G.R. No. 170623 - A. Z. Arnaiz Realty, Inc. vs. Office of the President

Petitioner A.Z. Arnaiz Realty, Inc. filed a petition for exclusion from the Comprehensive Agrarian Reform Program (CARP) coverage on April 25, 1994.
The petition involved three parcels of land under Transfer Certificate of Title (TCT) Nos. T-3543, T-6929, and T-3542, covering a total area of 843.3990 hectares, located in Barangay Asid, Sinalugan, Masbate, Masbate.
The basis for exclusion was that:

The DAR Regional Director, Region V, issued an Order on January 24, 1995, denying the petition based on several findings:

A portion of the lands had been leased to Monterey Farms Corporation from July 15, 1981 to July 15, 1991.
During the lease, petitioner sold its entire herd of cattle for ₱900,000.00 to Monterey Farms Corporation.
One of the land parcels (TCT No. T-3542) was no longer under petitioner’s ownership, as it had been transferred to Nuestra Señora del Carmen Marble, Inc., with a new title TCT No. T-6930 already issued.

The properties were not used directly, actually, and exclusively for pasture land.
There was no clear and convincing evidence that the petitioner intended to maintain the entire area for cattle ranching.
The presence of a peaceful coexistence with the farmers and the offer by Monterey Farms to renew the lease (with a rental increase) indicated that external factors (like the presence of NPA rebels) were not decisive in terminating any business activity.

A Motion for Reconsideration (denied December 8, 1995).
An appeal to the Secretary of Agrarian Reform, which was dismissed with an Order on October 23, 1996, reaffirming CARP coverage and issuing directives for survey and allocation.

A Motion for Reconsideration by the petitioner on February 13, 1998, which was denied.
An appeal before the Office of the President, which resulted in a Decision on September 19, 2001, dismissing the appeal and affirming previous administrative orders.
A subsequent Motion for Reconsideration with Earnest Prayer for Reinvestigation or Ocular Inspection dated October 15, 2002, which was likewise denied.

Petitioner then sought judicial relief by filing a petition before the Court of Appeals (CA), arguing on several grounds including alleged due process violations and reliance on the Luz Farms and Delia Sutton precedents.
On August 11, 2005, the CA delivered its Decision dismissing the petition, affirming the administrative orders of the Office of the President and the Department of Agrarian Reform.

The subject properties were not directly, actually, and exclusively used for pasture as evidenced by the leasing arrangement, sale of cattle, and the diversified use of the lands (agricultural crops such as corn, coconut, and others).
Only a relatively small portion (44.2470 hectares) of the land was above the 18% slope, contrary to petitioner’s assertion that the lands were predominantly unsuitable for agriculture.
The presence of farmers occupying part of the land was established, consistent with the agricultural use of the property.

The petitioner’s reliance on precedents (Luz Farms and Delia Sutton) was examined but ultimately found insufficient to alter the factual determinations regarding the land’s use and the procedural fairness of the administrative proceedings.

Whether the petitioner was accorded the requisite due process in having its petition for exclusion considered, notwithstanding the absence of a trial-type hearing.
Whether the administrative proceedings, relying on submissions in the form of pleadings, affidavits, and documentary evidence, met constitutional standards of fair hearing.

Whether the precedents set in Luz Farms v. Hon. DAR Secretary and Department of Agrarian Reform v. Sutton should be applied to exclude lands with slopes of 18% or over from CARP coverage.
Whether these precedents support the petitioner’s contention that the subject lands, being unsuitable for agriculture due to their topography, should be exempted from the agrarian reform program.

Whether the evidence sufficiently showed that the subject properties were directly, actually, and exclusively used for cattle ranching or commercial livestock raising.
Whether the prior lease arrangements and subsequent sale of cattle undermine the petitioner’s claim of maintaining its lands primarily for cattle-ranching purposes.