Republic of the Philippines Mother Earth. The sustaining soil.
The giver of life, without whose invigorating
SUPREME COURT
Manila
EN BANC
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, ET AL.,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.
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 economic security of all the people," 1
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 property and equitably diffuse property
ownership and profits." 2 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 soil." 3
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 as they are not inconsistent with its provisions. 4
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. Dulay 5 and Manotok v.
National Food Authority. 6 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 of Chavez v. Zobel, 7 Gonzales v. Estrella, 8 and
Association of Rice and Corn Producers of the Philippines, Inc. v. The National Land
Reform Council. 9 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 by law and the ruling of this Court in Tanada
v. Tuvera. 10 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 voted on the
issue during their session en banc. 11 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 party, and the resolution of the
question is unavoidably necessary to the decision of the case itself. 12
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 immediate
injury as a result of the acts or measures complained of. 13 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.
In the first Emergency Powers Cases, 14 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 other cases. 15
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 review under the
Constitution. 16
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 pre-empt 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 inconsistent with its
provisions. 17 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 CARP Law. 18
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 primary and specific purpose of which is to
authorize the release of public funds from the treasury. 19 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 the title. 20
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 for publication as this Court held in Tanada v.
Tuvera. 21 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 that jurisdiction be taken of
the cause. 22
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 question of law. 23
III
There are traditional distinctions between the police power and the power of
eminent domain that logically preclude the application of both powers at the same
time on the same subject. In the case of City of Baguio v. NAWASA, 24 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.
In the case of Pennsylvania Coal Co. v. Mahon, 25 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 of the taxing
power to achieve a police purpose has long been accepted. 26 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 power's standard of "public purpose." 27
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
In Penn Central Transportation Co. v. New York City, 29 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
right to construct larger, hence more profitable buildings on the transferee sites. 30
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 different from each other in these same particulars.
31
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. 32 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 conferred and the liabilities imposed. 33 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 oppressive upon individuals. 34 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, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 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 known as the political question. As
explained by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
 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 amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government." 37 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 expropriator. 39 It has been repeatedly stressed by this Court
that the measure is not the taker's gain but the owner's loss. 40 The word "just" is
used to intensify the meaning of the word "compensation" to convey the idea that
the equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample. 41
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.
As held in Republic of the Philippines v. Castellvi, 42 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, and all the resources of taxation may be employed in raising the
amount." 43 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 usurped by any other branch or official of the
government. EPZA v. Dulay 44 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
expropriated has to suffer by reason of the expropriation . 45
(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 standard as money in cash. 47 (Emphasis
supplied.)
Part cash and deferred payments are not and cannot, in the nature
of things, be regarded as a reliable and constant standard of
compensation. 48
"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 advantage. 49 (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 special definition of the just
compensation for the lands to be expropriated was reached by the Commission. 50
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 under the
Eminent Domain Act, or the commissioner's report under the Local Improvement
Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete at
the time of entry, title to the property taken remains in the owner until payment is
actually made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 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 effect. As
early as 1838, in Rubottom v. McLure, 54 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 appropriation of it to public
use." In Rexford v. Knight, 55 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 LBP bonds with
an accessible bank. Until then, title also remains with the landowner. 57 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.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-28609 January 17, 1974
ZOILA DE CHAVEZ, petitioner, vs. ENRIQUE ZOBEL and COURT OF APPEALS,
respondents.
G.R. No. L-28610 January 17, 1974
BARTOLOME DIMAALA, RUFO GARCIA, PAULINO ESGUERRA, FERNANDO
VEROYA, WILSON ZAPATERO, RUFINO ZAPATERO, ALMARIO ALAB, ROMAN
BEROYA, and ROMANA VIZCONDE, petitioners, vs. ENRIQUE ZOBEL and
COURT OF APPEALS, respondents.
FERNANDO, J.:1äwphï1.ñët
These two petitions 1 for the review of a joint decision of respondent
Court of Appeals, sustaining the right of respondent-landholder, Enrique
Zobel to eject petitioner-tenants and thus reversing a judgment in their
favor by the Court of Agrarian Relations, present the crucial issue of how
far this Tribunal is bound by the cardinal policy set forth in a presidential
decree 2 that ordains the emancipation of tenants and confers on them
ownership of the lands they till, upheld as part of the law of the land
under the Revised Constitution. 3 This too, in the face of its avowed
primordial objective: "The State shall formulate and implement an
agrarian reform program aimed at emancipating the tenant from the
bondage of the soil and achieving the goals enunciated in this
Constitution." 4 As thus posed, its resolution is rather obvious. We cannot
sustain respondent Court of Appeals.
Private respondent Zobel, as the registered owner of a parcel of land
located at Calatagan, Batangas, known Hacienda Bigaa, with an
aggregate area of more than five hundred hectares, sought to eject
petitioners, his tenants tilling lands in a portion thereof, relying on the
provision of Republic Act No. 1199, which would justify such a move
where the land is suited for mechanization. 5 Petitioners, as tenants,
vigorously objected to such petition not only on the ground that the small
areas they are occupying were not suited for mechanization, but likewise
on the allegation that the true intention of respondent as landholder was
to utilize the same for pasture and for the raising of sorghum. The Court
of Agrarian Relations dismissed the petition for ejectment, doubting such
an intent to mechanize and at the same time holding that mechanization
during rainy season of the year was not practicable. The matter was
elevated to respondent Court of Appeals, which reversed the Court of
Agrarian Relations and granted such petition for ejectment. Hence this
petition for review.
There is no question as to the tenancy relationship well as to the areas
occupied by petitioners as tenants. For the decision of the Court of
Appeals now sought to reviewed did clearly specify: "At the hearing of
these cases on July 15, 1963, the litigants, through their counsels,
entered into the following stipulation of facts: 1. That the relation of
landholder and tenant between the petitioner and the respondents is
admitted; 2. That the respective area cultivated by each of the
respondents is as indicated ... follows: Bartolome
Dimaala — 1 lot with an approximate area of 1.1440 hectare; Rufo Garcia
— area of lot is more or less one (1) hectare; Paulino Esguerra — two (2)
lots with an aggregate area of about two (2) hectares; Fernando Veroya
— one (1) lot with an area of about ½ hectare; Wilson Zapatero — one(1)
lot with an area of about less than 1-½ hectares; Rufino Zapatero — one
(1) lot with an area of about one (1) hectare; Almario Alab — three (3)
lots with an area of about 3 hectares; Roman Veroya — one (1) lot of
about ½ hectare; Romana Vizconde — one (1) lot with an area of about ½
hectare and Zoila de Chavez — four (4) lots with an aggregate area of
about 6 hectares." 6 That is why, as set forth at the outset, the
applicability of Presidential Decree No. 27 decreeing the emancipation of
tenants from the bondage of the soil and transferring to them the
ownership of the land they till and providing the instruments and
mechanism therefor is unavoidable. 7 Hence, again, as was made mention
of at the outset, the decision of the Court of Appeals cannot be
sustained.
1. The tenancy problem in the Philippines is of ancient vintage. The
opinion of Justice Tuason in the leading case of Guido v. Rural Progress
Administration 8 made reference to the concern shown by our great
patriot and hero Jose Rizal, one arising from first-hand knowledge and
bitter personal experience of his family. As was so vividly expressed by
Justice Labrador, speaking for this Court, in De Ramas v. Court of
Agrarian Relations: 9 "The history of land tenancy, especially in Central
Luzon, is a dark spot in the social life and history of the people. It was
among the tenants of Central Luzon that the late Pedro Abad Santos,
acting as a saviour of the tenant class, which generations has been
relegated to a life of bondage, without hope of salvation or improvement,
enunciated a form of socialism as a remedy for the pitiful condition of the
tenants forming the PKM organization of tenants and, during the war, the
Hukbalahap, rose in arms against the constituted authority as their only
salvation from permanent thralldom. According to statistics, whereas at
the beginning of the century we had only 19% of the people belonging to
the tenant class, after 60 years, the prevailing percentage has reached
39%." 10 Such situation calls to mind this apt observation of Laski, "of the
normal life of the poor, their perpetual fear of the morrow, their haunting
sense of impending disaster, their fitful search for beauty which
perpetually eludes." 11 The 1935 delegates to the Constitutional
Convention were not unaware of the gravity of the problem. Under the
Commonwealth and under the Republic therefore, the appropriate
legislation was enacted. 12 Progress in the solution of this serious social
malady, while considerable, did not supply the necessary corrective.
On this vital policy question, one of the utmost concern, the need for
what for some is a radical solution in its pristine sense, one that goes at
the root, was apparent. Presidential Decree No. 27 was thus conceived. It
was issued in October of 1972. The very next month, the 1971
Constitutional Convention voiced its overwhelming approval. There is no
doubt then, as set forth expressly therein, that the goal is emancipation.
13
What is more, the decree is now part and parcel of the law of the land
according to the revised Constitution itself. 14 Ejectment therefore of
petitioners is simply out of the question. That would be to set at naught
an express mandate of the Constitution. Once it has spoken, our duty is
clear; obedience is unavoidable. This is not only so because of the
cardinal postulate of constitutionalism, the supremacy of the
fundamental law. It is also because any other approach would run the risk
of setting at naught this basic aspiration to do away with all remnants of
a feudalistic order at war with the promise and the hope associated with
an open society. To deprive petitioners of the small landholdings in the
face of a presidential decree considered ratified by the new Constitution
and precisely in accordance with its avowed objective could indeed be
contributory to perpetuating the misery that tenancy had spawned in the
past as well as the grave social problems thereby created.<äre||
anº•1àw> There can be no justification for any other decision then
whether predicated on a juridical norm or on the traditional role assigned
to the judiciary of implementing and not thwarting fundamental policy
goals.
2. With the disposition of these petitions for review thus so clearly
indicated by the controlling constitutional provisions, a discussion of the
errors assigned by petitioners would be fruitless. Nonetheless, insofar as
they would stress the basic doctrine that the findings of fact of the Court
of Agrarian Relations, supported by substantial evidence, is well-nigh
conclusive on an appellate tribunal, is undeniable that such a submission
is supported and butressed by a host of our decisions dating back to
1958. 15
WHEREFORE, the joint decision in these two petition of respondent Court
of Appeals of November 23, 1967 is reversed and set aside, and the joint
decision of the Court of Agrarian Relations of October 1, 1964 dismissing
the actions filed by respondent Enrique Zobel is reinstated and given full
force and effect. Costs against respondent Enrique Zobel.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 131216 July 19, 2001
OFFICE OF THE PRESIDENT, MALACAÑANG, MANILA, through SENIOR
DEPUTY EXECUTIVE SECRETARY LEONARDO A. QUISUMBING, HONORABLE
BENJAMIN T. LEONG, SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM AND ROMEO B. BELLO, PROVINCIAL AGRARIAN REFORM OFFICER
(PARO) CABANATUAN CITY, petitioners, vs. COURT OF APPEALS and HEIRS
OF JOSE T. REYES, namely: JOSE T. REYES, JR., MANUEL T. REYES,
FELICIDAD R. GONZALES, LYDIA R. BUENCAMINO, ANITA R. INCIONG,
ALICIA R. MACEDA, LUZ R. QUIOGUE, JOSEFINA R. FAJARDO, and AURORA
R. MARIANO, respondents.
PARDO, J.:
Appeal via certiorari from the decision of the Court of Appeals1 ruling that the
farmland of the heirs of Jose T. Reyes (hereafter, "Reyes") consisting of 2.5
hectares situated at Gapan, Nueva Ecija, which was his share in the original twenty
four (24) hectare landholding of his late mother, was not included within the
coverage of Operation Land Transfer under R. A. No. 6657.
The facts, as found by the Court of Appeals, are as follows:
"During her lifetime, the late Aurora Tinio-Reyes, mother of the petitioner,
Jose T. Reyes (substituted by his heirs upon his death), owned several
parcels of land consisting of twenty-four (24) hectares, more or less,
situated at Gapan, Nueva Ecija. On 29 June 1977, Aurora Tinio-Reyes died
testate. A last will and testament which she executed on 19 December 1971
was admitted to probate on 12 January 1973. An Order granting Letters
Testamentary was issued on 24 November 1977. In said will, the testator
bequeathed to her nine (9) children several parcels of land consisting of
twenty-four (24) hectares, more or less, situated at Gapan, Nueva Ecija.
"On 8 September 1978, a Project of Partition was executed by and among
the surviving heirs. In the Project of Partition, a parcel of land covered by
T.C.T. No. NT-110703 was assigned to the petitioner. Thus, the distribution
of Aurora Tinio-Reyes' land were as follows:
"T.C.T. No. NT-110703 - Jose T. Reyes
"T.C.T. No. NT-110704 - Manuel T. Reyes
"T.C.T. No. NT-110705 - Luz Reyes Quiogue
"T.C.T. No. NT-110706 - Felicidad Reyes-Gonzales
"T.C.T. No. NT-110707 - Lydia Reyes-Buencamino
"T.C.T. No. NT-110708 - Anita Reyes-Inciona
"T.C.T. No. NT-110709 - Alicia Reyes-Maceda
"T.C.T. No. NT-110710 - Josefina Reyes-Fajardo
"T.C.T. No. NT-110711 - Aurora Reyes-Mariano
"Subsequently, the Probate Court issued an order closing the administration
of the estate. During the probate proceedings of the testator's will, no one
contested or challenged the said will.
"On 28 February 1979, the petitioner's brother, Manuel T. Reyes, was issued
T.C.T. No. NT-158798. From the said parcel of land, there were three
transfer certificates of title which were issued. Two portions of the
subdivided parcel of land, (T.C.T. No. NT-161175 and T.C.T. No. NT-161176),
were sold to one Francisco L. Buena, while the other portion covering T.C.T.
No. NT-167714 was sold to Apolonio Crisostomo.
"Following his brother's example, the petitioner requested from the Register
of Deeds of Cabanatuan City the issuance of a new transfer certificate of
title in his name. However, as a pre-requisite to the issuance of a new
certificate, a clearance from the Department of Agrarian Reform attesting to
the non-inclusion of the land in the Operation Land Transfer was required. In
the meantime, petitioner's sister, Josefina Reyes-Fajardo, entered into a
tenancy agreement ("KASUNDUAN") with her tenants on September 30,
1988.
"In February 1991, Josefina Fajardo received a letter from the Municipal
Agrarian Reform Officer which stated, inter alia, that: "Ayon po sa aming
talan, ang lupang palayan na inyong pag-aari ay nasasakupan ng
"Operation Land Transfer." It further stated that those who failed to exercise
their right of retention as of 25 August 1985, may retain five (5) hectares.
On the other hand, in response to the request of the petitioner for clearance
or certification, the Provincial Agrarian Reform Office of Cabanatuan City
issued his investigation Report and Recommendation to wit:
"In resume therefore, it is respectfully recommended that the
landholding of Josefina Reyes-Fajardo in her behalf and also in
behalves (sic) of her sisters will remain as not covered by Operation
Land Transfer (OLT) in view of the "Kasunduan" dated September 30,
1988, whereby they bind themselves that R. A. 6657 will be the law
to be enforced upon them, while the landholding of Jose T. Reyes will
remain as under Operation Land Transfer.
"December 16, 1988.
"The petitioner took exception to the recommendation of the Provincial
Agrarian Reform Office and appealed to the Department of Agrarian Reform.
"On 26 March 1990, the petitioner was issued twelve (12) new transfer
certificates of title, specifically, T.C.T. Nos. NT-211948 to NT-211959.
"On 29 August 1991, the respondent Secretary rendered the assailed Order
sustaining the recommendation of the Provincial Agrarian Reform Office of
Nueva Ecija. The Last Will and Testament not being registered prior to
October 21, 1972 when P. D. No. 27 took effect, the respondent Secretary
held that it did not bind third persons, much less the DAR, when the latter
placed the 24 hectares of land owned by the deceased Aurora Tinio-Reyes
under Operation Land Transfer. The said Order directed the immediate
generation of the Emancipation Patents and their distribution."2
On January 7, 1994, Jose T. Reyes elevated the case to the Court of Appeals via
petition for review.3
After due proceedings, on October 21, 1997, the Court of Appeals promulgated its
decision reversing the decision of the Office of the President,4 the dispositive
portion of which reads:
"WHEREFORE, the petition is GRANTED. The respondents are hereby
ORDERED to GRANT the petitioner the corresponding certification of non-
inclusion in the Operation Land Transfer.
"SO ORDERED."
Hence, this appeal.5
The issue raised is whether the respondent heirs' 2.5 hectare farmland, originally
part of the estate of their deceased grandmother, consisting of twenty four (24)
hectares, is covered by Operation Land Transfer under R. A. No. 6657, or P. D. No.
27.
We agree with the ruling of the Court of Appeals that the respondent heirs'
farmland is not covered by Operation Land Transfer of the Comprehensive Agrarian
Reform Law (CARL), R. A. No. 6657, or by P. D. No. 27.
There is no doubt that the original landholding of respondents' predecessor in
interest, consisting of twenty four (24) hectares of riceland tenanted by farmers
was covered by P. D. No. 27. Handwritten by President Marcos in October 1972,
after he seized political power by declaring martial law throughout the country,6
the decree declared "the emancipation of all tenant farmers" of private agriculture
lands primarily devoted to rice and corn.
However, the expropriation of the landholding did not take place on the effectivity
of P. D. No. 27 on October 21, 1972. The seizure would take effect on the payment
of just compensation, judicially determined.7
The Department of Agrarian Reform, as of August 29, 1991, when it decreed the
coverage of the landholding in question under CARL (R. A. No. 6657) had not paid
or even determined the just compensation for the taking of the landholding.8
Meantime, the original landowner died on June 29, 1977. Her nine (9) children
inherited the land as her heirs. Now, the landholding consists of only 2.5 hectares
for each heir. The size is decidedly within the retention area of seven (7) hectares
under P. D. No. 27, or five (5) hectares under R. A. No. 6657.1âwphi1.nêt
WHEREFORE, the Court denies the petition and affirms the decision of the Court
of Appeals.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 127876 December 17, 1999
ROXAS & CO., INC., petitioner, vs. THE HONORABLE COURT OF APPEALS,
DEPARTMENT OF AGRARIAN REFORM, SECRETARY OF AGRARIAN REFORM,
DAR REGIONAL DIRECTOR FOR REGION IV, MUNICIPAL AGRARIAN REFORM
OFFICER OF NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD, respondents.
PUNO, J.:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner
and the validity of the acquisition of these haciendas by the government under
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of
three haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in
the Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area
and is registered under Transfer Certificate of Title (TCT) No. 985. This land is
covered by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354.
Hacienda Banilad is 1,050 hectares in area, registered under TCT No. 924 and
covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is
867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-
44664 and T-44665.
The events of this case occurred during the incumbency of then President Corazon
C. Aquino. In February 1986, President Aquino issued Proclamation No. 3
promulgating a Provisional Constitution. As head of the provisional government,
the President exercised legislative power "until a legislature is elected and
convened under a new Constitution." 1 In the exercise of this legislative power, the
President signed on July 22, 1987, Proclamation No. 131 instituting a
Comprehensive Agrarian Reform Program and Executive Order No. 229 providing
the mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over
legislative power from the President. 2 This Congress passed Republic Act No. 6657,
the Comprehensive Agrarian Reform Law (CARL) of 1988. The Act was signed by
the President on June 10, 1988 and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a
voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No.
229. Haciendas Palico and Banilad were later placed under compulsory acquisition
by respondent DAR in accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian
Reform Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to
Parties" to petitioner. The Invitation was addressed to "Jaime Pimentel, Hda.
Administrator, Hda. Palico." 3 Therein, the MARO invited petitioner to a conference
on October 6, 1989 at the DAR office in Nasugbu to discuss the results of the DAR
investigation of Hacienda Palico, which was "scheduled for compulsory acquisition
this year under the Comprehensive Agrarian Reform Program." 4
On October 25, 1989, the MARO completed three (3) Investigation Reports after
investigation and ocular inspection of the Hacienda. In the first Report, the MARO
found that 270 hectares under Tax Declaration Nos. 465, 466, 468 and 470 were
"flat to undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers
of sugarcane. 5 In the second Report, the MARO identified as "flat to undulating"
approximately 339 hectares under Tax Declaration No. 0234 which also had
several actual occupants and tillers of sugarcane; 6 while in the third Report, the
MARO found approximately 75 hectare under Tax Declaration No. 0354 as "flat to
undulating" with 33 actual occupants and tillers also of sugarcane. 7
On October 27, 1989, a "Summary Investigation Report" was submitted and signed
jointly by the MARO, representatives of the Barangay Agrarian Reform Committee
(BARC) and Land Bank of the Philippines (LBP), and by the Provincial Agrarian
Reform Officer (PARO). The Report recommended that 333.0800 hectares of
Hacienda Palico be subject to compulsory acquisition at a value of P6,807,622.20. 8
The following day, October 28, 1989, two (2) more Summary Investigation Reports
were submitted by the same officers and representatives. They recommended that
270.0876 hectares and 75.3800 hectares be placed under compulsory acquisition
at a compensation of P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then Department Secretary
Miriam D. Santiago sent a "Notice of Acquisition" to petitioner. The Notice was
addressed as follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila. 10
Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were
subject to immediate acquisition and distribution by the government under the
CARL; that based on the DAR's valuation criteria, the government was offering
compensation of P3.4 million for 333.0800 hectares; that whether this offer was to
be accepted or rejected, petitioner was to inform the Bureau of Land Acquisition
and Distribution (BLAD) of the DAR; that in case of petitioner's rejection or failure
to reply within thirty days, respondent DAR shall conduct summary administrative
proceedings with notice to petitioner to determine just compensation for the land;
that if petitioner accepts respondent DAR's offer, or upon deposit of the
compensation with an accessible bank if it rejects the same, the DAR shall take
immediate possession of the land. 11
Almost two years later, on September 26, 1991, the DAR Regional Director sent to
the LBP Land Valuation Manager three (3) separate Memoranda entitled "Request
to Open Trust Account." Each Memoranda requested that a trust account
representing the valuation of three portions of Hacienda Palico be opened in favor
of the petitioner in view of the latter's rejection of its offered value. 12
Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for
conversion of Haciendas Palico and Banilad from agricultural to non-agricultural
lands under the provisions of the CARL. 13 On July 14, 1993, petitioner sent a letter
to the DAR Regional Director reiterating its request for conversion of the two
haciendas. 14
Despite petitioner's application for conversion, respondent DAR proceeded with the
acquisition of the two Haciendas. The LBP trust accounts as compensation for
Hacienda Palico were replaced by respondent DAR with cash and LBP bonds. 15 On
October 22, 1993, from the mother title of TCT No. 985 of the Hacienda,
respondent DAR registered Certificate of Land Ownership Award (CLOA) No. 6654.
On October 30, 1993, CLOA's were distributed to farmer beneficiaries. 16
Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu,
Batangas, sent a notice to petitioner addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas 17
The MARO informed Pimentel that Hacienda Banilad was subject to
compulsory acquisition under the CARL; that should petitioner wish to avail
of the other schemes such as Voluntary Offer to Sell or Voluntary Land
Transfer, respondent DAR was willing to provide assistance thereto. 18
On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel
inviting the latter to attend a conference on September 21, 1989 at the MARO
Office in Nasugbu to discuss the results of the MARO's investigation over Hacienda
Banilad. 19
On September 21, 1989, the same day the conference was held, the MARO
submitted two (2) Reports. In his first Report, he found that approximately 709
hectares of land under Tax Declaration Nos. 0237 and 0236 were "flat to
undulating (0-8% slope)." On this area were discovered 162 actual occupants and
tillers of sugarcane. 20 In the second Report, it was found that approximately 235
hectares under Tax Declaration No. 0390 were "flat to undulating," on which were
92 actual occupants and tillers of sugarcane. 21
The results of these Reports were discussed at the conference. Present in the
conference were representatives of the prospective farmer beneficiaries, the BARC,
the LBP, and Jaime Pimentel on behalf of the landowner. 22 After the meeting, on
the same day, September 21, 1989, a Summary Investigation Report was
submitted jointly by the MARO, representatives of the BARC, LBP, and the PARO.
They recommended that after ocular inspection of the property, 234.6498 hectares
under Tax Declaration No. 0390 be subject to compulsory acquisition and
distribution by CLOA. 23 The following day, September 22, 1989, a second Summary
Investigation was submitted by the same officers. They recommended that
737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be likewise placed
under compulsory acquisition for distribution. 24
On December 12, 1989, respondent DAR, through the Department Secretary, sent
to petitioner two (2) separate "Notices of Acquisition" over Hacienda Banilad. These
Notices were sent on the same day as the Notice of Acquisition over Hacienda
Palico. Unlike the Notice over Hacienda Palico, however, the Notices over Hacienda
Banilad were addressed to:
Roxas y Cia. Limited
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila. 25
Respondent DAR offered petitioner compensation of P15,108,995.52 for
729.4190 hectares and P4,428,496.00 for 234.6498 hectares. 26
On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation
Manager a "Request to Open Trust Account" in petitioner's name as compensation
for 234.6493 hectares of Hacienda Banilad. 27 A second "Request to Open Trust
Account" was sent on November 18, 1991 over 723.4130 hectares of said
Hacienda. 28
On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and
P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for
petitioner's land in Hacienda Banilad. 29
On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and
Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the government on May 6,
1988 before the effectivity of the CARL. The Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles — TCT Nos. T-44662, T-44663, T-44664
and T-44665. On January 12, 1989, respondent DAR, through the Regional Director
for Region IV, sent to petitioner two (2) separate Resolutions accepting petitioner's
voluntary offer to sell Hacienda Caylaway, particularly TCT Nos. T-44664 and T-
44663. 30 The Resolutions were addressed to:
Roxas & Company, Inc.
7th Flr. Cacho-Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M 31
On September 4, 1990, the DAR Regional Director issued two separate Memoranda
to the LBP Regional Manager requesting for the valuation of the land under TCT
Nos. T-44664 and T-44663. 32 On the same day, respondent DAR, through the
Regional Director, sent to petitioner a "Notice of Acquisition" over 241.6777
hectares under TCT No. T-44664 and 533.8180 hectares under TCT No. T-44663. 33
Like the Resolutions of Acceptance, the Notice of Acquisition was addressed to
petitioner at its office in Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J.
Roxas, sent a letter to the Secretary of respondent DAR withdrawing its VOS of
Hacienda Caylaway. The Sangguniang Bayan of Nasugbu, Batangas allegedly
authorized the reclassification of Hacienda Caylaway from agricultural to non-
agricultural. As a result, petitioner informed respondent DAR that it was applying
for conversion of Hacienda Caylaway from agricultural to other
uses. 34
In a letter dated September 28, 1992, respondent DAR Secretary informed
petitioner that a reclassification of the land would not exempt it from agrarian
reform. Respondent Secretary also denied petitioner's withdrawal of the VOS on
the ground that withdrawal could only be based on specific grounds such as
unsuitability of the soil for agriculture, or if the slope of the land is over 18 degrees
and that the land is undeveloped. 35
Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993,
petitioner filed its application for conversion of both Haciendas Palico and Banilad.
36
On July 14, 1993, petitioner, through its President, Eduardo Roxas, reiterated its
request to withdraw the VOS over Hacienda Caylaway in light of the following:
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge,
Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg.,
Diliman, Quezon City dated March 1, 1993 stating that the lands
subject of referenced titles "are not feasible and economically sound
for further agricultural development.
 2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu,
Batangas approving the Zoning Ordinance reclassifying areas
covered by the referenced titles to non-agricultural which was
enacted after extensive consultation with government agencies,
including [the Department of Agrarian Reform], and the requisite
public hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas
dated March 8, 1993 approving the Zoning Ordinance enacted by the
Municipality of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of
the Municipal Planning & Development, Coordinator and Deputized
Zoning Administrator addressed to Mrs. Alicia P. Logarta advising
that the Municipality of Nasugbu, Batangas has no objection to the
conversion of the lands subject of referenced titles to non-
agricultural. 37
On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with
respondent DAR Adjudication Board (DARAB) praying for the cancellation of the
CLOA's issued by respondent DAR in the name of several persons. Petitioner
alleged that the Municipality of Nasugbu, where the haciendas are located, had
been declared a tourist zone, that the land is not suitable for agricultural
production, and that the Sangguniang Bayan of Nasugbu had reclassified the land
to non-agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that the case
involved the prejudicial question of whether the property was subject to agrarian
reform, hence, this question should be submitted to the Office of the Secretary of
Agrarian Reform for determination. 38
On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No.
32484. It questioned the expropriation of its properties under the CARL and the
denial of due process in the acquisition of its landholdings.
Meanwhile, the petition for conversion of the three haciendas was denied by the
MARO on November 8, 1993.
Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39
Petitioner moved for reconsideration but the motion was denied on January 17,
1997 by respondent court. 40
Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER'S CAUSE OF ACTION IS PREMATURE FOR FAILURE
TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT
ILLEGALITY OF THE RESPONDENTS' ACTS, THE IRREPARABLE
DAMAGE CAUSED BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A
PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE
OF LAW — ALL OF WHICH ARE EXCEPTIONS TO THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER'S LANDHOLDINGS ARE SUBJECT TO COVERAGE
UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW OF
THE UNDISPUTED FACT THAT PETITIONER'S LANDHOLDINGS HAVE
BEEN CONVERTED TO NON-AGRICULTURAL USES BY PRESIDENTIAL
PROCLAMATION NO. 1520 WHICH DECLARED THE MUNICIPALITY
NASUGBU, BATANGAS AS A TOURIST ZONE, AND THE ZONING
ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING
CERTAIN PORTIONS OF PETITIONER'S LANDHOLDINGS AS NON-
AGRICULTURAL, BOTH OF WHICH PLACE SAID LANDHOLDINGS
OUTSIDE THE SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST
ENTITLE PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY
RESPONDENT DAR.
C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR
VOID FOR FAILURE TO OBSERVE DUE PROCESS, CONSIDERING THAT
RESPONDENTS BLATANTLY DISREGARDED THE PROCEDURE FOR THE
ACQUISITION OF PRIVATE LANDS UNDER R.A. 6657, MORE
PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE PETITIONER
AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE
ACQUIRED.
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND
ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST
COMPENSATION, CONSIDERING THAT PETITIONER WAS NOT PAID
JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY STRIPPED
OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO
ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A. 6657. 41
The assigned errors involve three (3) principal issues: (1) whether this Court can
take cognizance of this petition despite petitioner's failure to exhaust
administrative remedies; (2) whether the acquisition proceedings over the three
haciendas were valid and in accordance with law; and (3) assuming the haciendas
may be reclassified from agricultural to non-agricultural, whether this court has the
power to rule on this issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that respondent Court of Appeals
gravely erred in finding that petitioner failed to exhaust administrative remedies.
As a general rule, before a party may be allowed to invoke the jurisdiction of the
courts of justice, he is expected to have exhausted all means of administrative
redress. This is not absolute, however. There are instances when judicial action
may be resorted to immediately. Among these exceptions are: (1) when the
question raised is purely legal; (2) when the administrative body is in estoppel; (3)
when the act complained of is patently illegal; (4) when there is urgent need for
judicial intervention; (5) when the respondent acted in disregard of due process;
(6) when the respondent is a department secretary whose acts, as an alter ego of
the President, bear the implied or assumed approval of the latter; (7) when
irreparable damage will be suffered; (8) when there is no other plain, speedy and
adequate remedy; (9) when strong public interest is involved; (10) when the
subject of the controversy is private land; and (11) in quo warranto proceedings. 42
Petitioner rightly sought immediate redress in the courts. There was a violation of
its rights and to require it to exhaust administrative remedies before the DAR itself
was not a plain, speedy and adequate remedy.
Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer
beneficiaries over portions of petitioner's land without just compensation to
petitioner. A Certificate of Land Ownership Award (CLOA) is evidence of ownership
of land by a beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law
of 1988. 43 Before this may be awarded to a farmer beneficiary, the land must first
be acquired by the State from the landowner and ownership transferred to the
former. The transfer of possession and ownership of the land to the government
are conditioned upon the receipt by the landowner of the corresponding payment
or deposit by the DAR of the compensation with an accessible bank. Until then, title
remains with the landowner. 44 There was no receipt by petitioner of any
compensation for any of the lands acquired by the government.
The kind of compensation to be paid the landowner is also specific. The law
provides that the deposit must be made only in "cash" or "LBP bonds." 45
Respondent DAR's opening of trust account deposits in petitioner' s name with the
Land Bank of the Philippines does not constitute payment under the law. Trust
account deposits are not cash or LBP bonds. The replacement of the trust account
with cash or LBP bonds did not ipso facto cure the lack of compensation; for
essentially, the determination of this compensation was marred by lack of due
process. In fact, in the entire acquisition proceedings, respondent DAR disregarded
the basic requirements of administrative due process. Under these circumstances,
the issuance of the CLOA's to farmer beneficiaries necessitated immediate judicial
action on the part of the petitioner.
II. The Validity of the Acquisition Proceedings Over the Haciendas.
Petitioner's allegation of lack of due process goes into the validity of the acquisition
proceedings themselves. Before we rule on this matter, however, there is need to
lay down the procedure in the acquisition of private lands under the provisions of
the law.
A. Modes of Acquisition of Land under R. A. 6657
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL),
provides for two (2) modes of acquisition of private land: compulsory and
voluntary. The procedure for the compulsory acquisition of private lands is set forth
in Section 16 of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of
acquisition of private lands, the following procedures shall be followed:
a). After having identified the land, the landowners and the beneficiaries,
the DAR shall send its notice to acquire the land to the owners thereof, by personal
delivery or registered mail, and post the same in a conspicuous place in the
municipal building and barangay hall of the place where the property is located.
Said notice shall contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17, 18, and other pertinent
provisions hereof.
b) Within thirty (30) days from the date of receipt of written notice by
personal delivery or registered mail, the landowner, his administrator or
representative shall inform the DAR of his acceptance or rejection of the offer.
c) If the landowner accepts the offer of the DAR, the LBP shall pay the
landowner the purchase price of the land within thirty (30) days after he executes
and delivers a deed of transfer in favor of the Government and surrenders the
Certificate of Title and other muniments of title.
d) In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land 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 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.
e) 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.
f) Any party who disagrees with the decision may bring the matter to the
court of proper jurisdiction for final determination of just compensation.
In the compulsory acquisition of private lands, the landholding, the landowners and
the farmer beneficiaries must first be identified. After identification, the DAR shall
send a Notice of Acquisition to the landowner, by personal delivery or registered
mail, and post it in a conspicuous place in the municipal building and barangay hall
of the place where the property is located. Within thirty days from receipt of the
Notice of Acquisition, the landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the offer. If the landowner accepts,
he executes and delivers a deed of transfer in favor of the government and
surrenders the certificate of title. Within thirty days from the execution of the deed
of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase
price. If the landowner rejects the DAR's offer or fails to make a reply, the DAR
conducts summary administrative proceedings to determine just compensation for
the land. The landowner, the LBP representative and other interested parties may
submit evidence on just compensation within fifteen days from notice. Within thirty
days from submission, the DAR shall decide the case and inform the owner of its
decision and the amount of just compensation. Upon receipt by the owner of the
corresponding payment, or, in case of rejection or lack of response from the latter,
the DAR shall deposit the compensation in cash or in LBP bonds with an accessible
bank. The DAR shall immediately take possession of the land and cause the
issuance of a transfer certificate of title in the name of the Republic of the
Philippines. The land shall then be redistributed to the farmer beneficiaries. Any
party may question the decision of the DAR in the regular courts for final
determination of just compensation.
The DAR has made compulsory acquisition the priority mode of the land acquisition
to hasten the implementation of the Comprehensive Agrarian Reform Program
(CARP). 46 Under Section 16 of the CARL, the first step in compulsory acquisition is
the identification of the land, the landowners and the beneficiaries. However, the
law is silent on how the identification process must be made. To fill in this gap, the
DAR issued on July 26, 1989 Administrative Order No. 12, Series or 1989, which set
the operating procedure in the identification of such lands. The procedure is as
follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the assistance of the
pertinent Barangay Agrarian Reform Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered under the
CARP in his area of responsibility. The masterlist shall include such
information as required under the attached CARP Masterlist Form which
shall include the name of the landowner, landholding area, TCT/OCT
number, and tax declaration number.
2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title
(OCT/TCT) or landholding covered under Phase I and II of the CARP except
those for which the landowners have already filed applications to avail of
other modes of land acquisition. A case folder shall contain the following
duly accomplished forms:
a) CARP CA Form 1 — MARO Investigation Report
b) CARP CA Form 2 — Summary Investigation Report of Findings and
Evaluation
c) CARP CA Form 3 — Applicant's Information Sheet
d) CARP CA Form 4 — Beneficiaries Undertaking
e) CARP CA Form 5 — Transmittal Report to the PARO
The MARO/BARC shall certify that all information contained in the above-mentioned
forms have been examined and verified by him and that the same are true and
correct.
3. Send a Notice of Coverage and a letter of invitation to a
conference/meeting to the landowner covered by the Compulsory Case
Acquisition Folder. Invitations to the said conference/meeting shall also be
sent to the prospective farmer-beneficiaries, the BARC representative(s),
the Land Bank of the Philippines (LBP) representative, and other interested
parties to discuss the inputs to the valuation of the property. He shall
discuss the MARO/BARC investigation report and solicit the views, objection,
agreements or suggestions of the participants thereon. The landowner shall
also be asked to indicate his retention area. The minutes of the meeting
shall be signed by all participants in the conference and shall form an
integral part of the CACF.
4. Submit all completed case folders to the Provincial Agrarian
Reform Officer (PARO).
B. The PARO shall:
1. Ensure that the individual case folders are forwarded to him by his
MAROs.
2. Immediately upon receipt of a case folder, compute the valuation of the
land in accordance with A.O. No. 6, Series of 1988. 47 The valuation worksheet and
the related CACF valuation forms shall be duly certified correct by the PARO and all
the personnel who participated in the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO through
ocular inspection and verification of the property. This ocular inspection and
verification shall be mandatory when the computed value exceeds = 500,000 per
estate.
4. Upon determination of the valuation, forward the case folder, together
with the duly accomplished valuation forms and his recommendations, to the
Central Office. The LBP representative and the MARO concerned shall be furnished
a copy each of his report.
C. DAR Central Office, specifically through the Bureau of Land Acquisition and
Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from the PARO, review,
evaluate and determine the final land valuation of the property covered by the
case folder. A summary review and evaluation report shall be prepared and duly
certified by the BLAD Director and the personnel directly participating in the review
and final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized
representative, a Notice of Acquisition (CARP CA Form 8) for the subject property.
Serve the Notice to the landowner personally or through registered mail within
three days from its approval. The Notice shall include, among others, the area
subject of compulsory acquisition, and the amount of just compensation offered by
DAR.
3. Should the landowner accept the DAR's offered value, the BLAD shall
prepare and submit to the Secretary for approval the Order of Acquisition.
However, in case of rejection or non-reply, the DAR Adjudication Board (DARAB)
shall conduct a summary administrative hearing to determine just compensation,
in accordance with the procedures provided under Administrative Order No. 13,
Series of 1989. Immediately upon receipt of the DARAB's decision on just
compensation, the BLAD shall prepare and submit to the Secretary for approval the
required Order of Acquisition.
4. Upon the landowner's receipt of payment, in case of acceptance, or upon
deposit of payment in the designated bank, in case of rejection or non-response,
the Secretary shall immediately direct the pertinent Register of Deeds to issue the
corresponding Transfer Certificate of Title (TCT) in the name of the Republic of the
Philippines. Once the property is transferred, the DAR, through the PARO, shall take
possession of the land for redistribution to qualified beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian
Reform Officer (MARO) keep an updated master list of all agricultural lands under
the CARP in his area of responsibility containing all the required information. The
MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered
by CARP. The MARO then sends the landowner a "Notice of Coverage" and a "letter
of invitation" to a "conference/meeting" over the land covered by the CACF. He
also sends invitations to the prospective farmer-beneficiaries the representatives of
the Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines
(LBP) and other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of the parties. At
the meeting, the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer
(PARO) who shall complete the valuation of the land. Ocular inspection and
verification of the property by the PARO shall be mandatory when the computed
value of the estate exceeds P500,000.00. Upon determination of the valuation, the
PARO shall forward all papers together with his recommendation to the Central
Office of the DAR. The DAR Central Office, specifically, the Bureau of Land
Acquisition and Distribution (BLAD), shall review, evaluate and determine the final
land valuation of the property. The BLAD shall prepare, on the signature of the
Secretary or his duly authorized representative, a Notice of Acquisition for the
subject property. 48 From this point, the provisions of Section 16 of R.A. 6657 then
apply. 49
For a valid implementation of the CAR program, two notices are required: (1) the
Notice of Coverage and letter of invitation to a preliminary conference sent to the
landowner, the representatives of the BARC, LBP, farmer beneficiaries and other
interested parties pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice
of Acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of
invitation to the conference, and its actual conduct cannot be understated. They
are steps designed to comply with the requirements of administrative due process.
The implementation of the CARL is an exercise of the State's police power and the
power of eminent domain. To the extent that the CARL prescribes retention limits
to the landowners, there is an exercise of police power for the regulation of private
property in accordance with the Constitution. 50 But where, to carry out such
regulation, the owners are deprived of lands they own in excess of the maximum
area allowed, there is also a taking under the power of eminent domain. 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 physical possession of the said excess and all
beneficial rights accruing to the owner in favor of the farmer beneficiary. 51 The Bill
of Rights provides that "[n]o person shall be deprived of life, liberty or property
without due process of law." 52 The CARL was not intended to take away property
without due process of law. 53 The exercise of the power of eminent domain
requires that due process be observed in the taking of private property.
DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung,
was amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O.
No. 1, Series of 1993. The Notice of Coverage and letter of invitation to the
conference meeting were expanded and amplified in said amendments.
DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of
Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition
Pursuant to R.A. 6657," requires that:
B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including
supporting documents.
2. Gathers basic ownership documents listed under 1.a or 1.b above
and prepares corresponding VOCF/CACF by landowner/landholding.
3. Notifies/invites the landowner and representatives of the LBP,
DENR, BARC and prospective beneficiaries of the schedule of ocular
inspection of the property at least one week in advance.
4. MARO/LAND BANK FIELD OFFICE/BARC
a) Identify the land and landowner, and determine the
suitability for agriculture and productivity of the land and jointly
prepare Field Investigation Report (CARP Form No. 2), including the
Land Use Map of the property.
b) Interview applicants and assist them in the preparation of
the Application For Potential CARP Beneficiary (CARP Form No. 3).
c) Screen prospective farmer-beneficiaries and for those
found qualified, cause the signing of the respective Application to
Purchase and Farmer's Undertaking (CARP Form No. 4).
d) Complete the Field Investigation Report based on the result of the ocular
inspection/investigation of the property and documents submitted. See to it that
Field Investigation Report is duly accomplished and signed by all concerned.
5. MARO
a) Assists the DENR Survey Party in the conduct of a boundary/
subdivision survey delineating areas covered by OLT, retention, subject of
VOS, CA (by phases, if possible), infrastructures, etc., whichever is
applicable.
b) Sends Notice of Coverage (CARP Form No. 5) to landowner
concerned or his duly authorized representative inviting him for a
conference.
c) Sends Invitation Letter (CARP Form No. 6) for a conference/public
hearing to prospective farmer-beneficiaries, landowner, representatives of
BARC, LBP, DENR, DA, NGO's, farmers' organizations and other interested
parties to discuss the following matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/public hearing to
be guided by CARP Form No. 7.
e) Forwards the completed VOCF/CACF to the Provincial Agrarian
Reform Office (PARO) using CARP Form No. 8 (Transmittal Memo to PARO).
xxx xxx xxx
DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell
(VOS) and Compulsory Acquisition (CA) transactions involving lands enumerated
under Section 7 of the CARL. 54 In both VOS and CA. transactions, the MARO
prepares the Voluntary Offer to Sell Case Folder (VOCF) and the Compulsory
Acquisition Case Folder (CACF), as the case may be, over a particular landholding.
The MARO notifies the landowner as well as representatives of the LBP, BARC and
prospective beneficiaries of the date of the ocular inspection of the property at
least one week before the scheduled date and invites them to attend the same.
The MARO, LBP or BARC conducts the ocular inspection and investigation by
identifying the land and landowner, determining the suitability of the land for
agriculture and productivity, interviewing and screening prospective farmer
beneficiaries. Based on its investigation, the MARO, LBP or BARC prepares the Field
Investigation Report which shall be signed by all parties concerned. In addition to
the field investigation, a boundary or subdivision survey of the land may also be
conducted by a Survey Party of the Department of Environment and Natural
Resources (DENR) to be assisted by the MARO. 55 This survey shall delineate the
areas covered by Operation Land Transfer (OLT), areas retained by the landowner,
areas with infrastructure, and the areas subject to VOS and CA. After the survey
and field investigation, the MARO sends a "Notice of Coverage" to the landowner or
his duly authorized representative inviting him to a conference or public hearing
with the farmer beneficiaries, representatives of the BARC, LBP, DENR, Department
of Agriculture (DA), non-government organizations, farmer's organizations and
other interested parties. At the public hearing, the parties shall discuss the results
of the field investigation, issues that may be raised in relation thereto, inputs to the
valuation of the subject landholding, and other comments and recommendations
by all parties concerned. The Minutes of the conference/public hearing shall form
part of the VOCF or CACF which files shall be forwarded by the MARO to the PARO.
The PARO reviews, evaluates and validates the Field Investigation Report and other
documents in the VOCF/CACF. He then forwards the records to the RARO for
another review.
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993.
DAR A.O. No. 1, Series of 1993 provided, among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/
Agency/Unit Document
(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP
to LO by personal delivery Form No. 2
with proof of service, or registered mail with return card, informing
him that his property is now under CARP coverage and for LO to
select his retention area, if he desires to avail of his right of
retention; and at the same time invites him to join the field
investigation to be conducted on his property which should be
scheduled at least two weeks in advance of said notice. A copy of
said Notice shall CARP be posted for at least one Form No. 17 week
on the bulletin board of the municipal and barangay halls where the
property is located. LGU office concerned notifies DAR about
compliance with posting requirements thru return indorsement on
CARP Form No. 17.6 DARMO Send notice to the LBP, CARP BARC,
DENR representatives Form No. 3 and prospective ARBs of the
schedule of the field investigation to be conducted on the subject
property. 7 DARMO With the participation of CARP BARC the LO,
representatives of Form No. 4 LBP the LBP, BARC, DENR Land Use
DENR and prospective ARBs, Map Local Office conducts the
investigation on subject property to identify the landholding,
determines its suitability and productivity; and jointly prepares the
Field Investigation Report (FIR) and Land Use Map. However, the field
investigation shall proceed even if the LO, the representatives of the
DENR and prospective ARBs are not available provided, they were
given due notice of the time and date of investigation to be
conducted. Similarly, if the LBP representative is not available or
could not come on the scheduled date, the field investigation shall
also be conducted, after which the duly accomplished Part I of CARP
Form No. 4 shall be forwarded to the LBP representative for
validation. If he agrees to the ocular inspection report of DAR, he
signs the FIR (Part I) and accomplishes Part II thereof. In the event
that there is a difference or variance between the findings of the
DAR and the LBP as to the propriety of covering the land under
CARP, whether in whole or in part, on the issue of suitability to
agriculture, degree of development or slope, and on issues affecting
idle lands, the conflict shall be resolved by a composite team of DAR,
LBP, DENR and DA which shall jointly conduct further investigation
thereon. The team shall submit its report of findings which shall be
binding to both DAR and LBP, pursuant to Joint Memorandum Circular
of the DAR, LBP, DENR and DA dated 27 January 1992. 8 DARMO
Screen prospective ARBs BARC and causes the signing of CARP the
Application of Purchase Form No. 5 and Farmer's Undertaking
(APFU). 9 DARMO Furnishes a copy of the CARP duly accomplished
FIR to Form No. 4 the landowner by personal delivery with proof of
service or registered mail will return card and posts a copy thereof
for at least one week on the bulletin board of the municipal and
barangay halls where the property is located. LGU office concerned
CARP notifies DAR about Form No. 17 compliance with posting
requirement thru return endorsement on CARP Form No. 17.
B. Land Survey
10 DARMO Conducts perimeter or Perimeter And/or segregation
survey or DENR delineating areas covered Segregation Local Office
by OLT, "uncarpable Survey Plan areas such as 18% slope and
above, unproductive/unsuitable to agriculture, retention,
infrastructure. In case of segregation or subdivision survey, the plan
shall be approved by DENR-LMS.
C. Review and Completion of Documents
11. DARMO Forward VOCF/CACF CARP to DARPO. Form No. 6
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification process and increased
the number of government agencies involved in the identification and delineation
of the land subject to acquisition. 56 This time, the Notice of Coverage is sent to the
landowner before the conduct of the field investigation and the sending must
comply with specific requirements. Representatives of the DAR Municipal Office
(DARMO) must send the Notice of Coverage to the landowner by "personal delivery
with proof of service, or by registered mail with return card," informing him that his
property is under CARP coverage and that if he desires to avail of his right of
retention, he may choose which area he shall retain. The Notice of Coverage shall
also invite the landowner to attend the field investigation to be scheduled at least
two weeks from notice. The field investigation is for the purpose of identifying the
landholding and determining its suitability for agriculture and its productivity. A
copy of the Notice of Coverage shall be posted for at least one week on the bulletin
board of the municipal and barangay halls where the property is located. The date
of the field investigation shall also be sent by the DAR Municipal Office to
representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The
field investigation shall be conducted on the date set with the participation of the
landowner and the various representatives. If the landowner and other
representatives are absent, the field investigation shall proceed, provided they
were duly notified thereof. Should there be a variance between the findings of the
DAR and the LBP as to whether the land be placed under agrarian reform, the
land's suitability to agriculture, the degree or development of the slope, etc., the
conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA
which shall jointly conduct further investigation. The team's findings shall be
binding on both DAR and LBP. After the field investigation, the DAR Municipal Office
shall prepare the Field Investigation Report and Land Use Map, a copy of which
shall be furnished the landowner "by personal delivery with proof of service or
registered mail with return card." Another copy of the Report and Map shall
likewise be posted for at least one week in the municipal or barangay halls where
the property is located.
Clearly then, the notice requirements under the CARL are not confined to the
Notice of Acquisition set forth in Section 16 of the law. They also include the Notice
of Coverage first laid down in DAR A.O. No. 12, Series of 1989 and subsequently
amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993.
This Notice of Coverage does not merely notify the landowner that his property
shall be placed under CARP and that he is entitled to exercise his retention right; it
also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public hearing,
shall be conducted where he and representatives of the concerned sectors of
society may attend to discuss the results of the field investigation, the land
valuation and other pertinent matters. Under DAR A.O. No. 1, Series of 1993, the
Notice of Coverage also informs the landowner that a field investigation of his
landholding shall be conducted where he and the other representatives may be
present.
B. The Compulsory Acquisition of Haciendas Palico and Banilad
In the case at bar, respondent DAR claims that it, through MARO Leopoldo C.
Lejano, sent a letter of invitation entitled "Invitation to Parties" dated September
29, 1989 to petitioner corporation, through Jaime Pimentel, the administrator of
Hacienda Palico. 57 The invitation was received on the same day it was sent as
indicated by a signature and the date received at the bottom left corner of said
invitation. With regard to Hacienda Banilad, respondent DAR claims that Jaime
Pimentel, administrator also of Hacienda Banilad, was notified and sent an
invitation to the conference. Pimentel actually attended the conference on
September 21, 1989 and signed the Minutes of the meeting on behalf of petitioner
corporation. 58 The Minutes was also signed by the representatives of the BARC,
the LBP and farmer beneficiaries. 59 No letter of invitation was sent or conference
meeting held with respect to Hacienda Caylaway because it was subject to a
Voluntary Offer to Sell to respondent DAR. 60
When respondent DAR, through the Municipal Agrarian Reform Officer (MARO),
sent to the various parties the Notice of Coverage and invitation to the conference,
DAR A.O. No. 12, Series of 1989 was already in effect more than a month earlier.
The Operating Procedure in DAR Administrative Order No. 12 does not specify how
notices or letters of invitation shall be sent to the landowner, the representatives of
the BARC, the LBP, the farmer beneficiaries and other interested parties. The
procedure in the sending of these notices is important to comply with the
requisites of due process especially when the owner, as in this case, is a juridical
entity. Petitioner is a domestic
corporation, 61 and therefore, has a personality separate and distinct from its
shareholders, officers and employees.
The Notice of Acquisition in Section 16 of the CARL is required to be sent to the
landowner by "personal delivery or registered mail." Whether the landowner be a
natural or juridical person to whose address the Notice may be sent by personal
delivery or registered mail, the law does not distinguish. The DAR Administrative
Orders also do not distinguish. In the proceedings before the DAR, the distinction
between natural and juridical persons in the sending of notices may be found in the
Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of
pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised
Rules of Procedure. Notices and pleadings are served on private domestic
corporations or partnerships in the following manner:
Sec. 6. Service upon Private Domestic Corporation or Partnership. —
If the defendant is a corporation organized under the laws of the
Philippines or a partnership duly registered, service may be made on
the president, manager, secretary, cashier, agent, or any of its
directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14
provides:
Sec. 13. Service upon private domestic corporation or partnership. —
If the defendant is a corporation organized under the laws of the
Philippines or a partnership duly registered, service may be made on
the president, manager, secretary, cashier, agent, or any of its
directors.
Summonses, pleadings and notices in cases against a private domestic corporation
before the DARAB and the regular courts are served on the president, manager,
secretary, cashier, agent or any of its directors. These persons are those through
whom the private domestic corporation or partnership is capable of action. 62
Jaime Pimentel is not the president, manager, secretary, cashier or director of
petitioner corporation. Is he, as administrator of the two Haciendas, considered an
agent of the corporation?
The purpose of all rules for service of process on a corporation is to make it
reasonably certain that the corporation will receive prompt and proper notice in an
action against it. 63 Service must be made on a representative so integrated with
the corporation as to make it a priori supposable that he will realize his
responsibilities and know what he should do with any legal papers served on him,
64
and bring home to the corporation notice of the filing of the action. 65 Petitioner's
evidence does not show the official duties of Jaime Pimentel as administrator of
petitioner's haciendas. The evidence does not indicate whether Pimentel's duties is
so integrated with the corporation that he would immediately realize his
responsibilities and know what he should do with any legal papers served on him.
At the time the notices were sent and the preliminary conference conducted,
petitioner's principal place of business was listed in respondent DAR's records as
"Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101
Aguirre St., Makati, Metro Manila." 67 Pimentel did not hold office at the principal
place of business of petitioner. Neither did he exercise his functions in Plaza
Cervantes, Manila nor in Cacho-Gonzales Bldg., Makati, Metro Manila. He performed
his official functions and actually resided in the haciendas in Nasugbu, Batangas, a
place over two hundred kilometers away from Metro Manila.
Curiously, respondent DAR had information of the address of petitioner's principal
place of business. The Notices of Acquisition over Haciendas Palico and Banilad
were addressed to petitioner at its offices in Manila and Makati. These Notices were
sent barely three to four months after Pimentel was notified of the preliminary
conference. 68 Why respondent DAR chose to notify Pimentel instead of the officers
of the corporation was not explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and
the notices and letters of invitation were validly served on petitioner through him,
there is no showing that Pimentel himself was duly authorized to attend the
conference meeting with the MARO, BARC and LBP representatives and farmer
beneficiaries for purposes of compulsory acquisition of petitioner's landholdings.
Even respondent DAR's evidence does not indicate this authority. On the contrary,
petitioner claims that it had no knowledge of the letter-invitation, hence, could not
have given Pimentel the authority to bind it to whatever matters were discussed or
agreed upon by the parties at the preliminary conference or public hearing.
Notably, one year after Pimentel was informed of the preliminary conference, DAR
A.O. No. 9, Series of 1990 was issued and this required that the Notice of Coverage
must be sent "to the landowner concerned or his duly authorized representative."
69
Assuming further that petitioner was duly notified of the CARP coverage of its
haciendas, the areas found actually subject to CARP were not properly identified
before they were taken over by respondent DAR. Respondents insist that the lands
were identified because they are all registered property and the technical
description in their respective titles specifies their metes and bounds. Respondents
admit at the same time, however, that not all areas in the haciendas were placed
under the comprehensive agrarian reform program invariably by reason of
elevation or character or use of the land. 70
The acquisition of the landholdings did not cover the entire expanse of the two
haciendas, but only portions thereof. Hacienda Palico has an area of 1,024 hectares
and only 688.7576 hectares were targetted for acquisition. Hacienda Banilad has
an area of 1,050 hectares but only 964.0688 hectares were subject to CARP. The
haciendas are not entirely agricultural lands. In fact, the various tax declarations
over the haciendas describe the landholdings as "sugarland," and "forest,
sugarland, pasture land, horticulture and woodland." 71
Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically
requires that the land subject to land reform be first identified. The two haciendas
in the instant case cover vast tracts of land. Before Notices of Acquisition were sent
to petitioner, however, the exact areas of the landholdings were not properly
segregated and delineated. Upon receipt of this notice, therefore, petitioner
corporation had no idea which portions of its estate were subject to compulsory
acquisition, which portions it could rightfully retain, whether these retained
portions were compact or contiguous, and which portions were excluded from
CARP coverage. Even respondent DAR's evidence does not show that petitioner,
through its duly authorized representative, was notified of any ocular inspection
and investigation that was to be conducted by respondent DAR. Neither is there
proof that petitioner was given the opportunity to at least choose and identify its
retention area in those portions to be acquired compulsorily. The right of retention
and how this right is exercised, is guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. — . . . .
The right to choose the area to be retained, which shall be compact
or contiguous, shall pertain to the landowner; Provided, however,
That in case the area selected for retention by the landowner is
tenanted, the tenant shall have the option to choose whether to
remain therein or be a beneficiary in the same or another
agricultural land with similar or comparable features. In case the
tenant chooses to remain in the retained area, he shall be
considered a leaseholder and shall lose his right to be a beneficiary
under this Act. In case the tenant chooses to be a beneficiary in
another agricultural land, he loses his right as a leaseholder to the
land retained by the landowner. The tenant must exercise this option
within a period of one (1) year from the time the landowner
manifests his choice of the area for retention.
Under the law, a landowner may retain not more than five hectares out of the total
area of his agricultural land subject to CARP. The right to choose the area to be
retained, which shall be compact or contiguous, pertains to the landowner. If the
area chosen for retention is tenanted, the tenant shall have the option to choose
whether to remain on the portion or be a beneficiary in the same or another
agricultural land with similar or comparable features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was
the subject of a Voluntary Offer to Sell (VOS). The VOS in the instant case was
made on May 6, 1988, 72 before the effectivity of R.A. 6657 on June 15, 1988. VOS
transactions were first governed by DAR Administrative Order No. 19, series of
1989, 73 and under this order, all VOS filed before June 15, 1988 shall be heard and
processed in accordance with the procedure provided for in Executive Order No.
229, thus:
III. All VOS transactions which are now pending before the DAR and
for which no payment has been made shall be subject to the notice
and hearing requirements provided in Administrative Order No. 12,
Series of 1989, dated 26 July 1989, Section II, Subsection A,
paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL,
shall be heard and processed in accordance with the procedure
provided for in Executive Order No. 229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. — The government shall purchase all
agricultural lands it deems productive and suitable to farmer
cultivation voluntarily offered for sale to it at a valuation determined
in accordance with Section 6. Such transaction shall be exempt from
the payment of capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the identification of private
land as set forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely
reiterates the procedure of acquisition in Section 16, R.A. 6657. In other words, the
E.O. is silent as to the procedure for the identification of the land, the notice of
coverage and the preliminary conference with the landowner, representatives of
the BARC, the LBP and farmer beneficiaries. Does this mean that these
requirements may be dispensed with regard to VOS filed before June 15, 1988? The
answer is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land,
landowner and beneficiaries of the land subject to agrarian reform be identified
before the notice of acquisition should be issued. 74 Hacienda Caylaway was
voluntarily offered for sale in 1989. The Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles. In two separate Resolutions both dated
January 12, 1989, respondent DAR, through the Regional Director, formally
accepted the VOS over the two of these four
titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only
648.8544 hectares thereof fell within the coverage of R.A. 6657. 76 Petitioner claims
it does not know where these portions are located.
Respondent DAR, on the other hand, avers that surveys on the land covered by the
four titles were conducted in 1989, and that petitioner, as landowner, was not
denied participation therein, The results of the survey and the land valuation
summary report, however, do not indicate whether notices to attend the same
were actually sent to and received by petitioner or its duly authorized
representative. 77 To reiterate, Executive Order No. 229 does not lay down the
operating procedure, much less the notice requirements, before the VOS is
accepted by respondent DAR. Notice to the landowner, however, cannot be
dispensed with. It is part of administrative due process and is an essential requisite
to enable the landowner himself to exercise, at the very least, his right of retention
guaranteed under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not subject to agrarian reform
because they have been declared for tourism, not agricultural
purposes. 78 In 1975, then President Marcos issued Proclamation No. 1520
declaring the municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu,
including the subject haciendas, were allegedly reclassified as non-agricultural 13
years before the effectivity of R. A. No. 6657. 79 In 1993, the Regional Director for
Region IV of the Department of Agriculture certified that the haciendas are not
feasible and sound for agricultural development. 80 On March 20, 1992, pursuant to
Proclamation No. 1520, the Sangguniang Bayan of Nasugbu, Batangas adopted
Resolution No. 19 reclassifying certain areas of Nasugbu as non-agricultural. 81 This
Resolution approved Municipal Ordinance No. 19, Series of 1992, the Revised
Zoning Ordinance of Nasugbu 82 which zoning ordinance was based on a Land Use
Plan for Planning Areas for New Development allegedly prepared by the University
of the Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was approved by
the Sangguniang Panlalawigan of Batangas on March 8, 1993. 84
Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in
1991 when it approved conversion of 1,827 hectares in Nasugbu into a tourist area
known as the Batulao Resort Complex, and 13.52 hectares in Barangay Caylaway
as within the potential tourist belt. 85 Petitioner present evidence before us that
these areas are adjacent to the haciendas subject of this petition, hence, the
haciendas should likewise be converted. Petitioner urges this Court to take
cognizance of the conversion proceedings and rule accordingly. 6
We do not agree. Respondent DAR's failure to observe due process in the
acquisition of petitioner's landholdings does not ipso facto give this Court the
power to adjudicate over petitioner's application for conversion of its haciendas
from agricultural to non-agricultural. The agency charged with the mandate of
approving or disapproving applications for conversion is the DAR.
At the time petitioner filed its application for conversion, the Rules of Procedure
governing the processing and approval of applications for land use conversion was
the DAR A.O. No. 2, Series of 1990. Under this A.O., the application for conversion
is filed with the MARO where the property is located. The MARO reviews the
application and its supporting documents and conducts field investigation and
ocular inspection of the property. The findings of the MARO are subject to review
and evaluation by the Provincial Agrarian Reform Officer (PARO). The PARO may
conduct further field investigation and submit a supplemental report together with
his recommendation to the Regional Agrarian Reform Officer (RARO) who shall
review the same. For lands less than five hectares, the RARO shall approve or
disapprove applications for conversion. For lands exceeding five hectares, the
RARO shall evaluate the PARO Report and forward the records and his report to the
Undersecretary for Legal Affairs. Applications over areas exceeding fifty hectares
are approved or disapproved by the Secretary of Agrarian Reform.
The DAR's mandate over applications for conversion was first laid down in Section
4 (j) and Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in
the CARL and Memorandum Circular No. 54, Series of 1993 of the Office of the
President. The DAR's jurisdiction over applications for conversion is provided as
follows:
A. The Department of Agrarian Reform (DAR) is mandated to "approve or
disapprove applications for conversion, restructuring or readjustment of
agricultural lands into non-agricultural uses," pursuant to Section 4 (j) of Executive
Order No. 129-A, Series of 1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR, exclusive
authority to approve or disapprove applications for conversion of agricultural lands
for residential, commercial, industrial and other land uses.
C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, likewise empowers the DAR to authorize under
certain conditions, the conversion of agricultural lands.
D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the
President, provides that "action on applications for land use conversion on
individual landholdings shall remain as the responsibility of the DAR, which shall
utilize as its primary reference, documents on the comprehensive land use plans
and accompanying ordinances passed upon and approved by the local government
units concerned, together with the National Land Use Policy, pursuant to R.A. No.
6657 and E.O. No. 129-A. 87
Applications for conversion were initially governed by DAR A.O. No. 1, Series of
1990 entitled "Revised Rules and Regulations Governing Conversion of Private
Agricultural Lands and Non-Agricultural Uses," and DAR A.O. No. 2, Series of 1990
entitled "Rules of Procedure Governing the Processing and Approval of Applications
for Land Use Conversion." These A.O.'s and other implementing guidelines,
including Presidential issuances and national policies related to land use
conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this
recent issuance, the guiding principle in land use conversion is:
to preserve prime agricultural lands for food production while, at the
same time, recognizing the need of the other sectors of society
(housing, industry and commerce) for land, when coinciding with the
objectives of the Comprehensive Agrarian Reform Law to promote
social justice, industrialization and the optimum use of land as a
national resource for public welfare. 88
"Land Use" refers to the manner of utilization of land, including its allocation,
development and management. "Land Use Conversion" refers to the act or process
of changing the current use of a piece of agricultural land into some other use as
approved by the DAR. 89 The conversion of agricultural land to uses other than
agricultural requires field investigation and conferences with the occupants of the
land. They involve factual findings and highly technical matters within the special
training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with
specificity how the DAR must go about its task. This time, the field investigation is
not conducted by the MARO but by a special task force, known as the Center for
Land Use Policy Planning and Implementation (CLUPPI-DAR Central Office). The
procedure is that once an application for conversion is filed, the CLUPPI prepares
the Notice of Posting. The MARO only posts the notice and thereafter issues a
certificate to the fact of posting. The CLUPPI conducts the field investigation and
dialogues with the applicants and the farmer beneficiaries to ascertain the
information necessary for the processing of the application. The Chairman of the
CLUPPI deliberates on the merits of the investigation report and recommends the
appropriate action. This recommendation is transmitted to the Regional Director,
thru the Undersecretary, or Secretary of Agrarian Reform. Applications involving
more than fifty hectares are approved or disapproved by the Secretary. The
procedure does not end with the Secretary, however. The Order provides that the
decision of the Secretary may be appealed to the Office of the President or the
Court of Appeals, as the case may be, viz:
Appeal from the decision of the Undersecretary shall be made to the
Secretary, and from the Secretary to the Office of the President or
the Court of Appeals as the case may be. The mode of appeal/motion
for reconsideration, and the appeal fee, from Undersecretary to the
Office of the Secretary shall be the same as that of the Regional
Director to the Office of the Secretary. 90
Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate
unto itself authority to resolve a controversy the jurisdiction over which is initially
lodged with an administrative body of special competence. 91 Respondent DAR is in
a better position to resolve petitioner's application for conversion, being primarily
the agency possessing the necessary expertise on the matter. The power to
determine whether Haciendas Palico, Banilad and Caylaway are non-agricultural,
hence, exempt from the coverage of the CARL lies with the DAR, not with this
Court.
Finally, we stress that the failure of respondent DAR to comply with the requisites
of due process in the acquisition proceedings does not give this Court the power to
nullify the CLOA's already issued to the farmer beneficiaries. To assume the power
is to short-circuit the administrative process, which has yet to run its regular
course. Respondent DAR must be given the chance to correct its procedural lapses
in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to 177
farmer beneficiaries in 1993. 92 Since then until the present, these farmers have
been cultivating their lands. 93 It goes against the basic precepts of justice, fairness
and equity to deprive these people, through no fault of their own, of the land they
till. Anyhow, the farmer beneficiaries hold the property in trust for the rightful
owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings
over the three haciendas are nullified for respondent DAR's failure to observe due
process therein. In accordance with the guidelines set forth in this decision and the
applicable administrative procedure, the case is hereby remanded to respondent
DAR for proper acquisition proceedings and determination of petitioner's
application for conversion.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-32096 October 24, 1970
ROMEO F. EDU, in his capacity as Land Transportation Commissioner,
petitioner, vs. HON. VICENTE G. ERICTA in his capacity as Judge of the
Court of First Instance of Rizal, Br. XVIII, Quezon City, and TEDDY C. GALO
respondents.
FERNANDO, J.:.
Petitioner Romeo F. Edu, the Land Transportation Commissioner, would have us
rule squarely on the constitutionality of the Reflector Law1 in this proceeding for
certiorari and prohibition against respondent Judge, the Honorable Vicente G. Ericta
of the Court of First Instance of Rizal, Quezon City Branch, to annul and set aside
his order for the issuance of a writ of preliminary injunction directed against
Administrative Order No. 2 of petitioner for the enforcement of the aforesaid
statute, in a pending suit in his court for certiorari and prohibition, filed by the
other respondent Teddy C. Galo assailing; the validity of such enactment as well as
such administrative order. Respondent Judge, in his answer, would join such a plea
asking that the constitutional and legal questions raised be decided "once and for
all." Respondent Teddy C. Galo who was quite categorical in his assertion that both
the challenged legislation and the administrative order transgress the
constitutional requirements of due process and non-delegation, is not averse either
to such a definitive ruling. Considering the great public interest involved and the
reliance by respondent Galo and the allegation that the repugnancy to the
fundamental law could be discerned on the face of the statute as enacted and the
executive order as promulgated, this Court, sees no obstacle to the determination
in this proceeding of the constitutional questions raised. For reasons to be
hereafter stated, we sustain the validity of the Reflector Law and Administrative
Order No. 2 issued in the implementation thereof, the imputation of constitutional
infirmity being at best flimsy and insubstantial.
As noted in the answer of respondent Judge, respondent Galo on his behalf and
that of other motorist filed on May 20, 1970 a suit for certiorari and prohibition with
preliminary injunction assailing the validity of the challenged Act as an invalid
exercise of the police power, for being violative of the due process clause. This he
followed on May 28, 1970 with a manifestation wherein he sought as an alternative
remedy that, in the event that respondent Judge would hold said statute
constitutional, Administrative Order No. 2 of the Land Transportation
Commissioner, now petitioner, implementing such legislation be nullified as an
undue exercise of legislative power. There was a hearing on the plea for the
issuance of a writ of preliminary injunction held on May 27. 1970 where both
parties were duly represented, but no evidence was presented. The next day, on
May 28, 1970, respondent Judge ordered the issuance of a preliminary injunction
directed against the enforcement of such administrative order. There was the day
after, a motion for its reconsideration filed by the Solicitor General representing
petitioner. In the meanwhile, the clerk of court of respondent Judge issued, on June
1, 1970 the writ of preliminary injunction upon the filing of the required bond. The
answer before the lower court was filed by petitioner Edu on June 4, 1970.
Thereafter, on June 9, 1970, respondent Judge denied the motion for
reconsideration of the order of injunction. Hence this petition for certiorari and
prohibition filed with this court on June 18, 1970.
In a resolution of June 22, 1970, this Court required respondents to file an answer
to the petition for certiorari and prohibition. Respondent Judge, the Honorable
Vicente G. Ericta, did file his answer on June 30, 1970 explaining why he restrained
the enforcement of Administrative Order No. 2 and, as noted at the outset, joining
the Solicitor General in seeking that the legal questions raised namely the
constitutionality of the Reflector Law and secondly the validity of Administrative
Order No. 2 alleged to be in excess of the authority conferred on petitioner and
therefore violative of the principle of non-delegation of legislative power be
definitely decided. It was on until July 6, 1970 that respondent Galo filed his answer
seeking the dismissal of this petition concentrating on what he considered to be
the patent invalidity of Administrative Order No. 2 as it went beyond the authority
granted by the Reflector Law, even assuming that it is constitutional. In the
meanwhile, on July 2, 1970, the petition was called for hearing with Solicitor
Vicente Torres appearing for petitioner and respondent Galo for himself. It was
made clear during the course of such argumentation that the matter of the
constitutionality of the Reflector Law was likewise under consideration by this
Court. The case is thus ripe for decision.
We repeat that we find for petitioner and sustain the Constitutionality of the
Reflector Law as well as the validity of Administrative Order No. 2.
1. The threshold question is whether on the basis of the petition, the answers, and
the oral argument, it would be proper for this Court to resolve the issue of the
constitutionality of the Reflector Law. Our answer, as indicated, is in the
affirmative. It is to be noted that the main thrust of the petition before us is to
demonstrate in a rather convincing fashion that the challenged legislation does not
suffer from the alleged constitutional infirmity imputed to it by the respondent
Galo. Since the special civil action for certiorari and prohibition filed before him
before respondent Judge would seek a declaration of nullity of such enactment by
the attribution of the violation the face thereof of the due process guarantee in the
deprivation of property rights, it would follow that there is sufficient basis for us to
determine which view should prevail. Moreover, any further hearing by respondent
Judge would likewise to limited to a discussion of the constitutional issues raised,
no allegations of facts having made. This is one case then where the question of
validity is ripe for determination. If we do so, further effort need not be wasted and
time is saved moreover, the officials concerned as well as the public, both vitally
concerned with a final resolution of questions of validity, could know the definitive
answer and could act accordingly. There is a great public interest, as was
mentioned, to be served by the final disposition of such crucial issue, petitioner
praying that respondent Galo be declared having no cause of action with
respondent Judge being accordingly directed to dismiss his suit.
There is another reinforcement to this avenue of approach. We have done so
before in a suit, Climaco v. Macadaeg, 2 involving the legality of a presidential
directive. That was a petition for the review and reversal of a writ of preliminary
injunction issued by the then Judge Macadaeg. We there announced that we "have
decided to pass upon the question of the validity of the presidential directive
ourselves, believing that by doing so we would be putting an end to a dispute, a
delay in the disposition of which has caused considerable damage and injury to the
Government and to the tobacco planters themselves."
There is no principle of constitutional adjudication that bars this Court from
similarly passing upon the question of the validity of a legislative enactment in a
proceeding before it to test the propriety of the issuance of a preliminary
injunction. The same felt need for resolving once and for all the vexing question as
to the constitutionality of a challenged enactment and thus serve public interest
exists. What we have done in the case of an order proceeding from one of the
coordinate branches, the executive, we can very well do in the matter before us
involving the alleged nullity of a legislative act. Accordingly, there is nothing to
preclude the grant of the writs prayed for, the burden of showing the
constitutionality of the act having proved to be as will now be shown too much for
respondent Galo.
2. The Reflector Law reads in full: "(g) Lights and reflector when parked or disabled.
— Appropriate parking lights or flares visible one hundred meters away shall be
displayed at a corner of the vehicle whenever such vehicle is parked on highways
or in places that are not well-lighted or is placed in such manner as to endanger
passing traffic. Furthermore, every motor vehicle shall be provided at all times with
built-in reflectors or other similar warning devices either pasted, painted or
attached to its front and back which shall likewise be visible at light at least one
hundred meters away. No vehicle not provided with any of the requirements
mentioned in this subsection shall be registered."3 It is thus obvious that the
challenged statute is a legislation enacted under the police power to promote
public safety.
Justice Laurel, in the first leading decision after the Constitution came to force,
Calalang v. Williams,4 identified police power with state authority to enact
legislation that may interfere with personal liberty or property in order to promote
the general welfare. Persons and property could thus "be subjected to all kinds of
restraints and burdens in order to secure the general comfort, health and
prosperity of the state." Shortly after independence in 1948, Primicias v. Fugoso,5
reiterated the doctrine, such a competence being referred to as "the power to
prescribe regulations to promote the health, morals, peace, education, good order
or safety, and general welfare of the people." The concept was set forth in negative
terms by Justice Malcolm in a pre-Commonwealth decision as "that inherent and
plenary power in the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society."6 In that sense it could be hardly
distinguishable as noted by this Court in Morfe v. Mutuc7 with the totality of
legislative power.
It is in the above sense the greatest and most powerful attribute of government. It
is to quote Justice Malcolm anew "the most essential, insistent, and at least
illimitable of powers," 8 extending as Justice Holmes aptly pointed out "to all the
great public needs." 9 Its scope, ever-expanding to meet the exigencies of the
times, even to anticipate the future where it could be done, provides enough room
for an efficient and flexible response to conditions and circumstances thus assuring
the greatest benefits. In the language of Justice Cardozo: "Needs that were narrow
or parochial in the past may be interwoven in the present with the well-being of the
nation. What is critical or urgent changes with the
time." 10 The police power is thus a dynamic agency, suitably vague and far from
precisely defined, rooted in the conception that men in organizing the state and
imposing upon its government limitations to safeguard constitutional rights did not
intend thereby to enable an individual citizen or a group of citizens to obstruct
unreasonably the enactment of such salutary measures calculated to insure
communal peace, safety, good order, and welfare.
It would then be to overturn a host of decisions impressive for their number and
unanimity were this Court to sustain respondent Galo. 11 That we are not disposed
to do, especially so as the attack on the challenged statute ostensibly for
disregarding the due process safeguard is angularly unpersuasive. It would be to
close one's eyes to the hazards of traffic in the evening to condemn a statute of
this character. Such an attitude betrays lack of concern for public safety. How can
it plausibly alleged then that there was no observance of due process equated as it
has always been with that is reasonable? The statute assailed is not infected with
arbitrariness. It is not the product of whim or caprice. It is far from oppressive. It is
a legitimate response to a felt public need. It can stand the test of the most
unsymphatetic appraisal.
Respondent Galo is of a different mind, having been unable to resist the teaching
of many American State Court decisions referred to in the secondary source,
American Jurisprudence principally relied upon by him. He ought to have been
cautioned against an indiscriminate acceptance of such doctrines predicated on
what was once a fundamental postulate in American public law, laissez faire.
It is to be admitted that there was a period when such a concept did influence
American court decisions on constitutional law. As was explicitly stated by Justice
Cardozo speaking of that era: "Laissez-faire was not only a counsel of caution
which would do well to heed. It was a categorical imperative which statesmen as
well as judges must obey." 12 For a long time legislation tending to reduce
economic inequality foundered on the rock that was the due process clause,
enshrining as it did the liberty of contract, based on such a basic assumption.
The New Deal administration of President Roosevelt more responsive to the social
and economic forces at work changed matters greatly. By 1937, there was a
greater receptivity by the American Supreme Court to an approach not too
reverential of property rights. Even earlier, in 1935, Professor Coker of Yale,
speaking as a historian, could already discern a contrary drift. He did note the
expending range of governmental activity in the United States. 13 What is
undeniable is that by 1943, laissez-faire was no longer the dominant theory. In the
language of Justice Jackson in the leading case of West Virginia State Board of
Education v. Barnette: 14 "We must, transplant these rights to a soil in which the
laissez-faire concept or non-interference has withered at least as to economic
affairs, and social advancements are increasingly sought through closer integration
of society and through expanded and strengthened governmental controls."
While authoritative precedents from the United States federal and state
jurisdictions were deferred to when the Philippines was still under American rule, it
cannot be said that the laissez-faire principle was invariably adhered to by us even
then As early as 1919, in the leading case of Rubi v. Provincial Board of Mindoro, 15
Justice Malcolm already had occasion to affirm: "The doctrines of laissez-faire and
of unrestricted freedom of the individual, as axioms of economic and political
theory, are of the past. The modern period has shown a widespread belief in the
amplest possible demonstration of government activity. The Courts unfortunately
have sometimes seemed to trail after the other two branches of the Government in
this progressive march." People v. Pomar, 16 a 1924 decision which held invalid
under the due process clause a provision providing for maternity leave with pay
thirty days before and thirty days after confinement could be cited to show that
such a principle did have its day. It is to be remembered though that our Supreme
Court had no other choice as the Philippines was then under the United States, and
only recently the year before, the American Supreme Court in Adkins v. Children's
Hospital, 17 in line with the laissez-faire theory, did hold that a statute providing for
minimum wages was constitutionally infirm.
What is more, to erase any doubts, the Constitutional Convention saw to it that the
concept of laissez-faire was rejected. It entrusted to our government the
responsibility of coping with social and economic problems with the commensurate
power of control over economic affairs. Thereby it could live up to its commitment
to promote the general welfare through state action. No constitutional objection to
regulatory measures adversely affecting property rights, especially so when public
safety is the aim, is likely to be heeded, unless of course on the clearest and most
satisfactory proof of invasion of rights guaranteed by the Constitution. On such a
showing, there may be a declaration of nullity, but not because the laissez-faire
principle was disregarded but because the due process, equal protection, or non-
impairment guarantees would call for vindication.
To repeat, our Constitution which took effect in 1935 erased whatever doubts there
might be on that score. Its philosophy is a repudiation of laissez-faire. One of the
leading members of the Constitutional Convention, Manuel A. Roxas, later the first
President of the Republic, made it clear when he disposed of the objection of
Delegate Jose Reyes of Sorsogon, who noted the "vast extensions in the sphere of
governmental functions" and the "almost unlimited power to interfere in the affairs
of industry and agriculture as well as to compete with existing business" as
"reflections of the fascination exerted by [the then] current tendencies" in other
jurisdictions. 18 He spoke thus: "My answer is that this constitution has definite and
well defined philosophy not only political but social and economic. ... If in this
Constitution the gentlemen will find declarations of economic policy they are there
because they are necessary to safeguard the interests and welfare of the Filipino
people because we believe that the days have come when in self-defense, a nation
may provide in its constitution those safeguards, the patrimony, the freedom to
grow, the freedom to develop national aspirations and national interests, not to be
hampered by the artificial boundaries which a constitutional provision
automatically imposes. 19
It was not expected then when in a concurring opinion, Justice Laurel, who likewise
sat in the Constitutional Convention and was one of its leading lights, explicitly
affirmed in a concurring opinion, later quoted with approval in the leading case of
Antamok Goldfields Mining Co. v. Court of Industrial Relations, 20 that the
Constitution did away with the laissez-faire doctrine. In the course of such
concurring opinion and after noting the changes that have taken place calling for a
more affirmative role by the government and its undeniable power to curtail
property rights, he categorically declared the doctrine in People v. Pomar no longer
retains "its virtuality as a living principle." 21
It is in the light of such rejection of the laissez-faire principle that during the
Commonwealth era, no constitutional infirmity was found to have attached to
legislation covering such subjects as collective bargaining, 22 security of tenure,
23 minimum wages, 24 compulsory arbitration, 25 the regulation of tenancy 26 as
well as the issuance of
securities, 27 and control of public services. 28 So it is likewise under the Republic
this Court having given the seal of approval to more favorable tenancy laws, 29
nationalization of the retail trade, 30 limitation of the hours of labor, 31 imposition of
price control, 32 requirement of separation pay for one month, 33 and social security
scheme. 34
Respondent Galo thus could have profited by a little more diligence in the scrutiny
of Philippine decisions rendered with not unexpected regularity, during all the while
our Constitution has been in force attesting to the demise of such a shibboleth as
laissez-faire. It was one of those fighting faiths that time and circumstances had
upset, to paraphrase Holmes. Yet respondent Galo would seek to vivify and
resurrect it. That, it would appear, is a vain quest, a futile undertaking. The
Reflector Law is thus immune from the attack so recklessly hurled against it. It can
survive, and quite easily too, the constitutional test.
3. The same lack of success marks the effort of respondent Galo to impugn the
validity of Administrative Order No. 2 issued by petitioner in his official capacity,
duly approved by the Secretary of Public Works and Communications, for being
contrary to the principle of non-delegation of legislative power. Such administrative
order, which took effect on April 17, 1970, has a provision on reflectors in effect
reproducing what was set forth in the Act. Thus: "No motor vehicles of whatever
style, kind, make, class or denomination shall be registered if not equipped with
reflectors. Such reflectors shall either be factory built-in-reflector commercial glass
reflectors, reflection tape or luminous paint. The luminosity shall have an intensity
to be maintained visible and clean at all times such that if struck by a beam of light
shall be visible 100 meters away at night." 35 Then came a section on dimensions,
placement and color. As to dimensions the following is provided for: "Glass
reflectors — Not less than 3 inches in diameter or not less than 3 inches square;
Reflectorized Tape — At least 3 inches wide and 12 inches long. The painted or
taped area may be bigger at the discretion of the vehicle owner." 36 Provision is
then made as to how such reflectors are to be "placed, installed, pasted or
painted." 37 There is the further requirement that in addition to such reflectors
there shall be installed, pasted or painted four reflectors on each side of the motor
vehicle parallel to those installed, pasted or painted in front and those in the rear
end of the body thereof. 38 The color required of each reflectors, whether built-in,
commercial glass, reflectorized tape or reflectorized paint placed in the front part
of any motor vehicle shall be amber or yellow and those placed on the sides and in
the rear shall all be red. 39
Penalties resulting from a violation thereof could be imposed. Thus: "Non-
compliance with the requirements contained in this Order shall be sufficient cause
to refuse registration of the motor vehicle affected and if already registered, its
registration maybe suspended in pursuance of the provisions of Section 16 of RA
4136; [Provided], However, that in the case of the violation of Section 1(a) and (b)
and paragraph (8) Section 3 hereof, a fine of not less than ten nor more than fifty
pesos shall be imposed. 40 It is not to be lost sight of that under Republic Act No.
4136, of which the Reflector Law is an amendment, petitioner, as the Land
Transportation Commissioner, may, with the approval of the Secretary of Public
Works and Communications, issue rules and regulations for its implementation as
long as they do not conflict with its provisions. 41 It is likewise an express provision
of the above statute that for a violation of any of its provisions or regulations
promulgated pursuant thereto a fine of not less than P10 nor not less than P50
could be imposed. 42
It is a fundamental principle flowing from the doctrine of separation of powers that
Congress may not delegate its legislative power to the two other branches of the
government, subject to the exception that local governments may over local affairs
participate in its exercise. What cannot be delegated is the authority under the
Constitution to make laws and to alter and repeal them; the test is the
completeness of the statute in all its term and provisions when it leaves the hands
of the legislature. To determine whether or not there is an undue delegation of
legislative power the inquiry must be directed to the scope and definiteness of the
measure enacted. The legislature does not abdicate its functions when it describes
what job must be done, who is to do it, and what is the scope of his authority. For a
complex economy, that may indeed be the only way in which the legislative
process can go forward. A distinction has rightfully been made between delegation
of power to make the laws which necessarily involves a discretion as to what it
shall be, which constitutionally may not be done, and delegation of authority or
discretion as to its execution to exercised under and in pursuance of the law, to
which no valid objection call be made. The Constitution is thus not to be regarded
as denying the legislature the necessary resources of flexibility and practicability.
To avoid the taint of unlawful delegation, there must be a standard, which implies
at the very least that the legislature itself determines matters of principle and lay
down fundamental policy. Otherwise, the charge of complete abdication may be
hard to repel. A standard thus defines legislative policy, marks its limits, its maps
out its boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected. It is the
criterion by which legislative purpose may be carried out. Thereafter, the executive
or administrative office designated may in pursuance of the above guidelines
promulgate supplemental rules and regulations.
The standard may be either express or implied. If the former, the non-delegation
objection is easily met. The standard though does not have to be spelled out
specifically. It could be implied from the policy and purpose of the act considered
as a whole. In the Reflector Law, clearly the legislative objective is public safety.
That is sought to be attained as in Calalang v. Williams is "safe transit upon the
roads." 43
This is to adhere to the recognition given expression by Justice Laurel in a decision
announced not long after the Constitution came into force and effect that the
principle of non-delegation "has been made to adapt itself the complexities of
modern governments, giving rise to the adoption, within certain limits, of the
principle of "subordinate legislation" not only in the United States and England but
in practically all modern governments." 44 He continued: "Accordingly, with the
growing complexity of modern life, the multiplication of the subjects of
governmental regulation, and the increased difficulty of administering the laws,
there is a constantly growing tendency toward the delegation of greater powers by
the legislature and toward the approval of the practice by the courts." 45
Consistency with the conceptual approach requires the reminder that what is
delegated is authority non-legislative in character, the completeness of the statute
when it leaves the hands of Congress being assumed.
Our later decisions speak to the same effect. Thus from, Justice J. B. L. Reyes in
People vs. Exconde: 46 "It is well establish in this jurisdiction that, while the making
of laws is a non-delegable activity that corresponds exclusively to Congress,
nevertheless the latter may constitutionally delegate authority to promulgate rules
and regulations to implement a given legislation and effectuate its policies, for the
reason that the legislature often finds it impracticable (if not impossible) to
anticipate and proved for the multifarious and complex situations that may be met
in carrying the law in effect. All that is required is that the regulation should
germane to the objects and purposes of the law; that the regulation be not in
contradiction with it; but conform to the standards that the law prescribes ... " 47
An even more explicit formulation of the controlling principle comes from the pen
of the then Justice, now Chief Justice, Concepcion: "Lastly, the legality of Circular
No. 21 is assailed upon the ground that the grant of authority to issue the same
constitutes an undue delegation of legislative power. It is true that, under our
system of government, said power may not be delegated except to local
governments. However, one thing is to delegate the power to determine what the
law shall be, and another thing to delegate the authority to fix the details in the
execution of enforcement of a policy set out in the law itself. Briefly stated, the rule
is that the delegated powers fall under the second category, if the law authorizing
the, delegation furnishes a reasonable standard which "sufficiently marks the field
within which the Administrator is to act so that it may be known whether he has
kept within it in compliance with the legislative will." (Yakus vs. United States, 88 L.
ed.
848) ... It should be noted, furthermore, that these powers must be construed and
exercised in relation to the objectives of the law creating the Central Bank, which
are, among others, "to maintain monetary stability in the Philippines," and "to
promote a rising level of production, employment and real income in the
Philippines." (Section 2, Rep. Act No. 265). These standards are sufficiently
concrete and definite to vest in the delegated authority, the character of
administrative details in the enforcement of the law and to place the grant said
authority beyond the category of a delegation of legislative powers ... " 48
It bears repeating that the Reflector Law construed together with the Land
Transportation Code. Republic Act No. 4136, of which it is an amendment, leaves
no doubt as to the stress and emphasis on public safety which is the prime
consideration in statutes of this character. There is likewise a categorical
affirmation Of the power of petitioner as Land Transportation Commissioner to
promulgate rules and regulations to give life to and translate into actuality such
fundamental purpose. His power is clear. There has been no abuse. His
Administrative Order No. 2 can easily survive the attack, far-from-formidable,
launched against it by respondent Galo.
WHEREFORE, the writs of certiorari and prohibition prayed for are granted, the
orders of May 28, 1970 of respondent Judge for the issuance of a writ of
preliminary injunction, the writ of preliminary injunction of June 1, 1970 and his
order of June 9, 1970 denying reconsideration are annulled and set aside.
Respondent Judge is likewise directed to dismiss the petition for certiorari and
prohibition filed by respondent Teddy C. Galo, there being no cause of action as the
Reflector Law and Administrative Order No. 2 of petitioner have not been shown to
be tainted by invalidity. Without pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 15574 September 17, 1919
SMITH, BELL & COMPANY (LTD.), petitioner, vs. JOAQUIN NATIVIDAD,
Collector of Customs of the port of Cebu, respondent.
MALCOLM, J.:
A writ of mandamus is prayed for by Smith, Bell & Co. (Ltd.), against Joaquin
Natividad, Collector of Customs of the port of Cebu, Philippine Islands, to compel
him to issue a certificate of Philippine registry to the petitioner for its motor vessel
Bato. The Attorney-General, acting as counsel for respondent, demurs to the
petition on the general ground that it does not state facts sufficient to constitute a
cause of action. While the facts are thus admitted, and while, moreover, the
pertinent provisions of law are clear and understandable, and interpretative
American jurisprudence is found in abundance, yet the issue submitted is not
lightly to be resolved. The question, flatly presented, is, whether Act. No. 2761 of
the Philippine Legislature is valid — or, more directly stated, whether the
Government of the Philippine Islands, through its Legislature, can deny the registry
of vessels in its coastwise trade to corporations having alien stockholders.
FACTS.
Smith, Bell & Co., (Ltd.), is a corporation organized and existing under the laws of
the Philippine Islands. A majority of its stockholders are British subjects. It is the
owner of a motor vessel known as the Bato built for it in the Philippine Islands in
1916, of more than fifteen tons gross The Bato was brought to Cebu in the present
year for the purpose of transporting plaintiff's merchandise between ports in the
Islands. Application was made at Cebu, the home port of the vessel, to the
Collector of Customs for a certificate of Philippine registry. The Collector refused to
issue the certificate, giving as his reason that all the stockholders of Smith, Bell &
Co., Ltd., were not citizens either of the United States or of the Philippine Islands.
The instant action is the result.
LAW.
The Act of Congress of April 29, 1908, repealing the Shipping Act of April 30, 1906
but reenacting a portion of section 3 of this Law, and still in force, provides in its
section 1:
That until Congress shall have authorized the registry as vessels of the
United States of vessels owned in the Philippine Islands, the Government of
the Philippine Islands is hereby authorized to adopt, from time to time, and
enforce regulations governing the transportation of merchandise and
passengers between ports or places in the Philippine Archipelago. (35 Stat.
at L., 70; Section 3912, U. S. Comp Stat. [1916]; 7 Pub. Laws, 364.)
The Act of Congress of August 29, 1916, commonly known as the Jones Law, still in
force, provides in section 3, (first paragraph, first sentence), 6, 7, 8, 10, and 31, as
follows.
SEC. 3. That no law shall be enacted in said Islands which shall deprive any
person of life, liberty, or property without due process of law, or deny to any
person therein the equal protection of the laws. . . .
SEC. 6. That the laws now in force in the Philippines shall continue in force
and effect, except as altered, amended, or modified herein, until altered,
amended, or repealed by the legislative authority herein provided or by Act
of Congress of the United States.
SEC. 7. That the legislative authority herein provided shall have power,
when not inconsistent with this Act, by due enactment to amend, alter
modify, or repeal any law, civil or criminal, continued in force by this Act as
it may from time to time see fit
This power shall specifically extend with the limitation herein provided as to
the tariff to all laws relating to revenue provided as to the tariff to all laws
relating to revenue and taxation in effect in the Philippines.
SEC. 8. That general legislative power, except as otherwise herein provided,
is hereby granted to the Philippine Legislature, authorized by this Act.
SEC. 10. That while this Act provides that the Philippine government shall
have the authority to enact a tariff law the trade relations between the
islands and the United States shall continue to be governed exclusively by
laws of the Congress of the United States: Provided, That tariff acts or acts
amendatory to the tariff of the Philippine Islands shall not become law until
they shall receive the approval of the President of the United States, nor
shall any act of the Philippine Legislature affecting immigration or the
currency or coinage laws of the Philippines become a law until it has been
approved by the President of the United States: Provided further, That the
President shall approve or disapprove any act mentioned in the foregoing
proviso within six months from and after its enactment and submission for
his approval, and if not disapproved within such time it shall become a law
the same as if it had been specifically approved.
SEC. 31. That all laws or parts of laws applicable to the Philippines not in
conflict with any of the provisions of this Act are hereby continued in force
and effect." (39 Stat at L., 546.)
On February 23, 1918, the Philippine Legislature enacted Act No. 2761. The first
section of this law amended section 1172 of the Administrative Code to read as
follows:
SEC. 1172. Certificate of Philippine register. — Upon registration of a vessel
of domestic ownership, and of more than fifteen tons gross, a certificate of
Philippine register shall be issued for it. If the vessel is of domestic
ownership and of fifteen tons gross or less, the taking of the certificate of
Philippine register shall be optional with the owner.
"Domestic ownership," as used in this section, means ownership vested in
some one or more of the following classes of persons: (a) Citizens or native
inhabitants of the Philippine Islands; (b) citizens of the United States
residing in the Philippine Islands; (c) any corporation or company composed
wholly of citizens of the Philippine Islands or of the United States or of both,
created under the laws of the United States, or of any State thereof, or of
thereof, or the managing agent or master of the vessel resides in the
Philippine Islands
 Any vessel of more than fifteen gross tons which on February eighth,
nineteen hundred and eighteen, had a certificate of Philippine register
under existing law, shall likewise be deemed a vessel of domestic ownership
so long as there shall not be any change in the ownership thereof nor any
transfer of stock of the companies or corporations owning such vessel to
person not included under the last preceding paragraph.
Sections 2 and 3 of Act No. 2761 amended sections 1176 and 1202 of the
Administrative Code to read as follows:
SEC. 1176. Investigation into character of vessel. — No application for a
certificate of Philippine register shall be approved until the collector of
customs is satisfied from an inspection of the vessel that it is engaged or
destined to be engaged in legitimate trade and that it is of domestic
ownership as such ownership is defined in section eleven hundred and
seventy-two of this Code.
The collector of customs may at any time inspect a vessel or examine its
owner, master, crew, or passengers in order to ascertain whether the vessel
is engaged in legitimate trade and is entitled to have or retain the
certificate of Philippine register.
SEC. 1202. Limiting number of foreign officers and engineers on board
vessels. — No Philippine vessel operating in the coastwise trade or on the
high seas shall be permitted to have on board more than one master or one
mate and one engineer who are not citizens of the United States or of the
Philippine Islands, even if they hold licenses under section one thousand
one hundred and ninety-nine hereof. No other person who is not a citizen of
the United States or of the Philippine Islands shall be an officer or a member
of the crew of such vessel. Any such vessel which fails to comply with the
terms of this section shall be required to pay an additional tonnage tax of
fifty centavos per net ton per month during the continuance of said failure.
ISSUES.
Predicated on these facts and provisions of law, the issues as above stated recur,
namely, whether Act No 2761 of the Philippine Legislature is valid in whole or in
part — whether the Government of the Philippine Islands, through its Legislature,
can deny the registry of vessel in its coastwise trade to corporations having alien
stockholders .
OPINION.
1. Considered from a positive standpoint, there can exist no measure of doubt as to
the power of the Philippine Legislature to enact Act No. 2761. The Act of Congress
of April 29, 1908, with its specific delegation of authority to the Government of the
Philippine Islands to regulate the transportation of merchandise and passengers
between ports or places therein, the liberal construction given to the provisions of
the Philippine Bill, the Act of Congress of July 1, 1902, by the courts, and the grant
by the Act of Congress of August 29, 1916, of general legislative power to the
Philippine Legislature, are certainly superabundant authority for such a law. While
the Act of the local legislature may in a way be inconsistent with the Act of
Congress regulating the coasting trade of the Continental United States, yet the
general rule that only such laws of the United States have force in the Philippines
as are expressly extended thereto, and the abnegation of power by Congress in
favor of the Philippine Islands would leave no starting point for convincing
argument. As a matter of fact, counsel for petitioner does not assail legislative
action from this direction (See U. S. vs. Bull [1910], 15 Phil., 7; Sinnot vs.
Davenport [1859] 22 How., 227.)
2. It is from the negative, prohibitory standpoint that counsel argues against the
constitutionality of Act No. 2761. The first paragraph of the Philippine Bill of Rights
of the Philippine Bill, repeated again in the first paragraph of the Philippine Bill of
Rights as set forth in the Jones Law, provides "That no law shall be enacted in said
Islands which shall deprive any person of life, liberty, or property without due
process of law, or deny to any person therein the equal protection of the laws."
Counsel says that Act No. 2761 denies to Smith, Bell & Co., Ltd., the equal
protection of the laws because it, in effect, prohibits the corporation from owning
vessels, and because classification of corporations based on the citizenship of one
or more of their stockholders is capricious, and that Act No. 2761 deprives the
corporation of its properly without due process of law because by the passage of
the law company was automatically deprived of every beneficial attribute of
ownership in the Bato and left with the naked title to a boat it could not use .
The guaranties extended by the Congress of the United States to the Philippine
Islands have been used in the same sense as like provisions found in the United
States Constitution. While the "due process of law and equal protection of the laws"
clause of the Philippine Bill of Rights is couched in slightly different words than the
corresponding clause of the Fourteenth Amendment to the United States
Constitution, the first should be interpreted and given the same force and effect as
the latter. (Kepner vs. U.S. [1904], 195 U. S., 100; Sierra vs. Mortiga [1907], 204 U.
S.,.470; U. S. vs. Bull [1910], 15 Phil., 7.) The meaning of the Fourteenth
Amendment has been announced in classic decisions of the United States Supreme
Court. Even at the expense of restating what is so well known, these basic
principles must again be set down in order to serve as the basis of this decision.
The guaranties of the Fourteenth Amendment and so of the first paragraph of the
Philippine Bill of Rights, are universal in their application to all person within the
territorial jurisdiction, without regard to any differences of race, color, or
nationality. The word "person" includes aliens. (Yick Wo vs. Hopkins [1886], 118 U.
S., 356; Truax vs. Raich [1915], 239 U. S., 33.) Private corporations, likewise, are
"persons" within the scope of the guaranties in so far as their property is
concerned. (Santa Clara County vs. Southern Pac. R. R. Co. [1886], 118.U. S., 394;
Pembina Mining Co. vs. Pennsylvania [1888],.125 U. S., 181 Covington & L.
Turnpike Road Co. vs. Sandford [1896], 164 U. S., 578.) Classification with the end
in view of providing diversity of treatment may be made among corporations, but
must be based upon some reasonable ground and not be a mere arbitrary selection
(Gulf, Colorado & Santa Fe Railway Co. vs. Ellis [1897],.165 U. S., 150.) Examples of
laws held unconstitutional because of unlawful discrimination against aliens could
be cited. Generally, these decisions relate to statutes which had attempted
arbitrarily to forbid aliens to engage in ordinary kinds of business to earn their
living. (State vs. Montgomery [1900], 94 Maine, 192, peddling — but see.
Commonwealth vs. Hana [1907], 195 Mass., 262; Templar vs. Board of Examiners
of Barbers [1902], 131 Mich., 254, barbers; Yick Wo vs. Hopkins [1886], 118 U.
S.,.356, discrimination against Chinese; Truax vs. Raich [1915], 239 U. S., 33; In re
Parrott [1880], 1 Fed , 481; Fraser vs. McConway & Torley Co. [1897], 82 Fed , 257;
Juniata Limestone Co. vs. Fagley [1898], 187 Penn., 193, all relating to the
employment of aliens by private corporations.)
A literal application of general principles to the facts before us would, of course,
cause the inevitable deduction that Act No. 2761 is unconstitutional by reason of
its denial to a corporation, some of whole members are foreigners, of the equal
protection of the laws. Like all beneficient propositions, deeper research discloses
provisos. Examples of a denial of rights to aliens notwithstanding the provisions of
the Fourteenth Amendment could be cited. (Tragesser vs. Gray [1890], 73 Md.,
250, licenses to sell spirituous liquors denied to persons not citizens of the United
States; Commonwealth vs. Hana [1907], 195 Mass , 262, excluding aliens from the
right to peddle; Patsone vs. Commonwealth of Pennsylvania [1914], 232 U. S. ,
138, prohibiting the killing of any wild bird or animal by any unnaturalized foreign-
born resident; Ex parte Gilleti [1915], 70 Fla., 442, discriminating in favor of
citizens with reference to the taking for private use of the common property in fish
and oysters found in the public waters of the State; Heim vs. McCall [1915], 239 U.
S.,.175, and Crane vs. New York [1915], 239 U. S., 195, limiting employment on
public works by, or for, the State or a municipality to citizens of the United States.)
One of the exceptions to the general rule, most persistent and far reaching in
influence is, that neither the Fourteenth Amendment to the United States
Constitution, broad and comprehensive as it is, nor any other amendment, "was
designed to interfere with the power of the State, sometimes termed its `police
power,' to prescribe regulations to promote the health, peace, morals, education,
and good order of the people, and legislate so as to increase the industries of the
State, develop its resources and add to its wealth and prosperity. From the very
necessities of society, legislation of a special character, having these objects in
view, must often be had in certain districts." (Barbier vs. Connolly [1884], 113 U.S.,
27; New Orleans Gas Co. vs. Lousiana Light Co. [1885], 115 U.S., 650.) This is the
same police power which the United States Supreme Court say "extends to so
dealing with the conditions which exist in the state as to bring out of them the
greatest welfare in of its people." (Bacon vs. Walker [1907], 204 U.S., 311.) For
quite similar reasons, none of the provision of the Philippine Organic Law could
could have had the effect of denying to the Government of the Philippine Islands,
acting through its Legislature, the right to exercise that most essential, insistent,
and illimitable of powers, the sovereign police power, in the promotion of the
general welfare and the public interest. (U. S. vs. Toribio [1910], 15 Phil., 85;
Churchill and Tait vs. Rafferty [1915], 32 Phil., 580; Rubi vs. Provincial Board of
Mindoro [1919], 39 Phil., 660.) Another notable exception permits of the regulation
or distribution of the public domain or the common property or resources of the
people of the State, so that use may be limited to its citizens. (Ex parte Gilleti
[1915], 70 Fla., 442; McCready vs. Virginia [1876], 94 U. S., 391; Patsone vs.
Commonwealth of Pennsylvania [1914], 232U. S., 138.) Still another exception
permits of the limitation of employment in the construction of public works by, or
for, the State or a municipality to citizens of the United States or of the State.
(Atkin vs. Kansas [1903],191 U. S., 207; Heim vs. McCall [1915], 239 U.S., 175;
Crane vs. New York [1915], 239 U. S., 195.) Even as to classification, it is admitted
that a State may classify with reference to the evil to be prevented; the question is
a practical one, dependent upon experience. (Patsone vs. Commonwealth of
Pennsylvania [1914], 232 U. S., 138.)
To justify that portion of Act no. 2761 which permits corporations or companies to
obtain a certificate of Philippine registry only on condition that they be composed
wholly of citizens of the Philippine Islands or of the United States or both, as not
infringing Philippine Organic Law, it must be done under some one of the
exceptions here mentioned This must be done, moreover, having particularly in
mind what is so often of controlling effect in this jurisdiction — our local experience
and our peculiar local conditions.
To recall a few facts in geography, within the confines of Philippine jurisdictional
limits are found more than three thousand islands. Literally, and absolutely,
steamship lines are, for an Insular territory thus situated, the arteries of commerce.
If one be severed, the life-blood of the nation is lost. If on the other hand these
arteries are protected, then the security of the country and the promotion of the
general welfare is sustained. Time and again, with such conditions confronting it,
has the executive branch of the Government of the Philippine Islands, always later
with the sanction of the judicial branch, taken a firm stand with reference to the
presence of undesirable foreigners. The Government has thus assumed to act for
the all-sufficient and primitive reason of the benefit and protection of its own
citizens and of the self-preservation and integrity of its dominion. (In re Patterson
[1902], 1 Phil., 93; Forbes vs. Chuoco, Tiaco and Crossfield [1910], 16 Phil.,
534;.228 U.S., 549; In re McCulloch Dick [1918], 38 Phil., 41.) Boats owned by
foreigners, particularly by such solid and reputable firms as the instant claimant,
might indeed traverse the waters of the Philippines for ages without doing any
particular harm. Again, some evilminded foreigner might very easily take
advantage of such lavish hospitality to chart Philippine waters, to obtain valuable
information for unfriendly foreign powers, to stir up insurrection, or to prejudice
Filipino or American commerce. Moreover, under the Spanish portion of Philippine
law, the waters within the domestic jurisdiction are deemed part of the national
domain, open to public use. (Book II, Tit. IV, Ch. I, Civil Code; Spanish Law of
Waters of August 3, 1866, arts 1, 2, 3.) Common carriers which in the Philippines as
in the United States and other countries are, as Lord Hale said, "affected with a
public interest," can only be permitted to use these public waters as a privilege and
under such conditions as to the representatives of the people may seem wise. (See
De Villata vs. Stanley [1915], 32 Phil., 541.)
In Patsone vs. Commonwealth of Pennsylvania ([1913], 232 U.S., 138), a case
herein before mentioned, Justice Holmes delivering the opinion of the United States
Supreme Court said:
This statute makes it unlawful for any unnaturalized foreign-born resident to
kill any wild bird or animal except in defense of person or property, and `to
that end' makes it unlawful for such foreign-born person to own or be
possessed of a shotgun or rifle; with a penalty of $25 and a forfeiture of the
gun or guns. The plaintiff in error was found guilty and was sentenced to
pay the abovementioned fine. The judgment was affirmed on successive
appeals. (231 Pa., 46; 79 Atl., 928.) He brings the case to this court on the
ground that the statute is contrary to the 14th Amendment and also is in
contravention of the treaty between the United States and Italy, to which
latter country the plaintiff in error belongs .
Under the 14th Amendment the objection is twofold; unjustifiably depriving
the alien of property, and discrimination against such aliens as a class. But
the former really depends upon the latter, since it hardly can be disputed
that if the lawful object, the protection of wild life (Geer vs. Connecticut, 161
U.S., 519; 40 L. ed., 793; 16 Sup. Ct. Rep., 600), warrants the discrimination,
the, means adopted for making it effective also might be adopted. . . .
The discrimination undoubtedly presents a more difficult question. But we
start with reference to the evil to be prevented, and that if the class
discriminated against is or reasonably might be considered to define those
from whom the evil mainly is to be feared, it properly may be picked out. A
lack of abstract symmetry does not matter. The question is a practical one,
dependent upon experience. . . .
The question therefore narrows itself to whether this court can say that the
legislature of Pennsylvania was not warranted in assuming as its premise
for the law that resident unnaturalized aliens were the peculiar source of
the evil that it desired to prevent. (Barrett vs. Indiana,. 229 U.S., 26, 29; 57
L. ed., 1050, 1052; 33 Sup. Ct. Rep., 692.)
Obviously the question, so stated, is one of local experience, on which this
court ought to be very slow to declare that the state legislature was wrong
in its facts (Adams vs. Milwaukee, 228 U.S., 572, 583; 57 L. ed., 971,.977;
33 Sup. Ct. Rep., 610.) If we might trust popular speech in some states it
was right; but it is enough that this court has no such knowledge of local
conditions as to be able to say that it was manifestly wrong. . . .
Judgment affirmed.
We are inclined to the view that while Smith, Bell & Co. Ltd., a corporation having
alien stockholders, is entitled to the protection afforded by the due-process of law
and equal protection of the laws clause of the Philippine Bill of Rights,
nevertheless, Act No. 2761 of the Philippine Legislature, in denying to corporations
such as Smith, Bell &. Co. Ltd., the right to register vessels in the Philippines
coastwise trade, does not belong to that vicious species of class legislation which
must always be condemned, but does fall within authorized exceptions, notably,
within the purview of the police power, and so does not offend against the
constitutional provision.
This opinion might well be brought to a close at this point. It occurs to us, however,
that the legislative history of the United States and the Philippine Islands, and,
probably, the legislative history of other countries, if we were to take the time to
search it out, might disclose similar attempts at restriction on the right to enter the
coastwise trade, and might thus furnish valuable aid by which to ascertain and, if
possible, effectuate legislative intention.
3. The power to regulate commerce, expressly delegated to the Congress
by the Constitution, includes the power to nationalize ships built and owned
in the United States by registries and enrollments, and the recording of the
muniments of title of American vessels. The Congress "may encourage or it
may entirely prohibit such commerce, and it may regulate in any way it may
see fit between these two extremes." (U.S. vs. Craig [1886], 28 Fed., 795;
Gibbons vs. Ogden [1824], 9 Wheat., 1; The Passenger Cases [1849], 7
How., 283.)
Acting within the purview of such power, the first Congress of the United States
had not been long convened before it enacted on September 1, 1789, "An Act for
Registering and Clearing Vessels, Regulating the Coasting Trade, and for other
purposes." Section 1 of this law provided that for any ship or vessel to obtain the
benefits of American registry, it must belong wholly to a citizen or citizens of the
United States "and no other." (1 Stat. at L., 55.) That Act was shortly after
repealed, but the same idea was carried into the Acts of Congress of December 31,
1792 and February 18, 1793. (1 Stat. at L., 287, 305.).Section 4 of the Act of 1792
provided that in order to obtain the registry of any vessel, an oath shall be taken
and subscribed by the owner, or by one of the owners thereof, before the officer
authorized to make such registry, declaring, "that there is no subject or citizen of
any foreign prince or state, directly or indirectly, by way of trust, confidence, or
otherwise, interested in such vessel, or in the profits or issues thereof." Section 32
of the Act of 1793 even went so far as to say "that if any licensed ship or vessel
shall be transferred to any person who is not at the time of such transfer a citizen
of and resident within the United States, ... every such vessel with her tackle,
apparel, and furniture, and the cargo found on board her, shall be forefeited." In
case of alienation to a foreigner, Chief Justice Marshall said that all the privileges of
an American bottom were ipso facto forfeited. (U.S. vs. Willings and Francis [1807],
4 Cranch, 48.) Even as late as 1873, the Attorney-General of the United States was
of the opinion that under the provisions of the Act of December 31, 1792, no vessel
in which a foreigner is directly or indirectly interested can lawfully be registered as
a vessel of the United. States. (14 Op. Atty.-Gen. [U.S.], 340.)
These laws continued in force without contest, although possibly the Act of March
3, 1825, may have affected them, until amended by the Act of May 28, 1896 (29
Stat. at L., 188) which extended the privileges of registry from vessels wholly
owned by a citizen or citizens of the United States to corporations created under
the laws of any of the states thereof. The law, as amended, made possible the
deduction that a vessel belonging to a domestic corporation was entitled to
registry or enrollment even though some stock of the company be owned by aliens.
The right of ownership of stock in a corporation was thereafter distinct from the
right to hold the property by the corporation (Humphreys vs. McKissock [1890],
140 U.S., 304; Queen vs. Arnaud [1846], 9 Q. B., 806; 29 Op. Atty.-Gen. [U.S.],188.)
On American occupation of the Philippines, the new government found a
substantive law in operation in the Islands with a civil law history which it wisely
continued in force Article fifteen of the Spanish Code of Commerce permitted any
foreigner to engage in Philippine trade if he had legal capacity to do so under the
laws of his nation. When the Philippine Commission came to enact the Customs
Administrative Act (No. 355) in 1902, it returned to the old American policy of
limiting the protection and flag of the United States to vessels owned by citizens of
the United States or by native inhabitants of the Philippine Islands (Sec. 117.) Two
years later, the same body reverted to the existing Congressional law by
permitting certification to be issued to a citizen of the United States or to a
corporation or company created under the laws of the United States or of any state
thereof or of the Philippine Islands (Act No. 1235, sec. 3.) The two administration
codes repeated the same provisions with the necessary amplification of inclusion of
citizens or native inhabitants of the Philippine Islands (Adm. Code of 1916, sec.
1345; Adm. Code of 1917, sec. 1172). And now Act No. 2761 has returned to the
restrictive idea of the original Customs Administrative Act which in turn was merely
a reflection of the statutory language of the first American Congress.
Provisions such as those in Act No. 2761, which deny to foreigners the right to a
certificate of Philippine registry, are thus found not to be as radical as a first
reading would make them appear.
Without any subterfuge, the apparent purpose of the Philippine Legislature is seen
to be to enact an anti-alien shipping act. The ultimate purpose of the Legislature is
to encourage Philippine ship-building. This, without doubt, has, likewise, been the
intention of the United States Congress in passing navigation or tariff laws on
different occasions. The object of such a law, the United States Supreme Court
once said, was to encourage American trade, navigation, and ship-building by
giving American ship-owners exclusive privileges. (Old Dominion Steamship Co. vs.
Virginia [1905], 198 U.S., 299; Kent's Commentaries, Vol. 3, p. 139.)
In the concurring opinion of Justice Johnson in Gibbons vs. Ogden ([1824], 9
Wheat., 1) is found the following:
Licensing acts, in fact, in legislation, are universally restraining acts; as, for
example, acts licensing gaming houses, retailers of spirituous liquors, etc.
The act, in this instance, is distinctly of that character, and forms part of an
extensive system, the object of which is to encourage American shipping,
and place them on an equal footing with the shipping of other nations.
Almost every commercial nation reserves to its own subjects a monopoly of
its coasting trade; and a countervailing privilege in favor of American
shipping is contemplated, in the whole legislation of the United States on
this subject. It is not to give the vessel an American character, that the
license is granted; that effect has been correctly attributed to the act of her
enrollment. But it is to confer on her American privileges, as
contradistinguished from foreign; and to preserve the. Government from
fraud by foreigners, in surreptitiously intruding themselves into the
American commercial marine, as well as frauds upon the revenue in the
trade coastwise, that this whole system is projected.
The United States Congress in assuming its grave responsibility of legislating wisely
for a new country did so imbued with a spirit of Americanism. Domestic navigation
and trade, it decreed, could only be carried on by citizens of the United States. If
the representatives of the American people acted in this patriotic manner to
advance the national policy, and if their action was accepted without protest in the
courts, who can say that they did not enact such beneficial laws under the all-
pervading police power, with the prime motive of safeguarding the country and of
promoting its prosperity? Quite similarly, the Philippine Legislature made up
entirely of Filipinos, representing the mandate of the Filipino people and the
guardian of their rights, acting under practically autonomous powers, and imbued
with a strong sense of Philippinism, has desired for these Islands safety from
foreign interlopers, the use of the common property exclusively by its citizens and
the citizens of the United States, and protection for the common good of the
people. Who can say, therefore, especially can a court, that with all the facts and
circumstances affecting the Filipino people before it, the Philippine Legislature has
erred in the enactment of Act No. 2761?
Surely, the members of the judiciary are not expected to live apart from active life,
in monastic seclusion amidst dusty tomes and ancient records, but, as keen
spectators of passing events and alive to the dictates of the general — the national
— welfare, can incline the scales of their decisions in favor of that solution which
will most effectively promote the public policy. All the presumption is in favor of the
constitutionally of the law and without good and strong reasons, courts should not
attempt to nullify the action of the Legislature. "In construing a statute enacted by
the Philippine Commission (Legislature), we deem it our duty not to give it a
construction which would be repugnant to an Act of Congress, if the language of
the statute is fairly susceptible of another construction not in conflict with the
higher law." (In re Guariña [1913], 24. Phil., 36; U.S. vs. Ten Yu [1912], 24 Phil., 1.)
That is the true construction which will best carry legislative intention into effect.
With full consciousness of the importance of the question, we nevertheless are
clearly of the opinion that the limitation of domestic ownership for purposes of
obtaining a certificate of Philippine registry in the coastwise trade to citizens of the
Philippine Islands, and to citizens of the United States, does not violate the
provisions of paragraph 1 of section 3 of the Act of Congress of August 29, 1916 No
treaty right relied upon Act No. 2761 of the Philippine Legislature is held valid and
constitutional .
The petition for a writ of mandamus is denied, with costs against the petitioner. So
ordered.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 130716 December 9, 1998
FRANCISCO I. CHAVEZ, petitioner, vs. PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT (PCGG) and MAGTANGGOL GUNIGUNDO (in his
capacity as chairman of the PCGG), respondents, GLORIA A. JOPSON,
CELNAN A. JOPSON, SCARLET A. JOPSON, and TERESA A. JOPSON,
petitioners-in-intervention.
PANGANIBAN, J.:
Petitioner asks this Court to define the nature and the extent of the people's
constitutional right to information on matters of public concern. Does this right
include access to the terms of government negotiations prior to their
consummation or conclusion? May the government, through the Presidential
Commission on Good Government (PCGG), be required to reveal the proposed
terms of a compromise agreement with the Marcos heirs as regards their alleged
ill-gotten wealth? More specifically, are the "General Agreement" and
"Supplemental Agreement," both dated December 28, 1993 and executed between
the PCGG and the Marcos heirs, valid and binding?
The Case
These are the main questions raised in this original action seeking (1) to prohibit
and "[e]njoin respondents [PCGG and its chairman] from privately entering into,
perfecting and/or executing any greement with the heirs of the late President
Ferdinand E. Marcos . . . relating to and concerning the properties and assets of
Ferdinand Marcos located in the Philippines and/or abroad — including the so-
called Marcos gold hoard"; and (2) to "[c]ompel respondent[s] to make public all
negotiations and agreement, be they ongoing or perfected, and all documents
related to or relating to such negotiations and agreement between the PCGG and
the Marcos heirs." 1
The Facts
Petitioner Francisco I. Chavez, as "taxpayer, citizen and former government official
who initiated the prosecution of the Marcoses and their cronies who committed
unmitigated plunder of the public treasury and the systematic subjugation of the
country's economy," alleges that what impelled him to bring this action were
several news reports 2 bannered in a number of broadsheets sometime in
September 1997. These news items referred to (1) the alleged discovery of billions
of dollars of Marcos assets deposited in various coded accounts in Swiss banks; and
(2) the reported execution of a compromise, between the government (through
PCGG) and the Marcos heirs, on how to split or share these assets.
Petitioner, invoking his constitutional right to information 3 and the correlative duty
of the state to disclose publicly all its transactions involving the national interest, 4
demands that respondents make public any and all negotiations and agreements
pertaining to PCGG's task of recovering the Marcoses' ill-gotten wealth. He claims
that any compromise on the alleged billions of ill-gotten wealth involves an issue of
"paramount public interest," since it has a "debilitating effect on the country's
economy" that would be greatly prejudicial to the national interest of the Filipino
people. Hence, the people in general have a right to know the transactions or deals
being contrived and effected by the government.
Respondents, on the other hand, do not deny forging a compromise agreement
with the Marcos heirs. They claim, though, that petitioner's action is premature,
because there is no showing that he has asked the PCGG to disclose the
negotiations and the Agreements. And even if he has, PCGG may not yet be
compelled to make any disclosure, since the proposed terms and conditions of the
Agreements have not become effective and binding.
Respondents further aver that the Marcos heirs have submitted the subject
Agreements to the Sandiganbayan for its approval in Civil Case No. 141, entitled
Republic v. Heirs of Ferdinand E. Marcos, and that the Republic opposed such move
on the principal grounds that (1) said Agreements have not been ratified by or
even submitted to the President for approval, pursuant to Item No. 8 of the General
Agreement; and (2) the Marcos heirs have failed to comply with their undertakings
therein, particularly the collation and submission of an inventory of their assets.
The Republic also cited an April 11, 1995 Resolution in Civil Case No. 0165, in
which the Sandiganbayan dismissed a similar petition filed by the Marcoses'
attorney-in-fact.
Furthermore, then President Fidel V. Ramos, in his May 4, 1998 Memorandum 5
to
then PCGG Chairman Magtanggol Gunigundo, categorically stated:
This is to reiterate my previous position embodied in the Palace
Press Release of 6 April 1995 that I have not authorized you to
approve the Compromise Agreements of December 28, 1993 or any
agreement at all with the Marcoses, and would have disapproved
them had they been submitted to me.
 The Full Powers of Attorney of March 1994 and July 4, 1994, did not
authorize you to approve said Agreements, which I reserve for
myself as President of the Republic of the Philippines.
The assailed principal Agreement 6
reads:
GENERAL AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement entered into this 28th day of December, 1993, by and between —
The Republic of the Philippines, through the Presidential Commission on Good
Government (PCGG), a governmental agency vested with authority defined under
Executive Orders Nos. 1, 2 and 14, with offices at the philcomcen Building, Pasig,
Metro Manila, represented by its Chairman referred to as FIRST PARTY,
— and —
Estate of Ferdinand E. Marcos, represented by Imelda Romualdez Marcos and
Ferdinand R. Marcos, Jr., all of legal age, and with address at c/o No. 154 Lopez
Rizal St., Mandaluyong, Metro Manila, and Imelda Romualdez Marcos, Imee Marcos
Manotoc, Ferdinand E. Marcos, Jr., and Irene Marcos Araneta, hereinafter
collectively referred to as the PRIVATE PARTY.
W I T N E S S E T H:
WHEREAS, the PRIVATE PARTY has been impelled by their sense of nationalism and
love of country and of the entire Filipino people, and their desire to set up a
foundation and finance impact projects like installation of power plants in selected
rural areas and initiation of other community projects for the empowerment of the
people;
WHEREAS, the FIRST PARTY has obtained a judgment from the Swiss Federal
Tribunal of December 21, 1990, that the $356 million belongs in principle to the
Republic of the Philippines provided certain conditionalities are met, but even after
7 years, the FIRST PARTY has not been able to procure a final judgment of
conviction against the PRIVATE PARTY;
WHEREAS, the FIRST PARTY is desirous of avoiding a long-drawn out litigation
which, as proven by the past 7 years, is consuming money, time and effort, and is
counter-productive and ties up assets which the FIRST PARTY could otherwise
utilize for its Comprehensive Agrarian Reform Program, and other urgent needs;
WHEREAS, His Excellency, President Fidel V. Ramos, has adopted a policy of unity
and reconciliation in order to bind the nation's wounds and start the process of
rebuilding this nation as it goes on to the twenty-first century;
WHEREAS, this Agreement settles all claims and counterclaims which the parties
may have against one another, whether past, present, or future, matured or
inchoate.
NOW, THEREFORE, for and in consideration of the mutual covenants set forth
herein, the parties agree as follows:
1. The parties will collate all assets presumed to be owned by, or held by other
parties for the benefit of, the PRIVATE PARTY for purposes of determining the
totality of the assets covered by the settlement. The subject assets shall be
classified by the nature thereof, namely: (a) real estate; (b) jewelry; (c) paintings
and other works of art; (d) securities; (e) funds on deposit; (f) precious metals, if
any, and (g) miscellaneous assets or assets which could not appropriately fall
under any of the preceding classification. The list shall be based on the full
disclosure of the PRIVATE PARTY to insure its accuracy.
2. Based on the inventory, the FIRST PARTY shall determine which shall be ceded to
the FIRST PARTY, and which shall be assigned to/retained by the PRIVATE PARTY.
The assets of the PRIVATE PARTY shall be net of and exempt from, any form of
taxes due the Republic of the Philippines. However, considering the unavailability
of all pertinent and relevant documents and information as to balances and
ownership, the actual specification of assets to be retained by the PRIVATE PARTY
shall be covered by supplemental agreements which shall form part of this
Agreement.
3. Foreign assets which the PRIVATE PARTY shall fully disclose but which are held
by trustees, nominees, agents or foundations are hereby waived over by the
PRIVATE PARTY in favor of the FIRST PARTY. For this purpose, the parties shall
cooperate in taking the appropriate action, judicial and/or extrajudicial, to recover
the same for the FIRST PARTY.
4. All disclosures of assets made by the PRIVATE PARTY shall not be used as
evidence by the FIRST PARTY in any criminal, civil, tax or administrative case, but
shall be valid and binding against said PARTY for use by the FIRST PARTY in
withdrawing any account and/or recovering any asset. The PRIVATE PARTY
withdraws any objection to the withdrawal by and/or release to the FIRST PARTY by
the Swiss banks and/or Swiss authorities of the $356 million, its accrued interests,
and/or any other account; over which the PRIVATE PARTY waives any right, interest
or participation in favor of the FIRST PARTY. However, any withdrawal or release of
any account aforementioned by the FIRST PARTY shall be made in the presence of
any authorized representative of the PRIVATE PARTY.
5. The trustees, custodians, safekeepers, depositaries, agents, nominees, ESTATE OF FERDINAND E. MARCOS,
administrators, lawyers, or any other party acting in similar capacity in behalf of
the PRIVATE PARTY are hereby informed through this General Agreement to insure IMELDA R. MARCOS, MA. IMELDA
that it is fully implemented and this shall serve as absolute authority from both
parties for full disclosure to the FIRST PARTY of said assets and for the FIRST PARTY MARCOS-MANOTOC, FERDINAND R.
to withdraw said account and/or assets and any other assets which the FIRST
PARTY on its own or through the help of the PRIVATE PARTY/their trustees, etc.,
may discover. MARCOS, JR., & IRENE MARCOS-

6. Any asset which may be discovered in the future as belonging to the PRIVATE ARANETA
PARTY or is being held by another for the benefit of the PRIVATE PARTY and which
is not included in the list per No. 1 for whatever reason shall automatically belong By:
to the FIRST PARTY, and the PRIVATE PARTY in accordance with No. 4 above,
waives any right thereto. [Sgd.] IMELDA ROMUALDEZ-MARCOS

7. This Agreement shall be binding on and inure to the benefit of, the parties and [Sgd.] MA. IMELDA MARCOS-MANOTOC
their respective legal representatives, successors and assigns and shall supersede
any other prior agreement. FERDINAND R. MARCOS, JR. 7

8. The PARTIES shall submit this and any other implementing Agreements to the [Sgd.] IRENE MARCOS-ARANETA
President of the Philippines for approval. In the same manner, the PRIVATE PARTY
shall provide the FIRST PARTY assistance by way of testimony or deposition on any Assisted by:
information it may have that could shed light on the cases being pursued by the
FIRST PARTY against other parties. The FIRST PARTY shall desist from instituting
new suits already subject of this Agreement against the PRIVATE PARTY and cause [Sgd.] ATTY. SIMEON M. MESINA, JR.
the dismissal of all other cases pending in the Sandiganbayan and in other courts.
Counsel & Attorney-in-Fact
9. In case of violation by the PRIVATE PARTY of any of the conditions herein
contained, the PARTIES shall be restored automatically to the status quo ante the Petitioner also denounces this supplement to the above Agreement: 8
signing of this Agreement.
SUPPLEMENTAL AGREEMENT
For purposes of this Agreement, the PRIVATE PARTY shall be represented by Atty.
Simeon M. Mesina, Jr., as their only Attorney-in-Fact. This Agreement entered into this 28th day of December, 1993, by and between —

IN WITNESS WHEREOF, the parties have signed this instrument this 28th day of The Republic of the Philippines, through the Presidential Commission on Good
December, 1993, in Makati, Metro Manila. Government (PCGG), a governmental agency vested with authority defined under
Executive Orders Nos. 1, 2 and 14, with offices at the Philcomcen Building, Pasig,
PRESIDENTIAL COMMISSION ON Metro Manila, represented by its Chairman Magtanggol C. Gunigundo, hereinafter
referred to as the FIRST PARTY,
GOOD GOVERNMENT
— and —
By:
Estate of Ferdinand E. Marcos, represented by Imelda Romualdez Marcos and
[Sgd.] MAGTANGGOL C. GUNIGUNDO Ferdinand R. Marcos, Jr., all of legal age, and with address at c/o No. 154 Lopez
Rizal St., Mandaluyong, Metro Manila, and Imelda Romualdez Marcos, Imee Marcos
Manotoc, Ferdinand E. Marcos, Jr., and Irene Marcos Araneta, hereinafter
Chairman collectively referred to as the PRIVATE PARTY.
 W I T N E S S E T H: Assisted by:

The parties in this case entered into a General Agreement dated Dec. 28, 1993; [Sgd.] ATTY. SIMEON M. MESINA, JR.

The PRIVATE PARTY expressly reserve their right to pursue their interest and/or sue
over local assets located in the Philippines against parties other than the FIRST
PARTY.
The parties hereby agree that all expenses related to the recovery and/or
withdrawal of all assets including lawyers' fees, agents' fees, nominees' service
fees, bank charges, traveling expenses and all other expenses related thereto shall
be for the account of the PRIVATE PARTY.
In consideration of the foregoing, the parties hereby agree that the PRIVATE PARTY
shall be entitled to the equivalent of 25% of the amount that may be eventually
withdrawn from said $356 million Swiss deposits.
IN WITNESS WHEREOF, the parties have signed this instrument this 28th day of
December, 1993, in Makati, Metro Manila.
PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT
Counsel & Attorney-in-Fact
Acting on a motion of petitioner, the Court issued a Temporary Restraining Order 10
dated March 23, enjoining respondents, their agents and/or representatives from
"entering into, or perfecting and/or executing any agreement with the heirs of the
late President Ferdinand E. Marcos relating to and concerning their ill-gotten
wealth."
Issues
The Oral Argument, held on March 16, 1998, focused on the following issues:
(a) Procedural:
(1) Whether or not the petitioner has the personality or legal
standing to file the instant petition; and
(2) Whether or not this Court is the proper court before which this
action may be filed.

By:[Sgd.] MAGTANGGOL C. GUNIGUNDO (b) Substantive:

Chairman (1) Whether or not this Court could require the PCGG to disclose to
the public the details of any agreement, perfected or not, with the
ESTATE OF FERDINAND E. MARCOS Marcoses; and

IMELDA R. MARCOS, MA. IMELDA (2) Whether or not there exist any legal restraints against a
compromise agreement between the Marcoses and the PCGG
MARCOS-MANOTOC, FERDINAND R. relative to the Marcoses' ill-gotten wealth. 11

MARCOS, JR., & IRENE MARCOS-ARANETA After their oral presentations, the parties filed their respective memoranda.

By: On August 19, 1998, Gloria, Celnan, Scarlet and Teresa, all surnamed Jopson, filed
before the Court a Motion for Intervention, attaching thereto their Petition in
[Sgd.] IMELDA ROMUALDEZ-MARCOS Intervention. They aver that they are "among the 10,000 claimants whose right to
claim from the Marcos Family and/or the Marcos Estate is recognized by the
decision in In re Estate of Ferdinand Marcos, Human Rights Litigation, Maximo
[Sgd.] MA. IMELDA MARCOS-MANOTOC Hilao, et al., Class Plaintiffs No. 92-15526, U.S. Court of Appeals for the 9th Circuit
US App. Lexis 14796, June 16, 1994 and the Decision of the Swiss Supreme Court
FERDINAND R. MARCOS, JR. 9 of December 10, 1997." As such, they claim to have personal and direct interest in
the subject matter of the instant case, since a distribution or disposition of the
[Sgd.] IRENE MARCOS-ARANETA Marcos properties may adversely affect their legitimate claims. In a minute
Resolution issued on August 24, 1998, the Court granted their motion to intervene
and required the respondents to comment thereon. The September 25, 1998
Comment 12 of the solicitor general on said motion merely reiterated his aforecited
arguments against the main petition. 13
The Court's Ruling
The petition id imbued with merit.
First Procedural Issue:
Petitioner's Standing
Petitioner, on the one hand, explains that as a taxpayer and citizen, he has the
legal personality to file the instant petition. He submits that since ill-gotten wealth
"belongs to the Filipino people and [is], in truth hand in fact, part of the public
treasury," any compromise in relation to it would constitute a diminution of the
public funds, which can be enjoined by a taxpayer whose interest is for a full, if not
substantial, recovery of such assets.
Besides, petitioner emphasize, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue "of transcendental importance the public." He asserts that
ordinary taxpayers have a right to initiate and prosecute actions questioning the
validity of acts or orders of government agencies or instrumentalities, if the issues
raised are "of paramount public interest;" and if they "immeasurably affect the
social, economic, and moral well-being of the people."
Moreover, the mere fact that he is a citizen satisfies the requirement of personal
interest, when the proceeding involves the assertion of a public right, 14 such as in
this case. He invokes several decisions 15 of this Court which have set aside the
procedural matter of locus standi, when the subject of the case involved public
interest.
On the other hand, the solicitor general, on behalf of respondents, contends that
petitioner has no standing to institute the present action, because no expenditure
of public funds is involved and said petitioner has no actual interest in the alleged
agreement. Respondents further insist that the instant petition is premature, since
there is no showing that petitioner has requested PCGG to disclose any such
negotiations and agreements; or that, if he has, the Commission has refused to do
so.
Indeed, the arguments cited by petitioner constitute the controlling decisional rule
as regards his legal standing to institute the instant petition. Access to public
documents and records is a public right, and the real parties in interest are the
people themselves. 16
In Tañada v. Tuvera, 17 the Court asserted that when the issue concerns a public a
right and the object of mandamus is to obtain the enforcement of a public duty, the
people are regarded as the real parties in interest; and because it is sufficient that
petitioner is a citizen and as such is interested in the execution of the laws, he
need not show that he has any legal or special interest in the result of the action. 18
In the aforesaid case, the petitioners sought to enforce their right to be informed
on matters of public concern, a right then recognized in Section 6, Article IV of the
1973 Constitution, 19 in connection with the rule that laws in order to be valid and
enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that
the right they sought to be enforced "is a public right recognized by no less than
the fundamental law of the land."
Legaspi v. Civil Service Commission, 20 while reiterating Tañada, further declared
that "when a mandamus proceeding involves the assertion of a public right, the
requirement of personal interest is satisfied by the mere fact that petitioner is a
citizen and, therefore, part of the general 'public' which possesses the right." 21
Further, in Albano v. Reyes, 22 we said that while expenditure of public funds may
not have been involved under the questioned contract for the development, the
management and the operation of the Manila International Container Terminal,
"public interest [was] definitely involved considering the important role [of the
subject contract] . . . in the economic development of the country and the
magnitude of the financial consideration involved." We concluded that, as a
consequence, the disclosure provision in the Constitution would constitute
sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information
and access to official records, documents and papers — a right guaranteed under
Section 7, Article III of the 1987 Constitution. Petitioner, a former solicitor general,
is a Filipino citizen. Because of the satisfaction of the two basic requisites laid down
by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a
public right (2) espoused by a Filipino citizen, we rule that the petition at bar
should be allowed.
In any event, the question on the standing of Petitioner Chavez is rendered moot
by the intervention of the Jopsons, who are among the legitimate claimants to the
Marcos wealth. The standing of the Jopsons is not seriously contested by the
solicitor general. Indeed, said petitioners-intervenors have a legal interest in the
subject matter of the instant case, since a distribution or disposition of the
Marcoses' ill-gotten properties may adversely affect the satisfaction of their claims.
Second Procedural Issue:
The Court's Jurisdiction
Petitioner asserts that because this petition is an original action for mandamus and
one that is not intended to delay any proceeding in the Sandiganbayan, its having
been filed before this Court was proper. He invokes Section 5, Article VIII of the
Constitution, which confers upon the Supreme Court original jurisdiction over
petitions for prohibition and mandamus.
The solicitor general, on the other hand, argues that the petition has been
erroneously brought before this Court, since there is neither a justiciable
controversy nor a violation of petitioner's rights by the PCGG. He alleges that the
assailed agreements are already the very lis mota in Sandiganbayan Civil Case No.
0141, which has yet to dispose of the issue; thus, this petition is premature.
Furthermore, respondents themselves have opposed the Marcos heirs' motion, filed
in the graft court, for the approval of the subject Agreements. Such opposition
belies petitioner's claim that the government, through respondents, has concluded
a settlement with the Marcoses as regards their alleged ill-gotten assets.
In Tañada and Legaspi, we upheld therein petitioners' resort to a mandamus
proceeding, seeking to enforce a public right as well as to compel performance of a
public duty mandated by no less than the fundamental law. 23 Further, Section 5,
Article VIII of the Constitution, expressly confers upon the Supreme Court original
jurisdiction over petitions for certiorari, prohibition, mandamus, quo warranto and
habeas corpus.
Respondents argue that petitioner should have properly sought relief before the
Sandiganbayan, particularly in Civil Case No. 0141, in which the enforcement of the
compromise Agreements is pending resolution. There may seem to be some merit
in such argument, if petitioner is merely seeking to enjoin the enforcement of the
compromise and/or to compel the PCGG to disclose to the public the terms
contained in said Agreements. However, petitioner is here seeking the public
disclose of "all negotiations and agreement, be they ongoing or perfected, and
documents related to or relating to such negotiations and agreement between the
PCGG and the Marcos heirs."
In other words, this petition is not confined to the Agreements that have already
been drawn, but likewise to any other ongoing or future undertaking towards any
settlement on the alleged Marcos loot. Ineluctably, the core issue boils down to the
precise interpretation, in terms of scope, of the twin constitutional provisions on
"public transactions." This broad and prospective relief sought by the instant
petition brings it out of the realm of Civil Case No. 0141.
First Substantive Issue: Public Disclosure of Terms of Any Agreement, Perfected or
Not
In seeking the public disclosure of negotiations and agreements pertaining to a
compromise settlement with the Marcoses as regards their alleged ill-gotten
wealth, petitioner invokes the following provisions of the Constitution:
Sec. 7 [Article III]. The right of the people to information on matters
of public concern shall be recognized. Access to official records, and
to documents, and papers pertaining to official acts, transactions, or
decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.
Sec. 28 [Article II]. Subject to reasonable conditions prescribed by
law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
Respondents' opposite view is that the above constitutional provisions refer to
completed and operative official acts, not to those still being considered. As
regards the assailed Agreements entered into by the PCGG with the Marcoses,
there is yet no right of action that has accrued, because said Agreements have not
been approved by the President, and the Marcos heirs have failed to fulfill their
express undertaking therein. Thus, the Agreements have not become effective.
Respondents add that they are not aware of any ongoing negotiation for another
compromise with the Marcoses regarding their alleged ill-gotten assets.
The "information" and the "transactions" referred to in the subject provisions of the
Constitution have as yet no defined scope and extent. There are no specific laws
prescribing the exact limitations within which the right may be exercised or the
correlative state duty may be obliged. However, the following are some of the
recognized restrictions: (1) national security matters and intelligence information,
(2) trade secrets and banking transactions, (3) criminal matters, and (4) other
confidential information.
Limitations to the Right:
(1) National Security Matters
At the very least, this jurisdiction recognizes the common law holding that there is
a governmental privilege against public disclosure with respect to state secrets
regarding military, diplomatic and other national security matters. 24 But where
there is no need to protect such state secrets, the privilege may not be invoked to
withhold documents and other information, 25 provided that they are examined "in
strict confidence" and given "scrupulous protection."
Likewise, information on inter-government exchanges prior to the conclusion of
treaties and executive agreements may be subject to reasonable safeguards for
the sake of national interest. 26
(2) Trade Secrets and
Banking Transactions
The drafters of the Constitution also unequivocally affirmed that, aside from
national security matters and intelligence information, trade or industrial secrets
(pursuant to the Intellectual Property Code 27 and other related laws) as well as
banking transactions (pursuant to the Secrecy of Bank Deposits Act 28) are also
exempted from compulsory disclosure. 29
(3) Criminal Matters
Also excluded are classified law enforcement matters, such as those relating to the
apprehension, the prosecution and the detention of criminals, 30 which courts may
nor inquire into prior to such arrest, detention and prosecution. Efforts at effective
law enforcement would be seriously jeopardized by free public access to, for
example, police information regarding rescue operations, the whereabouts of
fugitives, or leads on covert criminal activities.
(4) Other Confidential Information
The Ethical Standards Act 31 further prohibits public officials and employees from
using or divulging "confidential or classified information officially known to them by
reason of their office and not made available to the public." 32
Other acknowledged limitations to information access include diplomatic
correspondence, closed door Cabinet meetings and executive sessions of either
house of Congress, as well as the internal deliberations of the Supreme Court. 33
Scope: Matters of Public Concern and Transactions Involving Public Interest
In Valmonte v. Belmonte Jr., 34 the Court emphasized that the information sought
must be "matters of public concern," access to which may be limited by law.
Similarly, the state policy of full public disclosure extends only to "transactions
involving public interest" and may also be "subject to reasonable conditions
prescribed by law." As to the meanings of the terms "public interest" and "public
concern," the Court, in Legaspi v. Civil Service Commission, 35 elucidated:
In determining whether or not a particular information is of public
concern there is no rigid test which can be applied. "Public concern"
like "public interest" is a term that eludes exact definition. Both
terms embrace a broad spectrum of subjects which the public may
want to know, either because these directly affect their lives, or
simply because such matters naturally arouse the interest of an
ordinary citizen. In the final analysis, it is for the courts to determine
on a case by case basis whether the matter at issue is of interest or
importance, as it relates to or affects the public.
Considered a public concern in the above-mentioned case was the "legitimate
concern of citizens to ensure that government positions requiring civil service
eligibility are occupied only by persons who are eligibles." So was the need to give
the general public adequate notification of various laws that regulate and affect the
actions and conduct of citizens, as held in Tañada. Likewise did the "public nature
of the loanable funds of the GSIS and the public office held by the alleged
borrowers (members of the defunct Batasang Pambansa)" qualify the information
sought in Valmonte as matters of public interest and concern. In Aquino-Sarmiento
v. Morato, 36 the Court also held that official acts of public officers done in pursuit if
their official functions are public in character; hence, the records pertaining to such
official acts and decisions are within the ambit of the constitutional right of access
to public records.
Under Republic Act No. 6713, public officials and employees are mandated to
"provide information on their policies and procedures in clear and understandable
language, [and] ensure openness of information, public consultations and hearings
whenever appropriate . . .," except when "otherwise provided by law or when
required by the public interest." In particular, the law mandates free public access,
at reasonable hours, to the annual performance reports of offices and agencies of
government and government-owned or controlled corporations; and the
statements of assets, liabilities and financial disclosures of all public officials and
employees. 37
In general, writings coming into the hands of public officers in connection with their
official functions must be accessible to the public, consistent with the policy of
transparency of governmental affairs. This principle is aimed at affording the
people an opportunity to determine whether those to whom they have entrusted
the affairs of the government are honesty, faithfully and competently performing
their functions as public servants. 38 Undeniably, the essence of democracy lies in
the free flow of thought; 39 but thoughts and ideas must be well-informed so that
the public would gain a better perspective of vital issues confronting them and,
thus, be able to criticize as well as participate in the affairs of the government in a
responsible, reasonable and effective manner. Certainly, it is by ensuring an
unfettered and uninhibited exchange of ideas among a well-informed public that a
government remains responsive to the changes desired by the people. 40
The Nature of the Marcoses'
Alleged Ill-Gotten Wealth
We now come to the immediate matter under consideration.
Upon the departure from the country of the Marcos family and their cronies in
February 1986, the new government headed by President Corazon C. Aquino was
specifically mandated to "[r]ecover ill-gotten properties amassed by the leaders
and supporters of the previous regime and [to] protect the interest of the people
through orders of sequestration or freezing of assets or
accounts." 41 Thus, President Aquino's very first executive orders (which partook of
the nature of legislative enactments) dealt with the recovery of these alleged ill-
gotten properties.
Executive Order No. 1, promulgated on February 28, 1986, only two (2) days after
the Marcoses fled the country, created the PCGG which was primarily tasked to
assist the President in the recovery of vast government resources allegedly
amassed by former President Marcos, his immediate family, relatives and close
associates both here and abroad.
Under Executive Order No. 2, issued twelve (12) days later, all persons and entities
who had knowledge or possession of ill-gotten assets and properties were warned
and, under pain of penalties prescribed by law, prohibited from concealing,
transferring or dissipating them or from otherwise frustrating or obstructing the
recovery efforts of the government.
On May 7, 1986, another directive (EO No. 14) was issued giving additional powers
to the PCGG which, taking into account the overriding considerations of national
interest and national survival, required it to achieve expeditiously and effectively
its vital task of recovering ill-gotten wealth.
With such pronouncements of our government, whose authority emanates from the
people, there is no doubt that the recovery of the Marcoses' alleged ill-gotten
wealth is a matter of public concern and imbued with public interest. 42 We may
also add that "ill-gotten wealth," by its very nature, assumes a public character.
Based on the aforementioned Executive Orders, "ill-gotten wealth" refers to assets
and properties purportedly acquired, directly or indirectly, by former President
Marcos, his immediate family, relatives and close associates through or as a result
of their improper or illegal use of government funds or properties; or their having
taken undue advantage of their public office; or their use of powers, influences or
relationships, "resulting in their unjust enrichment and causing grave damage and
prejudice to the Filipino people and the Republic of the Philippines." Clearly, the
assets and properties referred to supposedly originated from the government itself.
To all intents and purposes, therefore, they belong to the people. As such, upon
reconveyance they will be returned to the public treasury, subject only to the
satisfaction of positive claims of certain persons as may be adjudged by competent
courts. Another declared overriding consideration for the expeditious recovery of
ill-gotten wealth is that it may be used for national economic recovery.
We believe the foregoing disquisition settles the question of whether petitioner has
a right to respondents' disclosure of any agreement that may be arrived at
concerning the Marcoses' purported ill-gotten wealth.
Access to Information on Negotiating Terms
But does the constitutional provision likewise guarantee access to information
regarding ongoing negotiations or proposals prior to the final agreement? This
same clarification was sought and clearly addressed by the constitutional
commissioners during their deliberations, which we quote hereunder: 43
MR. SUAREZ. And when we say "transactions" which should be
distinguished from contracts, agreements, or treaties or whatever,
does the Gentleman refer to the steps leading to the consummation
of the contract, or does he refer to the contract itself?
MR. OPLE. The "transactions" used here, I suppose, is generic and,
therefore, it can cover both steps leading to a contract, and already
a consummated contract, Mr. Presiding Officer.
MR. SUAREZ. This contemplates inclusion of negotiations leading to
the consummation of the transaction?
MR. OPLE. Yes, subject to reasonable safeguards on the national
interest.
Considering the intent of the Constitution, we believe that it is incumbent upon the
PCGG and its officers, as well as other government representatives, to disclose
sufficient public information on any proposed settlement they have decided to take
up with the ostensible owners and holders of ill-gotten wealth. Such information,
though, must pertain to definite propositions of the government, not necessarily to
intra-agency or inter-agency recommendations or communications 44 during the
stage when common assertions are still in the process of being formulated or are in
the "exploratory" stage. There is a need, of course, to observe the same
restrictions on disclosure of information in general, as discussed earlier — such as
on matters involving national security, diplomatic or foreign relations, intelligence
and other classified information.
Second Substantive Issue: Legal Restraints on a Marcos-PCGG Compromise
Petitioner lastly contends that any compromise agreement between the
government and the Marcoses will be a virtual condonation of all the alleged
wrongs done by them, as well as an unwarranted permission to commit graft and
corruption.
Respondents, for their part, assert that there is no legal restraint on entering into a
compromise with the Marcos heirs, provided the agreement does not violate any
law.
Prohibited Compromises
In general, the law encourages compromises in civil cases, except with regard to
the following matters: (1) the civil status of persons, (2) the validity of a marriage
or a legal separation, (3) any ground for legal separation, (4) future support, (5) the
jurisdiction of courts, and (6) future legitimate. 45 And like any other contract, the
terms and conditions of a compromise must not be contrary to law, morals, good
customs, public policy or public order. 46 A compromise is binding and has the force
of law between the parties, 47 unless the consent of a party is vitiated — such as by
mistake, fraud, violence, intimidation or undue influence — or when there is
forgery, or if the terms of the settlment are so palpably unconscionable. In the
latter instances, the agreement may be invalidated by the courts. 48
Effect of Compromise on Civil Actions
One of the consequences of a compromise, and usually its primary object, is to
avoid or to end a litigation. 49 In fact, the law urges courts to persuade the parties
in a civil case to agree to a fair settlement. 50 As an incentive, a court may mitigate
damages to be paid by a losing party who shows a sincere desire to compromise. 51
In Republic & Campos Jr. v. Sandiganbayan, 52 which affirmed the grant by the
PCGG of civil and criminal immunity to Jose Y. Campos and the family, the Court
held that in the absence an express prohibition, the rule on compromises in civil
actions under the Civil Code is applicable to PCGG cases. Such principle is pursuant
to the objectives of EO No. 14 particularly the just and expeditious recovery of ill-
gotten wealth, so that it may be used to hasten economic recovery. The same
principle was upheld in Benedicto v. Board of Administrators of Television Stations
RPN, BBC and IBC 53 and Republic v. Benedicto, 54 which ruled in favor of the
validity of the PCGG compromise agreement with Roberto S. Benedicto.
Immunity from Criminal Prosecution
However, any compromise relating to the civil liability arising from an offense does
not automatically terminate the criminal proceeding against or extinguish the
criminal liability of the malefactor. 55 While a compromise in civil suits is expressly
authorized by law, there is no similar general sanction as regards criminal liability.
The authority must be specifically conferred. In the present case, the power to
grant criminal immunity was confered on PCGG by Section 5 of EO No. 14, as
amended by EO No. 14-A, whci provides:
Sec. 5. The President Commission on Good Government is authorized
to grant immunity from criminal prosecution to any person who
provides information or testifies in any investigation conducted by
such Commission to establish the unlawful manner in which any
respondent, defendant or accused has acquired or accumulated the
property or properties in question in any case where such
information or testimony is necessary to ascertain or prove the
latter's guilt or his civil liability. The immunity thereby granted shall
be continued to protect the witness who repeats such testimony
before the Sandiganbayan when required to do so by the latter or by
the Commission.
The above provision specifies that the PCGG may exercise such authority under
these conditions: (1) the person to whom criminal immunity is granted provides
information or testifies in an investigation conducted by the Commission; (2) the
information or testimony pertains to the unlawful manner in which the respondent,
defendant or accused acquired or accumulated ill-gotten property; and (3) such
information or testimony is necessary to ascertain or prove guilt or civil liability of
such individual. From the wording of the law, it can be easily deducted that the
person referred to is a witness in the proceeding, not the principal respondent,
defendant or accused.
Thus, in the case of Jose Y. Campos, the grant of both civil and criminal immunity
to him and his family was "[i]n consideration of the full cooperation of Mr. Jose Y.
Campos [with] this Commission, his voluntary surrender of the properties and
assets [—] disclosed and declared by him to belong to deposed President
Ferdinand E. Marcos [—] to the Government of the Republic of the Philippines[;] his
full, complete and truthful disclosures[;] and his commitment to pay a sum of
money as determined by the Philippine Government." 56 Moreover, the grant of
criminal immunity to the Camposes and the Benedictos was limited to acts and
omissions prior to February 25, 1996. At the time such immunity was granted, no
criminal cases have yet been filed against them before the competent court.
Validity of the PCGG-Marcos Compromise Agreements
Going now to the subject General and Supplemental Agreements between the
PCGG and the Marcos heirs, a cursory perusal thereof reveals serious legal flaws.
First, the Agreements do not conform to the above requirements of EO Nos. 14 and
14-A. We believe that criminal immunity under Section 5 cannot be granted to the
Marcoses, who are the principal defendants in the spate of ill-gotten wealth cases
now pending before the Sandiganbayan. As stated earlier, the provision is
applicable mainly to witnesses who provide information or testify against a
respondent, defendant or accused in an ill-gotten wealth case.
While the General Agreement states that the Marcoses "shall provide the
[government] assistance by way of testimony or deposition on any information
[they] may have that could shed light on the cases being pursued by the
[government] against other parties," 57 the clause does not fully comply with the
law. Its inclusion in the Agreement may have been only an afterthought, conceived
in pro forma compliance with Section 5 of EO No. 14, as amended. There is no
indication whatsoever that any of the Marcos heirs has indeed provided vital
information against any respondent or defendant as to the manner in which the
latter may have unlawfully acquired public property.
Second, under Item No. 2 of the General Agreement, the PCGG commits to exempt
from all forms of taxes the properties to be retained by the Marcos heirs. This is a
clear violation of the Construction. The power to tax and to grant tax exemptions is
vested in the Congress and, to a certain extent, in the local legislative bodies. 58
Section 28 (4), Article VI of the Constitution, specifically provides: "No law granting
any tax exemption shall be passed without the concurrence of a majority of all the
Member of the Congress." The PCGG has absolutely no power to grant tax
exemptions, even under the cover of its authority to compromise ill-gotten wealth
cases.
Even granting that Congress enacts a law exempting the Marcoses form paying
taxes on their properties, such law will definitely not pass the test of the equal
protection clause under the Bill of Rights. Any special grant of tax exemption in
favor only of the Marcos heirs will constitute class legislation. It will also violate the
constitutional rule that "taxation shall be uniform and equitable." 59
Neither can the stipulation be construed to fall within the power of the
commissioner of internal revenue to compromise taxes. Such authority may be
exercised only when (1) there is reasonable doubt as to the validity of the claim
against the taxpayer, and (2) the taxpayer's financial position demonstrates a clear
inability to pay. 60 Definitely, neither requisite is present in the case of the
Marcoses, because under the Agreement they are effectively conceding the validity
of the claims against their properties, part of which they will be allowed to retain.
Nor can the PCGG grant of tax exemption fall within the power of the commissioner
to abate or cancel a tax liability. This power can be exercised only when (1) the tax
appears to be unjustly or excessively assessed, or (2) the administration and
collection costs involved do not justify the collection of the tax due. 61 In this
instance, the cancellation of tax liability is done even before the determination of
the amount due. In any event, criminal violations of the Tax Code, for which legal
actions have been filed in court or in which fraud is involved, cannot be
compromised. 62
Third, the government binds itself to cause the dismissal of all cases against the
Marcos heirs, pending before the Sandiganbayan and other court. 63 This is a direct
encroachment on judicial powers, particularly in regard to criminal jurisdiction.
Well-settled is the doctrine that once a case has been filed before a court of
competent jurisdiction, the matter of its dismissal or pursuance lies within the full
discretion and control of the judge. In a criminal case, the manner in which the
prosecution is handled, including the matter of whom to present as witnesses, may
lie within the sound discretion of the government prosecution; 64 but the court
decides, based on the evidence proffered, in what manner it will dispose of the
case. Jurisdiction, once acquired by the trial court, is not lost despite a resolution,
even by the justice secretary, to withdraw the information or to dismiss the
complaint. 65 The prosecution's motion to withdraw or to dismiss is not the least
binding upon the court. On the contrary, decisional rules require the trial court to
make its own evaluation of the merit of the case, because granting such motion is
equivalent to effecting a disposition of the case itself. 66
Thus, the PCGG, as the government prosecutor of ill-gotten wealth cases, cannot
guarantee the dismissal of all such criminal cases against the Marcoses pending in
the courts, for said dismissal is not within its sole power and discretion.
Fourth, the government also waives all claims and counterclaims, "whether past,
present, or future, matured or inchoate," against the Marcoses. 67 Again, this ill-
encompassing stipulation is contrary to law. Under the Civil Code, an action for
future fraud may not be waived. 68 The stipulation in the Agreement does not
specify the exact scope of future claims against the Marcoses that the government
thereby relinquishes. Such vague and broad statement may well be interpreted to
include all future illegal acts of any of the Marcos heirs, practically giving them a
license to perpetrate fraud against the government without any liability at all. This
is a palpable violation of the due process and equal protection guarantees of the
Constitution. It effectively ensconces the Marcoses beyond the reach of the law. It
also sets a dangerous precedent for public accountability. It is a virtual warrant for
public officials to amass public funds illegally, since there is an open option to
compromise their liability in exchange for only a portion of their ill-gotten wealth.
Fifth, the Agreements do not provide for a definite or determinable period within
which the parties shall fulfill their respective prestations. It may take a lifetime
before the Marcoses submit an inventory of their total assets.
Sixth, the Agreements do not state with specificity the standards for determining
which assets shall be forfeited by the government and which shall be retained by
the Marcoses. While the Supplemental Agreement provides that the Marcoses shall
be entitled to 25 per cent of the $356 million Swiss deposits (less government
recovery expenses), such sharing arrangement pertains only to the said deposits.
No similar splitting scheme is defined with respect to the other properties. Neither
is there, anywhere in the Agreements, a statement of the basis for the 25-75
percent sharing ratio. Public officers entering into an arrangement appearing to be
manifestly and grossly disadvantageous to the government, in violation of the Ati-
Graft and Corruption Practice Act, 69 invite their indictment for corruption under the
said law.
Finally, the absence of then President Ramos' approval of the principal Agreement,
an express condition therein, renders the compromise incomplete and
unenforceable. Nevertheless, as detailed above, even if such approval were
obtained, the Agreements would still not be valid.
From the foregoing disquisition, it is crystal clear to the Court that the General and
Supplemental Agreements, both dated December 28, 1993, which the PCGG
entered into with the Marcos heirs, are violative of the Constitution and the laws
aforementioned.
WHEREFORE, the petition is GRANTED. The General and Supplemental Agreement
dated December 28, 1993, which PCGG and the Marcos heirs entered into are
hereby declared NULL AND VOID for being contrary to law and the Constitution.
Respondent PCGG, its officers and all government functionaries and officials who
are or may be directly ot indirectly involved in the recovery of the alleged ill-gotten
wealth of the Marcoses and their associates are DIRECTED to disclose to the public
the terms of any proposed compromise settlment, as well as the final agreement,
relating to such alleged ill-gotten wealth, in accordance with the discussions
embodied in this Decision. No pronouncement as to cost.
SO ORDERED.