RepublicofthePhilippines

SupremeCourt
Manila

SECONDDIVISION

MILESTONEFARMS,INC.,
Petitioner,

versus

OFFICEOFTHEPRESIDENT,
Respondent.

G.R.No.182332

Present:

CARPIO,J.,
Chairperson,
NACHURA,
PERALTA,
ABAD,and

VILLARAMA,JR.,*JJ.

Promulgated:

February23,2011
xx
DECISION
NACHURA,J.:

[1]
BeforethisCourtisaPetitionforReviewonCertiorari under Rule 45 of the Rules of
Civil Procedure, seeking the reversal of the Court ofAppeals (CA)Amended Decision

[2]
dated

[3]
October4,2006anditsResolution datedMarch27,2008.

TheFacts

Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and
[4]
ExchangeCommissiononJanuary8,1960. Amongitspertinentsecondarypurposesare:(1)to
engage in the raising of cattle, pigs, and other livestock to acquire lands by purchase or lease,
whichmaybeneededforthispurposeandtosellandotherwisedisposeofsaidcattle,pigs,and

other livestock and their produce when advisable and beneficial to the corporation(2) to breed,
raise,andsellpoultrytopurchaseoracquireandsell,orotherwisedisposeofthesupplies,stocks,
equipment, accessories, appurtenances, products, and byproducts of said business and (3) to
import cattle, pigs, and other livestock, and animal food necessary for the raising of said cattle,
[5]
pigs,andotherlivestockasmaybeauthorizedbylaw.
On June 10, 1988, a new agrarian reform law, RepublicAct (R.A.) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL), took effect, which included the
raisingoflivestock,poultry,andswineinitscoverage.However,onDecember4,1990,thisCourt,
sitting en banc, ruled in Luz Farms v. Secretary of the Department of Agrarian Reform

[6]
that

agricultural lands devoted to livestock, poultry, and/or swine raising are excluded from the
ComprehensiveAgrarianReformProgram(CARP).

Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422hectare
property,coveredbyTransferCertificateofTitleNos.(T410434)M15750,(T486101)M7307,
(T486102)M7308,(T274129)M15751,(T486103)M7309,(T486104)M7310,(T332694)
M15755,(T486105)M7311,(T486106)M7312,M8791,(T486107)M7313,(T486108)M
7314, M8796, (T486109) M7315, (T486110) M9508, and M6013, and located in Pinugay,
Baras,Rizal,fromthecoverageoftheCARL,pursuanttotheaforementionedrulingofthisCourt
inLuzFarms.

Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued
AdministrativeOrderNo.9,Seriesof1993(DARA.O.No.9),settingforthrulesandregulations
to govern the exclusion of agricultural lands used for livestock, poultry, and swine raising from
CARPcoverage.Thus,onJanuary10,1994,petitionerredocumenteditsapplicationpursuantto
[7]
DARA.O.No.9.

Acting on the said application, the DARs Land Use Conversion and Exemption Committee
(LUCEC)ofRegionIVconductedanocularinspectiononpetitionerspropertyandarrivedatthe
followingfindings:

[T]heactuallandutilizationforlivestock,swineandpoultryis258.8422hectarestheareawhich
servedasinfrastructureis42.0000hectaresten(10)hectaresareplantedtocornandtheremaining
five(5)hectaresaredevotedtofishculturethatthelivestockpopulationare371headsofcow,20
heads of horses, 5,678 heads of swine and 788 heads of cocks that the area being applied for
exclusion is far below the required or ideal area which is 563 hectares for the total livestock

population that the approximate area not directly used for livestock purposes with an area of 15
hectares,moreorless,islikewisefarbelowtheallowable10%varianceand,thoughnotdirectly
used for livestock purposes, the ten (10) hectares planted to sweet corn and the five (5) hectares
devotedtofishpondcouldbeconsideredsupportivetolivestockproduction.

The LUCEC, thus, recommended the exemption of petitioners 316.0422hectare property

fromthecoverageofCARP.AdoptingtheLUCECsfindingsandrecommendation,DARRegional
DirectorPercivalDalugdug(DirectorDalugdug)issuedanOrderdatedJune27,1994,exempting
[8]
petitioners316.0422hectarepropertyfromCARP.
The Southern Pinugay Farmers MultiPurpose Cooperative, Inc. (Pinugay Farmers),
representedbyTimianoBalajadia,Sr.(Balajadia),movedforthereconsiderationofthesaidOrder,
but the same was denied by Director Dalugdug in his Order dated November 24, 1994.
[9]
Subsequently,thePinugayFarmersfiledaletterappealwiththeDARSecretary.

Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against
BalajadiaandcompanybeforetheMunicipalCircuitTrialCourt(MCTC)ofTeresaBaras,Rizal,
[10]
docketed as Civil Case No. 781T.
The MCTC ruled in favor of petitioner, but the decision
was later reversed by the RegionalTrial Court, Branch 80, ofTanay, Rizal. Ultimately, the case
[11]
reachedtheCA,which,initsDecision
datedOctober8,1999,reinstatedtheMCTCsruling,
orderingBalajadiaandalldefendantsthereintovacateportionsofthepropertycoveredbyTCT
[12]
Nos.M6013,M8796,andM8791.InitsResolution
datedJuly31,2000,theCAheldthat
thedefendantsthereinfailedtotimelyfileamotionforreconsideration,giventhefactthattheir
counsel of record received its October 8, 1999 Decision hence, the same became final and
executory.

[13]
Inthemeantime,R.A.No.6657wasamendedbyR.A.No.7881,
whichwasapproved
onFebruary20,1995.Privateagriculturallandsdevotedtolivestock,poultry,andswineraising
were excluded from the coverage of the CARL. On October 22, 1996, the factfinding team
formed by the DAR Undersecretary for Field Operations and Support Services conducted an
actual headcount of the livestock population on the property. The headcount showed that there
were448headsofcattleandmorethan5,000headsofswine.

TheDARSecretarysRuling

OnJanuary21,1997,thenDARSecretaryErnestoD.Garilao(SecretaryGarilao)issuedan
Order exempting from CARP only 240.9776 hectares of the 316.0422 hectares previously
exemptedbyDirectorDalugdug,anddeclaring75.0646hectaresofthepropertytobecoveredby
[14]
CARP.

SecretaryGarilaoopinedthat,forprivateagriculturallandstobeexcludedfromCARP,they
must already be devoted to livestock, poultry, and swine raising as of June 15, 1988, when the
CARL took effect.He found that the Certificates of Ownership of Large Cattle submitted by
petitionershowedthatonly86headsofcattlewereregisteredinthenameofpetitionerspresident,
MisaelVera,Jr.,priortoJune15,1988133weresubsequentlyboughtin1990,while204were
registeredfrom1992to1995.SecretaryGarilaogavemoreweighttothecertificatesratherthanto
theheadcountbecausethesameexplicitlyprovideforthenumberofcattleownedbypetitioneras
ofJune15,1988.

Applyingtheanimallandratio(1hectareforgrazingforeveryheadofcattle/carabao/horse)
and the infrastructureanimal ratio (1.7815 hectares for 21 heads of cattle/carabao/horse, and
0.5126 hectare for 21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted
240.9776hectaresoftheproperty,asfollows:

1.86hectaresforthe86headsofcattleexistingasof15June1988

2.8hectaresforinfrastructurefollowingtheratioof1.7815hectaresforevery21headsof
cattle

3.8hectaresforthe8horses

4.0.3809squaremetersofinfrastructureforthe8horses[and]

[15]
5.138.5967hectaresforthe5,678headsofswine.

[16]
Petitioner filed a Motion for Reconsideration,
submitting therewith copies of
CertificatesofTransferofLargeCattleandadditionalCertificatesofOwnershipofLargeCattle
issuedtopetitionerpriortoJune15,1988,asadditionalproofthatithadmettherequiredanimal
landratio.PetitioneralsosubmittedacopyofaDisbursementVoucherdatedDecember17,1986,
showingthepurchaseof100headsofcattlebytheBureauofAnimalIndustryfrompetitioner,as

further proof that it had been actively operating a livestock farm even before June 15,
1988.However,inhisOrderdatedApril15,1997,SecretaryGarilaodeniedpetitionersMotionfor
[17]
Reconsideration.

Aggrieved, petitioner filed its Memorandum on Appeal

[18]
before the Office of the

President(OP).

TheOPsRuling

OnFebruary4,2000,theOPrenderedadecision

[19]
reinstatingDirectorDalugdugsOrder

datedJune27,1994anddeclaredtheentire316.0422hectarepropertyexemptfromthecoverage
ofCARP.

However,onseparatemotionsforreconsiderationoftheaforesaiddecisionfiledbyfarmer
groups SamahangAnakPawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the Bureau of
Agrarian LegalAssistance of DAR, the OP issued a resolution

[20]
dated September 16, 2002,

settingasideitspreviousdecision.ThedispositiveportionoftheOPresolutionreads:

WHEREFORE, the Decision subject of the instant separate motions for reconsideration is
herebySETASIDEandanewoneenteredREINSTATINGtheOrderdated21January1997ofthen
DAR Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April 1997, without
prejudicetotheoutcomeofthecontinuingreviewandverificationproceedingsthatDAR,thruthe
appropriate MunicipalAgrarian Reform Officer, may undertake pursuant to Rule III (D) of DAR
AdministrativeOrderNo.09,seriesof1993.

[21]
SOORDERED.

TheOPheldthat,whenitcomestoproofofownership,thereferenceistheCertificateof
Ownership of Large Cattle. Certificates of cattle ownership, which are readily available being
issuedbytheappropriategovernmentofficeoughttomatchthenumberofheadsofcattlecounted
asexistingduringtheactualheadcount.Thepresenceoflargecattleontheland,withoutsufficient
proofofownershipthereof,onlyprovessuchpresence.

Taking note of Secretary Garilaos observations, the OP also held that, before an ocular
investigation is conducted on the property, the landowners are notified in advance hence, mere

relianceonthephysicalheadcountisdangerousbecausethereisapossibilitythatthelandowners
wouldincreasethenumberoftheircattleforheadcountpurposesonly.TheOPobservedthatthere
wasabigvariancebetweentheactualheadcountof448headsofcattleandonly86certificatesof
ownershipoflargecattle.

[22]
Consequently,petitionersoughtrecoursefromtheCA.

TheProceedingsBeforetheCAandItsRulings

OnApril29,2005,theCAfoundthat,basedonthedocumentaryevidencepresented,the
property subject of the application for exclusion had more than satisfied the animalland and
infrastructureanimalratiosunderDARA.O.No.9.TheCAalsofoundthatpetitionerappliedfor
exclusionlongbeforetheeffectivityofDARA.O.No.9,thus,negatingtheclaimthatpetitioner
merelyconvertedthepropertyforlivestock,poultry,andswineraisinginordertoexcludeitfrom
CARPcoverage.Petitionerwasheldtohaveactuallyengagedinthesaidbusinessontheproperty
evenbeforeJune15,1988.TheCAdisposedofthecaseinthiswise:

WHEREFORE,theinstantpetitionisherebyGRANTED.TheassailedResolution of the
Office of the President dated September 16, 2002 is hereby SETASIDE, and itsDecision dated
February 4, 2000 declaring the entire 316.0422 hectares exempt from the coverage of the
Comprehensive Agrarian Reform Program is hereby REINSTATEDwithout prejudice to the
outcomeofthecontinuingreviewandverificationproceedingswhichtheDepartmentofAgrarian
Reform,throughtheproperMunicipalAgrarianReformOfficer,mayundertakepursuanttoPolicy
Statement(D)ofDARAdministrativeOrderNo.9,Seriesof1993.

[23]
SOORDERED.

Meanwhile,sixmonthsearlier,oronNovember4,2004,withouttheknowledgeoftheCA
as the parties did not inform the appellate court then DAR Secretary Rene C. Villa (Secretary
[24]
Villa) issued DAR Conversion Order No. CON04100016
(Conversion Order), granting
petitioners application to convert portions of the 316.0422hectare property from agricultural to
residential and golf courses use. The portions converted with a total area of 153.3049 hectares
werecoveredbyTCTNos.M15755(T332694),M15751(T274129),andM15750(T410434).
With this Conversion Order, the area of the property subject of the controversy was effectively
reducedto162.7373hectares.
OntheCAsdecisionofApril29,2005,MotionsforReconsiderationwerefiledbyfarmer

[25]
groups, namely: the farmers represented by Miguel Espinas
(Espinas group), the Pinugay
[26]
[27]
Farmers,
and the SAPLAG.
The farmergroups all claimed that the CA should have
accorded respect to the factual findings of the OP. Moreover, the farmergroups unanimously
intimatedthatpetitioneralreadyconvertedanddevelopedaportionofthepropertyintoaleisure
residentialcommercialestateknownasthePaloAltoLeisureandSportsComplex(PaloAlto).

Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured

Evidence pursuant to DARAdministrative Order No. 9, Series of 1993

[28]
(Supplement) dated

June15,2005,theEspinasgroupsubmittedthefollowingasevidence:

[29]
1) Conversion Order
dated November 4, 2004, issued by Secretary Villa, converting
portionsofthepropertyfromagriculturaltoresidentialandgolfcoursesuse,withatotalareaof
153.3049hectaresthus,theEspinasgroupprayedthattheremaining162.7373hectares(subject
property)becoveredbytheCARP

[30]
2) Letter
dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer
(MARO)BismarkM.Elma(MAROElma)andoutgoingMAROCesarC.Celi(MAROCeli)of
Baras,Rizal,addressedtoProvincialAgrarianReformOfficer(PARO)IIofRizal,FelixbertoQ.
Kagahastian, (MARO Report), informing the latter, among others, that Palo Alto was already
underdevelopmentandthelotsthereinwerebeingofferedforsalethattherewereactualtillerson
the subject property that there were agricultural improvements thereon, including an irrigation
systemandroadprojectsfundedbytheGovernmentthattherewasnoexistinglivestockfarmon
thesubjectpropertyandthatthesamewasnotinthepossessionand/orcontrolofpetitionerand

[31]
3) Certification
dated June 8, 2005, issued by both MARO Elma and MARO Celi,
manifestingthatthesubjectpropertywasinthepossessionandcultivationofactualoccupantsand
tillers,andthat,uponinspection,petitionermaintainednolivestockfarmthereon.

Four months later, the Espinas group and the DAR filed their respective Manifestations.
[32]
InitsManifestationdatedNovember29,2005,theDARconfirmedthatthesubjectproperty
[33]
wasnolongerdevotedtocattleraising.Hence,initsResolution
datedDecember21,2005,the

CA directed petitioner to file its comment on the Supplement and the aforementioned
Manifestations. Employing the services of a new counsel, petitioner filed a Motion to Admit
[34]
Rejoinder,
andprayedthattheMAROReportbedisregardedandexpungedfromtherecords
forlackoffactualandlegalbasis.

With the CA now made aware of these developments, particularly Secretary Villas
ConversionOrderofNovember4,2004,theappellatecourthadtoacknowledgethattheproperty
subjectofthecontroversywouldnowbelimitedtotheremaining162.7373hectares.Inthesame
[35]
token,theEspinasgroupprayedthatthisremainingareabecoveredbytheCARP.
On October 4, 2006, the CA amended its earlier Decision. It held that itsApril 29, 2005
Decision was theoretically not final because DAR A.O. No. 9 required the MARO to make a
continuing review and verification of the subject property. While the CA was cognizant of our
[36]
rulinginDepartmentofAgrarianReformv.Sutton,
whereinwedeclaredDARA.O.No.9as
unconstitutional,itstillresolvedtolifttheexemptionofthesubjectpropertyfromtheCARP,not
onthebasisofDARA.O.No.9,butonthestrengthofevidencesuchastheMAROReportand
[37]
Certification, and theKatunayan
issued by the Punong Barangay, Alfredo Ruba (Chairman
Ruba), of Pinugay, Baras, Rizal, showing that the subject property was no longer operated as a
livestockfarm.Moreover,theCAheldthattheleaseagreements,

[38]
whichpetitionersubmitted

toprovethatitwascompelledtoleasearanchastemporaryshelterforitscattle,onlyreinforced
theDARsfindingthattherewasindeednoexistinglivestockfarmonthesubjectproperty.While
petitioner claimed that it was merely forced to do so to prevent further slaughtering of its cattle
allegedlycommittedbytheoccupants,theCAfoundtheclaimunsubstantiated.Furthermore,the
CA opined that petitioner should have asserted its rights when the irrigation and road projects
wereintroducedbytheGovernmentwithinitsproperty.Finally,theCAaccordedthefindingsof
MARO Elma and MARO Celi the presumption of regularity in the performance of official
functionsintheabsenceofevidenceprovingmisconductand/ordishonestywhentheyinspected
thesubjectpropertyandrenderedtheirreport.Thus,theCAdisposed:
WHEREFORE, this CourtsDecision datedApril 29, 2005 is hereby amended in that the
exemption of the subject landholding from the coverage of the ComprehensiveAgrarian Reform
Programisherebylifted,andthe162.7373hectareagriculturalportionthereofisherebydeclared
coveredbytheComprehensiveAgrarianReformProgram.

[39]
SOORDERED.

[40]
Unperturbed,petitionerfiledaMotionforReconsideration.
OnJanuary8,2007,MARO
Elma, in compliance with the Memorandum of DAR Regional Director Dominador B.Andres,
[41]
tenderedanotherReport
reiteratingthat,uponinspectionofthesubjectproperty,togetherwith
petitioners counselturned witness, Atty. Grace Eloisa J. Que (Atty. Que), PARO Danilo M.
Obarse,ChairmanRuba,andseveraloccupantsthereof,he,amongothers,foundnolivestockfarm
withinthesubjectproperty.About43headsofcattlewereshown,butMAROElmaobservedthat
the same were inside an area adjacent to PaloAlto. Subsequently, uponAtty. Ques request for
reinvestigation,designatedpersonneloftheDARProvincialandRegionalOffices(Investigating
Team) conducted another ocular inspection on the subject property on February 20, 2007. The
Investigating Team, in its Report

[42]
dated February 21, 2007, found that, per testimony of

[43]
petitionerscaretaker,RogelioLudivices(Roger),
petitionerhas43headsofcattletakencareof
bythefollowingindividuals:i)JosefinoCustodio(Josefino)18headsii)AndyAmahit15heads
andiii)BertPangan2headsthattheseindividualspasturedtheherdofcattleoutsidethesubject
property, while Roger took care of 8 heads of cattle inside the PaloAlto area that 21 heads of
cattleownedbypetitionerwereseenintheareaadjacenttoPaloAltothatJosefinoconfirmedto
theInvestigatingTeamthathetakescareof18headsofcattleownedbypetitionerthatthesaid
InvestigatingTeamsaw9headsofcattleinthePaloAltoarea,2ofwhichboreMFImarksand
that the 9 heads of cattle appear to have matched the Certificates of Ownership of Large Cattle
submittedbypetitioner.

Because of the contentious factual issues and the conflicting averments of the parties, the
CA set the case for hearing and reception of evidence on April 24, 2007.

[44]
Thereafter, as

narratedbytheCA,thefollowingeventstranspired:

On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses, namely,
[petitioners]counsel,[Atty.Que],andtheallegedcaretakerof[petitioners]farm,[Roger],whowere
bothcrossexaminedbycounselforfarmersmovantsandSAPLAG.[Petitioner]andSAPLAGthen
markedtheirdocumentaryexhibits.

On May 24, 2007, [petitioners] security guard and third witness, Rodolfo G. Febrada, submitted
hisJudicial Affidavit and was crossexamined by counsel for fa[r]mersmovants and
SAPLAG.Farmersmovantsalsomarkedtheirdocumentaryexhibits.

Thereafter,thepartiessubmittedtheirrespectiveFormal Offers of Evidence.Farmersmovants and

SAPLAG filed their objections to [petitioners]Formal Offer of Evidence. Later, [petitioner] and
farmersmovantsfiledtheirrespectiveMemoranda.

In December 2007, this Court issued aResolutionon the parties offer of evidence and considered
[45]
[petitioners]MotionforReconsiderationsubmittedforresolution.

Finally, petitioners motion for reconsideration was denied by the CA in its

[46]
Resolution
dated March 27, 2008. The CA discarded petitioners reliance on Sutton. It
ratiocinatedthattheMAROReportsandtheDARsManifestationcouldnotbedisregardedsimply
because DARA.O. No. 9 was declared unconstitutional. The Suttonruling was premised on the
factthattheSuttonpropertycontinuedtooperateasalivestockfarm.TheCAalsoreasonedthat,
inSutton,thisCourtdidnotremovefromtheDARthepowertoimplementtheCARP,pursuantto
[47]
thelattersauthoritytooverseetheimplementationofagrarianreformlawsunderSection50
of
theCARL.Moreover,theCAfound:

Petitionerappellantclaimedthattheyhad43headsofcattlewhicharebeingcaredforand
pasturedby4individuals.Toproveitsownershipofthesaidcattle,petitionerappellantofferedin
evidence 43 Certificates of Ownership of Large Cattle.Significantly, however, the
saidCertificateswerealldatedandissuedonNovember24,2006,nearly2monthsafterthisCourt
rendered itsAmended Decision lifting the exemption of the 162hectare portion of the subject
landholding. The acquisition of such cattle after the lifting of the exemption clearly reveals that
petitionerappellant was no longer operating a livestock farm, and suggests an effort to create a
[48]
semblanceoflivestockraisingforthepurposeofitsMotionforReconsideration.

OnpetitionersassertionthatbetweenMAROElmasReportdatedJanuary8,2007andthe
InvestigatingTeamsReport,thelattershouldbegivencredence,theCAheldthattherewereno
materialinconsistenciesbetweenthetworeportsbecausebothshowedthatthe43headsofcattle
werefoundoutsidethesubjectproperty.

Hence,thisPetitionassigningthefollowingerrors:

I.

THEHONORABLECOURTOFAPPEALSGRAVELYERREDWHENITHELDTHATLANDS
DEVOTED TO LIVESTOCK FARMING WITHIN THE MEANING OF LUZ
FARMS ANDSUTTON, AND WHICH ARE THEREBY EXEMPT FROM CARL COVERAGE,
ARE NEVERTHELESS SUBJECT TO DARS CONTINUING VERIFICATION AS TO USE,
AND, ON THE BASIS OF SUCH VERIFICATION, MAY BE ORDERED REVERTED TO
AGRICULTURALCLASSIFICATIONANDCOMPULSORYACQUISITION[]

II.

GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO REVERTED TO

AGRICULTURAL CLASSIFICATION, STILL THE PROCEEDINGS FOR SUCH PURPOSE

BELONGS TO THE EXCLUSIVE ORIGINAL JURISDICTION OF THE DAR, BEFORE

WHICH THE CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES,ANDAVAIL
THEMSELVESOFUSUALREVIEWPROCESSES,ANDNOTTOTHECOURTOFAPPEALS
EXERCISINGAPPELLATEJURISDICTIONOVERISSUESCOMPLETELYUNRELATEDTO
REVERSION[AND]

III.

INANY CASE,THE COURT OFAPPEALS GRAVELY ERREDAND COMMITTED GRAVE

ABUSE OF DISCRETION WHEN IT HELD THAT THE PROPERTY IN DISPUTE IS NO
[49]
LONGERBEINGUSEDFORLIVESTOCKFARMING.

Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are
classifiedasindustriallands,hence,outsidetheambitoftheCARPthatLuzFarms, Sutton, and
R.A.No.7881clearlyexcludedsuchlandsonconstitutionalgroundsthatpetitionerslandswere
actually devoted to livestock even before the enactment of the CARL that livestock farms are
exempt from the CARL, not by reason of any act of the DAR, but because of their nature as
industriallandsthatpetitionerspropertywasadmittedlydevotedtolivestockfarmingasofJune
1988andtheonlyissuebeforewaswhetherornotpetitionerspiecesofevidencecomplywiththe
ratios provided under DAR A.O. No. 9 and that DAR A.O. No. 9 having been declared as
unconstitutional, DAR had no more legal basis to conduct a continuing review and verification
proceedingsoverlivestockfarms.Petitionerarguesthat,incaseswherereversionofpropertiesto
agriculturaluseisproper,onlytheDARhastheexclusiveoriginaljurisdictiontohearanddecide
thesamehence,theCA,inthiscase,committedseriouserrorswhenitorderedthereversionof
thepropertyandwhenitconsideredpiecesofevidencenotexistingasofJune15,1988,despiteits
lack of jurisdiction that the CA should have remanded the case to the DAR due to conflicting
factual claims that the CA cannot ventilate allegations of fact that were introduced for the first
timeonappealasasupplementtoamotionforreconsiderationofitsfirstdecision,usethesameto
deviatefromtheissuespendingreview,and,onthebasisthereof,declareexemptlandsrevertedto
agricultural use and compulsorily covered by the CARP that the newly discovered [pieces of]
evidencewerenotintroducedintheproceedingsbeforetheDAR,hence,itwaserroneousforthe
CA to consider them and that piecemeal presentation of evidence is not in accord with orderly
justice. Finally, petitioner submits that, in any case, the CA gravely erred and committed grave
abuseofdiscretionwhenitheldthatthesubjectpropertywasnolongerusedforlivestockfarming
asshownbytheReportoftheInvestigatingTeam.Petitionerreliesonthe1997LUCECandDAR
findingsthatthesubjectpropertywasdevotedtolivestockfarming,andonthe1999CADecision
whichheldthattheoccupantsofthepropertyweresquatters,bereftofanyauthoritytostayand
[50]
possesstheproperty.


Ononehand,thefarmergroups,representedbytheEspinasgroup,contendthattheyhave
been planting rice and fruitbearing trees on the subject property, and helped the National
Irrigation Administration in setting up an irrigation system therein in 1997, with a produce of
1,500to1,600sacksofpalayeachyearthatpetitionercametocourtwithuncleanhandsbecause,
whileitsoughttheexemptionandexclusionoftheentireproperty,unknowntotheCA,petitioner
surreptitiouslyfiledforconversionofthepropertynowknownasPaloAlto,whichwasactually
granted by the DAR Secretary that petitioners bad faith is more apparent since, despite the
conversion of the 153.3049hectare portion of the property, it still seeks to exempt the entire
propertyinthiscaseandthatthefactthatpetitionerappliedforconversionisanadmissionthat
indeedthepropertyisagricultural.ThefarmergroupsalsocontendthatpetitionersrelianceonLuz
Farms and Sutton is unavailing because in these cases there was actually no cessation of the
businessofraisingcattlethatwhatisbeingexemptedistheactivityofraisingcattleandnotthe
property itself that exemptions due to cattle raising are not permanent that the declaration of
DARA.O.No.9asunconstitutionaldoesnotatalldiminishthemandateddutyoftheDAR,asthe
leadagencyoftheGovernment,toimplementtheCARLthattheDAR,vestedwiththepowerto
identifylandssubjecttoCARP,logicallyalsohasthepowertoidentifylandswhichareexcluded
and/or exempted therefrom that to disregard DARs authority on the matter would open the
floodgatestoabuseandfraudbyunscrupulouslandownersthatthefactualfindingoftheCAthat
thesubjectpropertyisnolongeralivestockfarmmaynotbedisturbedonappeal,asenunciatedby
thisCourtthatDARconductedareviewandmonitoringofthesubjectpropertybyvirtueofits
powersundertheCARLandthattheCAhassufficientdiscretiontoadmitevidenceinorderthat
[51]
itcouldarriveatafair,just,andequitablerulinginthiscase.

On the other hand, respondent OP, through the Office of the Solicitor General (OSG),
claimsthattheCAcorrectlyheldthatthesubjectpropertyisnotexemptfromthecoverageofthe
CARP,assubstantialpiecesofevidenceshowthatthesaidpropertyisnotexclusivelydevotedto
livestock,swine,and/orpoultryraisingthattheissuespresentedbypetitionerarefactualinnature
andnotproperinthiscasethatunderRule43ofthe1997RulesofCivilProcedure,questionsof
factmayberaisedbythepartiesandresolvedbytheCAthatduetothedivergenceinthefactual
findingsoftheDARandtheOP,theCAwasdutyboundtoreviewandascertainwhichofthesaid
findings are duly supported by substantial evidence that the subject property was subject to
continuingreviewandverificationproceedingsduetothethenprevailingDARA.O.No.9that
there is no question that the power to determine if a property is subject to CARP coverage lies
withtheDARSecretarythatpursuanttosuchpower,theMAROrenderedtheassailedreportsand

certification,andtheDARitselfmanifestedbeforetheCAthatthesubjectpropertyisnolonger
devoted to livestock farming and that, while it is true that this Courts ruling in Luz
Farms declared that agricultural lands devoted to livestock, poultry, and/or swine raising are
[52]
excludedfromtheCARP,thesaidrulingisnotwithoutanyqualification.

[53]
InitsReply
tothefarmergroupsandtotheOSGscomment,petitionercountersthatthe
farmergroups have no legal basis to their claims as they admitted that they entered the subject
propertywithouttheconsentofpetitionerthatthericeplotsactuallyfoundinthesubjectproperty,
which were subsequently taken over by squatters, were, in fact, planted by petitioner in
compliancewiththedirectiveofthenPresidentFerdinandMarcosfortheemployertoproviderice
toitsemployeesthatwhenalandisdeclaredexemptfromtheCARPonthegroundthatitisnot
agriculturalasofthetimetheCARLtookeffect,theuseanddispositionofthatlandisentirelyand
foreverbeyondDARsjurisdictionandthat,inasmuchasthesubjectpropertywasnotagricultural
fromtheverybeginning,DARhasnopowertoregulatethesame.Petitioneralsoassertsthatthe
CAcannotuncharacteristicallyassumetheroleoftrieroffactsandresolvefactualquestionsnot
previously adjudicated by the lower tribunals that MARO Elma rendered the assailed MARO
reports with bias against petitioner, and the same were contradicted by the Investigating Teams
Report, which confirmed that the subject property is still devoted to livestock farming and that
therehasbeennochangeinpetitionersbusinessinterestasanentityengagedinlivestockfarming
sinceitsinceptionin1960,thoughtherewasadmittedlyadeclineinthescaleofitsoperationsdue
totheillegalactsofthesquatteroccupants.

OurRuling

ThePetitionisbereftofmerit.

LetitbestressedthatwhentheCAprovidedinitsfirstDecisionthatcontinuingreviewand
verification may be conducted by the DAR pursuant to DARA.O. No. 9, the latter was not yet
declared unconstitutional by this Court. The first CA Decision was promulgated on April 29,
2005, while this Court struck down as unconstitutional DARA.O. No. 9, by way of Sutton, on
October19,2005.Likewise,letitbeemphasizedthattheEspinasgroupfiledtheSupplementand
submitted the assailed MARO reports and certification on June 15, 2005, which proved to be
adverse to petitioners case. Thus, it could not be said that the CA erred or gravely abused its
discretion in respecting the mandate of DARA.O. No. 9, which was then subsisting and in full

forceandeffect.

Whileitistruethatanissuewhichwasneitherallegedinthecomplaintnorraisedduring
thetrialcannotberaisedforthefirsttimeonappealasitwouldbeoffensivetothebasicrulesof
[54]
[55]
fair play, justice, and due process,
the same is not without exception,
such as this case.
[56]
The CA, under Section 3,
Rule 43 of the Rules of Civil Procedure, can, in the interest of
justice,entertainandresolvefactualissues.Afterall,technicalandproceduralrulesareintended
tohelpsecure,andnotsuppress,substantialjustice.Adeviationfromarigidenforcementofthe
rulesmaythusbeallowedtoattaintheprimeobjectiveofdispensingjustice,fordispensationof
[57]
justiceisthecorereasonfortheexistenceofcourts.
Moreover,petitionercannotvalidlyclaim
that it was deprived of due process because the CA afforded it all the opportunity to be heard.
[58]
The CA even directed petitioner to file its comment on the Supplement, and to prove and
establish its claim that the subject property was excluded from the coverage of the
CARP.PetitioneractivelyparticipatedintheproceedingsbeforetheCAbysubmittingpleadings
and pieces of documentary evidence, such as the Investigating Teams Report and judicial
affidavits.TheCAalsowentfurtherbysettingthecaseforhearing.Inalltheseproceedings,all
thepartiesrightstodueprocesswereamplyprotectedandrecognized.

With the procedural issue disposed of, we find that petitioners arguments fail to persuade. Its
invocationofSuttonisunavailing.InSutton,weheld:

Inthecaseatbar,wefindthattheimpugnedA.O.isinvalidasitcontravenestheConstitution.The
A.O.soughttoregulatelivestockfarmsbyincludingtheminthecoverageofagrarianreformand
prescribingamaximumretentionlimitfortheirownership.However,thedeliberationsofthe1987
ConstitutionalCommissionshowaclearintenttoexclude,interalia,alllandsexclusivelydevoted
tolivestock,swineandpoultryraising.The Courtclarified in theLuz Farms case that livestock,
swineandpoultryraisingareindustrialactivitiesanddonotfallwithinthedefinitionofagriculture
or agricultural activity. The raising of livestock, swine and poultry is different from crop or tree
farming. It is an industrial, not an agricultural, activity.A great portion of the investment in this
enterpriseisintheformofindustrialfixedassets,suchas:animalhousingstructuresandfacilities,
drainage,waterersandblowers,feedmillwithgrinders,mixers,conveyors,exhaustsandgenerators,
extensivewarehousingfacilitiesforfeedsandothersupplies,antipollutionequipmentlikebiogas
and digester plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses,sprayers,andothertechnologicalappurtenances.
Clearly,petitionerDARhasnopowertoregulatelivestockfarmswhichhavebeenexempted
bytheConstitutionfromthecoverageofagrarianreform.Ithasexceededitspowerinissuingthe
[59]
assailedA.O.

Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those
ofSuttonbecause,inSutton,thesubjectpropertyremainedalivestockfarm.Weevenhighlighted
therein the fact that there has been no change of business interest in the case of respondents.
[60]
[61]
Similarly, inDepartment of Agrarian Reform v. Uy,
we excluded a parcel of land from
CARPcoverageduetothefactualfindingsoftheMARO,whichwereconfirmedbytheDAR,that
the property was entirely devoted to livestock farming. However, in A.Z. Arnaiz Realty, Inc.,
represented by Carmen Z. Arnaiz v. Office of the President Department of Agrarian Reform
Regional Director, DAR Region V, Legaspi City Provincial Agrarian Reform Officer, DAR
Provincial Office, Masbate, Masbate and Municipal Agrarian Reform Officer, DAR Municipal
[62]

Office, Masbate, Masbate,

we denied a similar petition for exemption and/or exclusion, by

accordingrespecttotheCAsfactualfindingsanditsrelianceonthefindingsoftheDARandthe
OPthat

[63]
thesubjectparcelsoflandwerenotdirectly,actually,andexclusivelyusedforpasture.
Petitionersadmissionthat,since2001,itleasedanotherranchforitsownlivestockisfatal
[64]
to its cause.
While petitioner advances a defense that it leased this ranch because the
occupantsofthesubjectpropertyharmeditscattle,liketheCA,wefinditsurprisingthatnoteven
asinglepoliceand/orbarangayreportwasfiledbypetitionertoamplifyitsindignationoverthese
alleged illegal acts. Moreover, we accord respect to the CAs keen observation that the assailed
MAROreportsandtheInvestigatingTeamsReportdonotactuallycontradictoneanother,finding
thatthe43cows,whileownedbypetitioner,wereactuallypasturedoutsidethesubjectproperty.
`
Finally, it is established that issues of Exclusion and/or Exemption are characterized as
AgrarianLawImplementation(ALI)caseswhicharewellwithintheDARSecretaryscompetence
[65]
andjurisdiction.
Section3,RuleIIofthe2003DepartmentofAgrarianReformAdjudication
BoardRulesofProcedureprovides:
Section3.AgrarianLawImplementationCases.
The Adjudicator or the Board shall have no jurisdiction over matters involving the
administrativeimplementationofRANo.6657,otherwiseknownastheComprehensiveAgrarian
Reform Law (CARL) of 1988 and other agrarian laws as enunciated by pertinent rules and
administrative orders, which shall be under the exclusive prerogative of and cognizable by the
OfficeoftheSecretaryoftheDARinaccordancewithhisissuances,towit:

xxxx

3.8ExclusionfromCARPcoverageofagriculturallandusedforlivestock,swine,andpoultry
raising.

Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of his legal
mandate to exercise jurisdiction and authority over all ALI cases. To succumb to petitioners
contention that when a land is declared exempt from the CARP on the ground that it is not
agriculturalasofthetimetheCARLtookeffect,theuseanddispositionofthatlandisentirelyand
forever beyond DARs jurisdiction is dangerous, suggestive of selfregulation. Precisely, it is the
DAR Secretary who is vested with such jurisdiction and authority to exempt and/or exclude a
propertyfromCARPcoveragebasedonthefactualcircumstancesofeachcaseandinaccordance
with law and applicable jurisprudence. In addition, albeit parenthetically, Secretary Villa had
alreadygrantedtheconversionintoresidentialandgolfcoursesuseofnearlyonehalfoftheentire
area originally claimed as exempt from CARP coverage because it was allegedly devoted to
livestockproduction.

Insum,wefindnoreversibleerrorintheassailedAmendedDecisionandResolutionoftheCA
whichwouldwarrantthemodification,muchlessthereversal,thereof.

WHEREFORE, the Petition isDENIED and the Court of Appeals Amended Decision
datedOctober4,2006andResolutiondatedMarch27,2008areAFFIRMED.Nocosts.

SOORDERED.

ANTONIOEDUARDOB.NACHURAAssociateJustice