary deed of sale may be agreed upon by the parties. It is only where the
owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that
the power of eminent domain will come into play to assert the paramount authority of the State over
the interests of the property owner. Private rights must then yield to the irresistible demands of the
public interest on the time-honored justification, as in the case of the police power, that the welfare
of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is
absolute). The limitation is found in the constitutional injunction that "private property shall not be taken for public use
without just compensation" and in the abundant jurisprudence that has evolved from the interpretation of this
principle. Basically, the requirements for a proper exercise of the power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should first distribute
public agricultural lands in the pursuit of agrarian reform instead of immediately disturbing property rights by forcibly
acquiring private agricultural lands. Parenthetically, it is not correct to say that only public agricultural lands may be
covered by the CARP as the Constitution calls for "the just distribution of all agricultural lands." In any event, the
decision to redistribute private agricultural lands in the manner prescribed by the CARP was made by the legislative
and executive departments in the exercise of their discretion. We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when they decide what is
36
known as the political question. As explained by Chief Justice Concepcion in the case of Taada v. Cuenco:
The term "political question" connotes what it means in ordinary parlance, namely, a question of
policy. It refers to "those questions which, under the Constitution, are to be decided by the people
in their sovereign capacity; or in regard to which full discretionary authority has been delegated to
the legislative or executive branch of the government." It is concerned with issues dependent upon
the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the enlargement of judicial power, which
now includes the authority of the courts "to determine whether or not there has been a grave abuse of discretion
37
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." Even
so, this should not be construed as a license for us to reverse the other departments simply because their views may
not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the redistribution of
private landholdings (even as the distribution of public agricultural lands is first provided for, while also continuing
apace under the Public Land Act and other cognate laws). The Court sees no justification to interpose its authority,
which we may assert only if we believe that the political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,

38

it was held:

Congress having determined, as it did by the Act of March 3,1909 that the entire St. Mary's river
between the American bank and the international line, as well as all of the upland north of the
present ship canal, throughout its entire length, was "necessary for the purpose of navigation of
said waters, and the waters connected therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there is no room for judicial review
of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by the Constitution itself No less
than the 1987 Charter calls for agrarian reform, which is the reason why private agricultural lands are to be taken

from their owners, subject to the prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc.
No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural lands to enable farmers who are
landless to own directly or collectively the lands they till." That public use, as pronounced by the fundamental law
itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
39
expropriator. It has been repeatedly stressed by this Court that the measure is not the taker's gain but the owner's
40
loss. The word "just" is used to intensify the meaning of the word "compensation" to convey the idea that the
41
equivalent to be rendered for the property to be taken shall be real, substantial, full, ample.
It bears repeating that the measures challenged in these petitions contemplate more than a mere regulation of the
use of private lands under the police power. We deal here with an actual taking of private agricultural lands that has
dispossessed the owners of their property and deprived them of all its beneficial use and enjoyment, to entitle them to
the just compensation mandated by the Constitution.
42

As held in Republic of the Philippines v. Castellvi, there is compensable taking when the following conditions
concur: (1) the expropriator must enter a private property; (2) the entry must be for more than a momentary period;
(3) the entry must be under warrant or color of legal authority; (4) the property must be devoted to public use or
otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be
in such a way as to oust the owner and deprive him of beneficial enjoyment of the property. All these requisites are
envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking possession of the
condemned property, as "the compensation is a public charge, the good faith of the public is pledged for its payment,
43
and all the resources of taxation may be employed in raising the amount." Nevertheless, Section 16(e) of the
CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d), which
provides that in case of the rejection or disregard by the owner of the offer of the government to buy his land... the DAR shall conduct summary administrative proceedings to determine the compensation for
the land by requiring the landowner, the LBP and other interested parties to submit evidence as to
the just compensation for the land, within fifteen (15) days from the receipt of the notice. After the
expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide
the case within thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of justice and may not be
44
usurped by any other branch or official of the government. EPZA v. Dulay resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for property under expropriation should be
either the assessment of the property by the government or the sworn valuation thereof by the owner, whichever was
lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a matter
which under this Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the power to
determine the just compensation for the property, following the applicable decrees, its task would
be relegated to simply stating the lower value of the property as declared either by the owner or the
assessor. As a necessary consequence, it would be useless for the court to appoint commissioners
under Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
taking of private property is seemingly fulfilled since it cannot be said that a judicial proceeding was
not had before the actual taking. However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or charade as the court has only to choose
between the valuation of the owner and that of the assessor, and its choice is always limited to the
lower of the two. The court cannot exercise its discretion or independence in determining what is
just or fair. Even a grade school pupil could substitute for the judge insofar as the determination of
constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of whether the courts
under P.D. No. 1533, which contains the same provision on just compensation as its predecessor
decrees, still have the power and authority to determine just compensation, independent of what is
stated by the decree and to this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the valuation in the tax
documents is unfair or wrong. And it is repulsive to the basic concepts of justice and fairness to
allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment of
a court promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and considerations
essential to a fair and just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that rendered
the challenged decrees constitutionally objectionable. Although the proceedings are described as summary, the
landowner and other interested parties are nevertheless allowed an opportunity to submit evidence on the real value
of the property. But more importantly, the determination of the just compensation by the DAR is not by any means
final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction
for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the
courts of justice will still have the right to review with finality the said determination in the exercise of what is
admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the landowner in
such amount as may be agreed upon by the landowner and the DAR and the LBP, in accordance
with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may
be finally determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned Twenty-five percent (25%) cash, the
balance to be paid in government financial instruments
negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty
(50) hectares Thirty percent (30%) cash, the balance to be
paid in government financial instruments negotiable at any
time.
(c) For lands twenty-four (24) hectares and below Thirty-five
percent (35%) cash, the balance to be paid in government
financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares,
physical assets or other qualified investments in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates.
Ten percent (10%) of the face value of the bonds shall mature
every year from the date of issuance until the tenth (10th) year:
Provided, That should the landowner choose to forego the
cash portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be
used by the landowner, his successors-in- interest or his
assigns, up to the amount of their face value, for any of the
following:
(i) Acquisition of land or other real properties of the
government, including assets under the Asset Privatization
Program and other assets foreclosed by government financial
institutions in the same province or region where the lands for
which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or
controlled corporations or shares of stock owned by the
government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional
release of accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an
economic enterprise, preferably in a small and medium- scale
industry, in the same province or region as the land for which
the bonds are paid;
(v) Payment for various taxes and fees to government:
Provided, That the use of these bonds for these purposes will
be limited to a certain percentage of the outstanding balance of
the financial instruments; Provided, further, That the PARC
shall determine the percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of the

original bondholder in government universities, colleges, trade
schools, and other institutions;
(vii) Payment for fees of the immediate family of the original
bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time
allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional insofar as it requires
the owners of the expropriated properties to accept just compensation therefor in less than money, which is the only
medium of payment allowed. In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property expropriated is
entitled to a just compensation, which should be neither more nor less, whenever it is possible to
make the assessment, than the money equivalent of said property. Just compensation has always
been understood to be the just and complete equivalent of the loss which the owner of the thing
45
expropriated has to suffer by reason of the expropriation . (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,

46

this Court held:

It is well-settled that just compensation means the equivalent for the value of the property at the
time of its taking. Anything beyond that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss sustained, which is the measure of the
indemnity, not whatever gain would accrue to the expropriating entity. The market value of the land
taken is the just compensation to which the owner of condemned property is entitled, the market
value being that sum of money which a person desirous, but not compelled to buy, and an owner,
willing, but not compelled to sell, would agree on as a price to be given and received for such
property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the weight of authority is also
to the effect that just compensation for property expropriated is payable only in money and not otherwise. Thus
The medium of payment of compensation is ready money or cash. The condemnor cannot compel
the owner to accept anything but money, nor can the owner compel or require the condemnor to
pay him on any other basis than the value of the property in money at the time and in the manner
prescribed by the Constitution and the statutes. When the power of eminent domain is resorted to,
there must be a standard medium of payment, binding upon both parties, and the law has fixed that
47
standard as money in cash. (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a
48
reliable and constant standard of compensation.
"Just compensation" for property taken by condemnation means a fair equivalent in money, which
must be paid at least within a reasonable time after the taking, and it is not within the power of the
Legislature to substitute for such payment future obligations, bonds, or other valuable
49
advantage. (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just compensation is money and
no other. And so, conformably, has just compensation been paid in the past solely in that medium. However, we do
not deal here with the traditional excercise of the power of eminent domain. This is not an ordinary expropriation
where only a specific property of relatively limited area is sought to be taken by the State from its owner for a specific
and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of whatever kind as long as they
are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for the
benefit not only of a particular community or of a small segment of the population but of the entire Filipino nation, from
all levels of our society, from the impoverished farmer to the land-glutted owner. Its purpose does not cover only the
whole territory of this country but goes beyond in time to the foreseeable future, which it hopes to secure and edify
with the vision and the sacrifice of the present generation of Filipinos. Generations yet to come are as involved in this
program as we are today, although hopefully only as beneficiaries of a richer and more fulfilling life we will guarantee
to them tomorrow through our thoughtfulness today. And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms, calling for "a just distribution" among the farmers of
lands that have heretofore been the prison of their dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the vast areas of
land subject to expropriation under the laws before us, we estimate that hundreds of billions of pesos will be needed,
far more indeed than the amount of P50 billion initially appropriated, which is already staggering as it is by our
present standards. Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for agrarian reform as a
top priority project of the government. It is a part of this assumption that when they envisioned the expropriation that
would be needed, they also intended that the just compensation would have to be paid not in the orthodox way but a
less conventional if more practical method. There can be no doubt that they were aware of the financial limitations of
the government and had no illusions that there would be enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. We may therefore assume that their intention was to allow such manner
of payment as is now provided for by the CARP Law, particularly the payment of the balance (if the owner cannot be
paid fully with money), or indeed of the entire amount of the just compensation, with other things of value. We may
also suppose that what they had in mind was a similar scheme of payment as that prescribed in P.D. No. 27, which
was the law in force at the time they deliberated on the new Charter and with which they presumably agreed in
principle.
The Court has not found in the records of the Constitutional Commission any categorical agreement among the
members regarding the meaning to be given the concept of just compensation as applied to the comprehensive
agrarian reform program being contemplated. There was the suggestion to "fine tune" the requirement to suit the
demands of the project even as it was also felt that they should "leave it to Congress" to determine how payment
should be made to the landowner and reimbursement required from the farmer-beneficiaries. Such innovations as
"progressive compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
50
special definition of the just compensation for the lands to be expropriated was reached by the Commission.
On the other hand, there is nothing in the records either that militates against the assumptions we are making of the
general sentiments and intention of the members on the content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just compensation provided
for in the afore- quoted Section 18 of the CARP Law is not violative of the Constitution. We do not mind admitting that
a certain degree of pragmatism has influenced our decision on this issue, but after all this Court is not a cloistered
institution removed from the realities and demands of society or oblivious to the need for its enhancement. The Court
is as acutely anxious as the rest of our people to see the goal of agrarian reform achieved at last after the frustrations
and deprivations of our peasant masses during all these disappointing decades. We are aware that invalidation of the
said section will result in the nullification of the entire program, killing the farmer's hopes even as they approach
realization and resurrecting the spectre of discontent and dissent in the restless countryside. That is not in our view
the intention of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be made fully in money, we find
further that the proportion of cash payment to the other things of value constituting the total payment, as determined
on the basis of the areas of the lands expropriated, is not unduly oppressive upon the landowner. It is noted that the
smaller the land, the bigger the payment in money, primarily because the small landowner will be needing it more
than the big landowners, who can afford a bigger balance in bonds and other things of value. No less importantly, the
government financial instruments making up the balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his option, are also not unreasonable because payment is
made in shares of stock, LBP bonds, other properties or assets, tax credits, and other things of value equivalent to
the amount of just compensation.

Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a little
inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their forebearance and even sacrifice, will not
begrudge us their indispensable share in the attainment of the ideal of agrarian reform. Otherwise, our pursuit of this
elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be viable any
more as it appears that Section 4 of the said Order has been superseded by Section 14 of the CARP Law. This
repeats the requisites of registration as embodied in the earlier measure but does not provide, as the latter did, that in
case of failure or refusal to register the land, the valuation thereof shall be that given by the provincial or city assessor
for tax purposes. On the contrary, the CARP Law says that the just compensation shall be ascertained on the basis of
the factors mentioned in its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property even before actual payment to him
in full of just compensation, in contravention of a well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in
other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the condemnor's title relates back to the date on which the petition
51
under the Eminent Domain Act, or the commissioner's report under the Local Improvement Act, is filed.
... although the right to appropriate and use land taken for a canal is complete at the time of entry, title to the property
52
taken remains in the owner until payment is actually made. (Emphasis supplied.)
53

In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does not pass
to the condemnor until just compensation had actually been made. In fact, the decisions appear to be uniformly to this
54
effect. As early as 1838, in Rubottom v. McLure, it was held that "actual payment to the owner of the condemned
property was a condition precedent to the investment of the title to the property in the State" albeit "not to the
55
appropriation of it to public use." In Rexford v. Knight, the Court of Appeals of New York said that the construction
upon the statutes was that the fee did not vest in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further said that "both
on principle and authority the rule is ... that the right to enter on and use the property is complete, as soon as the
property is actually appropriated under the authority of law for a public use, but that the title does not pass from the
owner without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,

56

that:

If the laws which we have exhibited or cited in the preceding discussion are attentively examined it
will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared that
he shall "be deemed the owner" of a portion of land consisting of a family-sized farm except that "no title to the land
owned by him was to be actually issued to him unless and until he had become a full-fledged member of a duly
recognized farmers' cooperative." It was understood, however, that full payment of the just compensation also had to
be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land
they acquired by virtue of Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of full-fledged
membership in the farmers' cooperatives and full payment of just compensation. Hence, it was also perfectly proper

for the Order to also provide in its Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary
after October 21, 1972 (pending transfer of ownership after full payment of just compensation), shall be considered
as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government on
receipt by the landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or
57
LBP bonds with an accessible bank. Until then, title also remains with the landowner. No outright change of
ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily transferring title before the land is
fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as recognized under
E.O. No. 228, are retained by him even now under R.A. No. 6657. This should counter-balance the express provision
in Section 6 of the said law that "the landowners whose lands have been covered by Presidential Decree No. 27 shall
be allowed to keep the area originally retained by them thereunder, further, That original homestead grantees or
direct compulsory heirs who still own the original homestead at the time of the approval of this Act shall retain the
same areas as long as they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by the petitioners
with the Office of the President has already been resolved. Although we have said that the doctrine of exhaustion of
administrative remedies need not preclude immediate resort to judicial action, there are factual issues that have yet to
be examined on the administrative level, especially the claim that the petitioners are not covered by LOI 474 because
they do not own other agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have not yet exercised
their retention rights, if any, under P.D. No. 27, the Court holds that they are entitled to the new retention rights
provided for by R.A. No. 6657, which in fact are on the whole more liberal than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have been the subject of bitter attack from
those who point to the shortcomings of these measures and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be continuously re-examined and rehoned, that they may be
sharper instruments for the better protection of the farmer's rights. But we have to start somewhere. In the pursuit of
agrarian reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected difficulties.
This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice Holmes's words, "it
is an experiment, as all life is an experiment," and so we learn as we venture forward, and, if necessary, by our own
mistakes. We cannot expect perfection although we should strive for it by all means. Meantime, we struggle as best
we can in freeing the farmer from the iron shackles that have unconscionably, and for so long, fettered his soul to the
soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform program are
removed, to clear the way for the true freedom of the farmer. We may now glimpse the day he will be released not
only from want but also from the exploitation and disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the farm on which he toils will be his farm. It will be
his portion of the Mother Earth that will give him not only the staff of life but also the joy of living. And where once it
bred for him only deep despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at last
can he banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the music and the
dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED against
all the constitutional objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full payment of
compensation to their respective owners.

3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and
recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall enjoy
the retention rights granted by R.A. No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without pronouncement
as to costs.
EN BANC
[G.R. No. 86889 : December 4, 1990.]
192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM,
Respondent.

DECISION

PARAS, J.:

This is a petition for prohibition with prayer for restraining order and/or preliminary and permanent injunction against
the Honorable Secretary of the Department of Agrarian Reform for acting without jurisdiction in enforcing the assailed
provisions of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988 and in
promulgating the Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No. 6657, insofar
as the same apply to herein petitioner, and further from performing an act in violation of the constitutional rights of the
petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes the raising of livestock,
poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and Procedures Implementing
Production and Profit Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations implementing Section
11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business and together with
others in the same business allegedly stands to be adversely affected by the enforcement of Section 3(b), Section 11,
Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive Agrarian
Reform Law and of the Guidelines and Procedures Implementing Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and Regulations Implementing Section 11 thereof as promulgated by
the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines and rules be declared unconstitutional. Meanwhile, it is
also prayed that a writ of preliminary injunction or restraining order be issued enjoining public respondents from
enforcing the same, insofar as they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms' prayer for the issuance of
a preliminary injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said Motion for Reconsideration
regarding the injunctive relief, after the filing and approval by this Court of an injunction bond in the amount of
P100,000.00. This Court also gave due course to the petition and required the parties to file their respective
memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his Memorandum (Rollo, pp.
186-187).

Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of "Agricultural,
Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to commercial,
livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the authority to summarily
determine the just compensation to be paid for lands covered by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are distributed within
sixty (60) days of the end of the fiscal year as compensation to regular and other farmworkers in such lands
over and above the compensation they currently receive: Provided, That these individuals or entities realize
gross sales in excess of five million pesos per annum unless the DAR, upon proper application, determine a
lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of the net profit after tax
shall be distributed to said regular and other farmworkers within ninety (90) days of the end of the fiscal year
. . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules and Guidelines promulgated in accordance therewith.:cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII
x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers
and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of
other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention
limits as the Congress may prescribe, taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. In determining retention limits, the State
shall respect the rights of small landowners. The State shall further provide incentives for voluntary landsharing.
x x x"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In fact, it
acknowledges the correctness of the decision of this Court in the case of the Association of Small
Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming
the constitutionality of the Comprehensive Agrarian Reform Law. It, however, argued that Congress in
enacting the said law has transcended the mandate of the Constitution, in including land devoted to the
raising of livestock, poultry and swine in its coverage (Rollo, p. 131). Livestock or poultry raising is not
similar to crop or tree farming. Land is not the primary resource in this undertaking and represents no more
than five percent (5%) of the total investment of commercial livestock and poultry raisers. Indeed, there are
many owners of residential lands all over the country who use available space in their residence for
commercial livestock and raising purposes, under "contract-growing arrangements," whereby processing
corporations and other commercial livestock and poultry raisers (Rollo, p. 10). Lands support the buildings
and other amenities attendant to the raising of animals and birds. The use of land is incidental to but not the
principal factor or consideration in productivity in this industry. Including backyard raisers, about 80% of
those in commercial livestock and poultry production occupy five hectares or less. The remaining 20% are
mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under Section 3(b) of R.A. 6657 is proper. He cited that Webster's
International Dictionary, Second Edition (1954), defines the following words:

"Agriculture the art or science of cultivating the ground and raising and harvesting crops, often, including
also, feeding, breeding and management of livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially for profit.
Farm a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in constitutional construction is to ascertain
and thereafter assure the realization of the purpose of the framers in the adoption of the Constitution (J.M. Tuazon &
Co. vs. Land Tenure Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution begins with the language of the document itself. The
words used in the Constitution are to be given their ordinary meaning except where technical terms are employed in
which case the significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure Administration, 31
SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of doubtful meaning, the
courts may consider the debates in the constitutional convention as throwing light on the intent of the framers of the
Constitution. It is true that the intent of the convention is not controlling by itself, but as its proceeding was preliminary
to the adoption by the people of the Constitution the understanding of the convention as to what was meant by the
terms of the constitutional provision which was the subject of the deliberation, goes a long way toward explaining the
understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention of the framers of the Constitution to include livestock and
poultry industry in the coverage of the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A. 3844, as laud
devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandoned land (Record,
CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture." Commissioner Jamir proposed to
insert the word "ARABLE" to distinguish this kind of agricultural land from such lands as commercial and industrial
lands and residential properties because all of them fall under the general classification of the word "agricultural".
This proposal, however, was not considered because the Committee contemplated that agricultural lands are limited
to arable and suitable agricultural lands and therefore, do not include commercial, industrial and residential lands
(Record, CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed several questions, among
others, quoted as follows:
x x x
"Line 19 refers to genuine reform program founded on the primary right of farmers and farmworkers. I
wonder if it means that leasehold tenancy is thereby proscribed under this provision because it speaks of the
primary right of farmers and farmworkers to own directly or collectively the lands they till. As also mentioned
by Commissioner Tadeo, farmworkers include those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a piggery or a poultry
project and for that purpose hires farmworkers therein, these farmworkers will automatically have the right to
own eventually, directly or ultimately or collectively, the land on which the piggeries and poultry projects
were constructed. (Record, CONCOM, August 2, 1986, p. 618).
x x x
The questions were answered and explained in the statement of then Commissioner Tadeo, quoted as
follows:
x x x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan. Ipinaaalam ko kay
Commissioner Regalado na hindi namin inilagay ang agricultural worker sa kadahilanang kasama rito ang
piggery, poultry at livestock workers. Ang inilagay namin dito ay farm worker kaya hindi kasama ang piggery,
poultry at livestock workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).

It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private agricultural lands
devoted to commercial livestock, poultry and swine raising" in the definition of "commercial farms" is invalid, to the
extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program of the
State. There is simply no reason to include livestock and poultry lands in the coverage of agrarian reform. (Rollo, p.
21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of R.A. 6657 directing
"corporate farms" which include livestock and poultry raisers to execute and implement "production-sharing plans"
(pending final redistribution of their landholdings) whereby they are called upon to distribute from three percent (3%)
of their gross sales and ten percent (10%) of their net profits to their workers as additional compensation is
unreasonable for being confiscatory, and therefore violative of due process (Rollo, p. 21).:-cralaw
It has been established that this Court will assume jurisdiction over a constitutional question only if it is shown that the
essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or
controversy involving a conflict of legal rights susceptible of judicial determination, the constitutional question must
have been opportunely raised by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself (Association of Small Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform,
G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989,
175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with constitutional issues, it will not
hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this conclusion, its
only criterion will be the Constitution and God as its conscience gives it in the light to probe its meaning and discover
its purpose. Personal motives and political considerations are irrelevancies that cannot influence its decisions.
Blandishment is as ineffectual as intimidation, for all the awesome power of 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 Landowners of the Philippines, Inc. v. Secretary of
Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R.
79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional powers, it becomes the duty of
the judiciary to declare what the other branches of the government had assumed to do, as void. This is the essence
of judicial power conferred by the Constitution "(I)n one Supreme Court and in such lower courts as may be
established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973 Constitution and
which was adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the 1987 Constitution) and
which power this Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No. 6657
insofar as the inclusion of the raising of livestock, poultry and swine in its coverage as well as the Implementing Rules
and Guidelines promulgated in accordance therewith, are hereby DECLARED null and void for being unconstitutional
and the writ of preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin, Grio-Aquino,
Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave.

Separate Opinions

SARMIENTO, J., concurring:

I agree that the petition be granted.
It is my opinion however that the main issue on the validity of the assailed provisions of R.A. 6657 (the
Comprehensive Agrarian Reform Law of 1988) and its Implementing Rules and Guidelines insofar as they include the
raising of livestock, poultry, and swine in their coverage cannot be simplistically reduced to a question of
constitutional construction.
It is a well-settled rule that construction and interpretation come only after it has been demonstrated that application is
impossible or inadequate without them. A close reading however of the constitutional text in point, specifically, Sec. 4,
Art. XIII, particularly the phrase, ". . . in case of other farmworkers, to receive a just share of the fruits thereof,"
provides a basis for the clear and possible coverage of livestock, poultry, and swine raising within the ambit of the

comprehensive agrarian reform program. This accords with the principle that every presumption should be indulged
in favor of the constitutionality of a statute and the court in considering the validity of a statute should give it such
reasonable construction as can be reached to bring it within the fundamental law. 1
The presumption against unconstitutionality, I must say, assumes greater weight when a ruling to the contrary would,
in effect, defeat the laudable and noble purpose of the law, i.e., the welfare of the landless farmers and farmworkers
in the promotion of social justice, by the expedient conversion of agricultural lands into livestock, poultry, and swine
raising by scheming landowners, thus, rendering the comprehensive nature of the agrarian program merely illusory.
The instant controversy, I submit, boils down to the question of whether or not the assailed provisions violate the
equal protection clause of the Constitution (Article II, section 1) which teaches simply that all persons or things
similarly situated should be treated alike, both as to rights conferred and responsibilities imposed. 2
There is merit in the contention of the petitioner that substantial distinctions exist between land directed purely to
cultivation and harvesting of fruits or crops and land exclusively used for livestock, poultry and swine raising, that
make real differences, to wit:
x x x
No land is tilled and no crop is harvested in livestock and poultry farming. There are no tenants nor landlords, only
employers and employees.
Livestock and poultry do not sprout from land nor are they "fruits of the land."
Land is not even a primary resource in this industry. The land input is inconsequential that all the commercial hog and
poultry farms combined occupy less than one percent (1%) (0.4% for piggery, 0.2% for poultry) of the 5.45 million
hectares of land supposedly covered by the CARP. And most farms utilize only 2 to 5 hectares of land.: nad
In every respect livestock and poultry production is an industrial activity. Its use of an inconsequential portion of land
is a mere incident of its operation, as in any other undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an agricultural enterprise is nowhere more evident when
one considers that at least 95% of total investment in these farms is in the form of fixed assets which are industrial in
nature.
These include (1) animal housing structures and facilities complete with drainage, waterers, blowers, misters and in
some cases even piped-in music; (2) feedmills complete with grinders, mixers, conveyors, exhausts, generators, etc.;
(3) extensive warehousing facilities for feeds and other supplies; (4) anti-pollution equipment such as bio-gas and
digester plants augmented by lagoons and concrete ponds; (5) deepwells, elevated water tanks, pumphouses and
accessory facilities; (6) modern equipment such as sprayers, pregnancy testers, etc.; (7) laboratory facilities complete
with expensive tools and equipment; and a myriad other such technologically advanced appurtances.
How then can livestock and poultry farmlands be arable when such are almost totally occupied by these structures?
The fallacy of equating the status of livestock and poultry farmworkers with that of agricultural tenants surfaces when
one considers contribution to output. Labor cost of livestock and poultry farms is no more than 4% of total operating
cost. The 98% balance represents inputs not obtained from the land nor provided by the farmworkers inputs such
as feeds and biochemicals (80% of the total cost), power cost, cost of money and several others.
Moreover, livestock and poultry farmworkers are covered by minimum wage law rather than by tenancy law. They are
entitled to social security benefits where tenant-farmers are not. They are paid fixed wages rather than crop shares.
And as in any other industry, they receive additional benefits such as allowances, bonuses, and other incentives such
as free housing privileges, light and water.
Equating livestock and poultry farming with other agricultural activities is also fallacious in the sense that like the
manufacturing sector, it is a market for, rather than a source of agricultural output. At least 60% of the entire domestic
supply of corn is absorbed by livestock and poultry farms. So are the by-products of rice (rice-bran), coconut (copra
meal), banana (banana pulp meal), and fish (fish meal). 3
x x x
In view of the foregoing, it is clear that both kinds of lands are not similarly situated and hence, cannot be treated
alike. Therefore, the assailed provisions which allow for the inclusion of livestock and poultry industry within the
coverage of the agrarian reform program constitute invalid classification and must accordingly be struck down as
repugnant to the equal protection clause of the Constitution.chanrobles virtual law library

Endnotes

SARMIENTO, J., concurring:

1. In re Guarina, 24 Phil. 37; Yu Cong Eng v. Trinidad, 70 L. ed., p. 1059.
2. Ichong v. Hernandez, 101 Phil. 1155.
3. Rollo, 29-30.
EN BANC

DEPARTMENT OF AGRARIAN G.R. No. 162070

REFORM, represented by SECRETARY
JOSE MARI B. PONCE (OIC), Present:
Petitioner, Davide, C.J.,
Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
- versus - Austria-Martinez,
Corona,
Carpio Morales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario and
Garcia, JJ.
DELIA T. SUTTON, ELLA T.
SUTTON-SOLIMAN and Promulgated:
HARRY T. SUTTON,
Respondents. October 19, 2005
x-----------------------------------x

DECISION

PUNO, J.:

This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision and Resolution of the
Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively, which declared DAR Administrative
Order (A.O.) No. 9, series of 1993, null and void for being violative of the Constitution.

The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been devoted exclusively to
cow and calf breeding. On October 26, 1987, pursuant to the then existing agrarian reform program of the
government, respondents made a voluntary offer to sell (VOS)
certain incentives under the law.

[1]

their landholdings to petitioner DAR to avail of

On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the Comprehensive
Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage farms used for raising livestock, poultry
and swine.

On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of DAR,

[2]

this Court

ruled that lands devoted to livestock and poultry-raising are not included in the definition of agricultural land. Hence,
we declared as unconstitutional certain provisions of the CARL insofar as they included livestock farms in the
coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to withdraw their
VOS as their landholding was devoted exclusively to cattle-raising and thus exempted from the coverage of the
CARL.

[3]

On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected respondents
land and found that it was devoted solely to cattle-raising and breeding. He recommended to the DAR Secretary that
it be exempted from the coverage of the CARL.

On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and requested the
return of the supporting papers they submitted in connection therewith.

[4]

Petitioner ignored their request.

On December 27, 1993, DAR issued A.O. No. 9, series of 1993,

[5]

which provided that only portions of

private agricultural lands used for the raising of livestock, poultry and swine as of June 15, 1988 shall be excluded
from the coverage of the CARL. In determining the area of land to be excluded, the A.O. fixed the following retention
limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of land per 1 head of animal shall be retained by the landowner), and a
ratio of 1.7815 hectares for livestock infrastructure for every 21 heads of cattle shall likewise be excluded from the
operations of the CARL.

On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as final and irrevocable the
withdrawal of their VOS as, under the Luz Farms doctrine, their entire landholding is exempted from the CARL.

On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order

[7]

[6]

partially granting the application

of respondents for exemption from the coverage of CARL. Applying the retention limits outlined in the DAR A.O. No.
9, petitioner exempted 1,209 hectares of respondents land for grazing purposes, and a maximum of 102.5635

hectares for infrastructure. Petitioner ordered the rest of respondents landholding to be segregated and placed under
Compulsory Acquisition.

Respondents moved for reconsideration. They contend that their entire landholding should be exempted as
it is devoted exclusively to cattle-raising. Their motion was denied.

[8]

They filed a notice of appeal

[9]

with the Office of

the President assailing: (1) the reasonableness and validity of DAR A.O. No. 9, s. 1993, which provided for a ratio
between land and livestock in determining the land area qualified for exclusion from the CARL, and (2) the
constitutionality of DAR A.O. No. 9, s. 1993, in view of the Luz Farms case which declared cattle-raising lands
excluded from the coverage of agrarian reform.

On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner DAR.

[10]

It ruled that DAR

A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as the A.O. provided the guidelines to determine
whether a certain parcel of land is being used for cattle-raising. However, the issue on the constitutionality of the
assailed A.O. was left for the determination of the courts as the sole arbiters of such issue.

On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9, s. 1993, void for being
contrary to the intent of the 1987 Constitutional Commission to exclude livestock farms from the land reform program
of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian Reforms ruling that petitioners
landholding is covered by the agrarian reform program of the government is REVERSED and SET
ASIDE.
[11]
SO ORDERED.
Hence, this petition.

The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993, which prescribes a
maximum retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued DAR A.O. No. 9 to limit
the area of livestock farm that may be retained by a landowner pursuant to its mandate to place all public and private
agricultural lands under the coverage of agrarian reform. Petitioner also contends that the A.O. seeks to remedy
reports that some unscrupulous landowners have converted their agricultural farms to livestock farms in order to
evade their coverage in the agrarian reform program.
Petitioners arguments fail to impress.

Administrative agencies are endowed with powers legislative in nature, i.e., the power to make rules and
regulations. They have been granted by Congress with the authority to issue rules to regulate the implementation of a
law entrusted to them. Delegated rule-making has become a practical necessity in modern governance due to the
increasing complexity and variety of public functions. However, while administrative rules and regulations have the
force and effect of law, they are not immune from judicial review.

[12]

They may be properly challenged before the

courts to ensure that they do not violate the Constitution and no grave abuse of administrative discretion is committed
by the administrative body concerned.

The fundamental rule in administrative law is that, to be valid, administrative rules and regulations must be issued
by authority of a law and must not contravene the provisions of the Constitution.

[13]

The rule-making power of an

administrative agency may not be used to abridge the authority given to it by Congress or by the Constitution. Nor
can it be used to enlarge the power of the administrative agency beyond the scope intended. Constitutional
and statutory provisions control with respect to what rules and regulations may be promulgated by
administrative agencies and the scope of their regulations.

[14]

In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The A.O.
sought to regulate livestock farms by including them in the coverage of agrarian reform and prescribing a maximum
retention limit for their ownership. However, the deliberations of the 1987 Constitutional Commission show a
clear intent to exclude, inter alia, all lands exclusively devoted to livestock, swine and poultry- raising. The
Court clarified in the Luz Farms case that livestock, swine and poultry-raising are industrial activities and do not fall
within the definition of agriculture or agricultural activity. The raising of livestock, swine and poultry is different from
crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the investment in this enterprise
is in the form of industrial fixed assets, such as: animal housing structures and facilities, drainage, waterers and
blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive warehousing facilities for
feeds and other supplies, anti-pollution equipment like bio-gas and digester plants augmented by lagoons and
concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other technological appurtenances.

[15]

Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by the
Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the assailed A.O.

The subsequent case of Natalia Realty, Inc. v. DAR

[16]

reiterated our ruling in the Luz Farms case.

In Natalia Realty, the Court held that industrial, commercial and residential lands are not covered by the
CARL.

[17]

We stressed anew that while Section 4 of R.A. No. 6657 provides that the CARL shall cover all public

and private agricultural lands, the term agricultural land does not include lands classified as mineral, forest,
residential, commercial or industrial. Thus, in Natalia Realty, even portions of the Antipolo Hills Subdivision,
which are arable yet still undeveloped, could not be considered as agricultural lands subject to agrarian reform as
these lots were already classified as residential lands.

A similar logical deduction should be followed in the case at bar. Lands devoted to raising of livestock, poultry and
swine have been classified as industrial, not agricultural, lands and thus exempt from agrarian reform. Petitioner DAR
argues that, in issuing the impugned A.O., it was seeking to address the reports it has received that some
unscrupulous landowners have been converting their agricultural lands to livestock farms to avoid their coverage by
the agrarian reform. Again, we find neither merit nor logic in this contention. The undesirable scenario which
petitioner seeks to prevent with the issuance of the A.O. clearly does not apply in this case. Respondents
family acquired their landholdings as early as 1948. They have long been in the business of breeding cattle in
Masbate which is popularly known as the cattle-breeding capital of the Philippines.

[18]

Petitioner DAR does not

dispute this fact. Indeed, there is no evidence on record that respondents have just recently engaged in or converted
to the business of breeding cattle after the enactment of the CARL that may lead one to suspect that respondents
intended to evade its coverage. It must be stressed that what the CARL prohibits is the conversion of agricultural
lands for non-agricultural purposes after the effectivity of the CARL. There has been no change of business
interest in the case of respondents.

Moreover, it is a fundamental rule of statutory construction that the reenactment of a statute by Congress
without substantial change is an implied legislative approval and adoption of the previous law. On the other hand, by
making a new law, Congress seeks to supersede an earlier one.
CARL, Congress enacted R.A. No. 7881

[20]

[19]

In the case at bar, after the passage of the 1988

which amended certain provisions of the CARL. Specifically, the new law

changed the definition of the terms agricultural activity and commercial farming by dropping from its
coverage lands that are devoted to commercial livestock, poultry and swine-raising.

[21]

With this significant

modification, Congress clearly sought to align the provisions of our agrarian laws with the intent of the 1987
Constitutional Commission to exclude livestock farms from the coverage of agrarian reform.

In sum, it is doctrinal that rules of administrative bodies must be in harmony with the provisions of the
Constitution. They cannot amend or extend the Constitution. To be valid, they must conform to and be consistent with
the Constitution. In case of conflict between an administrative order and the provisions of the Constitution, the latter
prevails.

[22]

The assailed A.O. of petitioner DAR was properly stricken down as unconstitutional as it enlarges the

coverage of agrarian reform beyond the scope intended by the 1987 Constitution.

IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of the Court of
Appeals, dated September 19, 2003 and February 4, 2004, respectively, are AFFIRMED. No pronouncement as to
costs.

SO ORDERED.

REYNATO S. PUNO
Associate Justice
WE CONCUR:

HILARIO G. DAVIDE, JR.

Chief Justice