Milestone Farms v. President (G.R. No. 182332; February 23, 2011)


FACTS: Petitioner Milestone Farms, Inc. was incorporated with the SEC. 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 316.0422-hectare property. Meanwhile, 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 CARP coverage. Thus, on January 10, 1994, petitioner re-documented its application pursuant to DAR A.O. No. 9.

Acting on the said application, the DARs Land Use Conversion and Exemption Committee (LUCEC) of Region IV conducted an ocular inspection on petitioners property and arrived at the following findings:

The LUCEC, thus, recommended the exemption of petitioners 316.0422-hectare property from the coverage of CARP. Adopting the LUCEC's findings and recommendation, DAR Regional Director Percival Dalugdug (Director Dalugdug) issued an Order dated June 27, 1994, exempting petitioners 316.0422-hectare property from CARP.

The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers), represented by Timiano Balajadia, Sr. (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, on June 4, 1994, petitioner filed a complaint for Forcible Entry against Balajadia and company before the Municipal Circuit Trial Court (MCTC) of Teresa-Baras, Rizal, docketed as Civil Case No. 781-T.The MCTC ruled in favor of petitioner, but the decision was later reversed by the Regional Trial Court, Branch 80, of Tanay, Rizal. 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 covered by TCT Nos. M-6013, M-8796, and M-8791. 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.

In the meantime, 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 January 21, 1997, then DAR Secretary Ernesto D. 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.

On February 4, 2000, the Office of the President rendered a decision reinstating Order declared the entire 316.0422-hectare property exempt from the coverage of CARP.

Consequently, petitioner sought recourse from the CA. the CA found that, based on the documentary evidence presented, the property subject of the application for exclusion had more than satisfied the animal-land 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. Hence, the instant petition is hereby granted. Finally, petitioners motion for reconsideration was denied by the CA.

ISSUE: Is the land exempted from CARL coverage?

HELD: In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform and prescribing a maximum retention limit for their ownership. However, the deliberations of the 1987 Constitutional Commission show a clear intent to exclude, inter alia,all lands exclusively devoted to livestock, swine and poultry-raising. The Court clarified in the Luz Farms case that livestock, swine and poultry-raising are industrial activities and do not fall within the definition of "agriculture" 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 enterprise is in the form of industrial fixed assets, such as: animal housing structures and facilities, drainage, waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas and digester plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks, pump houses, sprayers, and other technological appurtenances.

Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by the Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the assailed A.O.While it is true that an issue which was neither alleged in the complaint nor raised during the trial cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice, and due process,the same is not without exception,such as this case. The CA, under Section 3,Rule 43 of the Rules of Civil Procedure, can, in the interest of justice, entertain and resolve factual issues. After all, technical and procedural rules are intended to help secure, and not suppress, substantial justice. A deviation from a rigid enforcement of the rules may thus be allowed to attain the prime objective of dispensing justice, for dispensation of justice is the core reason for the existence of courts.Moreover, petitioner cannot validly claim that it was deprived of due process because the CA afforded it all the opportunity to be heard.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. Petitioner actively participated in the proceedings before the CA by submitting pleadings and pieces of documentary evidence, such as the Investigating Teams Report and judicial affidavits. The CA also went further by setting the case for hearing. In all these proceedings, all the parties rights to due process were amply protected and recognized.

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