Atlas Fertilizer Corporation v. Secretary of the Department of Agrarian Reform

A constitutional challenge to a statute becomes moot and academic when the legislature amends the statute to cure or clarify the very provisions under attack, thereby removing the basis for judicial intervention.

Petitioners Atlas Fertilizer Corporation, Philippine Federation of Fishfarm Producers, Inc., and petitioner-in-intervention Archie's Fishpond, Inc. and Arsenio Al. Acuna are entities and individuals engaged in the aquaculture industry, utilizing fishponds and prawn farms. They challenged the constitutionality of several provisions of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), insofar as those provisions included aquaculture lands within the law's coverage. The constitutional challenge was anchored on the prior ruling in Luz Farms, Inc. vs. Secretary of Agrarian Reform, 192 SCRA 51 (1990), which had excluded lands devoted to livestock, poultry, and swine from CARL's coverage on the ground that the use of land in such activities was only incidental to productivity.

Petitioners Atlas Fertilizer Corporation, Philippine Federation of Fishfarm Producers, Inc., and petitioner-in-intervention Archie's Fishpond, Inc. and Arsenio Al. Acuna are engaged in the aquaculture industry, operating fishponds and prawn farms. They filed consolidated petitions before the Supreme Court assailing Sections 3(b), 11, 13, 16(d), 17, and 32 of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, together with the implementing guidelines contained in DAR Administrative Order Nos. 8 and 10, Series of 1988, as unconstitutional insofar as those provisions extended agrarian reform coverage to aquaculture lands.

Petitioners anchored their challenge on the Court's prior ruling in Luz Farms, Inc. vs. Secretary of Agrarian Reform, 192 SCRA 51 (1990), which had excluded livestock, poultry, and swine lands from CARL's scope. They contended that, under the reasoning in Luz Farms, aquaculture lands should likewise be excluded because the use of land in fishponds and prawn farms is only incidental to productivity, not the principal factor. They further argued that the challenged provisions violated the equal protection clause by treating aquaculture lands the same as agricultural lands despite their dissimilar situations, and by treating aquaculture lands differently from other industrial lands despite their similar situations.

While the petitions were pending, Congress approved Republic Act No. 7881 on February 20, 1995, amending certain provisions of R.A. No. 6657. The amendatory law revised the definition of "Agriculture, Agricultural Enterprise or Agricultural Activity" in Section 3(b) to remove the raising of fish; exempted private lands actually, directly, and exclusively used for prawn farms and fishponds from CARL coverage under Section 10; removed fishponds and prawn ponds from the definition of "commercial farms" in Section 11; and introduced Section 32-A, mandating an incentive plan whereby 7.5% of net profit before tax from fishpond or prawn farm operations would be distributed to regular pond workers. The Court found that these amendments expressly excluded fishponds and prawn farms from CARL coverage, thereby rendering the constitutional challenge moot.

• Constitutional Limitation on Agrarian Reform Coverage: Petitioners contended that Sections 3(b), 11, 13, 16(d), 17, and 32 of CARL unconstitutionally extended agrarian reform to aquaculture lands, notwithstanding that Section 4, Article XIII of the 1987 Constitution limits agrarian reform to agricultural lands only. They relied on the implied ruling in Luz Farms that lands devoted to fishing are not agricultural lands, since in aquaculture the use of land is only incidental to productivity.
• Equal Protection Clause: Petitioners argued that CARL violated the equal protection clause by classifying aquaculture lands in the same category as agricultural or farming lands despite their dissimilar situations, while treating aquaculture lands differently from other industrial lands despite their similar situations. They invoked the Constitutional Commission debates to show that the framers intended to exclude "industrial" lands, to which category aquaculture belongs.
• Economic and Employment Rights: Petitioners claimed that the challenged provisions distorted employment benefits and burdens in favor of aquaculture employees and against other industrial workers, contrary to Sections 1 and 3, Article XIII of the Constitution mandating the State to promote equality in economic and employment opportunities. They further asserted that the provisions deprived them of government-induced investments in aquaculture, contrary to Sections 2 and 3, Article XIII mandating the State to respect freedom of enterprise and the right to reasonable returns on investments.
• Invalidity of Implementing Orders: Petitioners maintained that DAR Administrative Order Nos. 8 and 10, Series of 1988, were unconstitutional and void as held in Luz Farms, because they implemented the assailed provisions of CARL.
• Absence of Agrarian Reform Beneficiaries: Petitioners argued that in fishponds and prawn farms there are no farmers or farm workers who till lands and no agrarian unrest, and therefore the constitutionally intended beneficiaries under Section 4, Article XIII of the 1987 Constitution do not exist in aquaculture.

• Constitutionality of CARL Provisions as Applied to Aquaculture: Whether Sections 3(b), 11, 13, 16(d), 17, and 32 of R.A. No. 6657, along with DAR Administrative Order Nos. 8 and 10, Series of 1988, are unconstitutional insofar as they include aquaculture lands, particularly fishponds and prawn farms, within the coverage of the Comprehensive Agrarian Reform Law.
• Mootness: Whether the passage of Republic Act No. 7881, amending the challenged provisions to exclude fishponds and prawn farms from CARL coverage, rendered the petitions moot and academic.

• Constitutionality of CARL Provisions as Applied to Aquaculture: Not passed upon. The Court declined to rule on the constitutionality of the challenged provisions, the issue having been rendered moot by legislative amendment.
• Mootness: Yes. The petitions were dismissed as moot and academic, R.A. No. 7881 having expressly excluded fishponds and prawn farms from CARL coverage, thereby removing the constitutional question.

• Constitutionality of CARL Provisions as Applied to Aquaculture: The Court acknowledged that it would not hesitate to declare a law void when squarely confronted with constitutional issues, but declined to preempt the Legislative and Executive branches where they had already acted to correct or clarify the challenged law by amendment. The constitutional challenge to the assailed provisions of CARL — including the definition of agricultural activity in Section 3(b) encompassing the raising of fish, the classification of fishponds and prawn ponds as commercial farms under Section 11, the production-sharing plan under Sections 13 and 32, and the summary valuation authority under Sections 16(d) and 17 — was not reached on the merits because the legislative branch had enacted R.A. No. 7881 on February 20, 1995, which amended each of the challenged provisions to remove aquaculture lands from CARL's scope.

• Mootness: R.A. No. 7881 expressly amended Section 3(b) to delete the raising of fish from the definition of agricultural activity; amended Section 10 to exempt private lands actually, directly, and exclusively used for prawn farms and fishponds from CARL coverage; amended Section 11 to remove fishponds and prawn ponds from the definition of commercial farms; and added Section 32-A, providing an incentive plan for fishpond and prawn farm workers based on 7.5% of net profit before tax. Because these amendments expressly excluded fishponds and prawn farms from CARL coverage, the constitutional question posed by the petitions no longer presented a live controversy. The Court accordingly dismissed the petitions as moot and academic.

• Mootness by Legislative Amendment — A case becomes moot and academic when the challenged statute is amended by the legislature to cure or clarify the very provisions under attack, such that the relief sought is no longer capable of judicial determination. The Court applied this principle by dismissing the petitions upon the enactment of R.A. No. 7881, which expressly excluded fishponds and prawn farms from CARL coverage, thereby eliminating the constitutional controversy.
• Judicial Restraint in Constitutional Review — While the Court will not hesitate to declare a law void when confronted squarely with constitutional issues, it will not preempt the Legislative and Executive branches in correcting or clarifying a challenged law by means of amendment. This principle guided the Court's decision to decline ruling on the merits of the constitutional challenge where Congress had already acted to amend the assailed provisions.

• "While the Court will not hesitate to declare a law or an act void when confronted squarely with constitutional issues, neither will it preempt the Legislative and the Executive branches of the government in correcting or clarifying, by means of amendment, said law or act." — This passage articulates the Court's doctrine of judicial restraint, declining to rule on constitutionality where the legislature has already acted to amend the challenged law.
• "The above-mentioned provisions of R.A. No. 7881 expressly state that fishponds and prawn farms are excluded from the coverage of CARL. In view of the foregoing, the question concerning the constitutionality of the assailed provisions has become moot and academic with the passage of R.A. No. 7881." — This is the ratio decidendi of the resolution, establishing that the legislative amendment rendered the constitutional challenge moot.

• Luz Farms, Inc. vs. Secretary of Agrarian Reform, 192 SCRA 51 (1990) — Cited as the controlling precedent for the proposition that lands devoted to livestock, poultry, and swine are excluded from CARL coverage because the use of land in such activities is only incidental to productivity. Petitioners relied on Luz Farms by analogy to argue that aquaculture lands should likewise be excluded. The Court did not rule on whether Luz Farms extended to aquaculture, as the issue was rendered moot by R.A. No. 7881.

• Section 4, Article XIII, 1987 Constitution — Cited by petitioners as limiting agrarian reform to agricultural lands only, thereby precluding the extension of CARL coverage to aquaculture lands.
• Sections 1, 2, and 3, Article XIII, 1987 Constitution — Cited by petitioners as mandating the State to promote equality in economic and employment opportunities, respect freedom of enterprise, and protect the right of enterprises to reasonable returns on investments and to expansion and growth.
• Sections 3(b), 11, 13, 16(d), 17, and 32, Republic Act No. 6657 (Comprehensive Agrarian Reform Law) — The challenged provisions that included aquaculture lands within CARL's coverage. These provisions were amended by R.A. No. 7881 to exclude fishponds and prawn farms.
• Sections 1, 2, 3, and 4, Republic Act No. 7881 — The amendatory law that revised the definition of agricultural activity to remove the raising of fish, exempted prawn farms and fishponds from CARL coverage, removed fishponds and prawn ponds from the definition of commercial farms, and introduced Section 32-A on incentives for fishpond and prawn farm workers.

Narvasa, C.J., Regalado, Davide, Jr., Melo, Puno, Vitug, Mendoza, Hermosisima, Jr., Panganiban, and Torres, Jr., JJ., concur. Padilla, Bellosillo, Kapunan, and Francisco, JJ., were on leave.