Luz Farms vs. Secretary, Department of Agrarian Reform

Factual Background

On June 10, 1988, the President approved R.A. No. 6657, which expressly included the raising of livestock, poultry and swine within its coverage. On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and Procedures Implementing Production and Profit Sharing under Sections 13 and 32 of R.A. No. 6657, and on January 9, 1989 the Department promulgated Rules and Regulations implementing Section 11 concerning commercial farms. Luz Farms operates in livestock and poultry production and alleged that it and others similarly situated would be adversely affected by enforcement of the cited statutory provisions and the Department’s implementing rules.

Petition and Reliefs Sought

Luz Farms filed a petition for prohibition with a prayer for a restraining order and for preliminary and permanent injunction against the Secretary of Agrarian Reform, alleging that the Secretary acted without jurisdiction in enforcing the challenged provisions of R.A. No. 6657 and in promulgating the implementing guidelines and rules insofar as they applied to petitioner. The petition sought declaratory relief that the cited statutory provisions and implementing rules are unconstitutional insofar as they include livestock, poultry and swine within the agrarian reform program and insofar as they impose production- and profit-sharing obligations on such enterprises.

Procedural History

This Court initially denied the petition for preliminary injunctive relief in a July 4, 1989 resolution, but on reconsideration granted injunctive relief in an August 24, 1989 resolution after the filing and approval of an injunction bond in the amount of P100,000. The Court thereafter gave due course to the petition and required memoranda from the parties. Luz Farms filed its memorandum on September 6, 1989, and the Solicitor General adopted his Comment as his memorandum on December 22, 1989.

Issues Presented

The principal question was whether Sections 3(b), 11, 13 and 32 of R.A. No. 6657, and the implementing rules and guidelines promulgated thereunder, are constitutional insofar as they include land devoted to the raising of livestock, poultry and swine within the coverage of the State’s comprehensive agrarian reform program and insofar as they require corporate farms, including such livestock and poultry enterprises, to execute and implement production-sharing plans that allocate three percent (3%) of gross sales and an additional ten percent (10%) of net profit to regular and other farmworkers.

Petitioner’s Contentions

Luz Farms did not seek nullification of R.A. No. 6657 in its entirety and acknowledged this Court’s prior decision in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform (G.R. 78742) upholding the law generally. Petitioner maintained, however, that Congress exceeded the constitutional mandate by including livestock, poultry and swine raising within the law’s coverage because these enterprises materially differ from crop and tree farming. Petitioner asserted that land is not the primary resource in commercial livestock and poultry undertakings, that land input represents a small percentage of total investment, and that many operations occur on small tracts or under contract-growing arrangements in nonarable or residential lands. Petitioner further argued that the production- and profit-sharing obligations are unreasonable and confiscatory and therefore violative of due process.

Respondent’s Contentions

The public respondent defended the inclusion of livestock and poultry within R.A. No. 6657 on the ground that such activities fall within the ordinary meaning of “agriculture.” The Department cited dictionary definitions to show that “agriculture” commonly includes feeding, breeding and management of livestock and that a “farm” may be a tract of land devoted to raising domestic animals. The Solicitor General adopted these positions in his memorandum.

Constitutional Text and Convention Debates

The Court situated the dispute against Article XIII, Section 4, 1987 Constitution, which directs the State to undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless to own lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof, and authorizes distribution of agricultural lands subject to specified priorities and retention limits. The Court reviewed the transcripts of the Constitutional Commission’s deliberations, noting that the framers and the Committee on Agrarian and Natural Resources adopted a definition of “agricultural land” derived from Section 186 of R.A. 3844 and contemplated a limitation to arable and suitable agricultural lands. The record reflects that the Commission declined an amendment to insert the word “ARABLE” but explained that agricultural lands were intended to be limited to arable lands and would not include commercial, industrial and residential properties. During interpellations, Commissioner Regalado asked whether piggery and poultry workers would be covered by the provision, and Commissioner Tadeo clarified that the term used in the draft was “farmworker,” intentionally excluding piggery, poultry and livestock workers.

Court’s Analysis and Ruling

The Court held that the controversy required constitutional construction and that the Court’s primary task was to ascertain and give effect to the framers’ purpose. Applying the ordinary meaning of the constitutional language and consulting the Constitutional Commission’s deliberations, the Court concluded that it was not the framers’ intention to include livestock and poultry raising within the State’s constitutionally mandated agrarian reform program. The Court observed that it would assume jurisdiction only where the essential requisites of an actual case or controversy were present; those requisites were satisfied here. The Court found merit in Luz Farms’ contention that inclusion of livestock and poultry enterprises within R.A. No. 6657 exceeded constitutional bounds and that the statutory production- and profit-sharing requirements imposed on corporate farms engaged in those activities were unreasonable and confiscatory, implicating due process. The Court therefore declared Sections 3(b), 11, 13 and 32 of R.A. No. 6657, insofar as they include the raising of livestock, poultry and swine within the law’s coverage, and the implementing rules and guidelines promulgated in accordance therewith, to be null and void for being unconstitutional. The writ of preliminary injunction previously issued was made permanent. The decision was delivered by Justice Paras and was concurred in by the remaining members of the Court then sitting.

Separate Opinion