[O.P. Case No. 97-L-9211.  October 2, 2000.]

IN RE: PETITION FOR EXEMPTION FROM CARP COVERAGE PURSUANT TO SECTION 10 OF R.A. NO. 6657,

ARAVAL INCORPORATED, represented by its Attorneys-in-Fact, MA. RITA QUIAMSON or MA. LOURDES A. QUIAMSON, petitioner-appellant.

R E S O L U T I O N

          This resolves the appeal of Araval Incorporated ("Araval", for brevity), through counsel, from the Order dated September 16, 1997 of then Secretary Ernesto Garilao of Agrarian Reform, which exempted from the coverage of the Comprehensive Agrarian Reform Program (CARP) only 28 hectares out of its total 100.1813 hectares landholding.

          Records disclose the following relevant facts:

          In a Petition dated March 8, 1990, reiterated in a letter of August 24, 1993, Araval requested the Department of Agrarian Reform (DAR) to exempt from CARP coverage its untenanted property situated in Tungkong Mangga, San Jose del Monte, Bulacan, consisting of sixteen (16) parcels of agricultural land, each covered by a transfer certificate of title (TCT), and with an aggregate area of 100.1813 hectares. In support of the petition, Araval invoked the following grounds pursuant to Section 10 of Republic Act (RA) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988:

(a)     A major portion of its property has a slope of 18% and above; and,

(b)     Its landholding is being used by the University of the Philippines, Los Baños (UPLB) as an experimental farm stations to research on mangoes and how different varieties of rootstocks and grafts would affect the size, taste, etc. of the fruit as well as to find out if there are any rootstock that may have dwarfing effect on the tree. UPLB is also using the property to experiment with disease-free cloned bananas.

          After due investigation, Legal Officer I Jesus C. Francisco and Chief LAD Lolita Halili of Bulacan Provincial Agrarian Reform Office jointly recommended to the DAR Region III Director, in their Memorandum of September 17, 1993 ". . . that the subject landholding of Araval Incorporated with a total area of 862,055 square meters, more or less" be exempted from the coverage of the Comprehensive Agrarian Reform Law (CARL)" . . . inasmuch as that said subject landholding is considered as 18% slope and above and subject for experimental purpose.

          In her 1st Indorsement of October 28, 1993, Bulacan Provincial Agrarian Reform Officer (PARO) Erlinda Pearl V. Armada recommended to the DAR Region III Director, San Fernando, Pampanga, the denial of Araval's petition on ground that the landholding was utilized for research only after the effectivity of RA No. 6657 in 1988.

          Acting thereon, Assistant Regional Director for Operations Eugenio B. Bernardo of DAR Region III referred Araval's petition to the Chief, Legal Division, DARRO, for legal advice in a 2nd Indorsement of November 16, 1993.

          Through a "REPORT/LEGAL OPINION/RECOMMENDATION" dated January 26, 1994, Legal Officer III Carlito Tadeo, with whom DARRO Legal Division Chief Epifanio G. Devero agreed, expressed the view that the landholding is not exempt from CARP, considering that the area slope of 18% is immaterial because the landholding is devoted principally to agricultural production and that, moreover, it was requested to be used by UPLB for research purposes only after the effectivity of RA 6657.

          DAR Region III OIC-Director Eugenio B. Bernardo was, however, of different persuasion. Finding that portions of the landholding are being devoted to experimental farm stations by the Department of Horticulture, UPLB and, hence, exempt from CARP coverage under Section 10 of RA No. 6657, he recommended to the DAR Secretary that subject landholding be acquired under CARP, except those portions used as experimental farm stations, which should, however, be acquired when no longer utilized for said purpose.

          Pursuant to the Memorandum dated March 7, 1997, of Atty. Pacifico V. Gomez, Jr., OIC-Head Executive Assistant, DAR, stating that only some portions of the landholding are actually and directly used as experimental farm stations by UPLB and that, moreover, the Memorandum of Agreement between Araval and UPLB was submitted to the DAR only in April 1996, whereas the Notice of Compulsory Coverage under CARP of subject property was issued as early as February 19, 1992, and, therefore, recommending that only those portions actually and directly used as experimental farms as of June 15, 1988, when RA No. 6657 took effect, should be exempted from CARP coverage, the DAR Secretary issued the appealed order on September 16, 1997.

          The resolution of the instant appeal devolves on the solitary issue of whether or not the DAR Secretary erred in not directing the exemption from CARP of subject landholding in its entirety and in ordering, instead, the exclusion from its coverage of only twenty-eight (28) hectares thereof, which are actually, directly and exclusively used by UPLB as experimental farm stations.

          In issuing the assailed order, the DAR Secretary noted, firstly, that the fact that a major portion of Araval's property has more than 18% slope does not import any decisive significance insofar as concerns CARP exemption and that, secondly, it is of no moment that the property is untenanted to come within the purview of the CARL.

          The foregoing observations should command our adherence. An agricultural land with a slant or elevation of 18% or over is, under Section 10 of RA No. 6657, exempted from CARP coverage if said land is undeveloped. Stated a little differently, exemption from CARP can only take place not only when the area slope is 18% or above but also when the area itself is not yet agriculturally developed, which is far from being the case in the subject landholding, as no less than Araval itself concedes. Moreover, DAR Administrative Order No. 13, Series of 1990 entitled "Rules and Procedures Governing Exemption of Lands from CARP coverage under Section 10, R.A. 6657", is clear and specific on this matter, thus:

          "The general policy under CARP is to cover as much lands suitable for agriculture as possible. However, Section 10, RA 6657 excludes and exempts certain types of lands from the coverage of CARP to wit:

xxx                      xxx                      xxx

B.      All lands with eighteen percent (18%) and over, except those already developed.

In the application of the aforecited provision of law, the following guidelines shall be observed:

xxx                      xxx                      xxx

E.      All lands with the slope of eighteen percent (18%) and over are exempt from acquisition and distribution. However, those with 18% slope and over but already developed for agricultural purposes as of 15 June 1988 shall be allocated to qualified applicants."

          Prescinding from above, we find no occasion, much less justification, for holding that the DAR Secretary erred in allowing only a partial exemption of the subject landholding from CARP.

          In the same breath, we share the DAR Secretary's reflections that to fall under CARP coverage, a landholding need not be tenanted, unlike in the case of Presidential Decree (PD) No. 27 which prescribes such condition. For, indeed, the application of CARP does not postulate the presence of actual tillers or tenants on the landholding, since Section 22 of RA No. 6657 considers as qualified beneficiaries the landless residents of the same barangay, or in the absence thereof, the landless residents of the same municipality in the order of priority prescribed therein.

          Be that as it may, this Office cannot go the length of holding as that arrived at by the DAR Secretary. Section 10 of RA No. 6657 emphatically provides:

          "Section 10.   Exemptions and Exclusions. — Lands actually, directly and exclusively used and found to be necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves, national defense, school sites and campuses including experimental farm stations operated by public or private schools for educational purposes, seeds and seedlings research and pilot production center, church sites and convents appurtenant thereto, sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, government and private research and quarantine centers, and all lands with eighteen percent (18%) slope and over, except those already developed shall be exempt from the coverage of this Act." (emphasis supplied)

          Given the above premise, the issue at once arises of whether or not the entire Araval landholding or only that portion thereof determined by the DAR Secretary should be exempted from CARP.

          The DAR Secretary contends all along that only so much of the property (28 has.) actually, directly and exclusively used by UPLB as experimental farm stations should be excluded from CARP coverage. In arriving at this ruling, the DAR Secretary relied heavily and leaned on pieces of evidence suggesting that only portions of the subject landholding are being used as experimental farm stations. These may be true as far as the requirements under Section 10 of RA 6657 are concerned, that the lands must be actually, directly, exclusively used for said purpose. However, the DAR Secretary failed to consider material and relevant evidence showing that the entire area are found to be necessary for experimental farm stations, proof of which is the undisputed fact that UPLB has been conducting a series of experiments on the area even prior to effectivity of CARL. Consider the following uncontroverted evidence adduced by Araval:

(a)     Affidavit dated April 30, 1996, of UPLB Professor Leon O. Namuco, former DAR witness, to the effect that the whole property of Araval has been made available to UPLB for experiments and planting since 1987, prior to which date, or sometime in the 70's, portions thereof have been used by UPLB as experiment site;

(b)     Certification dated June 3, 1991 of UPLB Professor Jose R. Deanon, Jr. to the effect that since 1980, UPLB has conducted a series of experiments and off-campus training of students at the area under his leadership as Assistant Professor and Plant Breeder of Vegetable Crops (pp. 57-58, Records); and,

(c)     A copy of the Memorandum of Agreement between Araval and UPLB executed on April 20, 1996, stating, inter alia, that since the 1970's, portions of the property have been planted to mango trees for experimental purposes and that, by virtue thereof, the entire property, save for the rest house standing thereon, shall be available to the UPLB as experimental farm stations (pp. 83-87, Records).

          The phraseology of Section 10 of RA 6657 goes beyond mere semantics. Thus, said Section reads: "Lands actually, directly and exclusively used and found to be necessary for parks, wildlife, forest reserves, . . . school sites and campuses including experimental farm stations operated by public or private schools for educational purposes, seeds and seedlings research and pilot production centers, . . ." Plainly stated, Section 10 contemplates of two (2) classes of lands that may be exempted from CARP, i.e., (1) lands actually, directly and exclusively used for the purposes therein stated, and (2) lands found to be necessary for such purposes.

          Confirmation of this conclusion may be found in a recent Supreme Court decision in Central Mindanao University v. Department of Agrarian Reform, G.R. No. 100091, October 22, 1993, where the DAR attempted to expropriate lands of CMU for distribution to farmers on the ground that the land was not being used directly, actually and exclusively for educational purposes because the land was being leased to del Monte. The Court said that the DAR's reading of "direct, actual and exclusive" use for educational purposes failed to take into consideration an agricultural school's need for lands and about which the school was the best judge.

          Applying Central Mindanao University, supra, UPLB is the best judge to determine what portions of the landholding are necessary for experimental farm stations, being an educational institution availing thereof.

          The Memorandum of Agreement between Araval and UPLB whereby the entirety of the Araval landholding is set aside and slated as experimental farm stations, constitutes the expansion program of said State University. In fact even prior to actual coverage of the subject land in 1992, UPLB has already manifested, in a letter dated February 27, 1990, its intention to expand by availing itself of the area of about 80 hectares for its research and development project (p. 61, Records). In said letter, Araval, through Mr. Jose T. Quimson, expressed its conformity to UPLB's expansion program, by signing thereon.

          Consequently, and in fealty to the Supreme Court's pronouncement in the case of Central Mindanao University (supra), this Office is constraint to hold for Araval. As lucidly put by the High Court:

          "The construction given by the DARAB to Section 10 restricts the land area of the CMU to its present needs or to a land area presently, actively exploited and utilized by the university in carrying out its present education program with its present student population and academic facility overlooking the very significant factor of growth of the university in the years to come. By the nature of the CMU, which is a school established to promote agriculture and industry, the need for a vast tract of agricultural land for future programs of expansion is obvious. . . ." (emphasis supplied)

          WHEREFORE, premises considered, the appealed order is hereby MODIFIED, EXEMPTING from CARP coverage the remaining landholding of ARAVAL, Incorporated pursuant to Section 10, R.A. No. 6657, subject to future coverage upon cessation of the educational use or purpose.

          SO ORDERED.

          Manila, Philippines.

By authority of the President:

(SGD.) RONALDO B. ZAMORA

Executive Secretary

Copy furnished:

Atty. Robert A. C. Sison

Department of Agrarian Reform