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NATALIA REALTY V. DAR
FACTS:
PP 1637 set aside several hectares of land in
Antipolo, San Mateo, and Montalban as townsite
areas to absorb the population overspill in the
metropolis which were designated as the Lungsod
Silangan Townsite, where Natalia Realty’s properties
were situated. Estate Developers and Investors
Corporation (EDIC), the developer of the Natalia
properties, was granted approval to develop the said
properties into low-cost housing subdivisions. The
Natalia properties then became the Antipolo Hills
Subdivision.
When the CARL came into effect, the DAR issued a
Notice of Coverage on the undeveloped portions of
the Antipolo Hills Subdivision. Natalia immediately
registered its objection to the said Notice and
requested the DAR Secretary to cancel the same.
However, members of the Samahan ng Magsasaka
sa Bundok Antipolo (SAMBA) filed a complaint
against Natalia and EDIC before the DAR Regional
Adjudicator to restrain them from developing areas
under their cultivation. The RA issued a writ of
Preliminary Injunction. Natalia and EDIC appealed to
the DARAB but the latter merely remanded the case
to the RA. Natalia then requested the DAR Secretary
to set aside the Notice of Coverage. Neither the DAR
Secretary nor the DAR Director concerned took
action on the protest letters.
ISSUES:
1. W/N the Natalia properties were validly
converted from agricultural to residential
land.
2. W/N the Natalia properties are covered by
the CARL.
HELD:
1. YES. Natalia and EDIC complied with all the
requirements of law, even securing prior approval
from DAR. As a matter of fact, there was no need for
Natalia and EDIC to do so because the Natalia
properties were within the areas set aside for the
Lungsod Silangan Reservation. Since PP 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.
2. NO. The undeveloped portions of the Antipolo Hills
Subdivision cannot be considered as “agricultural
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lands.” These lots were intended for residential use.
They ceased to be agricultural lands upon approval
of their inclusion in the Lungsod Silangan
Reservation.
DOCTRINE:
Lands not devoted to agricultural activity are outside
the coverage of CARL.
“Agricultural land” refers to “land devoted to
agricultural activity, and not classified as mineral,
forest, residential, commercial, or industrial land.”
ASSOCIATION OF SMALL LANDOWNERS IN
THE PHILIPPINES V. HONORABLE
SECRETARY OF AGRARIAN REFORM
FACTS:
Cases have been consolidated because they involve
common legal questions. They will be subject to one
common discussion and resolution.
G.R. No. 79777:
The petitioners are Nicolas Manaay and his wife who
own a 9-hectare riceland worked by four tenants and
Augustin Hermano, Jr. who owns a 5-hectare
riceland worked by four tenants. They question the
constitutionality of P.D. No. 27, E.O. Nos. 228 & 229,
and R.A. No. 6657 since their tenants were declared
full owners of the mentioned lands.
G.R. No. 79310
Landowners and sugar planters in the Victorias Mill
District, Victorias, Negros Occidental and Planters’
Committee Inc., with 1400 planter-members,
submitted a petition seeking to prohibit the
implementation of Proc. No. 131 and E.O. No. 229.
Aug. 27, 1987 – A motion for intervention was filed
by the National Federation of Sugarcane Planters,
which claim 20 000 members). It was granted by the
court.
Sept. 10, 1987 – A motion for intervention was filed
by Manuel Barcelona, et al., representing coconut
and riceland owners. It was granted by the court.
G.R. No. 79744
Sept. 3 1986 – The petitioner protested the
erroneous inclusion of his small landholding under
Operation Land Transfer accusing the then Secretary
of DAR of violation of due process and the
requirement for just compensation. Certificates of
Land Transfer were issued to the private
respondents who then refused to pay lease rentals.
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The petitioner is asking for the recall and cancellation
of these certificates.
Dec. 24, 1986 – Petitioner claims his petition was
denied without hearing.
Feb. 17, 1987 – A motion for reconsideration was
filed which had not been acted upon when E.O. Nos.
228 & 229 were issued which rendered his motion
moot.
ISSUES:
1. Whether or not the President had the power
to promulgate Proc. No. 131 and E.O. Nos.
228 & 229
2. Whether or not the President had the
legislative power for issuing the measures
3. Whether or not Proc. No. 131 conforms to
the requirements of a valid appropriation as
specified in the Constitution
4. Whether or not Proc. No. 131 and E.O. No.
229 should be invalidated because they do
not provide for retention limits required by
Article 13, Section 4 of the Constitution
5. Whether or not E.O. No. 229 violates
constitutional requirement that a bill should
only have one subject, to be expressed in
its title
6. Whether or not the writ of mandamus can
issue to compel the performance of a
discretionary act, especially by a specific
department of the government.
7. Whether this statute is an exercise of police
power or the power of eminent domain
8. Whether or not the statutes are valid
exercises of police power
9. Whether or not the equal protection clause
was violated
10. Whether or not the content and manner of
the just compensation provided for in the
CARP Law is not violative of the Constitution
11. Whether or not there is contravention of a
well- accepted principle of eminent domain
by divesting the landowner of his property
even before actual payment to him in full of
just compensation
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HELD:
1. YES. P.D. No. 27 by President Marcos
during Martial Law has been sustained in
Gonzales v. Estrella. President Aquino is
authorized under Section 6 of the Transitory
Provisions of the 1987 Constitution to
promulgate Proc. No. 131 and E.O. Nos.
228 & 229.
2. YES. The said measures were issued before
July 27, 1987, when the Congress was
formally convened and took over legislative
power.
3. NO. Proc. No. 131 is not an appropriation
measure for that is not its principal purpose
and therefore is not required to conform to
the requirements.
4. NO. R.A. No. 6657 does provide for such
limits now in Section 6 of the law.
5. NO. 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 the title.
6. NO. 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.
7. It is an exercise of the power of eminent
domain because there is payment of just
compensation unlike in the exercise of
police power wherein confiscation of
property is not compensable.
8. YES. A statute may be sustained under the
police power only if there is a concurrence
of the lawful subject and the lawful method.
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.
9. NO. 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
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be rejected. There is a substantial
distinction between these two classes of
owners that is clearly visible except to those
who will not see.
10. NO. It is declared that although money is
the traditional mode of payment, other
modes of payment shall be permitted as
compensation. The court accepts the theory
that payment of the just compensation is
not always required to be made fully in
money, they 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. 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. (Court: We do not mind
admitting that a certain degree of
pragmatism has influenced our decision on
this issue. 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.)
11. NO. The CARP Law 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 LBP bonds with an accessible
bank. Until then, title also remains with the
landowner.
DISPOSITIVE
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.
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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.
LUZ FARMS VS SEC. OF DAR
FACTS:
In 1988, RA 6657 was approved by the President of
the Philippines. It includes the raising of livestock,
poultry, and swine in its coverage.
In 1989, the Secretary of Agrarian Reform
promulgated the IRR of Secs. 11, 13, and 39 of the
said law.
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:
Section 3(b) which includes the "raising of livestock
(and poultry)" in the definition of "Agricultural,
Agricultural Enterprise or Agricultural Activity.
Section 11 which defines "commercial farms" as
"private agricultural lands devoted to commercial,
livestock, poultry and swine raising . . ."
Section 13 which calls upon petitioner to execute a
production-sharing plan.
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
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
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compensation to regular and other farmworkers in
such lands over and above the compensation they
currently receive xxx
ISSUE:
1. WON the CARL should include the raising of
livestock, poultry and swine in its coverage.
2. WON the requirement in Sections 13 and 32
of RA 6657 directing “corporate farms” to
execute and implement “production-
sharing plans” is unreasonable for being
confiscatory and violative of due process,
with respect to livestock and poultry raisers.
Separate Opinion: Sarmiento, J.
3. WON the assailed provisions violate the
equal protection clause of the Constitution.
HELD:
1. NO. Sec. 3 (b) and Sec. 11 of RA 6657 are
unconstitutional in so far as they include lands
devoted to raising livestock, swine and poultry within
its coverage. The use of land is incidental to but not
the principal factor or consideration of productivity in
this industry. It was never the intention of the
framers of the Constitution to include the livestock
and poultry industry in the coverage of the agrarian
reform program of the government. The intention of
the Committee was to limit the application of the
word “agriculture”. Thus, Section II of RA 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.
2. YES. As there is no reason to include livestock and
poultry lands in the coverage of agrarian reform,
there is no need to call upon them to distribute from
3% of their gross sales and 10% of their net profits
to their workers as additional compensation.
3. (Separate Opinion) NO. 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:
There are no tenants nor landlords in livestock and
poultry businesses;
Livestock and poultry do not sprout from land;
Land is not a primary resource;
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Livestock and poultry production are industrial
activities;
Livestock and poultry farmworkers are covered by
minimum wage law rather than by tenancy law.
JURISPRUDENCE:
Raising of livestock, poultry, and swine are excluded
from the coverage of the CARL.
HACIENDA LUISITA INC vs LUISITA
INDUSTRIAL PARK CORP
FACTS:
On 1989, some 93% of the then farmworker-
beneficiaries (FWBs) complement of Hacienda Luisita
signified in a referendum their acceptance of the
proposed HLI’s Stock Distribution Option Plan
(SODP). The SDOA was formally entered into by
Tadeco, HLI, and the 5,848 qualified FWBs. This
attested to by then DAR Secretary Philip Juico. The
SDOA embodied the basis and mechanics of HLI’s
SDP, which was eventually approved by the PARC
after a follow-up referendum conducted by the DAR,
in which 5,117 FWBs, out of 5,315 who participated,
opted to receive shares in HLI.
On 1995, HLI applied for the conversion of 500
hectares of land of the hacienda from agricultural to
industrial use, pursuant to Sec. 65 of RA 6657. The
DAR approved the application subject to payment of
three percent (3%) of the gross selling price to the
FWBs and to HLI’s continued compliance with its
undertakings under the SDP, among other
conditions.
On 1996, HLI, in exchange for subscription of
12,000,000 shares of stocks of Centennary, ceded
300 hectares of the converted area to the latter.
Subsequently, Centennary sold the entire 300
hectares for PhP750 million to Luisita Industrial Park
Corporation (LIPCO), which used it in developing an
industrial complex. Later, LIPCO transferred these 2
parcels to RCBC in payment of LIPCO’s
PhP431,695,732.10 loan obligations. LIPCO’s titles
were cancelled and new ones were issued to RCBC.
Apart from the 500 hectares, another 80.51 hectares
were later detached from Hacienda Luisita and
acquired by the government as part of the Subic-
Clark-Tarlac Expressway (SCTEX) complex. Thus,
4,335.75 hectares remained of the original 4,915
hectares Tadeco ceded to HLI.
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ISSUE:
Whether or not Sec. 31 of RA 6657, which allows
stock transfer in lieu of outright land transfer,
unconstitutional?
HELD:
There is, thus, nothing unconstitutional in the
formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural
land must always be in the hands of the farmers.
Then it falls on the shoulders of DAR and PARC to
see to it the farmers should always own majority of
the common shares entitled to elect the members of
the board of directors to ensure that the farmers will
have a clear majority in the board. Before the SDP is
approved, strict scrutiny of the proposed SDP must
always be undertaken by the DAR and PARC, such
that the value of the agricultural land contributed to
the corporation must always be more than 50% of
the total assets of the corporation to ensure that the
majority of the members of the board of directors
are composed of the farmers. The PARC composed
of the President of the Philippines and cabinet
secretaries must see to it that control over the board
of directors rests with the farmers by rejecting the
inclusion of non-agricultural assets which will yield
the majority in the board of directors to non-farmers.
Any deviation, however, by PARC or DAR from the
correct application of the formula prescribed by the
second paragraph of Sec. 31 of RA 6675 does not
make said provision constitutionally infirm. Rather, it
is the application of said provision that can be
challenged. Ergo, Sec. 31 of RA 6657 does not trench
on the constitutional policy of ensuring control by the
farmers.
DAR vs. SUTTON
FACTS:
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 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) their landholdings to
petitioner DAR to avail of certain incentives under the
law.
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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, the Court
ruled that lands devoted to livestock and poultry-
raising are not included in the definition of
agricultural land and declared as unconstitutional
certain provisions of the CARL insofar as they
included livestock farms in the coverage of agrarian
reform. In view of this, 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.
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. Petitioner
ignored such request.
On December 27, 1993, DAR issued A.O. No. 9,
series of 1993, 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 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 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.
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Respondents moved for reconsideration, contending On the other hand, by making a new law, Congress
that their entire landholding should be exempted as seeks to supersede an earlier one. In the case at bar,
it is devoted exclusively to cattle-raising. Said motion after the passage of the 1988 CARL, Congress
was denied. Respondents filed a notice of appeal enacted R.A. No. 7881 which amended certain
with the Office of the President assailing: (1) the provisions of the CARL. Specifically, the new law
reasonableness and validity of DAR A.O. No. 9, s. changed the definition of the terms "agricultural
1993, which provided for a ratio between land and activity" and "commercial farming" by dropping from
livestock in determining the land area qualified for its coverage lands that are devoted to commercial
exclusion from the CARL, and (2) the livestock, poultry and swine-raising. With this
constitutionality of DAR A.O. No. 9, s. 1993, in view significant modification, Congress clearly sought to
of the Luz Farms case which declared cattle-raising align the provisions of our agrarian laws with the
lands excluded from the coverage of agrarian reform. intent of the 1987 Constitutional Commission to
The OP affirmed the impugned order. On appeal to exclude livestock farms from the coverage of
CA, the CA ruled in favor of respondents and agrarian reform.
declared A.O. No. 9, Series of 1993 as void.
It is doctrinal that rules of administrative bodies must
ISSUE: be in harmony with the provisions of the
Constitution. They cannot amend or extend the
Whether or not DAR Administrative Order No. 09, Constitution. To be valid, they must conform to and
Series of 1993 which prescribes a maximum be consistent with the Constitution. In case of
retention for owners of lands devoted to livestock conflict between an administrative order and the
raising is constitutional? provisions of the Constitution, the latter prevails. The
assailed A.O. of petitioner DAR was properly stricken
HELD: down as unconstitutional as it enlarges the coverage
of agrarian reform beyond the scope intended by the
The impugned A.O. is invalid as it contravenes the 1987 Constitution.
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 appurtenance.

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.

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.

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