Fishponds and Prawn Farms Exempted: Understanding Agrarian Reform Amendments

G.R. No. 93100, June 19, 1997 (Atlas Fertilizer Corporation vs. The Honorable Secretary of the Department of Agrarian Reform)

Imagine a thriving fishpond, the heart of a family’s livelihood for generations. Suddenly, the threat of agrarian reform looms, casting uncertainty over their future. This scenario reflects the real-world impact of the legal battles surrounding the Comprehensive Agrarian Reform Law (CARL) and its application to aquaculture lands in the Philippines. This case, Atlas Fertilizer Corporation vs. The Honorable Secretary of the Department of Agrarian Reform, delves into the complex question of whether fishponds and prawn farms should be covered by agrarian reform, ultimately leading to significant amendments that redefined the scope of the law.

The central legal question revolved around the constitutionality of including aquaculture lands, specifically fishponds and prawn farms, within the coverage of CARL. Petitioners argued that CARL’s provisions violated the Constitution by extending agrarian reform beyond agriculture lands, treating aquaculture lands unfairly compared to other industrial lands, distorting employment benefits, and depriving them of government-induced investments. The Supreme Court’s resolution hinged on the interpretation of “agricultural lands” and the impact of subsequent legislative amendments.

Understanding the Comprehensive Agrarian Reform Law (CARL)

The Comprehensive Agrarian Reform Law (CARL), or Republic Act No. 6657, is a landmark legislation in the Philippines aimed at promoting social justice and equitable land distribution. It seeks to redistribute private and public agricultural lands to landless farmers and farmworkers, empowering them and boosting agricultural productivity. The law defines key terms and establishes the mechanisms for land acquisition, compensation, and distribution.

However, the implementation of CARL has been fraught with challenges, particularly in defining the scope of “agricultural lands.” The original law included activities like “raising of fish” within the definition of agriculture, leading to disputes over whether fishponds and prawn farms fell under its coverage. This ambiguity prompted legal challenges and ultimately led to legislative amendments to clarify the law’s intent.

Key provisions of CARL that were challenged in this case include:

• Section 3(b): Defined “Agricultural, Agricultural Enterprise or Agricultural Activity” to include the “raising of fish.”
• Section 11: Defined “commercial farms” as private agricultural lands devoted to fishponds and prawn ponds.
• Section 13: Called upon landowners to execute a production-sharing plan.
• Sections 16(d) and 17: Vested the Department of Agrarian Reform (DAR) with the authority to determine just compensation for lands covered by CARL.
• Section 32: Spelled out the production-sharing plan, requiring a percentage of gross sales to be distributed to farmworkers.

These provisions were challenged on the grounds that they unconstitutionally extended agrarian reform to aquaculture lands and violated the equal protection clause.

The Case: Atlas Fertilizer Corporation vs. DAR

Atlas Fertilizer Corporation, along with the Philippine Federation of Fishfarm Producers, Inc. and Archie’s Fishpond, Inc., challenged the constitutionality of the aforementioned provisions of CARL. These entities, engaged in the aquaculture industry, argued that fishponds and prawn farms should not be subject to agrarian reform.

The petitioners’ main arguments were:

• That aquaculture lands are not “agriculture lands” as defined by the Constitution.
• That including aquaculture lands violates the equal protection clause because they are treated the same as agricultural lands but are fundamentally different.
• That the provisions distort employment benefits and burdens.
• That the provisions deprive them of government-induced investments.

The case reached the Supreme Court, where the central issue was whether the inclusion of fishponds and prawn farms within the coverage of CARL was constitutional. The Court considered the arguments presented by the petitioners and the legal context surrounding the law.

However, while the case was pending, a crucial development occurred: the enactment of Republic Act No. 7881. This law amended certain provisions of CARL, specifically addressing the issue of aquaculture lands. Section 2 of R.A. No. 7881 explicitly states:

“Private lands actually, directly and exclusively used for prawn farms and fishponds shall be exempt from the coverage of this Act…”

This amendment effectively removed fishponds and prawn farms from the coverage of CARL, rendering the constitutional questions raised in the case moot and academic.

As the Supreme Court stated:

“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.”

The Court, therefore, dismissed the petition.

Practical Implications of R.A. No. 7881

The enactment of R.A. No. 7881 had significant implications for the aquaculture industry in the Philippines. By exempting fishponds and prawn farms from CARL coverage, the law provided much-needed clarity and security to aquaculture businesses. This exemption allowed them to continue their operations without the threat of land redistribution, fostering investment and growth in the sector.

Furthermore, R.A. No. 7881 introduced incentives for fishpond and prawn farm owners to share a portion of their profits with their workers. Section 32-A mandates that owners execute an incentive plan with their workers’ organization, distributing 7.5% of their net profit before tax as compensation. This provision aimed to balance the interests of landowners and workers, promoting fair labor practices within the aquaculture industry.

Key Lessons:

• Legislative amendments can significantly alter the interpretation and application of existing laws.
• The definition of “agricultural lands” does not automatically include aquaculture lands, as clarified by R.A. No. 7881.
• Fishpond and prawn farm owners should be aware of the incentives and profit-sharing requirements outlined in R.A. No. 7881.

Frequently Asked Questions

Q: Does CARL still apply to agricultural lands in general?

A: Yes, CARL remains in effect for agricultural lands not specifically exempted by law.

Q: What is the retention limit for landowners under CARL?

A: The retention limit is generally five hectares, with certain exceptions.

Q: What happens if a fishpond was already distributed before R.A. No. 7881?

A: If a fishpond was distributed and a Certificate of Land Ownership Award (CLOA) was issued, a majority of the workers must consent to the exemption within one year of R.A. 7881’s effectivity. If they don’t agree, the fishpond will be collectively managed by a worker-beneficiary cooperative.

Q: Are there incentives for fishpond owners to share profits with workers?

A: Yes, R.A. No. 7881 mandates a profit-sharing plan where 7.5% of the net profit before tax is distributed to regular and other pond workers.

Q: Does this exemption apply to agricultural lands converted to fishponds after R.A. No. 7881?

A: The exemption does not apply to agricultural lands converted to fishponds if the converted land exceeds the landowner’s retention limit.

ASG Law specializes in agrarian reform and land use regulations. Contact us or email hello@asglawpartners.com to schedule a consultation.