75 SCRA 343 Political Law Constitutional Law Bill of Rights Equal Protection Valid

Classification

Eminent Domain Just Compensation

These are four consolidated cases questioning the constitutionality of the Comprehensive
Agrarian Reform Act (R.A. No. 6657 and related laws i.e., Agrarian Land Reform Code or R.A. No.
3844).

Brief background: Article XIII of the Constitution on Social Justice and Human Rights includes a
call for the adoption by the State of an agrarian reform program. The State shall, by law,
undertake an agrarian reform program founded on the right of farmers and regular farmworkers,
who are landless, to own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. RA 3844 was enacted in 1963. P.D. No.
27 was promulgated in 1972 to provide for the compulsory acquisition of private lands for
distribution among tenant-farmers and to specify maximum retention limits for landowners.
In 1987, President Corazon Aquino issued E.O. No. 228, declaring full land ownership in favor of
the beneficiaries of PD 27 and providing for the valuation of still unvalued lands covered by the
decree as well as the manner of their payment. In 1987, P.P. No. 131, instituting a comprehensive
agrarian reform program (CARP) was enacted; later, E.O. No. 229, providing the mechanics for its
(PP131s) implementation, was also enacted. Afterwhich is the enactment of R.A. No. 6657,
Comprehensive Agrarian Reform Law in 1988. This law, while considerably changing the earlier
mentioned enactments, nevertheless gives them suppletory effect insofar as they are not
inconsistent with its provisions.

[Two of the consolidated cases are discussed below]

G.R. No. 78742: (Association of Small Landowners vs Secretary)

The Association of Small Landowners in the Philippines, Inc. sought exception from the land
distribution scheme provided for in R.A. 6657. The Association is comprised of landowners of
ricelands and cornlands whose landholdings do not exceed 7 hectares. They invoke that since
their landholdings are less than 7 hectares, they should not be forced to distribute their land to
their tenants under R.A. 6657 for they themselves have shown willingness to till their own land.
In short, they want to be exempted from agrarian reform program because they claim to belong
to a different class.

G.R. No. 79777: (Manaay vs Juico)

Nicolas Manaay questioned the validity of the agrarian reform laws (PD 27, EO 228, and 229) on
the ground that these laws already valuated their lands for the agrarian reform program and that
the specific amount must be determined by the Department of Agrarian Reform (DAR). Manaay
averred that this violated the principle in eminent domain which provides that only courts can
determine just compensation. This, for Manaay, also violated due process for under the
constitution, no property shall be taken for public use without just compensation.

Manaay also questioned the provision which states that landowners may be paid for their land in
bonds and not necessarily in cash. Manaay averred that just compensation has always been in
the form of money and not in bonds.

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

2. Whether or not there is a violation of due process.

3. Whether or not just compensation, under the agrarian reform program, must be in terms of
cash.

HELD:

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

(1) it must be based on substantial distinctions;

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

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

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

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

2. No. 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.

3. No. Money as [sole] payment for just compensation is merely a concept in traditional exercise
of eminent domain. The agrarian reform program is a revolutionary exercise of eminent domain.
The program will require billions of pesos in funds if all compensation have to be made in cash
if everything is in cash, then the government will not have sufficient money hence, bonds, and
other securities, i.e., shares of stocks, may be used for just compensation.
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM,
Respondent.
FACTS
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
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
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
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations
implementing Section 11 of R.A. No. 6657 (Commercial Farms)
Luz Farms is a corporation engaged in the livestock and poultry business and allegedly stands to be
adversely affected by the following provisions in R.A. No. 6657
o (a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of
"Agricultural, Agricultural Enterprise or Agricultural Activity."
o (b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to
commercial, livestock, poultry and swine raising . . ."
o (c) Section 13 which calls upon petitioner to execute a production-sharing plan.
o (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.
o (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 . . ."
Luz Farms does not seek to nullify the whole act; it merely contends that the Acts provisions with regard
to livestock and poultry transcended its constitutional mandate
Respondent cited Webster's International Dictionary, Second Edition (1954): "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
ISSUES
1. Whether or not livestock and poultry lands should be included in agrarian reform.
2. Whether or not the aforementioned provisions are constitutional, 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.

HELD (including the Ratio Decidendi)

(1) No: 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. "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 Commissioner Tadeos
statement
(2) No: 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

RULING:
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.