G.R. No. 182332               February 23, 2011

MILESTONE FARMS, INC., Petitioner, vs.OFFICE OF THE PRESIDENT, Respondent.

D E C I S I O N

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Amended Decision2 dated October 4, 2006 and its Resolution3 dated March 27, 2008.

The Facts

Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and Exchange Commission on January 8, 1960.4 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 by-products 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.5

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 Reform6 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, covered by Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M-7307, (T-486102) M-7308, (T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T-332694) M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791, (T-486107) M-7313, (T-486108) M-7314, M-8796, (T-486109) M-7315, (T-486110) M-9508, and M-6013, and located in Pinugay, Baras, Rizal, from the coverage of the CARL, pursuant to the aforementioned ruling of this Court in Luz Farms.

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. 9.7

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

[T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares; the area which served as infrastructure is 42.0000 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 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, more or less, is likewise far below the allowable 10% variance; and, though 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.

The LUCEC, thus, recommended the exemption of petitioner’s 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 petitioner’s 316.0422-hectare property from CARP.8

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, 1994.9 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.10 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 Decision11 dated October 8, 1999, reinstated the MCTC’s 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 Resolution12 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. 7881,13 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.

The DAR Secretary’s Ruling

On January 21, 1997, then DAR Secretary Ernesto D. Garilao (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.14

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 petitioner’s president, Misael Vera, Jr., 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 animal-land ratio (1 hectare for grazing for every head of cattle/carabao/horse) and the infrastructure-animal 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, as follows:

1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;

2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for every 21 heads of cattle;

3. 8 hectares for the 8 horses;

4. 0.3809 square meters of infrastructure for the 8 horses; [and]

5. 138.5967 hectares for the 5,678 heads of swine.15

Petitioner filed a Motion for Reconsideration,16 submitting therewith copies of Certificates of Transfer of Large Cattle and additional Certificates of Ownership of Large Cattle issued to petitioner prior to June 15, 1988, as additional proof that it had met the required animal-land ratio. Petitioner also submitted a copy of a Disbursement Voucher dated December 17, 1986, showing the purchase of 100 heads of cattle by the Bureau of Animal Industry from petitioner, as further proof that it had been actively operating a livestock farm even before June 15, 1988. However, in his Order dated April 15, 1997, Secretary Garilao denied petitioner’s Motion for Reconsideration.17

Aggrieved, petitioner filed its Memorandum on Appeal18 before the Office of the President (OP).

The OP’s Ruling

On February 4, 2000, the OP rendered a decision19 reinstating Director Dalugdug’s 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 farmer-groups Samahang Anak-Pawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the Bureau of Agrarian Legal Assistance of DAR, the OP issued a resolution20 dated September 16, 2002, setting aside its previous decision. The dispositive portion of the OP resolution reads:

WHEREFORE, the Decision subject of the instant separate motions for reconsideration is hereby SET ASIDE and a new one entered REINSTATING the Order dated 21 January 1997 of then DAR Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April 1997, without prejudice to the outcome of the continuing review and verification proceedings that DAR, thru the appropriate Municipal Agrarian Reform Officer, may undertake pursuant to Rule III (D) of DAR Administrative Order No. 09, series of 1993.

SO ORDERED.21

The OP held that, when it comes to proof of ownership, the reference is the Certificate of Ownership of Large Cattle. Certificates of cattle ownership, which are readily available – being issued by the appropriate government office – ought to match the number of heads of cattle counted as existing during the actual headcount. The presence of large cattle on the land, without sufficient proof of ownership thereof, only proves such presence.

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

reliance on the physical headcount is dangerous because there is a possibility that the landowners would increase the number of their cattle for headcount purposes only. The OP observed that there was a big variance between the actual headcount of 448 heads of cattle and only 86 certificates of ownership of large cattle.

Consequently, petitioner sought recourse from the CA.22

The Proceedings Before the CA and Its Rulings

On 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-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. Petitioner was held to have actually engaged in the said business on the property even before June 15, 1988. The CA disposed of the case in this wise:

WHEREFORE, the instant petition is hereby GRANTED. The assailed Resolution of the Office of the President dated September 16, 2002 is hereby SET ASIDE, and its Decision dated February 4, 2000 declaring the entire 316.0422 hectares exempt from the coverage of the Comprehensive Agrarian Reform Program is hereby REINSTATED without prejudice to the outcome of the continuing review and verification proceedings which the Department of Agrarian Reform, through the proper Municipal Agrarian Reform Officer, may undertake pursuant to Policy Statement (D) of DAR Administrative Order No. 9, Series of 1993.

SO ORDERED.23

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 Rene C. Villa (Secretary Villa) issued DAR Conversion Order No. CON-0410-001624 (Conversion Order), granting petitioner’s application to convert portions of the 316.0422-hectare property from agricultural to residential and golf courses use. The portions converted – with a total area of 153.3049 hectares – were covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and M-15750 (T-410434). With this Conversion Order, the area of the property subject of the controversy was effectively reduced to 162.7373 hectares.

On the CA’s decision of April 29, 2005, Motions for Reconsideration were filed by farmer-groups, namely: the farmers represented by Miguel Espinas25 (Espinas group), the Pinugay Farmers,26 and the SAPLAG.27 The farmer-groups all claimed that the CA should have accorded respect to the factual findings of the OP. Moreover, the farmer-groups 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 (Palo Alto).

Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured Evidence pursuant to DAR Administrative Order No. 9, Series of 199328 (Supplement) dated June 15, 2005, the Espinas group submitted the following as evidence:

1) Conversion Order29 dated November 4, 2004, issued by Secretary Villa, converting portions of the property from agricultural to residential and golf courses use, with a total area of 153.3049 hectares; thus, the Espinas group prayed that the remaining 162.7373 hectares (subject property) be covered by the CARP;

2) Letter30 dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer (MARO) Bismark M. Elma (MARO Elma) and outgoing MARO Cesar C. Celi (MARO Celi) of Baras, Rizal, addressed to Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q. Kagahastian, (MARO Report), informing the latter, among others, that Palo Alto was already under development and the lots therein were being offered for sale; that there were actual tillers on the subject property; that there were agricultural improvements thereon, including an irrigation system and road projects funded by the Government; that there was no existing livestock farm on the subject property; and that the same was not in the possession and/or control of petitioner; and

3) Certification31 dated June 8, 2005, issued by both MARO Elma and MARO Celi, manifesting that the subject property was in the possession and cultivation of actual occupants and tillers, and that, upon inspection, petitioner maintained no livestock farm thereon.

Four months later, the Espinas group and the DAR filed their respective Manifestations.32 In its Manifestation dated November 29, 2005, the DAR confirmed that the subject property was no longer devoted to cattle raising. Hence, in its Resolution33 dated December 21, 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 Rejoinder,34 and prayed that the MARO Report be disregarded and expunged from the records for lack of factual and legal basis.

With the CA now made aware of these developments, particularly Secretary Villa’s 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.35

On October 4, 2006, the CA amended its earlier Decision. It held that its April 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 ruling in Department of Agrarian Reform v. Sutton,36 wherein we declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift the exemption of the subject property from the CARP, not on the basis of DAR A.O. No. 9, but on the strength of evidence such as the MARO Report and Certification, and the Katunayan37 issued by the Punong Barangay, Alfredo Ruba (Chairman Ruba), of Pinugay, Baras, Rizal, showing that the subject property was no longer operated as a livestock farm. Moreover, the CA held that the lease agreements,38 which petitioner submitted to prove that it was compelled to lease a ranch as temporary shelter for its cattle, only reinforced the DAR’s finding that there was indeed no existing livestock farm on the subject property. While petitioner claimed that it was merely forced to do so to prevent further slaughtering of its cattle allegedly committed by the occupants, the CA found the claim unsubstantiated. Furthermore, the CA opined that petitioner should have asserted its rights when the irrigation and road projects were introduced by the Government within its property. Finally, the CA accorded the findings of MARO Elma and MARO Celi the presumption of regularity in the performance of official functions in the absence of evidence proving misconduct and/or dishonesty when they inspected the subject property and rendered their report. Thus, the CA disposed:

WHEREFORE, this Court’s Decision dated April 29, 2005 is hereby amended in that the exemption of the subject landholding from the coverage of the Comprehensive Agrarian Reform Program is hereby lifted, and the 162.7373 hectare-agricultural portion thereof is hereby declared covered by the Comprehensive Agrarian Reform Program.

SO ORDERED.39

Unperturbed, petitioner filed a Motion for Reconsideration.40 On January 8, 2007, MARO Elma, in compliance with the Memorandum of DAR Regional Director Dominador B. Andres, tendered another Report41 reiterating that, upon inspection of the subject property, together with petitioner’s counsel-turned witness, Atty. Grace Eloisa J. Que (Atty. Que), PARO Danilo M. Obarse, Chairman Ruba, and several occupants thereof, he, among others, found no livestock farm within the subject property. About 43 heads of cattle were shown, but MARO Elma observed that the same were inside an area adjacent to Palo Alto. Subsequently, upon Atty. Que’s request for reinvestigation, designated personnel of the DAR Provincial and Regional Offices (Investigating Team) conducted another ocular inspection on the subject property on February 20, 2007. The Investigating Team, in its Report42 dated February 21, 2007, found that, per testimony of petitioner’s caretaker, Rogelio Ludivices (Roger),43 petitioner has 43 heads of cattle taken care of by the following individuals: i) Josefino Custodio (Josefino) – 18 heads; ii) Andy Amahit – 15 heads; and iii) Bert Pangan – 2 heads; that these individuals pastured the herd of cattle outside the subject property, while Roger took care of 8 heads of cattle inside the Palo Alto area; that 21 heads of cattle owned by petitioner were seen in the area adjacent to Palo Alto; that Josefino confirmed to the Investigating Team that he takes care of 18 heads of cattle owned by petitioner; that the said Investigating Team saw 9 heads of cattle in the Palo Alto area, 2 of which bore "MFI" marks; and that the 9 heads of cattle appear to have matched the Certificates of Ownership of Large Cattle submitted by petitioner.

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 narrated by the CA, the following events transpired:

On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses, namely, [petitioner’s] counsel, [Atty. Que], and the alleged caretaker of [petitioner’s] farm, [Roger], who were both cross-examined by counsel for farmers-movants and SAPLAG. [Petitioner] and SAPLAG then marked their documentary exhibits.

On May 24, 2007, [petitioner’s] security guard and third witness, Rodolfo G. Febrada, submitted his Judicial Affidavit and was cross-examined by counsel for fa[r]mers-movants and SAPLAG. Farmers-movants also marked their documentary exhibits.

Thereafter, the parties submitted their respective Formal Offers of Evidence. Farmers-movants and SAPLAG filed their objections to [petitioner’s] Formal Offer of Evidence. Later, [petitioner] and farmers-movants filed their respective Memoranda.

In December 2007, this Court issued a Resolution on the parties’ offer of evidence and considered [petitioner’s] Motion for Reconsideration submitted for resolution.45

Finally, petitioner’s motion for reconsideration was denied by the CA in its Resolution46 dated March 27, 2008. The CA discarded petitioner’s reliance on Sutton. It ratiocinated that the MARO Reports and the DAR’s Manifestation could not be disregarded simply because DAR A.O. No. 9 was declared unconstitutional. The Sutton ruling was premised on the fact that the Sutton property continued to operate as a livestock farm. The CA also reasoned that, in Sutton, this Court did not remove from the DAR the power to implement the CARP, pursuant to the latter’s authority to oversee the implementation of agrarian reform laws under Section 5047 of the CARL. Moreover, the CA found:

Petitioner-appellant claimed that they had 43 heads of cattle which are being cared for and pastured by 4 individuals. To prove its ownership of the said cattle, petitioner-appellant offered in evidence 43 Certificates of Ownership of Large Cattle. Significantly, however, the said Certificates were all dated and issued on November 24, 2006, nearly 2 months after this Court rendered its Amended Decision

lifting the exemption of the 162-hectare portion of the subject landholding. The acquisition of such cattle after the lifting of the exemption clearly reveals that petitioner-appellant was no longer operating a livestock farm, and suggests an effort to create a semblance of livestock-raising for the purpose of its Motion for Reconsideration.48

On petitioner’s assertion that between MARO Elma’s Report dated January 8, 2007 and the Investigating Team’s Report, the latter should be given credence, the CA held that there were no material inconsistencies between the two reports because both showed that the 43 heads of cattle were found outside the subject property.

Hence, this Petition assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT 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[;]

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, AND AVAIL THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT TO THE COURT OF APPEALS EXERCISING APPELLATE JURISDICTION OVER ISSUES COMPLETELY UNRELATED TO REVERSION [; AND]

III.

IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE PROPERTY IN DISPUTE IS NO LONGER BEING USED FOR LIVESTOCK FARMING.49

Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are classified as industrial lands, hence, outside the ambit of the CARP; that Luz Farms, Sutton, and R.A. No. 7881 clearly excluded such lands on constitutional grounds; that petitioner’s lands were 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 industrial lands; that petitioner’s property was admittedly devoted to livestock farming as of June 1988 and the only issue before was whether or not petitioner’s pieces of evidence comply with the 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 proceedings over livestock farms. Petitioner argues that, in cases where reversion of properties to agricultural use is proper, only the DAR has the exclusive original jurisdiction to hear and decide the same; hence, the CA, in this case, committed serious errors when it ordered the reversion of the property and when it considered pieces of evidence not existing as of June 15, 1988, despite its 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 time on appeal as a supplement to a motion for reconsideration of its

first decision, use the same to deviate from the issues pending review, and, on the basis thereof, declare exempt lands reverted to agricultural use and compulsorily covered by the CARP; that the "newly discovered [pieces of] evidence" were not introduced in the proceedings before the DAR, hence, it was erroneous for the 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 abuse of discretion when it held that the subject property was no longer used for livestock farming as shown by the Report of the Investigating Team. Petitioner relies on the 1997 LUCEC and DAR findings that the subject property was devoted to livestock farming, and on the 1999 CA Decision which held that the occupants of the property were squatters, bereft of any authority to stay and possess the property.50

On one hand, the farmer-groups, represented by the Espinas group, contend that they have been planting rice and fruit-bearing trees on the subject property, and helped the National Irrigation Administration in setting up an irrigation system therein in 1997, with a produce of 1,500 to 1,600 sacks of palay each year; that petitioner came to court with unclean hands because, while it sought the exemption and exclusion of the entire property, unknown to the CA, petitioner surreptitiously filed for conversion of the property now known as Palo Alto, which was actually granted by the DAR Secretary; that petitioner’s bad faith is more apparent since, despite the conversion of the 153.3049-hectare portion of the property, it still seeks to exempt the entire property in this case; and that the fact that petitioner applied for conversion is an admission that indeed the property is agricultural. The farmer-groups also contend that petitioner’s reliance on Luz Farms and Sutton is unavailing because in these cases there was actually no cessation of the business of raising cattle; that what is being exempted is the activity of raising cattle and not the property itself; that exemptions due to cattle raising are not permanent; that the declaration of DAR A.O. No. 9 as unconstitutional does not at all diminish the mandated duty of the DAR, as the lead agency of the Government, to implement the CARL; that the DAR, vested with the power to identify lands subject to CARP, logically also has the power to identify lands which are excluded and/or exempted therefrom; that to disregard DAR’s authority on the matter would open the floodgates to abuse and fraud by unscrupulous landowners; that the factual finding of the CA that the subject property is no longer a livestock farm may not be disturbed on appeal, as enunciated by this Court; that DAR conducted a review and monitoring of the subject property by virtue of its powers under the CARL; and that the CA has sufficient discretion to admit evidence in order that it could arrive at a fair, just, and equitable ruling in this case.51

On the other hand, respondent OP, through the Office of the Solicitor General (OSG), claims that the CA correctly held that the subject property is not exempt from the coverage of the CARP, as substantial pieces of evidence show that the said property is not exclusively devoted to livestock, swine, and/or poultry raising; that the issues presented by petitioner are factual in nature and not proper in this case; that under Rule 43 of the 1997 Rules of Civil Procedure, questions of fact may be raised by the parties and resolved by the CA; that due to the divergence in the factual findings of the DAR and the OP, the CA was duty bound to review and ascertain which of the said findings are duly supported by substantial evidence; that the subject property was subject to continuing review and verification proceedings due to the then prevailing DAR A.O. No. 9; that there is no question that the power to determine if a property is subject to CARP coverage lies with the DAR Secretary; that pursuant to such power, the MARO rendered the assailed reports and certification, and the DAR itself manifested before the CA that the subject property is no longer devoted to livestock farming; and that, while it is true that this Court’s ruling in Luz Farms declared that agricultural lands devoted to livestock, poultry, and/or swine raising are excluded from the CARP, the said ruling is not without any qualification.52

In its Reply53 to the farmer-groups’ and to the OSG’s comment, petitioner counters that the farmer-groups have no legal basis to their claims as they admitted that they entered the subject property without the consent of petitioner; that the rice plots actually found in the subject property, which were subsequently taken over by squatters, were, in fact, planted by petitioner in compliance with the

directive of then President Ferdinand Marcos for the employer to provide rice to its employees; that when a land is declared exempt from the CARP on the ground that it is not agricultural as of the time the CARL took effect, the use and disposition of that land is entirely and forever beyond DAR’s jurisdiction; and that, inasmuch as the subject property was not agricultural from the very beginning, DAR has no power to regulate the same. Petitioner also asserts that the CA cannot uncharacteristically assume the role of trier of facts and resolve factual questions not 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 Team’s Report, which confirmed that the subject property is still devoted to livestock farming; and that there has been no change in petitioner’s business interest as an entity engaged in livestock farming since its inception in 1960, though there was admittedly a decline in the scale of its operations due to the illegal acts of the squatter-occupants.

Our Ruling

The Petition is bereft of merit.

Let it be stressed that when the CA provided in its first Decision that continuing review and verification may be conducted by the DAR pursuant to DAR A.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 DAR A.O. No. 9, by way of Sutton, on October 19, 2005. Likewise, let it be emphasized that the Espinas group filed the Supplement and submitted the assailed MARO reports and certification on June 15, 2005, which proved to be adverse to petitioner’s case. Thus, it could not be said that the CA erred or gravely abused its discretion in respecting the mandate of DAR A.O. No. 9, which was then subsisting and in full force and effect.

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,54 the same is not without exception,55 such as this case. The CA, under Section 3,56 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.57 Moreover, petitioner cannot validly claim 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. Petitioner actively participated in the proceedings before the CA by submitting pleadings and pieces of documentary evidence, such as the Investigating Team’s 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.

With the procedural issue disposed of, we find that petitioner’s arguments fail to persuade. Its invocation of Sutton is unavailing. In Sutton, we 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, pumphouses, 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.59

Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those of Sutton because, in Sutton, the subject property remained a livestock farm. We even highlighted therein the fact that "there has been no change of business interest in the case of respondents."60 Similarly, in Department of Agrarian Reform v. Uy,61 we excluded a parcel of land from CARP coverage due to the factual findings of the MARO, which were confirmed by the DAR, 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 Office, Masbate, Masbate,62 we denied a similar petition for exemption and/or exclusion, by according respect to the CA’s factual findings and its reliance on the findings of the DAR and the OP that

the subject parcels of land were not directly, actually, and exclusively used for pasture.63

Petitioner’s admission that, since 2001, it leased another ranch for its own livestock is fatal to its cause.64 While petitioner advances a defense that it leased this ranch because the occupants of the subject property harmed its cattle, like the CA, we find it surprising that not even a single police and/or barangay report was filed by petitioner to amplify its indignation over these alleged illegal acts. Moreover, we accord respect to the CA’s keen observation that the assailed MARO reports and the Investigating Team’s Report do not actually contradict one another, finding that the 43 cows, while owned by petitioner, were actually pastured outside the subject property.

Finally, it is established 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.65 Section 3, Rule II of the 2003 Department of Agrarian Reform Adjudication Board Rules of Procedure provides:

Section 3. Agrarian Law Implementation Cases.

The Adjudicator or the Board shall have no jurisdiction over matters involving the administrative implementation of RA No. 6657, otherwise known as the Comprehensive Agrarian 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 Office of the Secretary of the DAR in accordance with his issuances, to wit:

x x x x

3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry 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 petitioner’s contention that "when a land is declared exempt from the CARP on the ground that it is not agricultural as of the time the CARL took effect, the use and disposition of that land is entirely and forever beyond DAR’s jurisdiction" is dangerous, suggestive of self-regulation. Precisely, 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. In addition, albeit parenthetically, Secretary Villa had already granted the conversion into residential and golf courses use of nearly one-half of the entire area originally claimed as exempt from CARP coverage because it was allegedly devoted to livestock production.lawphil1

In sum, we find no reversible error in the assailed Amended Decision and Resolution of the CA which would warrant the modification, much less the reversal, thereof.

WHEREFORE, the Petition is DENIED and the Court of Appeals Amended Decision dated October 4, 2006 and Resolution dated March 27, 2008 are AFFIRMED. No costs.

SO ORDERED.

ANTONIO EDUARDO B. NACHURAAssociate Justice

WE CONCUR:

ANTONIO T. CARPIOAssociate Justice

Chairperson

DIOSDADO M. PERALTAAssociate Justice

ROBERTO A. ABADAssociate Justice

MARTIN S. VILLARAMA, JR.*

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIOAssociate JusticeChairperson, Second Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONAChief Justice

G.R. No. 183409               June 18, 2010

CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA), petitioner, vs.THE SECRETARY OF AGRARIAN REFORM, Respondent.

D E C I S I O N

PEREZ, J.:

This case is a Petition for Certiorari and Prohibition (with application for temporary restraining order and/or writ of preliminary injunction) under Rule 65 of the 1997 Revised Rules of Civil Procedure, filed by herein petitioner Chamber of Real Estate and Builders Associations, Inc. (CREBA) seeking to nullify and prohibit the enforcement of Department of Agrarian Reform (DAR) Administrative Order (AO) No. 01-02, as amended by DAR AO No. 05-07,1and DAR Memorandum No. 88,2 for having been issued by the Secretary of Agrarian Reform with grave abuse of discretion amounting to lack or excess of jurisdiction as some provisions of the aforesaid administrative issuances are illegal and unconstitutional.

Petitioner CREBA, a private non-stock, non-profit corporation duly organized and existing under the laws of the Republic of the Philippines, is the umbrella organization of some 3,500 private corporations, partnerships, single proprietorships and individuals directly or indirectly involved in land and housing development, building and infrastructure construction, materials production and supply, and services in the various related fields of engineering, architecture, community planning and development financing. The Secretary of Agrarian Reform is named respondent as he is the duly appointive head of the DAR whose administrative issuances are the subject of this petition.

The Antecedent Facts

The Secretary of Agrarian Reform issued, on 29 October 1997, DAR AO No. 07-97,3 entitled "Omnibus Rules and Procedures Governing Conversion of Agricultural Lands to Non-Agricultural Uses," which consolidated all existing implementing guidelines related to land use conversion. The aforesaid rules embraced all private agricultural lands regardless of tenurial arrangement and commodity produced, and all untitled agricultural lands and agricultural lands reclassified by Local Government Units (LGUs) into non-agricultural uses after 15 June 1988.

Subsequently, on 30 March 1999, the Secretary of Agrarian Reform issued DAR AO No. 01-99,4 entitled "Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-agricultural Uses," amending and updating the previous rules on land use conversion. Its coverage includes the following agricultural lands, to wit: (1) those to be converted to residential, commercial, industrial, institutional and other non-agricultural purposes; (2) those to be devoted to another type of agricultural activity such as livestock, poultry, and fishpond ─ the effect of which is to exempt the land from the Comprehensive Agrarian Reform Program (CARP) coverage; (3) those to be converted to non-agricultural use other than that previously authorized; and (4) those reclassified to residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of Republic Act No. 66575 on 15 June 1988 pursuant to Section 206 of Republic Act No. 71607 and other pertinent laws and regulations, and are to be converted to such uses.

On 28 February 2002, the Secretary of Agrarian Reform issued another Administrative Order, i.e., DAR AO No. 01-02, entitled "2002 Comprehensive Rules on Land Use Conversion," which further amended DAR AO No. 07-97 and DAR AO No. 01-99, and repealed all issuances inconsistent therewith. The aforesaid DAR AO No. 01-02 covers all applications for conversion from agricultural to non-agricultural uses or to another agricultural use.

Thereafter, on 2 August 2007, the Secretary of Agrarian Reform amended certain provisions8 of DAR AO No. 01-02 by formulating DAR AO No. 05-07, particularly addressing land conversion in time of exigencies and calamities.

To address the unabated conversion of prime agricultural lands for real estate development, the Secretary of Agrarian Reform further issued Memorandum No. 88 on 15 April 2008, which temporarily suspended the processing and approval of all land use conversion applications.

By reason thereof, petitioner claims that there is an actual slow down of housing projects, which, in turn, aggravated the housing shortage, unemployment and illegal squatting problems to the substantial prejudice not only of the petitioner and its members but more so of the whole nation.

Hence, this petition.

The Issues

In its Memorandum, petitioner posits the following issues:

I.

WHETHER THE DAR SECRETARY HAS JURISDICTION OVER LANDS THAT HAVE BEEN RECLASSIFIED AS RESIDENTIAL, COMMERCIAL, INDUSTRIAL, OR FOR OTHER NON-AGRICULTURAL USES.

II.

WHETHER THE DAR SECRETARY ACTED IN EXCESS OF HIS JURISDICTION AND GRAVELY ABUSED HIS DISCRETION BY ISSUING AND ENFORCING [DAR AO NO. 01-02, AS AMENDED] WHICH SEEK TO REGULATE RECLASSIFIED LANDS.

III.

WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL AUTONOMY OF LOCAL GOVERNMENT UNITS.

IV.

WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE PROCESS AND EQUAL PROTECTION CLAUSE[S] OF THE CONSTITUTION.

V.

WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE POWER.9

The subject of the submission that the DAR Secretary gravely abused his discretion is AO No. 01-02, as amended, which states:

Section 3. Applicability of Rules. – These guidelines shall apply to all applications for conversion, from agricultural to non-agricultural uses or to another agricultural use, such as:

x x x x

3.4 Conversion of agricultural lands or areas that have been reclassified by the LGU or by way of a Presidential Proclamation, to residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of RA 6657 on 15 June 1988, x x x. [Emphasis supplied].

Petitioner holds that under Republic Act No. 6657 and Republic Act No. 8435,10 the term agricultural lands refers to "lands devoted to or suitable for the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm products, and other farm activities and practices performed by a farmer in conjunction with such farming operations done by a person whether natural or juridical, and not classified by the law as mineral, forest, residential, commercial or industrial land." When the Secretary of Agrarian Reform, however, issued DAR AO No. 01-02, as amended, he included in the definition of agricultural lands "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988." In effect, lands reclassified from agricultural to residential, commercial, industrial, or other non-agricultural uses after 15 June 1988 are considered to be agricultural lands for purposes of conversion, redistribution, or otherwise. In so doing, petitioner avows that the Secretary of Agrarian Reform acted without jurisdiction as he has no authority to expand or enlarge the legal signification of the term agricultural lands through DAR AO No. 01-02. Being a mere administrative issuance, it must conform to the statute it seeks to implement, i.e., Republic Act No. 6657, or to the Constitution, otherwise, its validity or constitutionality may be questioned.

In the same breath, petitioner contends that DAR AO No. 01-02, as amended, was made in violation of Section 6511of Republic Act No. 6657 because it covers all applications for conversion from agricultural to non-agricultural uses or to other agricultural uses, such as the conversion of agricultural lands or areas that have been reclassified by the LGUs or by way of Presidential Proclamations, to residential, commercial, industrial or other non-agricultural uses on or after 15 June 1988. According to petitioner, there is nothing in Section 65 of Republic Act No. 6657 or in any other provision of law that confers to the DAR the jurisdiction or authority to require that non-awarded lands or reclassified lands be submitted to its conversion authority. Thus, in issuing and enforcing DAR AO No. 01-02, as amended, the Secretary of Agrarian Reform acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

Petitioner further asseverates that Section 2.19,12 Article I of DAR AO No. 01-02, as amended, making reclassification of agricultural lands subject to the requirements and procedure for land use conversion, violates Section 20 of Republic Act No. 7160, because it was not provided therein that reclassification by LGUs shall be subject to conversion procedures or requirements, or that the DAR’s approval or clearance must be secured to effect reclassification. The said Section 2.19 of DAR AO No. 01-02, as amended, also contravenes the constitutional mandate on local autonomy under Section 25,13 Article II and Section 2,14 Article X of the 1987 Philippine Constitution.

Petitioner similarly avers that the promulgation and enforcement of DAR AO No. 01-02, as amended, constitute deprivation of liberty and property without due process of law. There is deprivation of liberty and property without due process of law because under DAR AO No. 01-02, as amended, lands that are not within DAR’s jurisdiction are unjustly, arbitrarily and oppressively prohibited or restricted from legitimate use on pain of administrative and criminal penalties. More so, there is

discrimination and violation of the equal protection clause of the Constitution because the aforesaid administrative order is patently biased in favor of the peasantry at the expense of all other sectors of society.

As its final argument, petitioner avows that DAR Memorandum No. 88 is not a valid exercise of police power for it is the prerogative of the legislature and that it is unconstitutional because it suspended the land use conversion without any basis.

The Court’s Ruling

This petition must be dismissed.

Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum.15 In Heirs of Bertuldo Hinog v. Melicor,16citing People v. Cuaresma,17 this Court made the following pronouncements:

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket.18 (Emphasis supplied.)

The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.19

This Court thus reaffirms the judicial policy that it will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.20

Exceptional and compelling circumstances were held present in the following cases: (a) Chavez v. Romulo,21 on citizens’ right to bear arms; (b) Government of [the] United States of America v. Hon. Purganan,22 on bail in extradition proceedings; (c) Commission on Elections v. Judge Quijano-Padilla,23 on government contract involving modernization and computerization of voters’ registration list; (d) Buklod ng Kawaning EIIB v. Hon. Sec. Zamora,24on status and existence of a public office; and (e) Hon. Fortich v. Hon. Corona,25 on the so-called "Win-Win Resolution" of the Office of the President which modified the approval of the conversion to agro-industrial area.26

In the case at bench, petitioner failed to specifically and sufficiently set forth special and important reasons to justify direct recourse to this Court and why this Court should give due course to this petition in the first instance, hereby failing to fulfill the conditions set forth in Heirs of Bertuldo Hinog v. Melicor.27 The present petition should have been initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the dismissal of this petition.

Moreover, although the instant petition is styled as a Petition for Certiorari, in essence, it seeks the declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88. It, thus, partakes of the nature of a Petition for Declaratory Relief over which this Court has only appellate, not original, jurisdiction.28 Section 5, Article VIII of the 1987 Philippine Constitution provides:

Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Emphasis supplied.)

With that, this Petition must necessarily fail because this Court does not have original jurisdiction over a Petition for Declaratory Relief even if only questions of law are involved.

Even if the petitioner has properly observed the doctrine of judicial hierarchy, this Petition is still dismissible.

The special civil action for certiorari is intended for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction.29

The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.30

Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though within the general power of a tribunal, board or officer, is not authorized and invalid with respect to the particular proceeding, because the conditions which alone authorize the exercise of the general power in respect of it are wanting.31 Without jurisdiction means lack or want of legal power, right or authority to hear and determine a cause or causes, considered either in general or with reference to a particular matter. It means lack of power to exercise authority.32Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or

personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.33

In the case before this Court, the petitioner fails to meet the above-mentioned requisites for the proper invocation of a Petition for Certiorari under Rule 65. The Secretary of Agrarian Reform in issuing the assailed DAR AO No. 01-02, as amended, as well as Memorandum No. 88 did so in accordance with his mandate to implement the land use conversion provisions of Republic Act No. 6657. In the process, he neither acted in any judicial or quasi-judicial capacity nor assumed unto himself any performance of judicial or quasi-judicial prerogative. A Petition for Certiorari is a special civil action that may be invoked only against a tribunal, board, or officer exercising judicial functions. Section 1, Rule 65 of the 1997 Revised Rules of Civil Procedure is explicit on this matter, viz.:

SECTION 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment must be rendered annulling or modifying the proceedings of such tribunal, board or officer. 1avvphi1

A tribunal, board, or officer is said to be exercising judicial function where it has the power to determine what the law is and what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties. Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public administrative officers or bodies x x x required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature."34

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a law that gives rise to some specific rights of persons or property under which adverse claims to such rights are made, and the controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with power and authority to determine the law and adjudicate the respective rights of the contending parties.35

The Secretary of Agrarian Reform does not fall within the ambit of a tribunal, board, or officer exercising judicial or quasi-judicial functions. The issuance and enforcement by the Secretary of Agrarian Reform of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88 were done in the exercise of his quasi-legislative and administrative functions and not of judicial or quasi-judicial functions. In issuing the aforesaid administrative issuances, the Secretary of Agrarian Reform never made any adjudication of rights of the parties. As such, it can never be said that the Secretary of Agrarian Reform had acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing and enforcing DAR AO No. 01-02, as amended, and Memorandum No. 88 for he never exercised any judicial or quasi-judicial functions but merely his quasi-legislative and administrative functions.

Furthermore, as this Court has previously discussed, the instant petition in essence seeks the declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88. Thus, the adequate and proper remedy for the petitioner therefor is to file a Petition for Declaratory Relief, which this Court has only appellate and not original jurisdiction. It is beyond the province of certiorari to declare the aforesaid administrative issuances unconstitutional and illegal because certiorari is confined only to the determination of the existence of grave abuse of discretion amounting to lack or excess of jurisdiction. Petitioner cannot simply allege grave abuse of discretion amounting to lack or excess of jurisdiction and then invoke certiorari

to declare the aforesaid administrative issuances unconstitutional and illegal. Emphasis must be given to the fact that the writ of certiorari dealt with in Rule 65 of the 1997 Revised Rules of Civil Procedure is a prerogative writ, never demandable as a matter of right, "never issued except in the exercise of judicial discretion."36

At any rate, even if the Court will set aside procedural infirmities, the instant petition should still be dismissed.

Executive Order No. 129-A37 vested upon the DAR the responsibility of implementing the CARP. Pursuant to the said mandate and to ensure the successful implementation of the CARP, Section 5(c) of the said executive order authorized the DAR to establish and promulgate operational policies, rules and regulations and priorities for agrarian reform implementation. Section 4(k) thereof authorized the DAR to approve or disapprove the conversion, restructuring or readjustment of agricultural lands into non-agricultural uses. Similarly, Section 5(l) of the same executive order has given the DAR the exclusive authority to approve or disapprove conversion of agricultural lands for residential, commercial, industrial, and other land uses as may be provided for by law. Section 7 of the aforesaid executive order clearly provides that "the authority and responsibility for the exercise of the mandate of the [DAR] and the discharge of its powers and functions shall be vested in the Secretary of Agrarian Reform x x x."

Under DAR AO No. 01-02, as amended, "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" have been included in the definition of agricultural lands. In so doing, the Secretary of Agrarian Reform merely acted within the scope of his authority stated in the aforesaid sections of Executive Order No. 129-A, which is to promulgate rules and regulations for agrarian reform implementation and that includes the authority to define agricultural lands for purposes of land use conversion. Further, the definition of agricultural lands under DAR AO No. 01-02, as amended, merely refers to the category of agricultural lands that may be the subject for conversion to non-agricultural uses and is not in any way confined to agricultural lands in the context of land redistribution as provided for under Republic Act No. 6657.

More so, Department of Justice Opinion No. 44, Series of 1990, which Opinion has been recognized in many cases decided by this Court, clarified that after the effectivity of Republic Act No. 6657 on 15 June 1988 the DAR has been given the authority to approve land conversion.38 Concomitant to such authority, therefore, is the authority to include in the definition of agricultural lands "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" for purposes of land use conversion.

In the same vein, the authority of the Secretary of Agrarian Reform to include "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" in the definition of agricultural lands finds basis in jurisprudence. In Ros v. Department of Agrarian Reform,39 this Court has enunciated that after the passage of Republic Act No. 6657, agricultural lands, though reclassified, have to go through the process of conversion, jurisdiction over which is vested in the DAR. However, agricultural lands, which are already reclassified before the effectivity of Republic Act No. 6657 which is 15 June 1988, are exempted from conversion.40 It bears stressing that the said date of effectivity of Republic Act No. 6657 served as the cut-off period for automatic reclassifications or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority.41 It necessarily follows that any reclassification made thereafter can be the subject of DAR’s conversion authority. Having recognized the DAR’s conversion authority over lands reclassified after 15 June 1988, it can no longer be argued that the Secretary of Agrarian Reform was wrongfully given the authority and power to include "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" in the definition of agricultural lands. Such inclusion does not unduly expand or enlarge the definition of agricultural

lands; instead, it made clear what are the lands that can be the subject of DAR’s conversion authority, thus, serving the very purpose of the land use conversion provisions of Republic Act No. 6657.

The argument of the petitioner that DAR AO No. 01-02, as amended, was made in violation of Section 65 of Republic Act No. 6657, as it covers even those non-awarded lands and reclassified lands by the LGUs or by way of Presidential Proclamations on or after 15 June 1988 is specious. As explained in Department of Justice Opinion No. 44, series of 1990, it is true that the DAR’s express power over land use conversion provided for under Section 65 of Republic Act No. 6657 is limited to cases in which agricultural lands already awarded have, after five years, ceased to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes. To suggest, however, that these are the only instances that the DAR can require conversion clearances would open a loophole in Republic Act No. 6657 which every landowner may use to evade compliance with the agrarian reform program. It should logically follow, therefore, from the said department’s express duty and function to execute and enforce the said statute that any reclassification of a private land as a residential, commercial or industrial property, on or after the effectivity of Republic Act No. 6657 on 15 June 1988 should first be cleared by the DAR.42

This Court held in Alarcon v. Court of Appeals43 that reclassification of lands does not suffice. Conversion and reclassification differ from each other. Conversion is the act of changing the current use of a piece of agricultural land into some other use as approved by the DAR while reclassification is the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, and commercial, as embodied in the land use plan, subject to the requirements and procedures for land use conversion. In view thereof, a mere reclassification of an agricultural land does not automatically allow a landowner to change its use. He has to undergo the process of conversion before he is permitted to use the agricultural land for other purposes.44

It is clear from the aforesaid distinction between reclassification and conversion that agricultural lands though reclassified to residential, commercial, industrial or other non-agricultural uses must still undergo the process of conversion before they can be used for the purpose to which they are intended.

Nevertheless, emphasis must be given to the fact that DAR’s conversion authority can only be exercised after the effectivity of Republic Act No. 6657 on 15 June 1988.45 The said date served as the cut-off period for automatic reclassification or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority.46Thereafter, reclassification of agricultural lands is already subject to DAR’s conversion authority. Reclassification alone will not suffice to use the agricultural lands for other purposes. Conversion is needed to change the current use of reclassified agricultural lands.

It is of no moment whether the reclassification of agricultural lands to residential, commercial, industrial or other non-agricultural uses was done by the LGUs or by way of Presidential Proclamations because either way they must still undergo conversion process. It bears stressing that the act of reclassifying agricultural lands to non-agricultural uses simply specifies how agricultural lands shall be utilized for non-agricultural uses and does not automatically convert agricultural lands to non-agricultural uses or for other purposes. As explained in DAR Memorandum Circular No. 7, Series of 1994, cited in the 2009 case of Roxas & Company, Inc. v. DAMBA-NFSW and the Department of Agrarian Reform,47 reclassification of lands denotes their allocation into some specific use and providing for the manner of their utilization and disposition or the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, or commercial, as embodied in the land use plan. For reclassified agricultural lands, therefore, to be

used for the purpose to which they are intended there is still a need to change the current use thereof through the process of conversion. The authority to do so is vested in the DAR, which is mandated to preserve and maintain agricultural lands with increased productivity. Thus, notwithstanding the reclassification of agricultural lands to non-agricultural uses, they must still undergo conversion before they can be used for other purposes.

Even reclassification of agricultural lands by way of Presidential Proclamations to non-agricultural uses, such as school sites, needs conversion clearance from the DAR. We reiterate that reclassification is different from conversion. Reclassification alone will not suffice and does not automatically allow the landowner to change its use. It must still undergo conversion process before the landowner can use such agricultural lands for such purpose.48Reclassification of agricultural lands is one thing, conversion is another. Agricultural lands that are reclassified to non-agricultural uses do not ipso facto allow the landowner thereof to use the same for such purpose. Stated differently, despite having reclassified into school sites, the landowner of such reclassified agricultural lands must apply for conversion before the DAR in order to use the same for the said purpose.

Any reclassification, therefore, of agricultural lands to residential, commercial, industrial or other non-agricultural uses either by the LGUs or by way of Presidential Proclamations enacted on or after 15 June 1988 must undergo the process of conversion, despite having undergone reclassification, before agricultural lands may be used for other purposes.

It is different, however, when through Presidential Proclamations public agricultural lands have been reserved in whole or in part for public use or purpose, i.e., public school, etc., because in such a case, conversion is no longer necessary. As held in Republic v. Estonilo,49 only a positive act of the President is needed to segregate or reserve a piece of land of the public domain for a public purpose. As such, reservation of public agricultural lands for public use or purpose in effect converted the same to such use without undergoing any conversion process and that they must be actually, directly and exclusively used for such public purpose for which they have been reserved, otherwise, they will be segregated from the reservations and transferred to the DAR for distribution to qualified beneficiaries under the CARP.50 More so, public agricultural lands already reserved for public use or purpose no longer form part of the alienable and disposable lands of the public domain suitable for agriculture.51 Hence, they are outside the coverage of the CARP and it logically follows that they are also beyond the conversion authority of the DAR.

Clearly from the foregoing, the Secretary of Agrarian Reform did not act without jurisdiction or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) including lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988 in the definition of agricultural lands under DAR AO No. 01-02, as amended, and; (2) issuing and enforcing DAR AO No. 01-02, as amended, subjecting to DAR’s jurisdiction for conversion lands which had already been reclassified as residential, commercial, industrial or for other non-agricultural uses on or after 15 June 1988.

Similarly, DAR AO No. 01-02, as amended, providing that the reclassification of agricultural lands by LGUs shall be subject to the requirements of land use conversion procedure or that DAR’s approval or clearance must be secured to effect reclassification, did not violate the autonomy of the LGUs.

Section 20 of Republic Act No. 7160 states that:

SECTION 20. Reclassification of Lands. – (a) A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the

following cases: (1) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or (2) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance:

x x x x

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise known as "The Comprehensive Agrarian Reform Law," shall not be affected by the said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said Act.

x x x x

(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions of R.A. No. 6657.

The aforequoted provisions of law show that the power of the LGUs to reclassify agricultural lands is not absolute. The authority of the DAR to approve conversion of agricultural lands covered by Republic Act No. 6657 to non-agricultural uses has been validly recognized by said Section 20 of Republic Act No. 7160 by explicitly providing therein that, "nothing in this section shall be construed as repealing or modifying in any manner the provisions of Republic Act No. 6657."

DAR AO No. 01-02, as amended, does not also violate the due process clause, as well as the equal protection clause of the Constitution. In providing administrative and criminal penalties in the said administrative order, the Secretary of Agrarian Reform simply implements the provisions of Sections 73 and 74 of Republic Act No. 6657, thus:

Sec. 73. Prohibited Acts and Omissions. – The following are prohibited:

x x x x

(c) The conversion by any landowner of his agricultural land into any non-agricultural use with intent to avoid the application of this Act to his landholdings and to disposes his tenant farmers of the land tilled by them;

x x x x

(f) The sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary right over the land he acquired by virtue of being a beneficiary, in order to circumvent the provisions of this Act.

x x x x

Sec. 74. Penalties. ─ Any person who knowingly or willfully violates the provisions of this Act shall be punished by imprisonment of not less than one (1) month to not more than three (3) years or a fine of not less than one thousand pesos (P1,000.00) and not more than fifteen thousand pesos (P15,000.00), or both, at the discretion of the court.

If the offender is a corporation or association, the officer responsible therefor shall be criminally liable.

And Section 11 of Republic Act No. 8435, which specifically provides:

Sec. 11. Penalty for Agricultural Inactivity and Premature Conversion. – x x x.

Any person found guilty of premature or illegal conversion shall be penalized with imprisonment of two (2) to six (6) years, or a fine equivalent to one hundred percent (100%) of the government's investment cost, or both, at the discretion of the court, and an accessory penalty of forfeiture of the land and any improvement thereon.

In addition, the DAR may impose the following penalties, after determining, in an administrative proceedings, that violation of this law has been committed:

a. Consolation or withdrawal of the authorization for land use conversion; and

b. Blacklisting, or automatic disapproval of pending and subsequent conversion applications that they may file with the DAR.

Contrary to petitioner’s assertions, the administrative and criminal penalties provided for under DAR AO No. 01-02, as amended, are imposed upon the illegal or premature conversion of lands within DAR’s jurisdiction, i.e., "lands not reclassified as residential, commercial, industrial or for other non-agricultural uses before 15 June 1998."

The petitioner’s argument that DAR Memorandum No. 88 is unconstitutional, as it suspends the land use conversion without any basis, stands on hollow ground.

It bears emphasis that said Memorandum No. 88 was issued upon the instruction of the President in order to address the unabated conversion of prime agricultural lands for real estate development because of the worsening rice shortage in the country at that time. Such measure was made in order to ensure that there are enough agricultural lands in which rice cultivation and production may be carried into. The issuance of said Memorandum No. 88 was made pursuant to the general welfare of the public, thus, it cannot be argued that it was made without any basis.

WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED. Costs against petitioner.

SO ORDERED.

JOSE PORTUGAL PEREZAssociate Justice