ASSOCIATION OF LANDOWNERS VS SEC OF DAR

FACTS

The following are consolidated cases:

 Nicolas Manaay and his wife owned a 9-hectare Riceland; while Agustin
Hermano Jr. owned 5. They both have four tenants, each on their respective
landholdings, who were declared full owners of the said land by EO 228 as
qualified farmers under PD 27. Manaaays and Hermano questioned the
constitutionality of PD 27 and Eos 228 and 229. The petitioners now
contend that President Aquino usurped the legislature‘s power.
 A petition by landowners and sugar planters in Victoria‘s Mill Negros
Occidental against Proclamation 131 and EO 229. Proclamation 131 is the
creation of Agrarian Reform Fund with initial fund of P50Billion. Landowners
and sugar planters in the Victoria Mills District in Negros as well as Planters’
Committee, Inc., seek to prohibit the implementation of the PP131 and EO
229 for being violative of the Constitutional provisions on just compensation,
due process and equal protection.
 Inocentes Pabico alleges that then DAR Secretary placed his landholding
under the coverage of OLT (Operation Land Transfer), in violation of due
process and the requirement for just compensation. CLT (Certificates of
Land) transfer were subsequently issued to tenants, who then refused to
pay lease rentals to him. He then protested the erroneous inclusion of his
small landholding under OLT and asked for the recall and cancellation of the
said CLT, which was denied without hearing. Although he filed a Motion for
Reconsideration, EO Nos. 228 and 229 were issued, rendering his motion
moot and academic because the said EOs directly affected the transfer of
his land to his farmer-tenants.
 The association of the Small Landowners of the Philippines invokes the right
of retention granted by PD 27 to owners of rice and corn lands not
exceeding 7 hectares as long as they are cultivating or intend to cultivate
the same. Their respected lands do not exceed the statutory limits but are
occupied by tenants who are actually cultivating such lands. Because PD
No. 316 provides that no tenant-farmer in agricultural land primarily devoted
to rice and corn shall be ejected or removed from his farm holding until such
time as the respective rights of the tenant-farmers and the land owners shall
have been determined, they petitioned the court for a writ of mandamus to
compel the DAR Secretary to issue the Implementing rules, as they could
 not eject their tenants and so are unable to enjoy their right of retention.

ISSUES

1. Whether or not the PD No.27, RA 6657 and EO Nos. 228 and 229 were
constitutional.
2. Whether or not the CARP fund provision in Proclamation No. 131 conforms
to the requirements of a valid appropriation.
3. Whether or not Proclamation No. 131 and EO No. 229 should be invalidated
because they do not provide for retention limits.
4. Whether or not the assailed statutes violates the equal protection clause.
5. Whether or not the assailed statutes are valid exercises of police power.
6. Whether or not the content and manner of just compensation provided for
the CARP is violative of the Constitution.
7. Whether or not the CARP and EO 228 contravene a well accepted principle
of eminent domain by divesting the land owner of his property even before
actual payment to him in full of just compensation

RULING

1. Yes. The promulgation of PD No. 27 by then Pres. Marcos in the exercise of

his powers under martial law has already been sustained and there is no
reason to modify or reverse it on that issue. As for the power of then Pres
Aquino to promulgate PP 131 and Eos 228 and 229, the same was authorized
by Section 6 of the Transitory Provisions of the 1987 Constitution. Therefore it
is a valid exercise of Police Power and Eminent Domain. Significantly, the
Congress which was alleged to have been undercut by her did not reject but in
fact substantially affirmed the challenged measures and has specifically
provided that they shall be suppletory to RA 6657 whenever not inconsistent
with its provision.
2. No. Proclamation No.131 is not an appropriation measure even if it provide
for the creation of the said fund, for that is not the principal purpose.
Appropriation law is one where the 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.
3. No. This argument is no longer tenable because RA 6657 does not provide
for such limits now in Section 6 of the law. As such, landowners who were
unable to exercise their rights to retention under PD 27 shall enjoy the retention
rights granted by RA 6657 under the condition therein prescribed.
4. No. The petitioners have not shown that they belong to a different class and
entitled to different treatment. The argument that not only landowners but also
owners of their properties must be rejected. There is substantial distinction
between these two classes of owners that is clearly visible except to those who
will not see. The Association had not shown any proof that they belong to a
different class exempt from the agrarian reform program. Under the law,
classification has been defined as the grouping of persons or things similar to
each other in certain particulars and different from each other in these same
particulars. To be valid, it must conform to the following requirements:
(1) it must be based on substantial distinctions;
(2) it must be germane to the purposes of the law;
(3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class.
Equal protection simply means that all persons or things similarly situated must
be treated alike both as to the rights conferred and the liabilities imposed. The
Association have not shown that they belong to a different class and entitled to
a different treatment. The argument that not only landowners but also owners
of other properties must be made to share the burden of implementing land
reform must be rejected. There is a substantial distinction between these two
classes of owners that is clearly visible except to those who will not see. There
is no need to elaborate on this matter. In any event, the Congress is allowed a
wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion
is abused to the detriment of the Bill of Rights. In the contrary, it appears that
Congress is right in classifying small landowners as part of the agrarian reform
program.
5. Yes. The subject and purpose of agrarian reform have been laid down by the
Constitution itself, which satisfies the first requirement of the lawful subject.
However, objection is raised to the manner fixing the just compensation, which
it is claimed is judicial prerogatives. However, there is no arbitrariness in the
provision as the determination of just compensation by DAR is only preliminary
unless accepted by all parties concerned. Otherwise, the courts will still have
the right to review with finality the said determination.
6. No. Although the traditional medium for payment of just compensation is
money and no other, what is being dealt with here is not the traditional exercise
of the power and eminent domain. This is a revolutionary kind of expropriation,
which involves not mere millions of pesos. The initially intended amount of
P50B may not be enough, and is in fact not even fully available at the time. The
invalidation of the said section resulted in the nullification of the entire program.
7. No. EO 228 categorically stated that all qualified farmer-beneficiaries were
deemed full owners of the land they acquired under PP 27, after proof of full
payment of just compensation. The CARP Law, for its part, conditions the
transfer of possession and ownership of the land to the government on the
receipt by the landowner of the corresponding payment or the deposit of DAR
of the compensation in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner.
It is true that the determination of just compensation is a power lodged in the
courts. However, there is no law which prohibits administrative bodies like the
DAR from determining just compensation. In fact, just compensation can be
that amount agreed upon by the landowner and the government – even without
judicial intervention so long as both parties agree. The DAR can determine just
compensation through appraisers and if the landowner agrees, then judicial
intervention is not needed. What is contemplated by law however is that, the
just compensation determined by an administrative body is merely preliminary.
If the landowner does not agree with the finding of just compensation by an
administrative body, then it can go to court and the determination of the latter
shall be the final determination. This is even so provided by RA 6657:
Section 16 (f): Any party who disagrees with the decision may bring the
matter to the court of proper jurisdiction for final determination of just
compensation.

Luz Farms v. Secretary of DAR

FACTS

 Luz Farms is a corporation engaged in the livestock and poultry business

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

ISSUES

WON 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 is constitutional

RULING

 Said provisions are unconstitutional.

 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.
Commissioner Tadeo: 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.
Commissioner Tadeo pointed out that the reason why they used the
term “farmworkers” rather than “agricultural workers” in the said law is
because “agricultural workers” includes the livestock and poultry
industry, hence, since they do not intend to include the latter, they
used “farmworkers” to have distinction.
 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.
 Hence, there is merit on the petitioner’s argument that the product-sharing
plan applied to “corporate farms” in the contested provisions is
unreasonable for being consficatory and violative of the due process of aw.

DAR vs Sutton

FACTS

 Sutton inherited a land in Aroroy, Masbate devoted exclusively to cow and

calf breeding. On October 26, 1987, pursuant to the existing agrarian reform
program of the government, Sutton made a voluntary offer to sell (VOS)
their landholdings to DAR to avail incentives under the law.
 A new agrarian law, RA 6657 known as Comprehensive Agrarian Reform
Law (CARL) of 1988 took effect. It included in its coverage farms used for
raising livestock, poultry and swine.
 An en banc decision in the case of Luz Farms vs. Secretary of DAR, ruled
that land devoted to livestock and poultry-raising are not included in the
definition of agricultural land.
 In view of the Luz Farm ruling, Sutton filed with petitioner DAR a formal
 request to withdraw their VOS as their landholding was exclusively to
cattle-raising and thus exempted from the coverage of the CARL. DAR
ignored their request.
 DAR issue Administrative Order No. 9, series of 1993, which provided that
only portion 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 and the ration of
1.7815 hectares for livestock infrastructure for every 21 heads of cattle shall
likewise be excluded from the operation of the CARL.
 DAR Secretary Garilao issue an Order partially granting the application of
Sutton for exemption from the coverage of CARL applying the retention limit
outlined in the DAR A.O No. 9. DAR ordered the rest of respondents’
landholding to be segregated and placed under Compulsory Acquisition.
 On October 2001, the Office of the President affirmed the impugned Order
of petitioner DAR. It ruled that DAR A.O. no. 9 does not run counter to the
Luz Farm case as the A.O provided the guidelines to determine whether a
certain parcel of land is being used for cattle-raising.
 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.

ISSUES

Whether of not DAR Administrative Order No.9 is unconstitutional?

RULING

YES.
 Administrative agencies are endowed with powers legislative in nature.
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.
 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. 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.
 In the case at bar, SC 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.
 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.
 Respondents’ family acquired their landholdings as early as 1948. 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.
 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. In the case at bar,
after the passage of the 1988 CARL, Congress enacted R.A. No. 7881
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. 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.
 Natalia Realty Inc and Estate Developers & Investors Corp vs DAR

FACTS

 Petitioner Natalia is the owner of three contiguous parcels of land located in

Banaba, Antipolo, 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.
 EDIC (Estate Developers and Investors Corporation), developer of Natalia,
applied for and was granted preliminary approval and locational clearances
by the Human Settlements Regulatory Commission. Natalia was likewise
issued development permits after complying with the requirements. Thus
the Natalia properties later became the Antipolo Hills Subdivision.
 On 15 June 1988, CARL was enacted.
 DAR, through MARO (Municipal Agrarian Reform Officer), issued a Notice
of Coverage on the undeveloped portions of the Antipolo Hills Subdivision
which consisted of roughly 90.3307 hectares.
 Natalia and EDIC protested to this.
 Members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc.
(SAMBA), filed a complaint against Natalia and EDIC before the DAR
Regional Adjudicator to restrain Natalia from developing areas under
cultivation by SAMBA members.
 DAR Regional ruled by temporarily restraining Natalia from further
developing the subdivision.
 Natalia elevated their cause to DARAB but the latter merely remanded the
case to the Regional Adjudicator for further proceedings
 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. Natalia elevated the matter to SC
 Natalia’s contention: Subject properties already ceased to be agricultural
lands when they were included in the areas reserved by presidential fiat for
 townsite reservation.
 OSG’s contention: 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 to residential was ever
filed with the DAR. In other words, there was no valid conversion.

ISSUES

1. Whether or not the subject properties shall be included in the coverage of

CARP
2. Are lands already classified for residential, commercial or industrial use, and
approved by HLURB and its precursor agencies prior to 15 June 1988, covered
by RA 6657?

RULING

1. Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of
tenurial arrangement and commodity produced, all public and private
agricultural lands." As to what constitutes "agricultural land," it is referred to as
"land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land. 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."
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.
2. The land subject of the controversy has been set aside for the Lungsod
Silangan Reservation by Proclamation No. 1637 prior to the effectivity of RA
6657 and in effect converted these lands into residential use. Since the Natalia
lands were converted prior to 15 June 1988, DAR is bound by such conversion,
and thus it was an error to include these within the coverage of CARL.