Sec. 6 of RA 6657 Retention Rights (incl.

retention rights under PD 27)

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SECTION 6. Retention Limits. Except as otherwise provided in this Act, no person may own
or retain, directly or indirectly, any public or private agricultural land, the size of which shall
vary according to factors governing a viable family-size farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform
Council (PARC) created hereunder, but in no case shall retention by the landowner exceed five
(5) hectares.
Three (3) hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the
land or directly managing the farm: Provided, That landowners whose lands have been covered
by Presidential Decree No. 27 shall be allowed to keep the areas originally retained by them
thereunder: Provided, further, That original homestead grantees or their direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to
the landowner: Provided, however, That in case the area selected for retention by the landowner
is tenanted, the tenant shall have the option to choose whether to remain therein or be a
beneficiary in the same or another agricultural land with similar or comparable features. In case
the tenant chooses to remain in the retained area, he shall be considered a leaseholder and shall
lose his right to be a beneficiary under this Act. In case the tenant chooses to be a beneficiary in
another agricultural land, he loses his right as a leaseholder to the land retained by the landowner.
The tenant must exercise this option within a period of one (1) year from the time the landowner
manifests his choice of the area for retention. In all cases, the security of tenure of the farmers or
farmworkers on the land prior to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of
possession of private lands executed by the original landowner in violation of the Act shall be
null and void: Provided, however, That those executed prior to this Act shall be valid only when
registered with the Register of Deeds within a period of three (3) months after the effectivity of
this Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform
(DAR) within thirty (30) days of any transaction involving agricultural lands in excess of five (5)
hectares.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 78517 February 27, 1989
GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO RICALDE,
VICENTE RICALDE and ROLANDO SALAMAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M. REYES and
FE M. REYES, respondents.
Bureau of Agrarian Legal Assistance for petitioners.
Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for private respondents.

PARAS, J.:
Before us is a petition seeking the reversal of the decision rendered by the respondent
Court of Appeals**on March 3, 1987 affirming the judgment of the court a quo dated
April 29, 1986, the dispositive portion of the trial court's decision reading as follows;
WHEREFORE, the decision rendered by this Court on November 5, 1982
is hereby reconsidered and a new judgment is hereby rendered:
1. Declaring that Presidential Decree No. 27 is inapplicable to lands
obtained thru the homestead law,
2. Declaring that the four registered co-owners will cultivate and operate
the farmholding themselves as owners thereof; and
3. Ejecting from the land the so-called tenants, namely; Gabino Alita,
Jesus Julian, Sr., Jesus Julian, Jr., Pedro Ricalde, Vicente Ricalde and
Rolando Salamar, as the owners would want to cultivate the farmholding
themselves.
No pronouncement as to costs.
SO ORDERED. (p. 31, Rollo)
The facts are undisputed. The subject matter of the case consists of two (2) parcels of
land, acquired by private respondents' predecessors-in-interest through homestead
patent under the provisions of Commonwealth Act No. 141. Said lands are situated at
Guilinan, Tungawan, Zamboanga del Sur.
Private respondents herein are desirous of personally cultivating these lands, but
petitioners refuse to vacate, relying on the provisions of P.D. 27 and P.D. 316 and
appurtenant regulations issued by the then Ministry of Agrarian Reform (DAR for short),
now Department of Agrarian Reform (MAR for short).
On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against
Hon. Conrado Estrella as then Minister of Agrarian Reform, P.D. Macarambon as
Regional Director of MAR Region IX, and herein petitioners (then defendants) for the

declaration of P.D. 27 and all other Decrees, Letters of Instructions and General Orders
issued in connection therewith as inapplicable to homestead lands.
Defendants filed their answer with special and affirmative defenses of July 8, 1981.
Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants
from declaring the lands in litigation under Operation Land Transfer and from being
issued land transfer certificates to which the defendants filed their opposition dated
August 4, 1982.
On November 5, 1982, the then Court of Agrarian Relations 16th Regional District,
Branch IV, Pagadian City (now Regional Trial Court, 9th Judicial Region, Branch XVIII)
rendered its decision dismissing the said complaint and the motion to enjoin the
defendants was denied.
On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which
defendants filed their opposition on January 10, 1983.
Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision
prompting defendants to move for a reconsideration but the same was denied in its
Order dated June 6, 1986.
On appeal to the respondent Court of Appeals, the same was sustained in its judgment
rendered on March 3, 1987, thus:
WHEREFORE, finding no reversible error thereof, the decision appealed
from is hereby AFFIRMED.
SO ORDERED. (p. 34, Rollo)
Hence, the present petition for review on certiorari.
The pivotal issue is whether or not lands obtained through homestead patent are
covered by the Agrarian Reform under P.D. 27.
The question certainly calls for a negative answer.
We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of
tenants from the bondage of the soil and transferring to them ownership of the land they
till is a sweeping social legislation, a remedial measure promulgated pursuant to the
social justice precepts of the Constitution. However, such contention cannot be invoked
to defeat the very purpose of the enactment of the Public Land Act or Commonwealth
Act No. 141. Thus,
The Homestead Act has been enacted for the welfare and protection of
the poor. The law gives a needy citizen a piece of land where he may build
a modest house for himself and family and plant what is necessary for
subsistence and for the satisfaction of life's other needs. The right of the
citizens to their homes and to the things necessary for their subsistence is
as vital as the right to life itself. They have a right to live with a certain
degree of comfort as become human beings, and the State which looks
after the welfare of the people's happiness is under a duty to safeguard
the satisfaction of this vital right. (Patricio v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the superiority of the
homesteaders' rights over the rights of the tenants guaranteed by the Agrarian Reform

statute. In point is Section 6 of Article XIII of the 1987 Philippine Constitution which
provides:
Section 6. The State shall apply the principles of agrarian reform or
stewardship, whenever applicable in accordance with law, in the
disposition or utilization of other natural resources, including lands of
public domain under lease or concession suitable to agriculture, subject to
prior rights, homestead rights of small settlers, and the rights of
indigenous communities to their ancestral lands.
Additionally, it is worthy of note that the newly promulgated Comprehensive Agrarian
Reform Law of 1988 or Republic Act No. 6657 likewise contains a proviso supporting
the inapplicability of P.D. 27 to lands covered by homestead patents like those of the
property in question, reading,
Section 6. Retention Limits. ...
... Provided further, That original homestead grantees or their direct
compulsory heirs who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as they continue to
cultivate said homestead.'
WHEREFORE, premises considered, the decision of the respondent Court of Appeals
sustaining the decision of the Regional Trial Court is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
** Penned by Justice Jorge R. Coquia and concurred in by Justices Josue N. Bellosillo and Venancio D. Aldecoa, Jr. of
the Fourth Division.

Sec. 10 of RA 6657 Exemptions

and Exclusions
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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 centers, church
sites and convents appurtenant thereto, mosque 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 the Act.

Sec. 3(c) of RA 6657 in relation to DOJ

Opinion No. 44 s. 1990 and the case of
Natalia Realty et. al.. versus DAR, GR No.
103302, August 12, 1993
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(c) Agricultural Land refers to land devoted to agricultural activity as defined in this Act and not
classified as mineral, forest, residential, commercial or industrial land. [Sec. 3(c) of RA 6657]

The meaning of agricultural lands covered by the CARL was explained further by the DAR in
its Administrative Order No. 1, Series of 1990,[12] entitled Revised Rules and Regulations
Governing Conversion of Private Agricultural Land to Non-Agricultural Uses, issued pursuant
to Section 49 of CARL, which we quote:
x x x. Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657
and not classified as mineral or forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies,and not classified in town plans and zoning ordinances
as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential, commercial or industrial use.
(Emphasis supplied)
Prior to this Order, Department of Justice Opinion No. 44 dated March 16, 1990, which was
addressed to then DAR Secretary Florencio Abad, recognized the fact that before the date of the
laws effectivity on June 15, 1988, the reclassification or conversion of lands was not exclusively
done by the DAR.[13] Rather, it was a coordinated effort of all concerned agencies; namely,
the Department of Local Governments and Community Development, the Human Settlements
Commission and the DAR.[14] Then Justice Secretary Franklin M. Drilon explained the
coordination in this wise:
x x x. Under R.A. No. 3844,[15] as amended by R.A. No. 6389,[16] an agricultural lessee may,
by order of the court, be dispossessed of his landholding if after due hearing, it is shown that the
landholding is declared by the [DAR]upon the recommendation of the National Planning
Commission to be suited for residential, commercial, industrial or some other urban
purposes.[17]
Likewise, under various Presidential Decrees (P.D. Nos. 583, 815 and 946) which were issued
to give teeth to the implementation of the agrarian reform program decreed in P.D. No. 27, the
DAR was empowered to authorize conversions of tenanted agricultural lands, specifically
those planted to rice and/or corn, to other agricultural or to non-agricultural uses, subject to
studies on zoning of the Human Settlements Commissions (HSC). This nonexclusiveauthority of the DAR under the aforesaid laws was, x x x recognized and reaffirmed by
other concerned agencies, such as the Department of Local Government and Community

Development (DLGCD) and the then Human Settlements Commission (HSC) in a Memorandum
of Agreement executed by the DAR and these two agencies on May 13, 1977, which is an
admission that with respect to land use planning and conversions, the authority is not exclusive
to any particular agency but is a coordinated effort of all concerned agencies.
It is significant to mention that in 1978, the then Ministry of Human Settlements was granted
authority to review and ratify land use plans and zoning ordinance of local governments and to
approve development proposals which include land use conversions (see LOI No. 729 [1978]).
This was followed by [E.O.] No. 648 (1981) which conferred upon the Human Settlements
Regulatory Commission (the predecessors of the Housing and Land Use Regulatory Board
[HLURB] the authority to promulgate zoning and other land use control standards and guidelines
which shall govern land use plans and zoning ordinances of local governments, subdivision or
estate development projects of both the public and private sector and urban renewal plans,
programs and projects; as well as to review, evaluate and approve or disapprove comprehensive
land use development plans and zoning components of civil works and infrastructure projects, of
national, regional and local governments, subdivisions, condominiums or estate development
projects including industrial estates.
Hence, the justice secretary opined that the authority of the DAR to approve conversions of
agricultural lands to non-agricultural uses could be exercised only from the date of the laws
effectivity on June 15, 1988. [Junio v. Garilao, G.R. No. 147146. July 29, 2005]

EN BANC
[G.R. No. 103302. August 12, 1993.]
NATALIA REALTY, INC., and ESTATE DEVELOPERS AND INVESTORS CORP.,
petitioners, vs. DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG
and DIR. WILFREDO LEANO, DAR-REGION IV, respondents.
Loni M. Patajo for petitioners.
The Solicitor General for respondents.
SYLLABUS
1.POLITICAL LAW; STATUTORY CONSTRUCTION; A SPECIAL LAW PREVAILS OVER
A GENERAL LAW. The implementing Standards, Rules and Regulations of P.D. 957 applied
to all subdivisions and condominiums in general. On the other hand, Presidential Proclamation
No. 1637 referred only to the Lungsod Silangan Reservation, which makes it a special law. It is a
basic tenet in statutory construction that between a general law and a special law, the latter
prevails (National Power Corporation v. Presiding Judge, RTC, Br. XXV, G.R. No. 72477, 16
October 1990, 190 SCRA 477).
2.ID.; ADMINISTRATIVE LAW; NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES,
JUSTIFIED IN THE CASE AT BAR. Anent the argument that there was failure to exhaust
administrative remedies in the instant petition, suffice it to say that the issues raised in the case
filed by SAMBA members differ from those of petitioners. The former involve possession; the
latter, the propriety of including under the operation of CARL lands already converted for
residential use prior to its effectivity. Besides, petitioners were not supposed to wait until public
respondents acted on their letter-protests, this after sitting it out for almost a year. Given the
official indifference, which under the circumstances could have continued forever, petitioners
had to act to assert and protect their interests. (Rocamora v. RTC-Cebu, Br. VIII, G.R. No.
65037, 23 November 1988, 167 SCRA 615).
3.CIVIL LAW; LAND REGISTRATION; AGRICULTURAL LAND, DEFINED; LANDS NOT
DEVOTED TO AGRICULTURAL ACTIVITY, OUTSIDE THE COVERAGE OF CARL.
Section 4 of R.A. 6657 provides that the CARL shall cover, regardless of tenurial arrangement
and commodity produced, all public and private agricultural lands. As to what constitutes
agricultural land, it is referred to as land devoted to agricultural activity as defined in this Act
and not classified as mineral, forest, residential, commercial or industrial land. (Sec. 3 (c), R.A.
6657) The deliberations of the Constitutional Commission confirm this limitation. Agricultural
lands are only those lands which are arable and suitable agricultural lands and do not include
commercial, industrial and residential lands. (Luz Farms v. Secretary of the Department of
Agrarian Reform, G.R. No. 86889, 4 December 1990, 192 SCRA 51, citing Record, CONCOM,
7 August 1986, Vol. III, p. 30) Indeed, lands not devoted to agricultural activity are outside the
coverage of CARL. These include lands previously converted to non-agricultural uses prior to
the effectivity of CARL by government agencies other than respondent DAR. In its Revised
Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural
Uses, (DAR Administrative Order No. 1, Series of 1990), DAR itself defined agricultural land
thus . . . Agricultural land refers to those devoted to agricultural activity as defined in R.A.
6657 and not classified as mineral or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its
preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial
use. The Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted
in an Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the

NATALIA lands are part, having been reserved for townsite purposes to be developed as human
settlements by the proper land and housing agency, are not deemed agricultural lands within
the meaning and intent of Section 3 (c) of R.A. No. 6657. Not being deemed agricultural
lands, they are outside the coverage of CARL.
DECISION
BELLOSILLO, J p:
Are lands already classified for residential, commercial or industrial use, as approved by the
Housing and Land Use Regulatory Board and its precursor agencies 1 prior to 15 June 1988, 2
covered by R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988?
This is the pivotal issue in this petition for certiorari assailing the Notice of Coverage 3 of the
Department of Agrarian Reform over parcels of land already reserved as townsite areas before
the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous
parcels of land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205
hectares and 2.7080 hectares, or a total of 125.0078 hectares, and embraced in Transfer
Certificate of Title No. 31527 of the Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located
in the Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the
population overspill in the metropolis which were designated as the Lungsod Silangan Townsite.
The NATALIA properties are situated within the areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing
subdivisions within the reservation, petitioner Estate Developers and Investors Corporation
(EDIC, for brevity), as developer of NATALIA properties, applied for and was granted
preliminary approval and locational clearances by the Human Settlements Regulatory
Commission. The necessary permit for Phase I of the subdivision project, which consisted of
13.2371 hectares, was issued sometime in 1982; 4 for Phase II, with an area of 80.0000 hectares,
on 13 October 1983; 5 and for Phase III, which consisted of the remaining 31.7707 hectares, on
25 April 1986. 6 Petitioners were likewise issued development permits 7 after complying with
the requirements. Thus the NATALIA properties later became the Antipolo Hills Subdivision.
Cdpr
On 15 June 1988, R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988 (CARL, for brevity), went into effect. Conformably therewith, respondent Department of
Agrarian Reform (DAR, for brevity), through its Municipal Agrarian Reform Officer, issued on
22 November 1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills
Subdivision which consisted of roughly 90.3307 hectares. NATALIA immediately registered its
objection to the Notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and
twice wrote him requesting the cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc.
(SAMBA, for brevity), filed a complaint against NATALIA and EDIC before the DAR Regional
Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA members.
8 The Regional Adjudicator temporarily restrained petitioners from proceeding with the
development of the subdivision. Petitioners then moved to dismiss the complaint; it was denied.
Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB);
however, on 16 December 1991 the DARAB merely remanded the case to the Regional
Adjudicator for further proceedings. 9

In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request
to set aside the Notice of Coverage. Neither respondent Secretary nor respondent Director took
action on the protest-letters, thus compelling petitioners to institute this proceeding more than a
year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including
undeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL. They
argue that NATALIA properties already ceased to be agricultural lands when they were included
in the areas reserved by presidential fiat for townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They
maintain that the permits granted petitioners were not valid and binding because they did not
comply with the implementing Standards, Rules and Regulations of P.D. 957, otherwise known
as The Subdivision and Condominium Buyers Protective Decree, in that no application for
conversion of the NATALIA lands from agricultural to residential was ever filed with the DAR.
In other words, there was no valid conversion. Moreover, public respondents allege that the
instant petition was prematurely filed because the case instituted by SAMBA against petitioners
before the DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a
consequence, that petitioners failed to fully exhaust administrative remedies available to them
before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and
Locational Clearances as well as the Development Permits granted petitioners for Phases I, II
and III of the Antipolo Hills Subdivision reveals that contrary to the claim of public respondents,
petitioners NATALIA and EDIC did in fact comply with all the requirements of law.
Petitioners first secured favorable recommendations from the Lungsod Silangan Development
Corporation, the agency tasked to oversee the implementation of the development of the townsite
reservation, before applying for the necessary permits from the Human Settlements Regulatory
Commission. 10 And, in all permits granted to petitioners, the Commission stated invariably
therein that the applications were in conformance 11 or conformity 12 or conforming 13
with the implementing Standards, Rules and Regulations of P.D. 957. Hence, the argument of
public respondents that not all of the requirements were complied with cannot be sustained. llcd
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval
from DAR. The NATALIA properties were within the areas set aside for the Lungsod Silangan
Reservation. Since Presidential Proclamation No. 1637 created the townsite reservation for the
purpose of providing additional housing to the burgeoning population of Metro Manila, it in
effect converted for residential use what were erstwhile agricultural lands provided all requisites
were met. And, in the case at bar, there was compliance with all relevant rules and requirements.
Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the
requirements prescribed by P.D. 957
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only
to the Lungsod Silangan Reservation, which makes it a special law. It is a basic tenet in statutory
construction that between a general law and a special law, the latter prevails. 14
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of
the Antipolo Hills Subdivision which have already been developed. 15 Of course, this is contrary
to its earlier position that there was no valid conversion. The applications for the developed and
undeveloped portions of subject subdivision were similarly situated. Consequently, both did not
need prior DAR approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall cover, regardless of tenurial arrangement and commodity

produced, all public and private agricultural lands. As to what constitutes agricultural land, it
is referred to as land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land. 16 The deliberations of the
Constitutional Commission confirm this limitation. Agricultural lands are only those lands
which are arable and suitable agricultural lands and do not include commercial, industrial
and residential lands. 17
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as agricultural lands. These lots were
intended for residential use. They ceased to be agricultural lands upon approval of their inclusion
in the Lungsod Silangan Reservation. Even today, the areas in question continue to be developed
as a low-cost housing subdivision, albeit at a snails pace. This can readily be gleaned from the
fact that SAMBA members even instituted an action to restrain petitioners from continuing with
such development. The enormity of the resources needed for developing a subdivision may have
delayed its completion but this does not detract from the fact that these lands are still residential
lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, 18 DAR itself
defined agricultural land thus
. . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and
not classified as mineral or forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as
approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by
such conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills
Subdivision within the coverage of CARL. prLL
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian
Reform, noted in an Opinion 19 that lands covered by Presidential Proclamation No. 1637, inter
alia, of which the NATALIA lands are part, having been reserved for townsite purposes to be
developed as human settlements by the proper land and housing agency, are not deemed
agricultural lands within the meaning and intent of Section 3 (c) of R.A. No. 6657. Not being
deemed agricultural lands, they are outside the coverage of CARL.
Anent the argument that there was failure to exhaust administrative remedies in the instant
petition, suffice it to say that the issues raised in the case filed by SAMBA members differ from
those of petitioners. The former involve possession; the latter, the propriety of including under
the operation of CARL lands already converted for residential use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents acted on their letterprotests, this after sitting it out for almost a year. Given the official indifference, which under the
circumstances could have continued forever, petitioners had to act to assert and protect their
interests. 20
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in
issuing the assailed Notice of Coverage dated 22 November 1990 of lands over which they no
longer have jurisdiction.
WHEREFORE, the Petition for Certiorari is GRANTED. The Notice of Coverage of 22
November 1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision were
placed under CARL coverage is hereby SET ASIDE. llcd

SO ORDERED.
Narvasa, C . J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero,
Nocon, Melo, Quiason, Puno and Vitug, JJ., concur.
Footnotes
1. National Housing Authority and Human Settlements Regulatory Commission; see C. T.
Torres v. Hibionada, G.R. No. 80916, 9 November 1990, 191 SCRA 268.
2. Date of effectivity of R.A. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988.
3. Annex H, Petition; Rollo, p. 33.
4. Annex A, Petition; Rollo, p. 26.
5. Annex C, Petition; Rollo, p. 28.
6. Annex E, Petition; Rollo, p. 30.
7. Annexes B, D and F, Petition; Rollo, pp. 27, 29 and 31.
8. Complaint, p. 3; Rollo, p. 68.
9. DARAB Resolution, 16 December 1991, p. 8; Rollo, p. 82.
10. Renamed Housing and Land Use Regulatory Board (HLURB) per E.O. No. 90, dated 17
December 1986.
11. Annexes A and C, Petition; Rollo, pp. 26 and 28.
12. Annex B, Petition; Rollo, p. 27.
13Annexes D and E, Petition; Rollo, pp. 29-30.
4. National Power Corporation v. Presiding Judge, RTC, Br. XXV, G.R. No. 72477, 16
October 1990, 190 SCRA 477.
5. Comment, p. 8; Rollo, p. 63.
6. Sec. 3 (c), R.A. 6657.
7. Luz Farms v. Secretary of the Department of Agrarian Reform, G.R. No. 86889, 4
December 1990, 192 SCRA 51, citing Record, CONCOM, 7 August 1986, Vol. III, p. 30.
8. DAR Administrative Order No. 1, Series of 1990.
9. Opinion No. 181, Series of 1990.
10. Rocamora v. RTC-Cebu, Br. VIII, G.R. No. 65037, 23 November 1988, 167 SCRA 615.

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

MILESTONE FARMS, INC.,

Petitioner,

G.R. No. 182332

Present:

CARPIO, J.,
Chairperson,
NACHURA,
- versus -

PERALTA,
ABAD, and
VILLARAMA, JR.,* JJ.

Promulgated:
OFFICE OF THE PRESIDENT,

February 23, 2011

Respondent.
x-----------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1[1] under Rule 45 of

the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA)
Amended Decision2[2] dated October 4, 2006 and its Resolution3[3] dated March
27, 2008.

The Facts

Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the

Securities and Exchange Commission on January 8, 1960. 4[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[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[6] that agricultural lands devoted
to livestock, poultry, and/or swine raising are excluded from the Comprehensive
Agrarian Reform Program (CARP).
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Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422hectare property, covered by Transfer Certificate of Title Nos. (T-410434) M15750, (T-486101) M-7307, (T-486102) M-7308, (T-274129) M-15751, (T486103) 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[7]

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:

[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 petitioners 316.0422hectare property from the coverage of CARP. Adopting the LUCECs 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.8[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[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[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[11] 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
Resolution12[12] 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[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.
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The DAR Secretarys 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[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 petitioners 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;

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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[15]

Petitioner filed a Motion for Reconsideration,16[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
petitioners Motion for Reconsideration.17[17]

Aggrieved, petitioner filed its Memorandum on Appeal18[18] before the

Office of the President (OP).

The OPs Ruling

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On February 4, 2000, the OP rendered a decision 19[19] reinstating Director

Dalugdugs Order dated June 27, 1994 and declared the entire 316.0422-hectare
property exempt from the coverage of CARP.

However, on separate motions for reconsideration of the aforesaid decision

filed by 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[20] 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[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 Garilaos observations, the OP also held that, before
an ocular investigation is conducted on the property, the landowners are notified in
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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[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.

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SO ORDERED.23[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. CON0410-001624[24] (Conversion Order), granting petitioners 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 CAs decision of April 29, 2005, Motions for Reconsideration were
filed by farmer-groups, namely: the farmers represented by Miguel Espinas 25[25]
(Espinas group), the Pinugay Farmers,26[26] and the SAPLAG.27[27] The farmergroups 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 leisureresidential-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[28] (Supplement) dated June 15, 2005, the Espinas group submitted the
following as evidence:

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1) Conversion Order29[29] 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[30] 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[31] 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[32] In its Manifestation dated November 29, 2005, the DAR
confirmed that the subject property was no longer devoted to cattle raising. Hence,

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in its Resolution33[33] 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[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

Villas Conversion Order of November 4, 2004, the appellate court had to
acknowledge that the property subject of the controversy would now be limited to
the remaining 162.7373 hectares. In the same token, the Espinas group prayed that
this remaining area be covered by the CARP.35[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[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[37] 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[38] which petitioner submitted to prove that it was
compelled to lease a ranch as temporary shelter for its cattle, only reinforced the
DARs 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
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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 Courts 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[39]

Unperturbed, petitioner filed a Motion for Reconsideration.40[40] On January

8, 2007, MARO Elma, in compliance with the Memorandum of DAR Regional
Director Dominador B. Andres, tendered another Report41[41] reiterating that, upon
inspection of the subject property, together with petitioners 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. Ques 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[42] dated February 21, 2007, found that, per testimony of petitioners
caretaker, Rogelio Ludivices (Roger),43[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
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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[44] Thereafter, as narrated by the CA, the following events transpired:

On May 17, 2007, [petitioner] presented the Judicial Affidavits of its

witnesses, namely, [petitioners] counsel, [Atty. Que], and the alleged caretaker of
[petitioners] 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, [petitioners] 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 [petitioners]
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 [petitioners] Motion for Reconsideration submitted for
resolution.45[45]

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Finally, petitioners motion for reconsideration was denied by the CA in its

Resolution46[46] dated March 27, 2008. The CA discarded petitioners reliance on
Sutton. It ratiocinated that the MARO Reports and the DARs 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 latters
authority to oversee the implementation of agrarian reform laws under Section
5047[47] 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[48]

On petitioners assertion that between MARO Elmas Report dated January 8,

2007 and the Investigating Teams 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.
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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
DARS 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[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 petitioners 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 petitioners property was admittedly devoted to livestock
farming as of June 1988 and the only issue before was whether or not petitioners
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
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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[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 petitioners 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 farmergroups also contend that petitioners reliance on Luz Farms and Sutton is unavailing
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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 DARs 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[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 Courts ruling in Luz Farms declared that agricultural lands devoted to
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livestock, poultry, and/or swine raising are excluded from the CARP, the said
ruling is not without any qualification.52[52]

In its Reply53[53] to the farmer-groups and to the OSGs 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 DARs 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 Teams Report, which confirmed that the subject property is still
devoted to livestock farming; and that there has been no change in petitioners
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.

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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 petitioners 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[54] the same is
not without exception,55[55] such as this case. The CA, under Section 3, 56[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[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[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 Teams Report and judicial affidavits. The CA also went further by

54
55
56
57
58

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 petitioners 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[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[60] Similarly, in Department of Agrarian
Reform v. Uy,61[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,
59
60
61

Masbate,62[62] we denied a similar petition for exemption and/or exclusion, by

according respect to the CAs factual findings and its reliance on the findings of the
DAR and the OP that

62

the subject parcels of land were not directly, actually, and exclusively used for
pasture.63[63]
Petitioners admission that, since 2001, it leased another ranch for its own
livestock is fatal to its cause.64[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 CAs keen observation that the assailed
MARO reports and the Investigating Teams 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 Secretarys competence and jurisdiction.65[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:
xxxx
3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine,
and poultry raising.

63
64
65

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 petitioners 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
DARs 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.

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.

EN BANC

[G.R. No. 86889. December 4, 1990.]

LUZ FARMS, petitioner, vs. THE HONORABLE SECRETARY OF THE

DEPARTMENT OF AGRARIAN REFORM, respondent.

Enrique M. Belo for petitioner.

DECISION

PARAS, J :
p

This is a petition for prohibition with prayer for restraining order and/or preliminary
and permanent injunction against the Honorable Secretary of the Department of Agrarian
Reform for acting without jurisdiction in enforcing the assailed provisions of R.A. No.
6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988 and in
promulgating the Guidelines and Procedure Implementing Production and Profit Sharing
under R.A. No. 6657, insofar as the same apply to herein petitioner, and further from
performing an act in violation of the constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which
includes the raising of livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines
and Procedures Implementing Production and Profit Sharing as embodied in Sections 13
and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and
Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p.
81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and
poultry business and together with others in the same business allegedly stands to be
adversely affected by the enforcement of Section 3(b), Section 11, Section 13, Section
16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive
Agrarian Reform Law and of the Guidelines and Procedures Implementing Production
and Profit Sharing under R.A. No. 6657 promulgated on January 2, 1989 and the Rules
and Regulations Implementing Section 11 thereof as promulgated by the DAR on January
9, 1989 (Rollo, pp. 2-36).

Hence, this petition praying that aforesaid laws, guidelines and rules be declared
unconstitutional. Meanwhile, it is also prayed that a writ of preliminary injunction or
restraining order be issued enjoining public respondents from enforcing the same, insofar
as they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz
Farms' prayer for the issuance of a preliminary injunction in its Manifestation dated May
26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant
said Motion for Reconsideration regarding the injunctive relief, after the filing and
approval by this Court of an injunction bond in the amount of P100,000.00. This Court
also gave due course to the petition and required the parties to file their respective
memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition
as his Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are
made to apply to it:

(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the
definition of "Agricultural, Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands
devoted to commercial, livestock, poultry and swine raising . . ."
(c)

Section 13 which calls upon petitioner to execute a production-sharing plan.

(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the
authority to summarily determine the just compensation to be paid for lands covered
by the Comprehensive Agrarian Reform Law.
(e)

Section 32 which spells out the production-sharing plan mentioned in Section 13

". . . (W)hereby three percent (3%) of the gross sales from
the production of such lands are distributed within sixty (60)
days of the end of the fiscal year as compensation to regular and
other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these
individuals or entities realize gross sales in excess of five
million pesos per annum unless the DAR, upon proper
application, determine a lower ceiling.
In the event that the individual or entity realizes a profit,
an additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety
(90) days of the end of the fiscal year . . ."

The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32
of R.A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988), insofar as the said
law includes the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith.
The constitutional provision under consideration reads as follows:

ARTICLE XIII
xxx

xxx

xxx

AGRARIAN AND NATURAL RESOURCES REFORM

Section 4.
The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities and reasonable retention
limits as the Congress may prescribe, taking into account ecological, developmental,
or equity considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the rights of small landowners.
The State shall further provide incentives for voluntary land-sharing.
xxx

xxx

xxx"

Luz Farms contended that it does not seek the nullification of R.A. 6657 in its
entirety. In fact, it acknowledges the correctness of the decision of this Court in the case
of the Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian
Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the Comprehensive
Agrarian Reform Law. It, however, argued that Congress in enacting the said law has
transcended the mandate of the Constitution, in including land devoted to the raising of
livestock, poultry and swine in its coverage (Rollo, p. 131). Livestock or poultry raising
is not similar to crop or tree farming. Land is not the primary resource in this undertaking
and represents no more than five percent (5%) of the total investment of commercial
livestock and poultry raisers. Indeed, there are many owners of residential lands all over
the country who use available space in their residence for commercial livestock and
raising purposes, under "contract-growing arrangements," whereby processing
corporations and other commercial livestock and poultry raisers (Rollo, p. 10). Lands
support the buildings and other amenities attendant to the raising of animals and birds.
The use of land is incidental to but not the principal factor or consideration in
productivity in this industry. Including backyard raisers, about 80% of those in
commercial livestock and poultry production occupy five hectares or less. The remaining
20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is
embraced in the term "agriculture" and the inclusion of such enterprise under Section 3(b)
of R.A. 6657 is proper. He cited that Webster's International Dictionary, Second Edition
(1954), defines the following words:

"Agriculture the art or science of cultivating the ground and raising and harvesting
crops, often, including also, feeding, breeding and management of livestock, tillage,
husbandry, farming.

It includes farming, horticulture, forestry, dairying, sugarmaking . . .

Livestock domestic animals used or raised on a farm, especially for profit.
Farm a plot or tract of land devoted to the raising of domestic or other animals."
(Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in
constitutional construction is to ascertain and thereafter assure the realization of the
purpose of the framers in the adoption of the Constitution (J.M. Tuazon & Co. vs. Land
Tenure Administration, 31 SCRA 413 [1970]).
Ascertainment of the meaning of the provision of Constitution begins with the
language of the document itself. The words used in the Constitution are to be given their
ordinary meaning except where technical terms are employed in which case the
significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous
or of doubtful meaning, the courts may consider the debates in the constitutional
convention as throwing light on the intent of the framers of the Constitution. It is true that
the intent of the convention is not controlling by itself, but as its proceeding was
preliminary to the adoption by the people of the Constitution the understanding of the
convention as to what was meant by the terms of the constitutional provision which was
the subject of the deliberation, goes a long way toward explaining the understanding of
the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the
meaning of the word "agricultural," clearly show that it was never the intention of the
framers of the Constitution to include livestock and poultry industry in the coverage of
the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under
Section 166 of R.A. 3844, as laud devoted to any growth, including but not limited to
crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM, August 7,
1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture."
Commissioner Jamir proposed to insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and residential
properties because all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because the Committee
contemplated that agricultural lands are limited to arable and suitable agricultural lands
and therefore, do not include commercial, industrial and residential lands (Record,
CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice),
posed several questions, among others, quoted as follows:

xxx

xxx

xxx

"Line 19 refers to genuine reform program founded on the primary right of farmers
and farmworkers. I wonder if it means that leasehold tenancy is thereby proscribed
under this provision because it speaks of the primary right of farmers and
farmworkers to own directly or collectively the lands they till. As also mentioned by
Commissioner Tadeo, farmworkers include those who work in piggeries and poultry
projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a
piggery or a poultry project and for that purpose hires farmworkers therein, these
farmworkers will automatically have the right to own eventually, directly or ultimately
or collectively, the land on which the piggeries and poultry projects were constructed.
(Record, CONCOM, August 2, 1986, p. 618).
xxx

xxx

xxx

The questions were answered and explained in the statement of then Commissioner
Tadeo, quoted as follows:

xxx

xxx

xxx

"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan.

Ipinaaalam ko kay Commissioner Regalado na hindi namin inilagay ang agricultural
worker sa kadahilanang kasama rito ang piggery, poultry at livestock workers. Ang
inilagay namin dito ay farm worker kaya hindi kasama ang piggery, poultry at
livestock workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which
includes "private agricultural lands devoted to commercial livestock, poultry and swine
raising" in the definition of "commercial farms" is invalid, to the extent that the
aforecited agro-industrial activities are made to be covered by the agrarian reform
program of the State. There is simply no reason to include livestock and poultry lands in
the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13
and 32 of R.A. 6657 directing "corporate farms" which include livestock and poultry
raisers to execute and implement "production-sharing plans" (pending final redistribution
of their landholdings) whereby they are called upon to distribute from three percent (3%)
of their gross sales and ten percent (10%) of their net profits to their workers as additional
compensation is unreasonable for being confiscatory, and therefore violative of due
process (Rollo, p. 21).
It has been established that this Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a judicial inquiry into such a
question are first satisfied. Thus, there must be an actual case or controversy involving a
conflict of legal rights susceptible of judicial determination, the constitutional question
must have been opportunely raised by the proper party, and the resolution of the question
is unavoidably necessary to the decision of the case itself (Association of Small
Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna
v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14
July 1989, 175 SCRA 343).

However, despite the inhibitions pressing upon the Court when confronted with
constitutional issues, it will not hesitate to declare a law or act invalid when it is
convinced that this must be done. In arriving at this conclusion, its only criterion will be
the Constitution and God as its conscience gives it in the light to probe its meaning and
discover its purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decisions. Blandishment is as ineffectual as intimidation, for all the
awesome power of the Congress and Executive, the Court will not hesitate "to make the
hammer fall heavily," where the acts of these departments, or of any official, betray the
people's will as expressed in the Constitution (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R.
79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional
powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do, as void. This is the essence of judicial power conferred
by the Constitution "(I)n one Supreme Court and in such lower courts as may be
established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of
the 1973 Constitution and which was adopted as part of the Freedom Constitution, and
Article VIII, Section 1 of the 1987 Constitution) and which power this Court has
exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections
3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock,
poultry and swine in its coverage as well as the Implementing Rules and Guidelines
promulgated in accordance therewith, are hereby DECLARED null and void for being
unconstitutional and the writ of preliminary injunction issued is hereby MADE
permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Padilla,
Bidin, Grio-Aquino, Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave.

Separate Opinions
SARMIENTO, J., concurring:
I agree that the petition be granted.
It is my opinion however that the main issue on the validity of the assailed
provisions of R.A. 6657 (the Comprehensive Agrarian Reform Law of 1988) and its
Implementing Rules and Guidelines insofar as they include the raising of livestock,
poultry, and swine in their coverage can not be simplistically reduced to a question of
constitutional construction.
It is a well-settled rule that construction and interpretation come only after it has
been demonstrated that application is impossible or inadequate without them. A close

reading however of the constitutional text in point, specifically, Sec. 4, Art. XIII,
particularly the phrase, ". . . in case of other farmworkers, to receive a just share of the
fruits thereof," provides a basis for the clear and possible coverage of livestock, poultry,
and swine raising within the ambit of the comprehensive agrarian reform program. This
accords with the principle that every presumption should be indulged in favor of the
constitutionality of a statute and the court in considering the validity of a statute should
give it such reasonable construction as can be reached to bring it within the fundamental
law. 1
The presumption against unconstitutionality, I must say, assumes greater weight
when a ruling to the contrary would, in effect, defeat the laudable and noble purpose of
the law, i.e., the welfare of the landless farmers and farmworkers in the promotion of
social justice, by the expedient conversion of agricultural lands into livestock, poultry,
and swine raising by scheming landowners, thus, rendering the comprehensive nature of
the agrarian program merely illusory.
The instant controversy, I submit, boils down to the question of whether or not the
assailed provisions violate the equal protection clause of the Constitution (Article II,
section 1) which teaches simply that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. 2
There is merit in the contention of the petitioner that substantial distinctions exist
between land directed purely to cultivation and harvesting of fruits or crops and land
exclusively used for livestock, poultry and swine raising, that make real differences, to
wit:

xxx

xxx

xxx

No land is tilled and no crop is harvested in livestock and poultry farming. There are
no tenants nor landlords, only employers and employees.
Livestock and poultry do not sprout from land nor are they "fruits of the land."
Land is not even a primary resource in this industry. The land input is inconsequential
that all the commercial hog and poultry farms combined occupy less than one percent
(1%) (0.4% for piggery, 0.2% for poultry) of the 5.45 million hectares of land
supposedly covered by the CARP. And most farms utilize only 2 to 5 hectares of land.
In every respect livestock and poultry production is an industrial activity. Its use of an
inconsequential portion of land is a mere incident of its operation, as in any other
undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an agricultural enterprise
is nowhere more evident when one considers that at least 95% of total investment in
these farms is in the form of fixed assets which are industrial in nature.
These include (1) animal housing structures and facilities complete with drainage,
waterers, blowers, misters and in some cases even piped-in music; (2) feedmills
complete with grinders, mixers, conveyors, exhausts, generators, etc.; (3) extensive
warehousing facilities for feeds and other supplies; (4) anti-pollution equipment such
as bio-gas and digester plants augmented by lagoons and concrete ponds; (5)
deepwells, elevated water tanks, pumphouses and accessory facilities; (6) modern

equipment such as sprayers, pregnancy testers, etc.; (7) laboratory facilities complete
with expensive tools and equipment; and a myriad other such technologically
advanced appurtances.
How then can livestock and poultry farmlands be arable when such are almost totally
occupied by these structures?
The fallacy of equating the status of livestock and poultry farmworkers with that of
agricultural tenants surfaces when one considers contribution to output. Labor cost of
livestock and poultry farms is no more than 4% of total operating cost. The 98%
balance represents inputs not obtained from the land nor provided by the farmworkers
inputs such as feeds and biochemicals (80% of the total cost), power cost, cost of
money and several others.
Moreover, livestock and poultry farmworkers are covered by minimum wage law
rather than by tenancy law. They are entitled to social security benefits where tenantfarmers are not. They are paid fixed wages rather than crop shares. And as in any
other industry, they receive additional benefits such as allowances, bonuses, and other
incentives such as free housing privileges, light and water.
Equating livestock and poultry farming with other agricultural activities is also
fallacious in the sense that like the manufacturing sector, it is a market for, rather than
a source of agricultural output. At least 60% of the entire domestic supply of corn is
absorbed by livestock and poultry farms. So are the by-products of rice (rice-bran),
coconut (copra meal), banana (banana pulp meal), and fish (fish meal). 3
xxx

xxx

xxx

In view of the foregoing, it is clear that both kinds of lands are not similarly situated
and hence, can not be treated alike. Therefore, the assailed provisions which allow for the
inclusion of livestock and poultry industry within the coverage of the agrarian reform
program constitute invalid classification and must accordingly be struck down as
repugnant to the equal protection clause of the Constitution.

Footnotes
SARMIENTO, J., concurring:

1.

In re Guarina, 24 Phil. 37; Yu Cong Eng v. Trinidad, 70 L. ed., p. 1059.

2.

Ichong v. Hernandez, 101 Phil. 1155.

3.

Rollo, 29-30.

EN BANC

DEPARTMENT OF AGRARIAN G.R. No. 162070

REFORM, represented by SECRETARY
JOSE MARI B. PONCE (OIC), Present:
Petitioner, Davide, C.J.,
Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
- versus - Austria-Martinez,
Corona,
Carpio Morales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario and
Garcia, JJ.
DELIA T. SUTTON, ELLA T.
SUTTON-SOLIMAN and Promulgated:
HARRY T. SUTTON,
Respondents. October 19, 2005

x-----------------------------------x

DECISION

PUNO, J.:

This is a petition for review filed by the Department of Agrarian Reform (DAR) of
the Decision and Resolution of the Court of Appeals, dated September 19, 2003
and February 4, 2004, respectively, which declared DAR Administrative Order
(A.O.) No. 9, series of 1993, null and void for being violative of the Constitution.

The case at bar involves a land in Aroroy, Masbate, inherited by respondents which
has been devoted exclusively to cow and calf breeding. On October 26, 1987,
pursuant to the then existing agrarian reform program of the government,
respondents made a voluntary offer to sell (VOS)[1] their landholdings to
petitioner DAR to avail of certain incentives under the law.

On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also
known as the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect.
It included in its coverage farms used for raising livestock, poultry and swine.

On December 4, 1990, in an en banc decision in the case of Luz Farms v.

Secretary of DAR,[2] this Court ruled that lands devoted to livestock and poultryraising are not included in the definition of agricultural land. Hence, we declared as
unconstitutional certain provisions of the CARL insofar as they included livestock
farms in the coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a
formal request to withdraw their VOS as their landholding was devoted exclusively
to cattle-raising and thus exempted from the coverage of the CARL.[3]

On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy,

Masbate, inspected respondents land and found that it was devoted solely to cattleraising and breeding. He recommended to the DAR Secretary that it be exempted
from the coverage of the CARL.

On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal

of their VOS and requested the return of the supporting papers they submitted in
connection therewith.[4] Petitioner ignored their request.

On December 27, 1993, DAR issued A.O. No. 9, series of 1993,[5] which
provided that only portions of private agricultural lands used for the raising of
livestock, poultry and swine as of June 15, 1988 shall be excluded from the
coverage of the CARL. In determining the area of land to be excluded, the A.O.
fixed the following retention limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of

land per 1 head of animal shall be retained by the landowner), and a ratio of 1.7815
hectares for livestock infrastructure for every 21 heads of cattle shall likewise be
excluded from the operations of the CARL.

On February 4, 1994, respondents wrote the DAR Secretary and advised him to
consider as final and irrevocable the withdrawal of their VOS as, under the Luz
Farms doctrine, their entire landholding is exempted from the CARL.[6]

On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an

Order[7] partially granting the application of respondents for exemption from the
coverage of CARL. Applying the retention limits outlined in the DAR A.O. No. 9,
petitioner exempted 1,209 hectares of respondents land for grazing purposes, and a
maximum of 102.5635 hectares for infrastructure. Petitioner ordered the rest of
respondents landholding to be segregated and placed under Compulsory
Acquisition.

Respondents moved for reconsideration. They contend that their entire

landholding should be exempted as it is devoted exclusively to cattle-raising. Their
motion was denied.[8] They filed a notice of appeal[9] with the Office of the
President assailing: (1) the reasonableness and validity of DAR A.O. No. 9, s.
1993, which provided for a ratio between land and livestock in determining the
land area qualified for exclusion from the CARL, and (2) the constitutionality of

DAR A.O. No. 9, s. 1993, in view of the Luz Farms case which declared cattleraising lands excluded from the coverage of agrarian reform.

On October 9, 2001, the Office of the President affirmed the impugned Order of
petitioner DAR.[10] It ruled that DAR A.O. No. 9, s. 1993, does not run counter to
the Luz Farms case as the A.O. provided the guidelines to determine whether a
certain parcel of land is being used for cattle-raising. However, the issue on the
constitutionality of the assailed A.O. was left for the determination of the
courts as the sole arbiters of such issue.

On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR
A.O. No. 9, s. 1993, void for being contrary to the intent of the 1987 Constitutional
Commission to exclude livestock farms from the land reform program of the
government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order
No. 09, Series of 1993 is hereby DECLARED null and void. The
assailed order of the Office of the President dated 09 October 2001 in
so far as it affirmed the Department of Agrarian Reforms ruling that
petitioners landholding is covered by the agrarian reform program of
the government is REVERSED and SET ASIDE.
SO ORDERED.[11]
Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series
of 1993, which prescribes a maximum retention limit for owners of lands devoted
to livestock raising.

Invoking its rule-making power under Section 49 of the CARL, petitioner submits
that it issued DAR A.O. No. 9 to limit the area of livestock farm that may be
retained by a landowner pursuant to its mandate to place all public and private
agricultural lands under the coverage of agrarian reform. Petitioner also contends
that the A.O. seeks to remedy reports that some unscrupulous landowners have
converted their agricultural farms to livestock farms in order to evade their
coverage in the agrarian reform program.

Petitioners arguments fail to impress.

Administrative agencies are endowed with powers legislative in nature, i.e., the
power to make rules and regulations. They have been granted by Congress with the
authority to issue rules to regulate the implementation of a law entrusted to them.
Delegated rule-making has become a practical necessity in modern governance due
to the increasing complexity and variety of public functions. However, while
administrative rules and regulations have the force and effect of law, they are not
immune from judicial review.[12] They may be properly challenged before the
courts to ensure that they do not violate the Constitution and no grave abuse of
administrative discretion is committed by the administrative body concerned.

The fundamental rule in administrative law is that, to be valid, administrative

rules and regulations must be issued by authority of a law and must not
contravene the provisions of the Constitution.[13] The rule-making power of an
administrative agency may not be used to abridge the authority given to it by

Congress or by the Constitution. Nor can it be used to enlarge the power of the
administrative agency beyond the scope intended. Constitutional and
statutory provisions control with respect to what rules and regulations may be
promulgated by administrative agencies and the scope of their regulations.[14]

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.[15]

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.

The subsequent case of Natalia Realty, Inc. v. DAR[16] reiterated our

ruling in the Luz Farms case. In Natalia Realty, the Court held that industrial,
commercial and residential lands are not covered by the CARL.[17] We stressed
anew that while Section 4 of R.A. No. 6657 provides that the CARL shall cover
all public and private agricultural lands, the term agricultural land does not
include lands classified as mineral, forest, residential, commercial or
industrial. Thus, in Natalia Realty, even portions of the Antipolo Hills
Subdivision, which are arable yet still undeveloped, could not be considered as
agricultural lands subject to agrarian reform as these lots were already classified as
residential lands.

A similar logical deduction should be followed in the case at bar. Lands devoted to
raising of livestock, poultry and swine have been classified as industrial, not
agricultural, lands and thus exempt from agrarian reform. Petitioner DAR argues
that, in issuing the impugned A.O., it was seeking to address the reports it has
received that some unscrupulous landowners have been converting their
agricultural lands to livestock farms to avoid their coverage by the agrarian reform.
Again, we find neither merit nor logic in this contention. The undesirable
scenario which petitioner seeks to prevent with the issuance of the A.O. clearly
does not apply in this case. Respondents family acquired their landholdings as

early as 1948. They have long been in the business of breeding cattle in Masbate
which is popularly known as the cattle-breeding capital of the Philippines.[18]
Petitioner DAR does not dispute this fact. Indeed, there is no evidence on record
that respondents have just recently engaged in or converted to the business of
breeding cattle after the enactment of the CARL that may lead one to suspect that
respondents intended to evade its coverage. It must be stressed that what the CARL
prohibits is the conversion of agricultural lands for non-agricultural purposes
after the effectivity of the CARL. There has been no change of business interest
in the case of respondents.

Moreover, it is a fundamental rule of statutory construction that the

reenactment of a statute by Congress without substantial change is an implied
legislative approval and adoption of the previous law. On the other hand, by
making a new law, Congress seeks to supersede an earlier one.[19] In the case at
bar, after the passage of the 1988 CARL, Congress enacted R.A. No. 7881[20]
which amended certain provisions of the CARL. Specifically, the new law
changed the definition of the terms agricultural activity and commercial
farming by dropping from its coverage lands that are devoted to commercial
livestock, poultry and swine-raising.[21] With this significant modification,
Congress clearly sought to align the provisions of our agrarian laws with the
intent of the 1987 Constitutional Commission to exclude livestock farms from
the coverage of agrarian reform.

In sum, it is doctrinal that rules of administrative bodies must be in harmony

with the provisions of the Constitution. They cannot amend or extend the
Constitution. To be valid, they must conform to and be consistent with the
Constitution. In case of conflict between an administrative order and the provisions
of the Constitution, the latter prevails.[22] The assailed A.O. of petitioner DAR
was properly stricken down as unconstitutional as it enlarges the coverage of
agrarian reform beyond the scope intended by the 1987 Constitution.

IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision

and Resolution of the Court of Appeals, dated September 19, 2003 and February 4,
2004, respectively, are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

RA 7881 (1995) Exempting Prawn Farms and

Fishponds from CARP
Posted on June 22, 2014 by albinoski2005

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REPUBLIC ACT NO. 7881
AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6657, ENTITLED
AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN REFORM PROGRAM TO
PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION, PROVIDING THE
MECHANISM FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES
SECTION 1. Section 3, Paragraph (b) of Republic Act No. 6657 is hereby amended to read as
follows:chanroblesvirtualawlibrary
Sec. 3. Definitions. For the purpose of this Act, unless the context indicates otherwise:
(b) Agriculture, Agricultural Enterprise or Agricultural Activity means the cultivation of the
soil, planting of crops, growing of fruit trees, 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 persons whether natural or juridical.
Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to read as follows:
Sec. 10. Exemptions and Exclusions.
(a) Lands actually, directly and exclusively used for parks, wildlife, forest reserves,
reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves shall be exempt
from the coverage of this Act.
(b) Private lands actually, directly and exclusively used for prawn farms and fishponds shall be
exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have not
been distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian reform
beneficiaries under the Comprehensive Agrarian Reform Program.
In cases where the fishponds or prawn farms have been subjected to the Comprehensive
Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of
compulsory acquisition, a simple and absolute majority of the actual regular workers or tenants
must consent to the exemption within one (1) year from the effectivity of this Act. When the
workers or tenants do not agree to this exemption, the fishponds or prawn farms shall be
distributed collectively to the worker-beneficiaries or tenants who shall form a cooperative or
association to manage the same.
In cases where the fishponds or prawn farms have not been subjected to the Comprehensive
Agrarian Reform Law, the consent of the farm workers shall no longer be necessary, however,
the provision of Section 32-A hereof on incentives shall apply.

(c) Lands actually, directly and exclusively used and found to be necessary for national defense,
school sites and campuses, including experimental farm stations operated by public or private
schools for educational purposes, seeds and seedling research and pilot production center, church
sites and convents appurtenant thereto, mosque 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.
Sec. 3. Section 11 Paragraph 1 is hereby amended to read as follows:
Sec. 11. Commercial Farming. Commercial farms, which are private agricultural lands
devoted to saltbeds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and
rubber plantations, shall be subject to immediate compulsory acquisition and distribution after
ten (10) years from the effectivity of this Act.In the case of new farms, the ten-year period shall
begin from the first year of commercial production and operation, as determined by the
DAR.During the ten-year period, the Government shall initiate steps necessary to acquire these
lands, upon payment of just compensation for the land and the improvements thereon, preferably
in favor of organized cooperatives or associations which shall thereafter manage the said lands
for the workers-beneficiaries.
Sec. 4. There shall be incorporated after Section 32 of Republic Act No. 6657 a new section to
read as follows:
Sec. 32-A. Incentives. Individuals or entities owning or operating fishponds and prawn farms
are hereby mandated to execute within six (6) months from the effectivity of this Act an
incentive plan with their regular fishpond or prawn farmworkers or fishpond or prawn farm
workers organization, if any, whereby seven point five percent (7.5%) of their net profit before
tax from the operation of the fishpond or prawn farms are distributed within sixty (60) days at
the end of the fiscal year as compensation to regular and other pond workers in such ponds over
and above the compensation they currently receive.
In order to safeguard the right of the regular fishpond or prawn farm workers under the
incentive plan, the books of the fishpond or prawn farm owners shall be subject to periodic audit
or inspection by certified public accountants chosen by the workers.
The foregoing provision shall not apply to agricultural lands subsequently converted to fishpond
or prawn farms provided the size of the land converted does not exceed the retention limit of the
landowner.
Sec. 5. There shall be incorporated after Section 65 of Republic Act No. 6657 new sections to
read as follows:
Sec. 65-A. Conversion into Fishpond and Prawn Farms. No conversion of public agricultural
lands into fishponds and prawn farms shall be made except in situations where the provincial
government with the concurrence of the Bureau of Fisheries and Aquatic Resources (BFAR)
declares a coastal zone as suitable for fishpond development.In such case, the Department of
Environment and Natural Resources (DENR) shall allow the lease and development of such
areas: Provided, That the declaration shall not apply to environmentally critical projects and
areas as contained in title (A) sub-paragraph two, (B-5) and (C-1) and title (B), number eleven
(11) of Proclamation No. 2146, entitled Proclaiming Certain Areas and Types of Projects as
Environmentally Critical and Within the Scope of the Environmental Impact Statement (EIS)
System established under Presidential Decree No. 1586, to ensure the protection of river
systems, aquifers and mangrove vegetations from pollution and environmental
degradation: Provided, further, That the approval shall be in accordance with a set of guidelines
to be drawn up and promulgated by the DAR and the BFAR: Provided, furthermore, That small-

farmer cooperatives and organizations shall be given preference in the award of the Fishpond
Lease Agreement (FLAs).
No conversion of more than five (5) hectares of private lands to fishpond and prawn farms shall
be allowed after the passage of this Act, except when the use of the land is more economically
feasible and sound for fishpond and/or prawn farm, as certified by the Bureau of Fisheries and
Aquatic Resources (BFAR), and a simple and absolute majority of the regular farm workers or
tenants agree to the conversion, the Department of Agrarian Reform, may approve applications
for change in the use of the land: Provided, finally, That no piecemeal conversion to circumvent
the provisions of this Act shall be allowed.In these cases where the change of use is approved,
the provisions of Section 32-A hereof on incentives shall apply.
Sec. 65-B. Inventory. Within one (1) year from the effectivity of this Act, the BFAR shall
undertake and finish an inventory of all government and private fishponds and prawn farms, and
undertake a program to promote the sustainable management and utilization of prawn farms and
fishponds.No lease under Section 65-A hereof may be granted until after the completion of the
said inventory.
The sustainable management and utilization of prawn farms and fishponds shall be in
accordance with the effluent standards, pollution charges and other pollution control measures
such as, but not limited to, the quantity of fertilizers, pesticides and other chemicals used, that
may be established by the Fertilizer and Pesticide Authority (FPA), the Environmental
Management Bureau (EMB), and other appropriate government regulatory bodies, and existing
regulations governing water utilization, primarily Presidential Decree No. 1067, entitled A
Decree Instituting A Water Code, Thereby Revising and Consolidating the Laws Governing the
Ownership, Appropriation, Utilization, Exploitation, Development, Conservation and Protection
of Water Resources.
Sec. 65-C. Protection of Mangrove Areas. In existing Fishpond Lease Agreements (FLAs)
and those that will be issued after the effectivity of this Act, a portion of the fishpond area
fronting the sea, sufficient to protect the environment, shall be established as a buffer zone and
be planted to specified mangrove species to be determined in consultation with the regional
office of the DENR.The Secretary of Environment and Natural Resources shall provide the
penalties for any violation of this undertaking as well as the rules for its implementation.
Sec. 65-D. Change of Crops. The change of crops to commercial crops or high value crops
shall not be considered as a conversion in the use or nature of the land. The change in crop
should, however, not prejudice the rights of tenants or leaseholders should there be any and the
consent of a simple and absolute majority of the affected farm workers, if any, shall first be
obtained.
Sec. 6. There shall be incorporated after Section 73 of Republic Act No. 6657 a new section to
read as follows:
Sec. 73-A. Exception. The provisions of Section 73, paragraph (E), to the contrary
notwithstanding, the sale and/or transfer of agricultural land in cases where such sale, transfer or
conveyance is made necessary as a result of a banks foreclosure of the mortgaged land is hereby
permitted.
Sec. 7. Separability Clause. If for any reason, any section or provision of this Act is declared
null and void, no other section provision or part thereof shall be affected and the same shall
remain in full force and effect.
Sec. 8. Effectivity Clause. This Act shall take effect fifteen (15) days after its publication in at
least two (2) newspapers of general circulation.