ASSO. OF SMALL LANDOWNERS VS. SEC. OF DAR [175 SCRA 343; G.R. NO.

L-78742; 14 JUL 1989]

Facts: Several petitions are the root of the case:

a. A petition alleging the constitutionality of PD No. 27, EO 228 and 229 and RA 6657. Subjects of the petition are a 9-
hectare and 5 hectare Riceland worked by four tenants. Tenants were declared full owners by EO 228 as qualified farmers
under PD 27. The petitioners now contend that President Aquino usurped the legislature’s power.

b. 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.

c. A petition by owners of land which was placed by the DAR under the coverage of Operation Land Transfer.

d. A petition invoking the right of retention under PD 27 to owners of rice and corn lands not exceeding seven hectares.

Issue: Whether or Not the aforementioned EO’s, PD, and RA were constitutional.

Held: The promulgation of PD 27 by President Marcos was valid in exercise of Police power and eminent domain.

The power of President Aquino to promulgate Proc. 131 and EO 228 and 229 was authorized under Sec. 6 of the Transitory
Provisions of the 1987 Constitution. Therefore it is a valid exercise of Police Power and Eminent Domain.

RA 6657 is likewise valid. The carrying out of the regulation under CARPbecomes necessary to deprive owners of whatever
lands they may own inexcess 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 and the physical possession of said excess and all beneficial rights
accruing to the owner infavour of the farmer.

A statute may be sustained under the police power only if there is concurrence of the lawful subject and the method.

Subject and purpose of the Agrarian Reform Law is valid, however what is to be determined is the method employed to
achieve it.

175 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 (PP131’s) 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

Page 1 of 2
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.

Page 2 of 2