It has been more than three decades since the Supreme Court decided Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform (G.R. Nos. 78742, 79310, 79744, 79777, July 14, 1989). Yet, the echoes of that landmark case still resonate across today’s debates on land rights, expropriation, and social justice. The case remains a constitutional compass for expropriation and land valuation. It guides the ongoing struggle to harmonize social justice with property rights.
This 1989 decision — penned by Justice Isagani A. Cruz — did more than uphold the constitutionality of agrarian reform under President Corazon Aquino. It defined how the State must pursue justice without committing injustice.
The 1989 decision, penned by Justice Isagani A. Cruz, arose at a pivotal moment. The Philippines had just ratified the 1987 Constitution. This called for genuine agrarian reform as a cornerstone of social justice. Acting under that mandate, President Corazon Aquino issued Proclamation No. 131 and Executive Order No. 229, launching the Comprehensive Agrarian Reform Program (CARP). These measures authorized the compulsory acquisition of private agricultural lands. Payment was provided not solely in cash. It also included government bonds, shares of stock, and other financial instruments.
Many landowners objected, arguing that such payment schemes were confiscatory and unconstitutional. They contended that agrarian reform could not override the constitutional protection of private property. They insisted that compensation must be paid in full and in money. The case reached the Supreme Court. The issue was not the legitimacy of reform itself. Instead, it was about the manner by which it was to be carried out.
Justice Cruz spoke for the Court. He upheld the constitutionality of the government’s agrarian reform measures. He delivered what would become one of the most defining interpretations of the Constitution’s takings clause. He explained that agrarian reform is “police power in purpose but eminent domain in method.” It is justified by the public welfare. Yet it involves the taking of private property. Therefore, it requires the payment of just compensation.
🟩 “The measure of compensation is the full and fair equivalent of the property taken from its owner by the expropriator. 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 taken shall be real, substantial, full, and ample. Such payment need not always be made in money. It may be in other things of equivalent value, as long as it is real, substantial, and just.”
— Justice Isagani A. Cruz, Association of Small Landowners (1989)
The Court emphasized that the question of just compensation is judicial in nature. Courts have the final word on what is fair and just, not any administrative or legislative body. This passage marked a turning point in Philippine constitutional law. It did not abandon market value as the measure of compensation. Instead, it broadened the understanding of how justice may be delivered in its equivalent form.
Justice Isagani Cruz, writing for the Court, clarified that the measure of compensation remains the property’s market value. This is the price that a willing buyer would pay to a willing seller under normal conditions.
What the Court changed was not the measure, but the form.
The Court held that just compensation need not always be paid in cash. The owner must receive the full and fair equivalent of the property’s market value. This means that payment can be made through bonds, stocks, or other financial instruments, provided they reflect true, realizable worth.
The logic was both constitutional and practical. Implementing agrarian reform on a national scale would have been impossible. This task involves millions of hectares. It would not be feasible if the government were required to pay every landowner in full cash. The Court allowed flexibility. However, it insisted that the total value received must be real, substantial, and equivalent to what was taken.
In other words:
The market value remains the yardstick,
while equivalent value is the means of payment.
The Court recognized that the price paid must reflect the full and fair value of the property taken. It should be the true market value. However, under exceptional circumstances, the government will pay through instruments of equivalent value. These instruments can be bonds or shares, as long as their worth is real and realizable. This doctrinal shift was both pragmatic and principled. The State can pursue a massive redistribution of land. It did so without collapsing under fiscal burden. Meanwhile, it safeguarded the constitutional rights of landowners to fair recompense.
Later decisions, including Land Bank of the Philippines v. Wycoco (2004) and Land Bank v. Honeycomb Farms (2009), reaffirmed this doctrine. Courts must determine just compensation based on market indicators, which include comparable sales, income potential, and zonal valuations. This holds even if the payment is made through other equivalent means. Thus, while the form of payment may vary, the standard of fairness does not. The Small Landowners decision preserved the essence of justice. It ensures that the value taken must be replaced by the same value returned. This must be done in whatever lawful form.
Beyond its technical rulings, the case represents a moral and constitutional reconciliation. It proved that reform need not be confiscation. Social justice must operate within the boundaries of the rule of law. The State may pursue redistribution and public welfare. However, it cannot deny fairness to those from whom the property is taken. In that balance lies the very heart of constitutional democracy.
More than three decades later, the decision continues to influence modern expropriation cases, such as Republic v. Arellano University (G.R. No. 260038, 2025), where the Court reaffirmed that just compensation cannot be based merely on administrative valuations or outdated schedules of market values. It must reflect all relevant market conditions. It should consider the property’s location and potential. Other factual considerations must make compensation truly fair. These modern cases, while dealing with urban development and public infrastructure, trace their constitutional lineage directly to Small Landowners.
The ruling’s wisdom resonates today in broader contexts. These include urban redevelopment, socialized housing, and environmental expropriations. It is also present in discussions on carbon markets and the just transition. Its enduring message is that reform must be fair, and fairness must be real. The law may adapt to new social challenges, but its foundation in justice and due process remains unchanged.
Association of Small Landowners remains a testament to the idea that progress and fairness are not adversaries but partners. The decision did not merely uphold agrarian reform; it humanized it. It emphasized that while the State may right historical wrongs, it must ensure the integrity of law is preserved. Thirty-six years later, it continues to serve as a reminder to both the government and citizens. Social justice should not be pursued at the expense of constitutional justice. No taking, however noble its purpose, is truly just without just compensation.
Why It Matters Today
The decision remains a bedrock precedent in property law, agrarian reform, and expropriation. It clarified the balance between individual property rights and collective welfare. This decision shapes how courts interpret “just compensation” in modern takings. These include cases from agrarian lands to urban redevelopment, road widening, and environmental expropriations.
In contemporary jurisprudence (e.g., City Government of Pasay v. Arellano University, 2025), the same principles continue to ensure that landowners are fairly compensated, while allowing the State to pursue inclusive, socially just development.
For further reading:
- Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform (1989) https://lawphil.net/judjuris/juri1989/jul1989/gr_78742_1989.html
2. City Government of Pasay v. Arellano University, 2025 https://sc.judiciary.gov.ph/260038-city-government-of-pasay-vs-arellano-university/
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