[O.P. Case No. 97-E-8035.  February  4, 2000.]

RE: APPLICATION FOR EXEMPTION/EXCLUSION OF AGRICULTURAL LAND EMBRACED UNDER TRANSFER CERTIFICATES OF TITLE NOS. (410434) M-15750; (486101) M-7507; (486102) M-7308; (274129) M-15751; (486103) M-7309; (486104) M-7310; (332694) M-15755; (486105) M-7311; (486106) M-7312; M-8791; (486107) M-7313; (486108) M-7314; M-8796; (486109) M-7315; (486110) M-9508; M-6013; WITH AN AGGREGATE AREA OF 316.0422 HECTARES LOCATED AT PINUGAY, BARAS, RIZAL

MILESTONE FARMS, INC., appellant,

DANTE ESPIRITU, ET AL., appellants.

D E C I S I O N

          This resolves the partial appeals separately interposed by Milestone Farms, Inc ("MFI" or "Milestone", for short) and Dante Espiritu, et al., from the Order of then Secretary Ernesto Garilao of the Department of Agrarian Reform (DAR) dated April 15, 1997, reiterating his earlier Order of January 21, 1997, the dispositive portion of which reads as follows:

          "WHEREFORE, premises considered, Order is hereby issued:

1.      EXEMPTING from CARP coverage a total area of 240.9776 hectares out of the 316.0422 hectares previously exempted by Regional Director Percival Dalugdug in his Order dated 27 June 1994;

2.      DECLARING 75.0646 hectares COVERED under R.A. 6657 (Comprehensive Agrarian Reform Law);

3.      DIRECTING the MARO/PARO concerned to proceed with the coverage and distribution of the 75.0646 hectares to qualified beneficiaries in accordance with pertinent agrarian laws and regulations.

          SO ORDERED."

          At the core of the case are, as indicated in the caption hereof, several parcels of land with an aggregate area of 316.0422 hectares, more or less, situated at Pinugay, Baras, Rizal, registered under several titles in the name of Milestone.

          Records yield the following relevant facts:

          In May 1993, Milestone applied for the exemption of the property in question from the Comprehensive Agrarian Reform Program (CARP) coverage. The application was ostensibly filed in line with the pronouncement in Luz Farms vs. Secretary of the Department of Agrarian Reform (192 SCRA 51 [1990]) excluding private agricultural lands devoted to livestock, poultry and swine raising from CARP coverage.

          Consequent to the Luz Farms ruling, the DAR promulgated on December 27, 1993 Administrative Order No. 09, s. of 1993, (AO 09, hereafter) prescribing rules and regulations governing the exclusion from CARP coverage of agricultural lands used for livestock, poultry and swine raising. What transpired next is as recited in the appealed order dated January 21, 1997, thus:

          "On January 10, 1994, MFI, through its President Misael G. Vera [redocumented its] application for exemption pursuant to Administrative Order No. 09, Series of 1993 over a 316.0422 hectares of land covered by the above enumerated Transfer Certificates of Title located at Lot C of Pinugay, Baras, Rizal.

          In support of its application, MFI submitted the following documentary requirements, to wit:

xxx                    xxx                    xxx

          A perusal of the submitted documentary requirements revealed the following:

1.      All the subject parcels of land were acquired by MFI before June 15, 1988, the effectivity date of the Comprehensive Agrarian Reform Law (CARL), the earliest of which was the parcel of land covered by TCT No. (274129) M-15751 on 5 January 1970 while the latest were two parcels of land covered by TCT Nos. M-8791 and M-8790 on 31 August 1978;

2.      423 Certificates of Ownership of Large Cattle were submitted (204 for the years 1992 to 1995 and 219 for the years 1980 up to 1990);

3.      In its Articles of Incorporation approved by the SEC on 8 January 1960, the following were listed as some of MFI's secondary purposes, to wit:

1.      To engage in the raising of cattle, pigs and other livestock, . . . and to sell and otherwise dispose of said cattle, pigs and other livestock . . .;

2.      To import cattle, pigs and other livestock, and animal feed necessary for the raising of said cattle, pigs and other livestock as may be authorized by law.

          Acting on the aforesaid application, the Land Use Conversion and Exemption Committee (LUCEC) of Region IV conducted an investigation and ocular inspection in the area. . . . Thus, the LUCEC recommended for the approval of the application for exemption." (words in bar added)

          On June 27, 1994, Regional Director Percival Dalugdug of DAR Region IV issued an order exempting the subject 316.0422 hectares of land from CARP coverage on the strength of the following premises:

          "After evaluation of the reports of the PARO and MARO concerned and the LUCEC . . . and the documents submitted . . . it was found out that the total land area applied for is 316.0422 hectares, more or less, with the following actual land utilization, to wit:

For livestock, swine/poultry:

A.     Grazing                                           258.8422
B.      Infrastructure                                    42.2000
C.     Planted to sweet corn                      10.0000
D.     Fish pond                                            5.0000

That the livestock population/density is as follows:

A.     Cows                                       371 heads
B.      Horses                                     20 heads
C.     Swine                                       5,678 heads
D.     Cocks                                      798 heads

          Finding the instant application to be in order and in accordance with [AO] No. 9, series of 1993 and based on the variance above given to be way below the 10% variance, it is hereby ordered that subject parcels of land be EXEMPTED/EXCLUDED from CARP coverage."

          In time, a group calling itself the Southern Pinugay Farmers Multi-Purpose Cooperative (SPFMC) moved for a reconsideration, but its motion was denied by Director Dalugdug in an order dated November 24, 1994.

          Undaunted, the SPFMC, via a letter appeal dated April 24, 1995 elevated the case to the DAR Proper. Subsequently, in July 1996, one Timiano Balajadia Jr., President of Pinugay Farmers Association (PFA), filed a petition seeking a re-evaluation of the exempting order aforestated.

          On January 21, 1997, DAR Secretary Garilao issued the appealed order, the decretal part of which is quoted at the outset, excluding from CARP coverage only 240.9776 hectares, from the original 316.0422 hectares, thus bringing in 75.0646 hectares of the property in question (316.0422 - 2409776 = 75.06460.) under CARP. Secretary Garilao's order is anchored on the interplay of the ensuing premises:

1.         A headcount of the livestock population in the area conducted on October 22, 1996 showed that there are 448 heads of cattle and about 5,000 plus heads of swine placed in feedlots/corrals near the Vera's residence.

2.         AO No. 09, series of 1993, in implementing the Luz Farms ruling, requires "that in order for private agricultural lands to be excluded from CARP, they must already be devoted to livestock, poultry and swine raising as of 15 June 1988 which means that the livestock must be existing in the area at the time the law took effect."

3.         The "Certificates of Ownership of Large Cattle submitted by petitioner shows that the total number of cattle registered in the name of Misael Vera, Jr. prior to 15 June 1988 covering the years 1980 up to 1986, is only 86 heads of cattle. One hundred thirty-three (133) were subsequently bought in 1990 while a total of Two hundred four. (204) were registered from 1992 to 1995." Between a mere headcount and the certificates submitted, the latter deserve more weight "because the same explicitly provides the number of cattle owned by herein petitioner as of 15 June 1988."

4.         Applying the animal-land ratio (1 ha. for grazing for every head of cattle/carabao/horse) as well as the infrastructure-animal ratio (1.7815 has. for 21 heads of cattle/carabao/horse, and 0.5126 ha. For 21 heads of hogs) set forth in AO 09, what is exempted from CARP coverage would only be 240.9776 hectares, broken down as follows: 86 has. and 8 has. for grazing and infrastructure, respectively for the 86 heads of cattle; 8 has. and 0.3809 sq. m. for grazing and infrastructure, respectively, for 8 horses, and 138.5967 has. for the 5,678 heads of swine.

          In the same order, Secretary Garilao brushed aside the allegations of SPFMC regarding the land in question being covered by Operation Land Transfer pursuant to Proclamation No. 14, s. of 1971.

Subsequently, Milestone and Dante Santos, et al., claiming to be farmers-beneficiaries and members of the Samahang Anak-Pawis ng Lagundi, Inc (SAPLAG, for short), separately sought reconsideration, the latter inter alia alleging that they have been prevented by Milestone's agents from entering the farm area. In an order of April 15, 1997, the DAR denied reconsideration.

          Meanwhile, or on June 4, 1994, Milestone filed a complaint for forcible entry against Timiano Balajadia and other SAPLAG members before the Municipal Circuit Trial Court (MCTC) of Teresa-Baras, Teresa Rizal, docketed thereat as Civil Case No. 781-T.

          In this recourse, Milestone urges the setting aside of the appealed order insofar as it declared the 75.0646-hectare area in question as covered by CARP. On the other hand, Santos, et al., seeks, as primary relief, the denial altogether of "the petition or application [of Milestone] for exemption/exclusion."

          The appeal of Milestone is impressed with merit.

          Milestone maintains that the rationale behind the appealed order, supra, is erroneous, it being its threshold submission that, contrary to the DAR Secretary's posture, private agricultural lands, to be excluded from CARP coverage, need not be devoted to livestock, poultry or swine raising at the time the Comprehensive Agrarian Reform Law (RA 6657) took effect on June 15, 1988.

          The submission is well taken. The Luz Farms ruling, pursuant to which AO 09 was promulgated, stands distinctly silent on whether or not a piece of agricultural land converted for livestock/poultry raising after June 15, 1988 is forever barred from being exempted from CARP coverage. But more importantly, AO 09 provides, under Section VII thereof, that an exclusion order shall issue provided the landowner applies for exclusion before the effectivity of the AO.

          "All landowners who have effectively converted their landholdings to poultry, livestock or swine raising after June 15, 1988 and before the effectivity of the rules shall immediately apply for the necessary exclusion order from the DAR, pursuant to Section IV of this [AO]."

          Records tend to show that Milestone initially applied for exemption/exclusion long before AO 09 became effective, ten (10) days after its publication early in January of 1994. And to stress, the area applied for was, at the time Milestone's application was being processed, the home, per the reports of the MARO, PARO and the LUCEC, supra, of the following mix: 391 heads of cows/horses, 5,678 heads of swine and 788 heads of chicken, a livestock population which is sufficient to compel exclusion of the applied area from CARP coverage.

          Apart from the foregoing, Milestone takes exception to the findings of the DAR Secretary that it had only 86 heads of cattle before June 15, 1988 as evidenced by the certificates of ownership of large cattle it submitted. Corollarily, Milestone faults the DAR Secretary for declaring that "between a mere headcount and the Certificates submitted by [MFI] itself, [DAR] is inclined to give more weight to such certificates because the same explicitly provides for the number of cattle owned by [MFI] as of 15 June 1988."

          Milestone's lament is quite understandable. For the DAR Secretary's preference for certificates of ownership loses sight of a number of significant realities. Foremost of these is the cattle business cycle, or what Milestone refers to as the dynamic nature of livestock raising, which involves the sale and purchase, replacement and culling of stocks as well as in-breeding. Once a cattle is sold, the corresponding certificate of registration is transferred to the buyer in line with Section 525 of the Revised Administrative Code, as amended, pertinently reading:

          "In case of sale, the owner shall deliver to the purchaser the original certificate of ownership and all certificates of intermediate transfer, showing ownership in himself, and in case of loss of the original certificate of ownership, or of any of the certificates of intermediate transfer, certified copies of the proper entries showing such documents to have been issued by the proper official."

          It is thus impossible, as aptly pointed out, for Milestone to hold on to these certificates prior to June 15, 1988, transactions and transfers of livestock ownership having taken place years before that date. Accordingly, the certificates of ownership of large cattle registered in Milestone's name prior to June 15, 1988 would not necessarily be reflective of the actual state of livestock raising in its farm. Stated a bit differently, the eighty-six (86) certificates of ownership adverted to in the appealed order would be insufficient to establish the actual number of cattle owned by Milestone — which was 448 heads — and existing in the site during the ocular inspection.

          On the practical viewpoint, the reliance of the DAR Secretary on certificates of ownership, instead of the more reliable physical headcount, as a measure of determining the actual number of large cattle Milestone owned — his basis for denying or granting the exemption sought — would only render useless the results of two investigations conducted by DAR personnel themselves. If said certificates are to be the controlling norm, why conduct the investigation and the headcount in the first place?

          It cannot be overemphasized that Milestone has met the livestock, swine and poultry density requirement contemplated under AO 09 to exempt the entire area in question from CARP coverage. The report of LUCEC of DAR Region IV which conducted an on-site inspection of the subject area vis-a-vis Milestone's underlying application for exemption said so. Secretary Garilao, no less, cited this report in the appealed order of January 21, 1997, in the following language:

          ". . . the Land Use Conversion and Exemption Committee (LUCEC) of Region IV conducted an investigation and ocular inspection in the area. Their findings revealed that the actual land utilization for livestock, swine and poultry is 258.8422 hectares; the area which served as infrastructure is 42.000 hectares; ten (10) hectares are planted to corn and the remaining five (5) hectares are devoted to fish culture; that the livestock population are 371 heads of cow, 20 heads of horses; 5,678 heads of swine and 788 heads of cocks; that the areas 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, more or less, is likewise far below the allowable 10% variance; and, through not directly used for livestock purposes, the ten (10) hectares planted to sweet corn and the five (5) hectares devoted to fishpond could be considered supportive to livestock production. Thus, the LUCEC recommended for the approval of the application for exemption." (emphasis added)

          Absent convincing evidence to the contrary, the above findings, arrived at in the regular performance of official duties, are presumed correct.

          Furthermore, the results of a second investigation to determine the actual utilization of the area in question conducted on October 22, 1996 by a team formed by then DAR Undersecretary Soliman, in response to the petition filed by Mr. Timiano Balajadia Sr., support Milestone's plea for exemption. There, it was established, after an actual headcount, that the livestock population of the area consisted of four hundred forty eight (448) heads of cattle and about five thousand plus (5,000+) heads of swine. Even Secretary Garilao conceded, albeit with some qualifications, that these numbers juxtaposed with the application of the one-head per one-hectare ratio would leave the DAR with "no other option but to sustain the questioned Orders issued by Director Dalugdug."

          Given the above perspective, the appeal of Dante Espiritu, et al., assuming their standing in this case, need not detain this Office long. Suffice it to state that their right as prospective farmer-beneficiaries would in the ultimate analysis hinge on one issue: whether or not the subject parcels of land ought to be covered by CARP, a question resolved above in the negative. Furthermore, their claim of being farmers of the Milestone property would appear to have been belied by the decision of the MCTC of Teresa-Baras, Rizal dated February 16, 1995, in Civil Case No. 781-T for forcible entry, supra, finding Timiano Balajadia, et al., to have entered forcibly into the possession of the Milestone property in Pinugay, Baras, Rizal and ordering them and those claiming rights under them to vacate and surrender actual possession of the lands embraced in TCT Nos. M-6013, M-8796 and 8791. This trial court's decision, which veritably dismissed Balajadia, et al's claim of agricultural tenancy, was affirmed by the Court of Appeals in its decision promulgated on October 8, 1999 in CA-G-R SF No. 43698 entitled "Milestone Farm, Inc., Petitioner, versus Hon. Reynaldo G. Ros, as Judge RTC of Tanay, Rizal Branch 80 and Timiano Balajadia, et al., Respondents".

          One final word. The CARP aims to acquire private agricultural lands for distribution to the farmers-tillers, the freeing of farmers from the bondage of the soil being the objective of land reform (Association of Small Land Owners in the Phil., Inc. vs. Secretary of Agrarian Reform, 175 SCRA 343) This ideal, however, should not be pursued at the expense of landowners. Like prospective farmer-beneficiaries, landowners are equally deserving of fairness and the protection of the law. So it must be, here.

          WHEREFORE, the appealed Order dated January 21, 1997, as reiterated in another Order dated April 15, 1997 of then Secretary Ernesto D. Garilao of Agrarian Reform is hereby MODIFIED in the sense that the 75.0646 hectares declared therein as covered under R.A. 6657 is hereby declared as exempt from such coverage, as decreed in the Order dated June 27, 1994 of Regional Director Percival C. Dalugdug, which is hereby REINSTATED in its entirety. Accordingly, the instant appeal of Dante Espiritu, et al., is hereby DISMISSED.

          SO ORDERED.

          Manila, Philippines.

By authority of the President:

(SGD.) RONALDO B. ZAMORA

Executive Secretary

Copy furnished:

Atty. Renato M. Pambid

Atty. Martin Felix F. T. Tuanquin

Department of Agrarian Reform