Case Digest: Milestone Farms, Inc. v. Office of the President G.R. No. 182332, Feb 23, 2011,644 SCRA 2 17 (2011)

Petitioner, was incorporated with the Securities and Exchange Commission (SEC) on January 8, 1960. Among its pertinent secondary purposes are: (1) to engage in the raising of cattle, pigs, and other livestock; to acquire lands by purchase or lease, which may be needed for this purpose; and to sell and otherwise dispose of said cattle, pigs, and other livestock and their produce when advisable and beneficial to the corporation; (2) to breed, raise, and sell poultry; to purchase or acquire and sell, or otherwise dispose of the supplies, 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, pigs, and other livestock as may be authorized by law.
On June 10, 1988, a new Agrarian Reform law, Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), took effect, which included the raising of livestock, poultry, and swine in its coverage. However, on December 4, 1990, this Court, sitting en banc, ruled in Luz Farms v. Secretary of the Department of Agrarian Reform that agricultural lands devoted to livestock, poultry, and/or swine raising are excluded from the Comprehensive Agrarian Reform Program (CARP).

Thus, in May 1993, petitioner applied for the exemption/exclusion of its several properties from the coverage of the CARL, pursuant to the aforementioned ruling of this Court in Luz Farms. On December 27, 1993, the Department of Agrarian Reform (DAR) issued Administrative Order No. 9, Series of 1993 (DAR A.O. No. 9), setting forth rules and regulations to govern the exclusion of agricultural lands used for livestock, poultry, and swine raising from CAR coverage. Thus, on January 10, 1994, petitioner redocumented its application pursuant to DAR A.O. No. 9.

The DARs Land Use Conversion and Exemption Committee (LUCEC) of Region IV conducted an ocular inspection on petitioners property and arrived with a recommendation for the exemption of petitioners 316.0422 hectare property from the coverage of CARP. Adopting the LUCECs findings and recommendation, DAR Regional Director  Dalugdug issued an Order exempting petitioners 316.0422 hectare property from CARP.

The Southern Pinugay Farmers Multi Purpose Cooperative, Inc. (Pinugay Farmers), represented by Balajadia, moved for the reconsideration of the said Order, but the same was denied by Director Dalugdug in his Order dated November 24, 1994. Subsequently, the Pinugay Farmers filed a letter appeal with the DAR Secretary.
Correlatively, petitioner filed a complaint for Forcible Entry against Balajadia and company before the Municipal Circuit Trial Court (MCTC) of Teresa Baras, Rizal. The MCTC ruled in favor of petitioner, but the decision was later reversed by the Regional Trial Court, Ultimately, the case reached the CA, which, in its Decision dated October 8, 1999, reinstated the MCTCs ruling, ordering Balajadia and all defendants therein to vacate portions of the property. In its Resolution dated July 31, 2000, the CA held that the defendants therein failed to timely file a motion for reconsideration, given the fact that their counsel of record received its October 8, 1999 Decision; hence, the same became final and executory.

R.A. No. 6657 was amended by R.A. No. 7881, which was approved on February 20, 1995. Private agricultural lands devoted to livestock, poultry, and swine raising were excluded from the coverage of the CARL. On October 22, 1996, the fact finding 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 were 448 heads of cattle and more than 5,000 heads of swine.
On January 21, 1997, then DAR Secretary  Garilao issued an Order exempting from CARP only 240.9776 hectares of the 316.0422 hectares previously exempted by Director Dalugdug, and declaring 75.0646 hectares of the property to be covered by CARP.

Secretary Garilao opined that, for private agricultural lands to be excluded from CARP, 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 petitioner showed that only 86 heads of cattle were registered in the name of petitioners president, prior to June 15, 1988; 133 were subsequently bought in 1990, while 204 were registered from 1992 to 1995. Secretary Garilao gave more weight to the certificates rather than to the headcount because the same explicitly provide for the number of cattle owned by petitioner as of June 15, 1988.

Applying the animalland ratio (1 hectare for grazing for every head of cattle/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 240.9776 hectares of the property.Petitioner filed a Motion for Reconsideration, however, Secretary Garilao denied petitioners Motion for Reconsideration.

Aggrieved, petitioner filed its Memorandum on Appeal before the Office of the President (OP). On February 4, 2000, the OP rendered a decision reinstating Director Dalugdugs Order dated June 27, 1994 and declared the entire 316.0422 hectare property exempt from the coverage of CARP.
However, on separate motions for reconsideration of the aforesaid decision filed by farmergroups Samahang AnakPawis ng Lagundi and Pinugay Farmers, and the Bureau of Agrarian Legal Assistance of DAR, the OP issued a resolution dated September 16, 2002, setting aside its previous decision and a new one entered REINSTATING the Order dated 21 January 1997 of then DAR Secretary Ernesto D. Garilao.

April 29, 2005, the CA found that, based on the documentary evidence presented, the property subject of the application for exclusion had more than satisfied the animal -and and infrastructure-animal ratios under DAR A.O. No. 9. The CA also found that petitioner applied for exclusion long before the effectivity of DAR A.O. No. 9, thus, negating the claim that petitioner merely converted the property for livestock, poultry, and swine raising in order to exclude it from CARP coverage.Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the CA as the parties did not inform the appellate court then DAR Secretary Villa issued DAR Conversion Order granting petitioners application to convert portions of the 316.0422 hectare property from agricultural to residential and golf courses use.
The CAs decision of April 29, 2005, Motions for Reconsideration were filed by farmergroups, namely: the farmers represented by Espinas (Espinas group), the Pinugay 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 intimated that petitioner already converted and developed a portion of the property into a leisure residential commercial estate known as the Palo Alto Leisure and Sports Complex .

With the CA now made aware of these developments, particularly Secretary Villas Conversion Order of November 4, 2004, the appellate court had to acknowledge that the property subject of the controversy would now be limited to the remaining 162.7373 hectares. In the same token, the Espinas group prayed that this remaining area be covered by the CARP.CA amended its decision and the 162.7373 hectare agricultural portion is declared covered by CARP. Petitioner filed a Motion for Reconsideration but was denied.

Issue:
Whether or not lands devoted to livestock farming within the meaning of Luz farms and Sutton, and which are thereby exempt from  CARL coverage, are nevertheless subject to DAR’s continuing verification as to use, and, on the basis of such verification, may be ordered reverted to agricultural classification and compulsory acquisition

Held:
YES. The Court held that it is established that that issues of Exclusion and/or Exemption are characterized as Agrarian Law Implementation (ALI) cases which are well within the DAR Secretary’s competence and jurisdiction. It is the DAR Secretary who is vested with such jurisdiction and authority to exempt and/or exclude a property from CARP coverage based on the factual circumstances of each case and in accordance with law and applicable jurisprudence.