IV.

  Those which are devoted to cattle raising as of 15 June 1988

DAR ADMINISTRATIVE ORDER NO. 01-04

This Administrative Order (A.O.) covers all applications for exclusion from CARP coverage of
private agricultural lands or portions thereof actually, exclusively, and directly used for cattle
raising as of 15 June 1988.

Additional provisions:

Ra 6657 section 3 (b) - Agriculture, Agricultural Enterprise or Agricultural Activity means the
cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry or
fish, including the harvesting of such farm products, and other farm activities and practices
performed by a farmer in conjunction with such farming operations done by person whether
natural or juridical.

Ra 6657 section 11 - Commercial farms, which are private agricultural lands devoted to
commercial livestock, poultry and swine raising, and aquaculture including saltbeds, fishponds
and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and
rubber plantations, shall be subject to immediate compulsory acquisition and distribution after
(10) years from the effectivity of the Act.n 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 the 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 hereafter manage the said lands for the
worker-beneficiaries. If the DAR determines that the purposes for which this deferment is
granted no longer exist, such areas shall automatically be subject to redistribution. The
provisions of Section 32 of the Act, with regard to production-and income-sharing, shall apply to
commercial farms.

Ra 6657 section 13 - Any enterprise adopting the scheme provided for in Section 32 or operating
under a production venture, lease, management contract or other similar arrangement and any
farm covered by Sections 8 and 11 hereof is hereby mandated to execute within ninety (90) days
from the effectivity of this Act, a production-sharing plan, under guidelines prescribed by the
appropriate government agency. Nothing herein shall be construed to sanction the diminution of
any benefits such as salaries, bonuses, leaves and working conditions granted to the employee-
beneficiaries under existing laws, agreements, and voluntary practice by the enterprise, nor shall
the enterprise and its employee-beneficiaries be prevented from entering into any agreement with
terms more favorable to the latter.

Ra 6657 section 32 - Pending final land transfer, individuals or entities owning, or operating
under lease or management contract, agricultural lands are hereby mandated to execute a
production-sharing plan with their farm workers or farmworkers' reorganization, if any, whereby
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, determines a lower ceiling.

DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI

Facts:
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)
their landholdings to petitioner DAR to avail of certain incentives under the law. On June 10,
1988, CARL took effect.

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. MARO inspected respondents’ land and found that it
was devoted solely to cattle-raising and breeding. He recommended to the DAR Secretary that it
be exempted from the coverage of the CARL.
DAR ignored their request. DAR issued A.O. No. 9, series of 1993, 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. DAR
Secretary Garilao issued an Order partially granting the application of respondents for exemption
from the coverage of CARL. 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.
Office of the President affirmed the order of DAR.
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

Issue:
Whether or not 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 are constitutional.

Held:
YES. 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.