G.R. No. 140847 . September 23, 2005.
HOSPICIO DE SAN JOSE DE BARILI, CEBU CITY, Petitioner, vs. DEPARTMENT OF AGRARIAN REFORM, Respondent.

FACTS

Petitioner Hospicio de San Jose de Barili is a charitable organization incorporated by Act No. 3239 in 1925, funded by donations from its founders, the Cuis. Section 4 of this special law explicitly prohibits the sale “under any consideration” of the real properties donated to the Hospicio. In 1987, the Department of Agrarian Reform (DAR) issued an order placing two of Hospicio’s agricultural landholdings under the Operation Land Transfer of Presidential Decree No. 27, decreeing their distribution to tenant-farmers. Hospicio moved for reconsideration, arguing that the special prohibition in its charter could not be repealed by the general agrarian reform laws.
The DAR Secretary denied the motion, ruling that P.D. No. 27 is itself a special law and provides no exemption for lands owned by charitable institutions. The Court of Appeals affirmed, holding that Section 4 of Act No. 3239 was expressly repealed by both P.D. No. 27 and the Comprehensive Agrarian Reform Law ( R.A. No. 6657 ). Hospicio elevated the case to the Supreme Court, contending that the agrarian laws impaired the obligation of contracts and that its charter, being special, was not repealed.

ISSUE

Whether the prohibition against sale in Act No. 3239 bars the compulsory acquisition and distribution of Hospicio’s land under the agrarian reform program.

RULING

No. The Supreme Court affirmed the appellate court’s decision but clarified the legal reasoning. The Court held that the land transfer under P.D. No. 27 is not a “sale” within the civil law concept contemplated by Act No. 3239 . A contract of sale requires consent, determinate subject matter, and a price certain. The transfer under agrarian reform is a forced transaction, an exercise of the State’s police power and eminent domain to promote social justice. It is not a voluntary act of the landowner but a sovereign imposition. Therefore, the specific prohibition against “sale” in the Hospicio’s charter does not apply to this compulsory process.
Furthermore, the Court ruled that even assuming a conflict, the later agrarian reform laws impliedly repealed the inconsistent provision of the earlier Act No. 3239 . The repeal is implied because P.D. No. 27 and R.A. No. 6657 establish a comprehensive system for land distribution with no exemption for properties held under a statutory prohibition against sale. This demonstrates a clear legislative intent to supersede prior laws that would obstruct agrarian reform. The State’s police power to enact measures for the common welfare, such as land redistribution, prevails over prior statutory restrictions on property alienation.