CHAPTER I

PRELIMINARY

A. Definition of Agriculture

 Agriculture is an enterprise or business, activity or practice. It is synonymous to farming.

 The practice of agriculture is based on systematized body of knowledge (science) and requires
skill (art).
 Agriculture often involves the cultivation of the soil to grow plants and the raising of animals for
human needs. The words “crops” and “livestock” are also used. However, both words are special
or technical terms. “Crops" should clearly mean plants (with exceptions, as in mushroom) which
are useful to man (read Agricultural Crops Classifications) while “livestock” applies to both
domesticated animals and poultry. However, cultivation which essentially involves disturbing the
soil does not apply to crop production systems using soil-less media, as in hydroponics.
 Agriculture is practiced for the purpose of producing food and other human needs such as
clothing, shelter, medicines, weapons, tools, ornaments, and indefinitely many more. It is likewise
practiced as a business for economic gain. The ultimate purpose is essentially important in
clarifying what is agriculture.

a. Three Stages of Agricultural Development

From the point of development, Mellor divides agriculture into three stages. The stages are:

1. Traditional Agriculture

“It is a technologically stagnant stage in which production is increased largely through slowly
increased application of traditional forms of land, labour and capital.” The increase in output takes
place through an essentially symmetrical expansion of all inputs or through increased input of the
already abundant low productivity resources. Declining income and productivity per unit of an
input is a common feature of this phase.

2. Technologically Dynamics Agriculture-Low Capital Technology

In stage II, “a complex of technological changes substantially increases the efficiency of

agricultural processes and raises the rate of increase of agricultural production. The critical
characteristics of stage II, as compared with stage I is the constant generation and application of
technology which is facilitated by a complex institutional framework.”

3. Technologically Dynamic Agriculture High Capital Technology

This is the stage when agriculture has much of its relative importance in the generation of the
National Income. Agriculture of various developed countries is included in this stage.
Government’s role in different stages is quite important. In nature, of course, it is different.
It may be noted that as the stage of agricultural development cannot be very finely
demarcated, the objectives of agricultural policy at a particular time, too cannot be defined rigidly.
What we find at a particular point of time is a set of objective, their order of priority, of course,
 changing as the time changes. We shall be giving below only the relatively more important policy
objectives vis-a-vis agriculture in different stages of development.

B. Definition of Land Tenure

In common law systems, land tenure is the legal regime in which land is owned by an
individual, who is said to "hold" the land. The French verb "tenir" means "to hold" and "tenant" is
the present participle of "tenir", as Wikipedia defined.

Land tenure is the relationship that individuals and groups hold with respect to land and land-
based resources, such as trees, minerals, pastures, and water. Land tenure rules define the ways
in which property rights to land are allocated, transferred, used, or managed in a particular
society. When land tenure is secure, land can be a cornerstone for economic growth and an
incentive for investment, but when land rights are insecure, this can lead to conflicts, instability
and the exclusion of vulnerable groups, such as women, indigenous people and the poor.

Cambridge Dictionary defines Land tenure as the rules and arrangements connected with
owning land, especially land that is used for farming.

C. Related Concepts

a) Divine Right of Kingship

The Divine Rights of Kings Theory is an old theory that states that God created the State and
the rulers were appointed by Him. It is both a political and religious doctrine of royal and political
legitimacy. It asserts that a monarch is subject to no earthly authority and the rulers were
responsible to God alone and not to any human being. The people must then obey the king.
Disobedience means not only a crime but also a sin. Being supreme, some people considered
the King to be the shadow of God on earth. According to this doctrine, only God can judge an
unjust king. The doctrine implies that any attempt to depose the king or restrict his powers runs
contrary to the will of God and may constitute a sacrilegious act.

The remote origins of the theory are rooted in the medieval idea that God has bestowed
earthly power on the king, just as God had given spiritual power and authority to the church,
centering on the pope. The immediate author of the theory was Jean Bodin, who based it on the
interpretation of the Roman Law.

The Divine Right theory was further modified by King James the First of England (VI of
Scotland) who consistently clashed with the English Parliament as he tried to maintain and
expand royal authority. He wished to rule as an absolute monarch rather than a constitutional
one. He based his theories in part on his understanding of the bible. To him, “the state of
monarchy is the supremest thing upon earth, for kings are not only Gods lieutenants upon Earth
and sit upon God’s throne, but even by God himself they are called gods. There be three principal
that illustrate the state of monarchy: one taken out of the word of God, and the two other out of
grounds of policy and philosophy.”

The New Testament does have several passages which support the idea that a person
should submit him or herself to the governmental authorities. The most powerful passage of the
 Bible for maintaining the status quo is from Romans 13: 1-2: “Let every soul be subject unto the
higher powers. For there is no power but of God, the powers that be are ordained to God: and
they that resist shall receive to themselves damnation.”

One of the most famous quotes from the Bible about paying taxes is from Luke 20:25 which
states that “And Jesus said unto them, “Render therefore unto Caesar the things which are
Caesar’s, and unto God the things which are God’s.”

One of the relevant portions in the Divine Right of Kings Theory is the prevailing philosophy
and basis of Governance that the rulers of various pieces of lands were held to be Gods and/or
representatives of Gods on earth to which no earthly person nor entity can question their
authority. Under this theory, essentially all land belonged to the king. The King can grant various
persons such as nobles the use of tracts of land in exchange for pledges of loyalty, payment of
taxes and promise to provide soldiers when summoned by the King. In essence, if you speak
against the King or any layer of the government, if you could not pay your taxes, if the King
wanted to favor someone than you, you’ll lose your property. There were no private rights, no
freedom of speech, no freedom of religion nor of the press and no freedom to dissent with the
government. The fate of the people lies with the absolute whim of the King.

b) Feudalism

In its general sense, feudal society is a military hierarchy in which a ruler or lord offers
mounted fighters a fief, a unit of land to control in exchange for a military service. The individual
who accepted this land became a vassal, and the man who granted the land become known as
his liege or his lord.

Feudalism discouraged trade and economic growth. The land was worked by peasant
farmers called serfs, who were tied to individual plots of land and forbidden to move or change
occupations without the permission of their lord. The feudal lord might claim one-third to one-half
of their produce in taxes and fees, and the serfs owed him a set number of days each year in
which they would work the lord's fields in exchange for the right to work their own lands. Often,
they were required to grind their grain in the lord's mill, and bake all their bread in the lords' oven,
and to use roads and bridges the lord had built. Each time they did this, of course, they would
have to pay him a toll or a fee of some sort. They were, however, forbidden to set up their own
roads, bridges, mills, and ovens--the lord had a legal monopoly and would milk it for all it was
worth. In exchange for other hefty fees, various peasants might set up a commune (a cooperative
government amongst themselves), or pay the lord for the right to try their own court cases by
juries. Other ambitious communities might pool their resources and purchase a charter, a legal
document that gave the inhabitants of a town or village certain economic freedoms to buy and sell
their own land or produce. In practice, these occurrences were often economic necessities, but in
theory, these freedoms were generous gifts given by the lord to his former serfs in exchange for
various financial considerations.

In the Philippine context, feudalism is primarily an agriculture-based economic system where

most farmers or peasants don’t own land and are forced to work for a landlord who profits off
excessive land rent rates, exorbitant loan interest rates, and very low crop prices, among others.
Over decades, this setup has become dominant across the Philippines. In effect, it has left 9 out
 of 10 farmers landless today and has forced peasants and families to sell their labor to landlords,
in urban areas, and abroad.

Equally important to this economic system is the backward haciendero, or feudal, culture
needed to maintain it. Oppressive religious practices combined with the lack of access to quality
education produces a culture in which people internalize unquestioning obedience and utang na
loob (debt of gratitude). It produces a society where exploitation is downplayed as a temporary
state worth bearing to prevent any collective resistance and thoroughgoing change.

c) Spanish Encomienda System (Latin America & Philippines)

Latin America

When the Spanish arrived in the New World, they brought with them a set of customs and
traditions from their old Spain. One of the systems that were commonly practiced in Western
Europe was forced labour. In Spain, this was known as the Encomienda system. An encomienda
was a means of providing a Spaniard a portion of land and restricted property rights over a
certain number of Indians. The Encomienda system quickly became entrenched in South and
Central America. Although it was implemented with the intention to care for and provide for the
Native Americans, it became the most abusive and destructive system in colonial New Spain.

Encomienda, in colonial Spanish America, is a legal system by which the Spanish crown
attempted to define the status of the Indian population in its American colonies. It was based
upon the practice of exacting tribute from Muslims and Jews during the Reconquista
(“Reconquest”) of Muslim Spain. Although the original intent of the encomienda was to reduce
the abuses of forced labour (repartimiento) employed shortly after the discovery of the New
World, in practice it became a form of enslavement.

An encomienda (from encomendar, “to entrust”) consisted of a grant by the crown to a

conquistador, soldier, official, or others of a specified number of Indians living in a particular
area. The receiver of the grant, the encomendero, could exact tribute from the Indians in gold, in
kind, or in labour and was required to protect them and instruct them in the Christian faith.

The encomienda did not include a grant of land, but in practice the encomenderos gained
control of the Indians’ lands and failed to fulfil their obligations to the Indian population. The
encomienda was designed to meet the needs of the colonies’ early mining economy. With the
catastrophic decline in the Indian population and the replacement of mining activities by
agriculture, the system lost its effectiveness and was gradually replaced by the hacienda system
of landed estates. The encomienda was not officially abolished, however, until the late 18th
century.

Philippines

In 1570, the encomienda was introduced in the Philippines when Legaspi, in compliance with
the decree issued by King Philip II in 1558, distributed lands in Cebu to loyal Spanish subjects.
These men had helped conquer the Philippines. The encomienda was not actually a land grant
but was a favor from the kind under which the Spaniard receiving his favor was given the right to
collect tributes–or taxes–from the inhabitants of the area assigned to him. The man who received
this favor was called an encomendero. The encomienda was, therefore, a public office.

The encomenderos were required by law to perform the following duties:

1. to give protection to the natives

2. to help the missionaries convert the natives to Christianity
3. to promote education

Unfortunately, many Spanish encomenderos committed abuses, such as:

1. Brutal treatment of the Filipinos

2. Collecting more tribute than that authorized by law
3. Forcing the people to work for them
4. Seizure of the people’s animals and crops without just compensation

Because of the abuses of encomenderos, much bad feeling resulted. First, peace and order,
which the colonizers and the early Spanish friars had established, was disturbed. Second, the
abuses led to a conflict between the friars and the encomenderos. The early friars observed that
the encomenderos neglected their duty of teaching the Christian faith to the Filipinos. They saw
that the encomenderos were only interested in enriching themselves instead.

The friars tried to protect the Filipinos from the greed and abuses of the encomenderos by;

1. preaching from the pulpits against encomendero abuses

2. writing letters and memorials to the King of Spain in which they reported the abuses
of the encomenderos
3. refusing to absolve the encomenderos from their sins

The Filipinos, seeing that the encomenderos were interested only in getting rich, grew lazy.
They reasoned that it was useless to work too hard for a living if the fruits of their work would only
go to the payment of excessive tributes to the encomenderos. This attitude was encouraged by
the friars who told them that the abandonment of their labors would free from injustice.

There were three kinds of encomiendas:

1. the Royal Encomiendas, belonging to the King

2. the Ecclesiastical Encomiendas, belonging to the Church
3. Private Encomiendas, belonging to private individuals

At first the natives paid eight reales as tribute. This amount was increased to ten reales in
1589 by order of King Philip II. Aside from the tribute expected from the royal encomiendas, the
king also received reales from each tribute each encomiendero received from his encomienda.
The total amount of the tributes intended for the king was kept as fund to pay the expenses for
the country’s defense. This fund was called the situado.
 The size of an encomienda was determined in two ways:
1. by the number of people living in it
2. by the value of the land

The law limited the number of natives in an area and administered by an encomendero to not
more than 300, and the value of the land was limited to not more than P2,000. At first an
encomienda could be held for three generations (about ninety years). This was later reduced to
two generation. But because of the complaints from encomenderos, the king decided to return the
encomienda tenure to three generations in 1635.

d) Regalian Doctrine

Under the Regalian doctrine, all lands of whatever classification and other natural resources
not otherwise appearing to be clearly within private ownership are presumed to belong to the
State which is the source of any asserted right to ownership of land. Accordingly, public lands not
shown to have been reclassified or released as alienable agricultural land or alienated to private
person by the State remain part of the inalienable public domain.

Section 2. Article XII of the Constitution provides:

“All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources
shall not be alienated.”

e) Land Registration Act of 1902

On November 6, 1902, the Philippine Commission enacted Act No. 496 known as the Land
Registration Act. Under Act 496, Section 1., “The short title of this Act shall be “The Land
Registration Act.”

This provided for the creation of the Court of Land Registration (CLR), the offices of the
Register of Deeds and the institution in this country of the Torrens system of registration whereby
real estate ownership may be judicially confirmed and recorded in the archives of the
government.

Five judges were appointed by the Governor-General with the advice and consent of the
Philippine Commission. One Judge was designated Judge of Court; the rest were assigned
Associate Judges. Other members of the court were a clerk and assistant clerk, both appointed
by the Attorney General with the approval of the Secretary of Finance and Justice. Along with the
court were established the Registries of Deeds.

Landowners under this Act were required to register their landholdings and acquire Torrens
titles to land properties.
 The system, however, actually took effect on February 1, 1903.

Torrens System of Land Registration

In this system, title by registration takes the place of “title by deeds” of the system under
the “general” law. A sale of land for example is effected by a registered transfer, upon which
a certificate of title is issued. Certificate is guaranteed by statute, and with certain exceptions,
constitutes indefeasible title to the land mentioned therein.

Under old system, the same sale would be effected through conveyance, depending on
its validity, apart from intrinsic flaws, on the correctness of a long series of prior deeds, wills,
etc.

Object of the Torrens system: to do away with the delay, uncertainty, and expense of the
old conveyancing system.

Generally, by “Torrens” systems are meant those systems of registration of transactions

with interest in land whose declared object is, under governmental authority, to establish and
certify to the ownership of an absolute and indeafisible title to realty, and to simplify its
transfer.

f) Public Land Act of 1902

Also known as “Philippine Bill of 1902” or “The Philippine Organic Act of 1902”. This bill
limited private individual landholdings to 16 hectares, and corporate landholdings to 1024
hectares. It also gave the Americans the right to acquire agricultural lands and enabled American
agricultural interests to control huge tracts of land for large-scale farming.

It offered homestead plots not exceeding 16 hectares to families who had occupied and
cultivated the land they were residing since August 13, 1898.

Also known as Cooper Act, it provided a Bill of Rights for the Filipinos that protected their
rights: to live, to acquire property, to practice their religion, to be subjected to due process, to
exercise their obligations, to enjoy compensations due to them, and freedom of expression. But
the most important element contained in the bill was its clauses that called for the creation of a
lower legislative branch with elected Filipino representatives as legislators.

The bill also stated the American government’s readiness to call for a general election in the
islands should insurrection cedes and complete peace is maintained as attested by the Philippine
Commission. The decree mandates the US President to order the Philippine Commission to
perform a census of the islands and make a detailed report about the population and matters
about the people that may deemed by the Commission as necessary, while peace is being
upheld. Two years after the publication of the result of the census, and upon the satisfaction of
the Philippine Commission and the US President, a general election shall be called and the
elected Filipinos, not less than fifty but not greater than one hundred in number, will comprise the
Philippine Assembly—the body that will act as the lower house of the legislature in the
Philippines.
 The Filipinos became very cooperative with the promises offered by the bill. Peace was
maintained, a census was conducted and after its publication, an election was held on 30 July
1907 and the assembly was convened and inaugurated on 16 October 1907 at the Manila Grand
Opera House. The Nacionalista Party, espousing “immediate and complete independence”
headed by Sergio Osmeña garnered the majority of the seats. The First Philippine Assembly is
best remembered for its effort in reviving the issue of independence and for passing laws that
improved the type of education enjoyed by the Filipinos.

g) Friar Lands Act

This Act instituted transfer of friar lands to the tenants to diffuse the peasant unrest which
found expression in the 1898 Revolution against Spain. The American government purchased
some of the 23 large friar estates covering 166,000 hectares for $7 million, which it resold to
60,000 tenants at full cost plus interest. The prices were beyond the reach of most tenants and
some could not understand why they had to buy back the land which had belonged to their
parents. In fact, most of the lands transferred as a result of this Act were those in which agrarian
unrest was widespread. This act was later amended to allow the sale of friar lands (which were
prime lands) not only to Filipino tillers but to foreign nationals as well. In a short time, the Sugar
Trust, an American corporation, purchase the San Jose Estate.

h) Rice Share Tenancy Act of 1933

Public Act No. 4054 which was passed on February 27, 1933 by the Philippine Legislative
during the time of Governor-General Theodore Roosevelt, aimed at protecting tenants against
abuses of landlords. This Act provided for a 50-50 sharing of the crop, an interest rate ceiling at
10 percent per crop year, safeguards against arbitrary dismissal of tenants by landlords.
However, the law could go into effect “only in provinces where the majority of the municipal
councils shall, by resolution, petition for its application to the Governor-General.” With this
provision, the law was ineffective because members of the landed elite controlled the
municipalities. Subsequent amendments to make the law effective were also invalidated by
landlord resistance

i) Sugarcane Tenancy Contracts Act of 1933

Enacted on January 1, 1934, this law governed the relationship between landowners and
tenants in sugarlands which makes it a duty of the sugar central where the sugarcanes are milled
by the landowner thereat, upon the demand of the said tenant, which receipt shall be the basis of
the computation of the tenant’s share from the cane harvested. Basically, this Act makes it a duty
of the sugar central to exhibit to the tenants the receipts of the number of tons milled by the
landowner thereat.

 When the cane is not milled at the central but in the private mill of the landowner, the
latter, shall stipulate with his tenant the necessary expenses of milling, cutting and
 hauling the cane from field to mill, and of purchasing all necessary ingredients for boiling
the sugar and all materials for proper packing of product

 When there is no written agreement concerning the value of the share of the tenant, the
landowner shall not sell said share without the knowledge and written consent of the
tenant or his representative. When the tenant does not consent to the sale, the
landowner shall have the right to sell the same after the lapse of thirty days.

 The settlement of accounts between landowner and tenants and the distribution of the
crop shall be made immediately after each milling season

 Any violation to this Act shall be punished by a fine not less than twenty-five pesos nor
more than two hundred pesos, or by imprisonment for not less than ten days nor more
than sixty days, or both, in the discretion of the court

j) Republic Act 34 of 1946 (Agricultural Sharing)

Approved on September 30, 1946, this law was passed during the incumbency of President
Manuel Roxas, which amended certain sections of the Rice Share Tenancy Act of 1933 providing
for a 70 - 30 crop-sharing method. It further provides that in the case the land is planted with rice
on a second cropping or other auxiliary crops, all expenses of production shall be shouldered by
the tenant, but the sharing arrangement shall be 80% for the tenant, and 20% for the landowner
of the net harvest. Aside from the change in the sharing system, the legislation also provided for a
homelot for the tenant which is not less than 600 square meters.

k) Republic Act 1160 of 1954 (National Resettlement and Rehabilitation)

Abolished the LASEDECO and established the National Resettlement and Rehabilitation
Administration (NARRA) to resettle dissidents and landless farmers. It was particularly aimed at
rebel returnees providing home lots and farmlands in Palawan and Mindanao.

l) Republic Act 1199 of 1954 (Tenancy Rights)

Governed the relationship between landowners and tenant farmers by organizing share-
tenancy and leasehold system. The law provided the security of tenure of tenants. It is also
created the Court of Agrarian Reforms.

m) Agricultural Land Reform Code of 1963

This Code (Republic Act No. 3844) was enacted to institute land reforms in the Philippines
and aimed at establishing owner-cultivatorship and the family-size farm as the basis of Philippine
agriculture; achieving a dignified existence for the small farmers free from pernicious industrial
restraints and practices; and making small farmers more independent, self-reliant and responsible
citizens.
 It enunciates the following, which will be further discussed by the next group in reporting
Chapter 2:
1. An agricultural leasehold system to replace all existing share tenancy systems in
agriculture;
2. A declaration of rights for agricultural labor;
3. An authority for the acquisition and equitable distribution of agricultural land;
4. An institution to finance the acquisition and distribution of agricultural land;
5. A machinery to extend credit and similar assistance to agriculture;
6. A machinery to provide marketing, management, and other technical services to
agriculture;
7. A unified administration for formulating and implementing projects of land reform;
8. An expanded program of land capability survey, classification, and registration; and
9. A judicial system to decide issues arising under this Code and other related laws and
regulations.

n) P. D. No. 2 of 1972

PROCLAIMING THE ENTIRE COUNTRY AS A LAND REFORM AREA

PRESIDENTIAL DECREE No. 2 provides that:

All agencies and office of the Government are enjoined to extend full cooperation and
assistance to the Department of Agrarian Reform to insure the successful prosecution of the
Agrarian Reform Program.
The Agrarian Reform Coordinating Council created under Executive Order Mo. 387, series of
1971, is hereby directed to convene immediately to exercise its functions.
The Secretary of Agrarian Reform shall take necessary steps for the prompt and effective
implementation of this decree.

o) P. D. No. 27 of 1972

DECREEING THE EMANCIPATION OF TENANTS FROM THE BONDAGE OF THE SOIL,

TRANSFERRING TO THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING
THE INSTRUMENTS AND MECHANISM THEREFOR

Applicability of the Law

This shall apply to tenant farmers of private agricultural lands primarily devoted to rice
and corn under a system of sharecrop or lease-tenancy, whether classified as landed estate
or not.

Transfer of Land to Tenants

PRESIDENTIAL DECREE No. 27 provides that:

 “The tenant farmer, whether in land classified as landed estate or not, shall be deemed
owner of a portion constituting a family-size farm of five (5) hectares if not irrigated and three
(3) hectares if irrigated.”

Size of the land to be transferred to the tenant-farmer

a. five (5) hectares if not irrigated and three (3) hectares if irrigated, or
b. three (3) hectares if irrigated.

Retention right of landowner

Under PRESIDENTIAL DECREE No. 27 the landowner may retain an area of not more
than seven (7) hectares if such landowner is cultivating such area or will now cultivate it.

The cost of the land to be transferred to the tenant-farmer.

The value of the land shall be equivalent to two and one-half (2 1/2) times the average
harvest of three normal crop years immediately preceding the promulgation of this Decree

The tenant-farmer will pay

The total cost of the land, including interest at the rate of six (6) per centum per annum,
shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations;

In case of default, the amortization due shall be paid by the farmers' cooperative in which
the defaulting tenant-farmer is a member, with the cooperative having a right of recourse
against him;

The government shall guaranty such amortizations with shares of stock in government-
owned and government-controlled corporations;

Issuance of title

No title to the land owned by the tenant-farmers under this Decree shall be actually
issued to a tenant-farmer unless and until the tenant-farmer has become a full-fledged
member of a duly recognized farmer's cooperative.

Tenant-beneficiary cannot sell or transfer ownership of the land

Title to land acquired pursuant to this Decree or the Land Reform Program of the
Government shall not be transferable except by hereditary succession or to the Government
in accordance with the provisions of this Decree, the Code of Agrarian Reforms and other
existing laws and regulations;

Jurisdiction

The Department of Agrarian Reform through its Secretary is hereby empowered to

promulgate rules and regulations for the implementation of this Decree.
D. Police Power as Doctrinal Basis of Agrarian Reform

Asociacion de Agricultores v. Talisay-Silay Milling

G. R. No. L-19937 | February 19, 1979 | 88 SCRA 294
Barredo, J.

FACTS:

On June 1952, Republic Act 809 was enacted for the purpose of addressing the necessity to
increase the share of planters and laborers in the income derived from the sugar industry. Said
act was to regulate the relations among the persons engaged in the sugar industry. Under
Section 1 thereof, it was provided that in the absence of written milling agreements between the
majority of planters and the millers of sugarcane in any milling district in the Philippines, the
unrefined sugar produced in that district from the milling by any sugar central of the sugar cane of
any sugarcane planter or planter owner, as well as all byproducts and derivative thereof, shall be
divided between them depending on the maximum actual production. The higher the rate of
production, the bigger the percentage given to the planters.

The Association de Agricultores de Talisa-Silay Inc. and six sugarcane planters (PLANTERS)
filed a petition to the Secretary of Labor, praying that the latter declare the applicability of the RA
809 to the Talisay Silay Mill District (CENTRAL) for every crop year starting from 1952-1962.

CENTRAL alleged that RA 809 was invalid and unconstitutional and even if it was valid, the
planters had written milling contracts with them at the time the said act went into effect, and the
planters who entered into said contracts did so voluntarily and those voluntary contracts may not
be altered or modified without infringing the constitutional guarantee on freedom of contracts and
non-impairment clause of the Constitution. CENTRAL also alleged that the law violates the equal
protection clause since bigger milling districts should provide bigger shares than smaller ones.

ISSUES:

1. Whether RA 809 would violate the non-impairment clause of the Constitution and infringe
the Constitutional guarantee on freedom of contracts if applied to the Talisay Silay Mill
District.

2. Whether RA 809 violates the equal protection clause.

HELD:

No. RA 809 is a social justice and police power measure for the promotion of labor conditions
in sugar plantations. Hence, whatever rational degree of constraint it exerts on freedom of
contract and existing contractual obligation as is constitutionally permissible. The said act was
concerned and enacted as a social legislation designed primarily to ameliorate the condition of
the laborers in the sugar plantation. Having in view its primary objective, to promote the interests
of the laborer, it can never be possible that the State would be bereft of constitutional authority to
enact legislations of its kind.
 Section 5 of Article II of the Constitution of 1935, under the aegis of which the law in question
was enacted, made it one of the declared principles to which the people committed themselves
that "the promotion of social justice to insure the wellbeing and economic security of all the
people should be the concern of the State." More specifically in regard to labor, there was also
Section 6 of Article XIX, to the effect that "the State shall afford protection to labor ... and shall
regulate the relation between . . . labor and capital in industry and in agriculture.”

The Republic Act did not violate equal protection clause. The obvious standard used by the
legislature is the amount of production in each district. Naturally, the planters adhered to the
bigger centrals should be given bigger shares, considering that the more a sugar central
produces, the bigger its margin of profit which can be correspondingly cut for the purpose of
enlarging the share of the planters. Understandably, the smaller centrals may not be able to
afford to have their shares reduced substantially, which is evidently the reason why the law has
not been made applicable to centrals having a production of less than 150,000 piculs a year.

It is beyond cavil that dealing as it did with the unfortunate plight of the farm laborers crying
for just and urgent amelioration and confronted with the usual constitutional objections whenever
contractual relations are sought to be regulated, Congress ultimately availed of the state's police
power, in the face of which all arguments about freedom of contract and impairment of
contractual obligations have generally been held not to prevail. In Lutz vs. Araneta (G.R. No. L-
2859, Dec. 22, 1959), this Court recognized the propriety of exercising 'police power when it is
needed to do so in order that our sugar industry may be stabilized, and to that end, it was held
that the legislature could provide that the distribution of benefits from the proceeds of sugar be
readjusted among the components of the industry to enable it to resist the added strain of the
increase in taxes that it had to sustain then. With at least equal persuasiveness must such
reasoning obtain when the readjustment of the distribution of proceeds is impelled by the need to
render social justice among all the participants in the industry, especially the laborers. True it is
that, as counsel for the centrals contends, police power cannot be resorted to just any time the
legislature wishes, but it is not correct to say that it is indispensable that exceptional
circumstances must exist before police power can be exercised. As very aptly pointed out by the
able amicus curiae, Attys. Tañada, Teehankee and Carreon, gone are the days when courts
could "be found adhering to the doctrine that interference with contracts can only be justified by
exceptional circumstances", for the "test of validity today under the due process clause, even in
the case of legislation interfering with existing contracts, is reasonableness, as held by this
Honorable Supreme Court in the case of People vs. Zeta. In other words, freedom from
arbitrariness, capriciousness and whimsicality is the test of constitutionality." (p. 17, Brief of
Amicus Cuiae in Behalf of Silay-Saravia Planters' Association, Attys. Tañada, Teehankee and
Carreon.) And there is not enough showing here of unreasonableness in the legislation in
question. Quite to the contrary, as will be discussed anon, We find all the provisions of the
impugned act to be germane to the end being pursued.
Agrarian Reform and Social Legislation
Atty. Gefer R. Mancol

CHAPTER I
PRELIMINARY

Group I:
Katipunan, Hazel E.
Marcelo, Kathleen B.
Marin, Rey-Ann T.
Mediodia, Ilssa Maria Tara T.
Merrera, Karna Lowell V.
Mingoa, Clariz S.
Morillo, Deniel Salvador B.

Saturday 4-6pm MMS 203