Arce v. Department of Agrarian Reform
REITERATIONFacts
The Antecedents: For decades, the Heirs of Ramon Arce, Sr. have owned and operated a 76.39-hectare parcel of land in Rizal, utilized for livestock raising, specifically for milk and dairy production. Their method, known as "feedlot operation," involved confining animals and feeding them a cut-and-carry basis or zero grazing, with napier grass grown on the subject lands serving as fodder. In 1998, due to a liver fluke infestation, some older and milking livestock were transferred to a facility in Novaliches, Quezon City, while younger cattle remained on the subject lands. Despite this, the napier grass continued to be cultivated and harvested for feed. Procedural History: In August 2008, the Department of Agrarian Reform (DAR) issued a Notice of Coverage over the subject lands. The Heirs of Arce petitioned for exclusion, asserting their lands were used for livestock raising prior to the Comprehensive Agrarian Reform Law (CARL). Initially, the DAR's Provincial Agrarian Reform Officer (PARO) and DAR Provincial Office (DARPO) recommended granting the exclusion. However, the DAR Secretary later reversed this, denying the petition, citing a lack of continuous livestock use based on an ocular inspection. The Office of the President (OP) then granted the exclusion, finding the lands exempt. The DAR appealed to the Court of Appeals (CA), which reversed the OP's decision, ruling that the lands were no longer exclusively used for livestock. The Heirs of Arce then filed the present petition for review on certiorari. The Petition: The petitioners seek review on certiorari under Rule 45 of the Rules of Court, assailing the CA's decision. They argue that the CA erred in upholding the DAR Secretary's findings, which were allegedly based on proceedings violating their due process rights and despite substantial evidence of livestock presence. They contend the CA wrongly ruled the properties were no longer exclusively used for livestock, as they were vital for their feedlot operations. Furthermore, they claim the CA erred in giving due course to the DAR's petition for review due to non-observance of the exhaustion of administrative remedies. The core of their argument is that lands devoted to livestock raising are industrial, not agricultural, and thus exempt from CARP coverage, citing Supreme Court precedent.
Issue(s)
Whether the subject lands are exempt from the coverage of the Comprehensive Agrarian Reform Program (CARP) as lands devoted to livestock raising. Whether the DAR Secretary's Order denying the Petition for Exclusion was tainted with grave abuse of discretion and violated petitioners' right to due process. Whether the Court of Appeals erred in reversing the Office of the President's Decision granting the exclusion.
Ruling
The petition is granted. The August 5, 2016 Decision and the November 28, 2016 Resolution of the Court of Appeals are reversed and set aside. A new one is entered upholding the exemption of the subject lands from the coverage of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988.
Ratio Decidendi
On the exemption of lands devoted to livestock raising from CARP coverage: The Supreme Court reiterated its ruling in Luz Farms v. Secretary of DAR that lands devoted to livestock, poultry, and swine are industrial, not agricultural, and thus are exempt from CARP coverage. The Court found substantial evidence that the subject lands had been devoted to livestock production since the 1950s, even before CARP's enactment. The Court emphasized that the Constitutional Commission never intended to include the livestock industry in the agrarian reform program. Therefore, the subject lands, being utilized for livestock raising, are industrial and exempt from CARP. On the alleged failure to prove continuous use for livestock and due process violations: The Court found that the transfer of some livestock to the Novaliches property was temporary and for health reasons, as recommended by the Philippine Carabao Center, and did not divert the subject lands' use from livestock farming. The Court also gave greater weight to the MARO and DARPO's reports, which recommended exclusion based on their ocular inspections, over the DAR's reliance on Ucag's inspection. Ucag's inspection was conducted without prior notice to the petitioners, potentially from outside the premises, and without affording petitioners an opportunity to refute its findings, thus violating their right to due process. The Court noted that the subject lands were used to grow napier grass as fodder for the livestock, which is consistent with a feedlot operation and does not automatically classify the land as agricultural. On the Court of Appeals' reversal of the Office of the President's Decision: The Court held that the CA misapplied the ruling in Department of Agrarian Reform v. Vicente K. Uy by relying on administrative conditions (DAR A.O. No. 9, Series of 1993) that had already been declared unconstitutional in Department of Agrarian Reform v. Sutton. The Court reiterated that A.O. No. 9-93 was invalid as it contravened the Constitution by attempting to regulate livestock farms and include them in CARP coverage, contrary to the clear intent to exclude such activities. The Court also pointed out that the petitioners' use of the land for livestock raising predated CARP, negating any suspicion of conversion to evade coverage. The Court concluded that the subject lands remained non-agricultural and thus excluded from CARP.
Main Doctrine
Lands devoted to livestock raising, even if they produce feed crops like napier grass, are considered industrial and not agricultural lands, and are therefore exempt from the coverage of the Comprehensive Agrarian Reform Program (CARP).