Sec. 65. Conversion of Lands.

After the lapse of five (5) years from its award, when the land ceases to be economically feasible
and sound for agricultural purposes, or the locality has become urbanized and the land will have a
greater economic value for residential, commercial or industrial purposes, the DAR, upon application
of the beneficiary or the landowner, with due notice to the affected parties, and subject to existing
laws, may authorize the reclassification or conversion of the land and its disposition: provided, that
the beneficiary shall have fully paid his obligation.
chanrobles virtualaw library

CARPER Law amendment

Section 22. Section 65 of Republic Act No. 6657, as amended, is
hereby further amended to read as follows:
"SEC. 65. Conversion of Lands. - After the lapse of five (5) years from
its award, when the land ceases to be economically feasible and sound
for agricultural purposes, or the locality has become urbanized and the
land will have a greater economic value for residential, commercial or
industrial purposes, the DAR, upon application of the beneficiary or the
landowner with respect only to his/her retained area which is tenanted,
with due notice to the affected parties, and subject to existing laws,
may authorize the reclassification or conversion of the land and its
disposition: Provided, That if the applicant is a beneficiary under
agrarian laws and the land sought to be converted is the land awarded
to him/her or any portion thereof, the applicant, after the conversion is
granted, shall invest at least ten percent (10%)of the proceeds coming
from the conversion in government securities: Provided, further, That
the applicant upon conversion shall fully pay the price of the
land: Provided, furthermore, That irrigated and irrigable lands, shall not
be subject to conversion: Provided,finally, That the National Irrigation
Administration shall submit a consolidated data on the location
nationwide of all irrigable lands within one (1)year from the effectivity
of this Act.
"Failure to implement the conversion plan within five (5) years from the
approval of such conversion plan or any violation of the conditions of
the conversion order due to the fault of the applicant shall cause the
land to automatically be covered by CARP."
G.R. No. 183409, June 18, 2010
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.
(CREBA), petitioner,
vs.THE SECRETARY OF AGRARIAN REFORM, Respondent.
Facts:

1. DAR issued the following:

a) AO No. 01-02, as amended, providing for the guideline governing applications for
conversion, from agricultural to non-agricultural uses or to another agricultural use, such as:
Conversion of agricultural lands or areas that have been reclassified by the LGU or by way
of a Presidential Proclamation, to residential, commercial, industrial, or other non-agricultural
uses on or after the effectivity of RA 6657 on 15 June 1988.
b) Memorandum No. 88 on 15 April 2008, to address the unabated conversion of
prime agricultural lands for real estate development, which temporarily suspended the
processing and approval of all land use conversion applications.

2.Thesewereassailedonthefollowinggrounds:
1) that under Republic Act No. 6657 and Republic Act No. 8435, 10 the term agricultural lands
refers to "lands devoted to or suitable for the cultivation of the soil, planting of crops, growing
of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm
products, and other farm activities and practices performed by a farmer in conjunction with
such farming operations done by a person whether natural or juridical, and not classified by
the law as mineral, forest, residential, commercial or industrial land." When the Secretary of
Agrarian Reform, however, issued DAR AO No. 01-02, as amended, he included in the
definition of agricultural lands "lands not reclassified as residential, commercial, industrial or
other non-agricultural uses before 15 June 1988." In effect, lands reclassified from
agricultural to residential, commercial, industrial, or other non-agricultural uses after 15 June
1988 are considered to be agricultural lands for purposes of conversion, redistribution, or
otherwise. In so doing, petitioner avows that the Secretary of Agrarian Reform acted without
jurisdiction as he has no authority to expand or enlarge the legal signification of the term
agricultural lands through DAR AO No. 01-02. Being a mere administrative issuance, it must
conform to the statute it seeks to implement, i.e., Republic Act No. 6657, or to the
Constitution, otherwise, its validity or constitutionality may be questioned.
2) According to petitioner, there is nothing in Section 65 of Republic Act No. 6657 or in any
other provision of law that confers to the DAR the jurisdiction or authority to require that nonawarded lands or reclassified lands be submitted to its conversion authority. Thus, in issuing
and enforcing DAR AO No. 01-02, as amended, the Secretary of Agrarian Reform acted with
grave abuse of discretion amounting to lack or excess of jurisdiction.
3) DAR Memorandum No. 88 is not a valid exercise of police power for it is the prerogative of
the legislature and that it is unconstitutional because it suspended the land use conversion
without any basis.
By reason thereof, petitioner claims that there is an actual slow down of housing projects,
which, in turn, aggravated the housing shortage, unemployment and illegal squatting
problems to the substantial prejudice not only of the petitioner and its members but more so
of the whole nation.
WHETHER THE DAR SECRETARY HAS JURISDICTION OVER LANDS THAT HAVE BEEN
RECLASSIFIED AS RESIDENTIAL, COMMERCIAL, INDUSTRIAL, OR FOR OTHER NONAGRICULTURAL USES.
II.

WHETHER THE DAR SECRETARY ACTED IN EXCESS OF HIS JURISDICTION AND

GRAVELY ABUSED HIS DISCRETION BY ISSUING AND ENFORCING [DAR AO NO. 0102, AS AMENDED] WHICH SEEK TO REGULATE RECLASSIFIED LANDS.
III.
WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL AUTONOMY OF
LOCAL GOVERNMENT UNITS.
IV.
WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE PROCESS AND
EQUAL PROTECTION CLAUSE[S] OF THE CONSTITUTION.
WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE POWER.9
This Court held in Alarcon v. Court of Appeals43 that reclassification of lands does not suffice.
Conversion and reclassification differ from each other. Conversion is the act of changing the
current use of a piece of agricultural land into some other use as approved by the DAR while
reclassification is the act of specifying how agricultural lands shall be utilized for nonagricultural uses such as residential, industrial, and commercial, as embodied in the land use
plan, subject to the requirements and procedures for land use conversion. In view thereof, a
mere reclassification of an agricultural land does not automatically allow a landowner to
change its use. He has to undergo the process of conversion before he is permitted to use
the agricultural land for other purposes.44
It is clear from the aforesaid distinction between reclassification and conversion that
agricultural lands though reclassified to residential, commercial, industrial or other nonagricultural uses must still undergo the process of conversion before they can be used for
the purpose to which they are intended.
Nevertheless, emphasis must be given to the fact that DARs conversion authority can only
be exercised after the effectivity of Republic Act No. 6657 on 15 June 1988. 45 The said date
served as the cut-off period for automatic reclassification or rezoning of agricultural lands
that no longer require any DAR conversion clearance or authority.46Thereafter,
reclassification of agricultural lands is already subject to DARs conversion authority.
Reclassification alone will not suffice to use the agricultural lands for other purposes.
Conversion is needed to change the current use of reclassified agricultural lands.
It is of no moment whether the reclassification of agricultural lands to residential, commercial,
industrial or other non-agricultural uses was done by the LGUs or by way of Presidential
Proclamations because either way they must still undergo conversion process. It bears
stressing that the act of reclassifying agricultural lands to non-agricultural uses simply
specifies how agricultural lands shall be utilized for non-agricultural uses and does not
automatically convert agricultural lands to non-agricultural uses or for other purposes. As
explained in DAR Memorandum Circular No. 7, Series of 1994, cited in the 2009 case of
Roxas & Company, Inc. v. DAMBA-NFSW and the Department of Agrarian
Reform,47 reclassification of lands denotes their allocation into some specific use and
providing for the manner of their utilization and disposition or the act of specifying how
agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, or
commercial, as embodied in the land use plan. For reclassified agricultural lands, therefore,
to be used for the purpose to which they are intended there is still a need to change the

current use thereof through the process of conversion. The authority to do so is vested in the
DAR, which is mandated to preserve and maintain agricultural lands with increased
productivity. Thus, notwithstanding the reclassification of agricultural lands to non-agricultural
uses, they must still undergo conversion before they can be used for other purposes.
Even reclassification of agricultural lands by way of Presidential Proclamations to nonagricultural uses, such as school sites, needs conversion clearance from the DAR. We
reiterate that reclassification is different from conversion. Reclassification alone will not
suffice and does not automatically allow the landowner to change its use. It must still
undergo conversion process before the landowner can use such agricultural lands for such
purpose.48Reclassification of agricultural lands is one thing, conversion is another.
Agricultural lands that are reclassified to non-agricultural uses do not ipso facto allow the
landowner thereof to use the same for such purpose. Stated differently, despite having
reclassified into school sites, the landowner of such reclassified agricultural lands must apply
for conversion before the DAR in order to use the same for the said purpose.
Any reclassification, therefore, of agricultural lands to residential, commercial, industrial or
other non-agricultural uses either by the LGUs or by way of Presidential Proclamations
enacted on or after 15 June 1988 must undergo the process of conversion, despite having
undergone reclassification, before agricultural lands may be used for other purposes.
It is different, however, when through Presidential Proclamations public agricultural lands
have been reserved in whole or in part for public use or purpose, i.e., public school, etc.,
because in such a case, conversion is no longer necessary. As held in Republic v.
Estonilo,49 only a positive act of the President is needed to segregate or reserve a piece of
land of the public domain for a public purpose. As such, reservation of public agricultural
lands for public use or purpose in effect converted the same to such use without undergoing
any conversion process and that they must be actually, directly and exclusively used for such
public purpose for which they have been reserved, otherwise, they will be segregated from
the reservations and transferred to the DAR for distribution to qualified beneficiaries under
the CARP.50 More so, public agricultural lands already reserved for public use or purpose no
longer form part of the alienable and disposable lands of the public domain suitable for
agriculture.51 Hence, they are outside the coverage of the CARP and it logically follows that
they are also beyond the conversion authority of the DAR.
Clearly from the foregoing, the Secretary of Agrarian Reform did not act without jurisdiction
or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction in (1) including lands not reclassified as residential, commercial, industrial or
other non-agricultural uses before 15 June 1988 in the definition of agricultural lands under
DAR AO No. 01-02, as amended, and; (2) issuing and enforcing DAR AO No. 01-02, as
amended, subjecting to DARs jurisdiction for conversion lands which had already been
reclassified as residential, commercial, industrial or for other non-agricultural uses on or after
15 June 1988.

G.R. No. 132477 August 31, 2005

JOSE LUIS ROS, ANDONI F. ABOITIZ, XAVIER ABOITIZ, ROBERTO E. ABOITIZ,
ENRIQUE ABOITIZ, MATTHIAS G. MENDEZONA, CEBU INDUSTRIAL PARK
DEVELOPERS, INC. and FBM ABOITIZ MARINE, INC., Petitioners,
vs. DEPARTMENT OF AGRARIAN REFORM, HON. ERNESTO GARILAO, in his capacity

as DAR Secretary, and DIR. JOSE LLAMES, in his capacity as Director of DARRegional 7, Respondent.
Facts:
1. Petitioners are the owners/developers of several parcels of land located in Arpili,
Balamban, Cebu. By virtue of Municipal Ordinance No. 101 passed by the Municipal Council
of Balamban, Cebu, these lands were reclassified as industrial lands. 1 On 03 April 1995, the
Provincial Board of Cebu approved Balambans land use plan and adopted en
toto Balambans Municipal Ordinance No. 101 with the passage of Resolution No. 836-95
and Provincial Ordinance No. 95-8, respectively.2 As part of their preparation for the
development of the subject lands as an industrial park, petitioners secured all the necessary
permits and appropriate government certifications.3
Despite these permits and certifications, petitioner Matthias Mendezona received a letter
from Mr. Jose Llames, Director of the Department of Agrarian Reform (DAR) Regional Office
for Region 7, informing him that the DAR was disallowing the conversion of the subject lands
for industrial use and directed him to cease and desist from further developments on the land
to avoid the incurrence of civil and criminal liabilities.4
Petitioners were thus constrained to file with the Regional Trial Court (RTC) of Toledo City a
Complaint dated 29 July 1996 for Injunction with Application for Temporary Restraining Order
and a Writ of Preliminary Injunction, docketed as Civil Case No. T-590. 5 In an order6 dated 12
August 1996, the RTC, ruling that it is the DAR which has jurisdiction, dismissed the
Complaint for lack of jurisdiction.7 It justified the dismissal in this wise:
A perusal of Section 20 of the Local Government Code expressly provides that the
Municipalities through an Ordinance by the Sanggunian may authorize the reclassification of
the agricultural land within their area into non-agricultural. Paragraph (e) of the aforesaid
Section, provides further: that nothing in this Section shall be construed as repealing or
modifying in any manner the provision of Republic Act 6657. In an opinion of the Secretary of
Justice, quoted: With respect of (sic) conversion of agricultural land to non-agricultural uses
the authority of the DAR to approve the same may be exercise (sic) only from the date of the
effectivity of the Agrarian Reform Law on June 15, 1988. It appears that the petitioners had
applied for conversion on June 13, 1995 and therefore the petitioner (sic) are estopped from
questioning the authority and jurisdiction of the Department of Agrarian Reform. The
application having been filed after June 15, 1988, the reclassification by the Municipal
Council of Balamban was just a step in the conversion of the aforestated lands according to
its purpose. Executive Order No. 129-A, Section 5, "The Department shall be responsible for
implementing Comprehensive Agrarian Reform and for such purpose it is authorized to (J)
approve or disapprove the conversion, restructuring or readjustment of agricultural land into
non-agricultural uses." Said Executive Order amended Section 36 of Republic Act No. 3644
which clearly mandates that the DAR Secretary (sic) approve or disapprove conversion are
not impliedly repealed. In fact, under Section 75 of Republic Act 6657 the above laws and
other laws not inconsistent of (sic) this act shall have suppletory effect. Further, Section 68 of
Republic Act 6657 provides: No injunction, restraining order, prohibition or mandamus shall
be issued by the lower court against the Department of Agrarian Reform, DENR and
Department of Justice in their implementation of the program. With this provision, it is
therefore clear (sic) when there is conflict of laws determining whether the Department of
Agrarian Reform has been exclusively empowered by law to approve land conversion after
June 15, 1988 and (sic) the final ruling falls only with the Supreme Court or Office of the
President.

WHEREFORE, in view of the foregoing, the Application for Restraining Order is hereby
ordered DENIED and the main case is DISMISSED, this Court having no jurisdiction over the
same.8
In an order dated 18 September 1996, the trial court denied the motion for reconsideration
filed by the petitioners.9Petitioners filed before this Court a Petition for Review
on Certiorari with application for Temporary Restraining Order and Writ of Preliminary
Injunction.10 In a resolution11 dated 11 November 1996, this Court referred the petition to the
Court of Appeals.12 Petitioners moved for a reconsideration of the said resolution but the
same was denied in a resolution dated 27 January 1997. 13
At the Court of Appeals, the public respondents were ordered14 to file their Comments on the
petition. Two sets of comments from the public respondents, one from the Department of
Agrarian Reform Provincial Office15 and another from the Office of the Solicitor
General,16 were submitted, to which petitioners filed their Consolidated Reply.17
The requirement that agricultural lands must go through the process of conversion despite
having undergone reclassification was underscored in the case of Alarcon v. Court of
Appeals,24 where it was held that reclassification of land does not suffice:
In the case at bar, there is no final order of conversion. The subject landholding was merely
reclassified. Conversion is different from reclassification. Conversion is the act of changing
the current use of a piece of agricultural land into some other use as approved by the
Department of Agrarian Reform. Reclassification, on the other hand, is the act of specifying
how agricultural lands shall be utilized for non-agricultural uses such as residential,
industrial, commercial, as embodied in the land use plan, subject to the requirements and
procedure for land use conversion. Accordingly, a mere reclassification of agricultural land
does not automatically allow a landowner to change its use and thus cause the ejectment of
the tenants. He has to undergo the process of conversion before he is permitted to use the
agricultural land for other purposes.
Rep. Act No. 6657 took effect on 15 June 1988. Municipal Ordinance No. 101 of Balamban,
Cebu, which reclassified the subject lands, was passed on 25 March 1992, and Provincial
Ordinance No. 95-8 of the Provincial Board of Cebu, which adopted Municipal Ordinance No.
101, was passed on 03 April 1995, long after Rep. Act No. 6657 has taken effect. Section 4
of Rep. Act No. 6657 provides:
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless
of tenurial arrangement and commodity produced, all public and private agricultural lands as
provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the
public domain suitable for agriculture.
...
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural
products raised or that can be raised thereon.
True, the DARs express power over land use conversion is limited to cases in which
agricultural lands already awarded have, after five years, ceased to be economically feasible
and sound for agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial purposes. But to
suggest that these are the only instances when the DAR can require conversion clearances

would open a loophole in R.A. No. 6657, which every landowner may use to evade
compliance with the agrarian reform program. Hence, it should logically follow from the said
departments express duty and function to execute and enforce the said statute that any
reclassification of a private land as a residential, commercial or industrial property should first
be cleared by the DAR."

G.R. No. 152085

July 8, 2003

MARCIANA ALARCON, ERENCIO AUSTRIA, JUAN BONIFACIO, PETRONILA DELA

CRUZ, RUFINA DELA CRUZ, CELESTINO LEGASPI, JOSE MAYONDAG and DAVID
SANTOS, petitioners,
vs.
HONORABLE COURT OF APPEALS and PASCUAL AND SANTOS, INC., respondents.
Respondent corporation, Pascual and Santos, Inc., is the owner of several saltbeds with an
area of 4.1763 hectares, situated in Barangay San Dionisio, Manuyo, Paraaque. In 1950, it
instituted petitioners as tenants of the saltbeds under a fifty-fifty share tenancy agreement.
The harmonious tenurial relationship between petitioners and private respondent was
interrupted in 1994, when the city government of Paraaque, represented by then Mayor
Pablo Olivares, authorized the dumping of garbage on the adjoining lot. The garbage
polluted the main source of salt water, which adversely affected salt production on the
subject landholding.
Petitioners informed respondent of this development, but it failed to take any step to stop the
dumping of garbage on the adjoining lot. This prompted petitioners to file a formal protest
with the City Government of Paraaque. However, their complaint was likewise ignored.
Thus petitioners were constrained to file with the Regional Agrarian Reform Adjudicator of
Region IV (RARAD-IV) a complaint against respondent and Mayor Pablo Olivares for
maintenance of peaceful possession and security of tenure with damages. Subsequently,
they amended their complaint to one for damages and disturbance compensation, with
prayer for temporary restraining order and injunction. Petitioners invoked Sections
7,2 30(1)3and 31(1)4 of Republic Act No. 3844, as amended, otherwise known as the
Agricultural Land Reform Code of the Philippines.
On July 28, 1997, Regional Adjudicator Fe Arche-Manalang rendered a decision holding that
under Metro Manila Zoning Ordinance No. 81-01, issued in 1981, the subject saltbeds have
been reclassified to residential lands. Consequently, the juridical tie between petitioners and
respondent was severed, for no tenurial relationship can exist on a land that is no longer
agricultural. This notwithstanding, petitioners are entitled to disturbance compensation,
pursuant to Section 36, par. 1 of R.A. 3844,5 as amended.
On the other hand, the Regional Adjudicator held that the DAR had no jurisdiction over the
complaint against Mayor Pablo Olivares, and dismissed the same. The dispositive portion of
the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered:

1. Directing the Respondent Pascual and Santos Inc., to pay to each complainant as
and by way of disturbance compensation 1,500 cavans of salt or their money
equivalent at the prevailing market value;
2. Dismissing all other claims for lack of basis;
3. Without pronouncement as to costs.
SO ORDERED.6
On appeal, the DARAB affirmed in toto the above decision of the RARAD. Aggrieved,
respondent filed a petition for review with the Court of Appeals, which was docketed as CAG.R. SP No. 63680. On September 28, 2001, the appellate court rendered the assailed
judgment reversing the decision of the DARAB,7 and ordering the dismissal of petitioners
complaint against respondent. Petitioners motion for reconsideration was denied.
At the core of the controversy is the issue of whether or not a mere reclassification of the
land from agricultural to residential, without any court action by the landowner to eject or
dispossess the tenant, entitles the latter to disturbance compensation.
Moreover, contrary to petitioners claim, the reclassification of the land is not enough to
entitle them to disturbance compensation. The law is clear that court proceedings are
indispensable where the reclassification of the landholding is duly determined before
ejectment can be effected, which in turn paves the way for the payment of disturbance
compensation. As held by the Court of Appeals, the parties can still continue with their
tenurial relationship even after such reclassification. In fact, it is undisputed that in this case,
the parties continued with their landlord-tenant relationship even after the enactment of
Metro Manila Zoning Ordinance No. 81-01. It was only in 1994 when this relationship was
interrupted because of the dumping of garbage by the Paraaque City Government. Clearly,
it was this latter event which caused petitioners dispossession, and it would be unfair to
oblige respondent to pay compensation for acts it did not commit.
Finally, the case of Bunye v. Aquino,15 does not apply in the instant case. We allowed the
payment of disturbance compensation in the said case because there was an order of
conversion issued by the Department of Agrarian Reform of the landholding from agricultural
to residential. The decree was never questioned and thus became final. Consequently, the
tenants were ejected from the land and were thus awarded disturbance compensation.
In the case at bar, there is no final order of conversion. The subject landholding was merely
reclassified. Conversion is different from reclassification. Conversion is the act of changing
the current use of a piece of agricultural land into some other use as approved by the
Department of Agrarian Reform.16 Reclassification, on the other hand, is the act of specifying
how agricultural lands shall be utilized for non-agricultural uses such as residential,
industrial, commercial, as embodied in the land use plan, subject to the requirements and
procedure for land use conversion.17 Accordingly, a mere reclassification of agricultural land
does not automatically allow a landowner to change its use and thus cause the ejectment of
the tenants. He has to undergo the process of conversion before he is permitted to use the
agricultural land for other purposes.

G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and

HON. BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines
Sur, petitioners,
vs. THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN
SAN JOAQUIN,respondents.

Facts:
The Governor of Camarines Sur filed two (2) separate cases
for expropriation against Ernesto and Efren San Joaquin pursuant to
Sangguniang Panlalawigan Resolution No. 129 authorizing the
Governor to purchase or expropriate properties owned by the San
Joaquins for the establishment of a pilot farm for non-food and nontraditional agricultural crops and a housing project for provincial
government employees. The San Joaquins moved to dismiss the
complaints on the ground of inadequacy of the price offered. The
motion was denied and a writ of possession was issued in favor of the
province. On appeal with the CA, the San Joaquins asked the appellate
court to, among others, nullify the resolution issued by the
Sanggunian. The CA asked the Office of the Solicitor General to
comment to the petition. The Solicitor General stated that the approval
of the Office of the President is not needed but the province must first
secure the approval of the DAR of the plan to expropriate the lands of
petitioners. The CA set aside the order of the trial court allowing the
province to take possession and ordered the suspension of the
expropriation proceedings until after the submission of the DAR
approval to convert the property.
Issue:
Is DAR approval still necessary before an LGU can
expropriate agricultural lands for conversion to non-agricultural use?
Ruling:
It is true that local government units have no inherent power of
eminent domain and can exercise it only when expressly authorized by
the legislature (City of Cincinnati v. Vester, 281 US 439, 74 L.ed. 950,
50 S Ct. 360). It is also true that in delegating the power to
expropriate, the legislature may retain certain control or impose
certain restraints on the exercise thereof by the local governments
(Joslin Mfg.Co.v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684).
While such delegated power may be a limited authority, it is complete
within its limits. Moreover, the limitations on the exercise of the
delegated power must be clearly expressed, either in the law
conferring the power or in other legistation.

Resolution No. 129 [1988] was promulgated pursuant to

Section 9 of B.P. Blg. 337, the Local Government Code, which provides:
xxx
Section 9 of B.P. Blg. 337 does not intimate in the least that
local government units must first secure the approval of the
Department of Land Reform for the conversion of lands from
agricultural to non-agricultural use, before they can institute the
necessary expropriation proceedings. Likewise, there is no provision in
the Comprehensive Agrarian Reform Law which expressly subjects the
expropriation of agricultural lands by local government units to the
control of the department of Agrarian Reform. The closest provision of
law that the Court of Appeal could cite to justify the intervention of the
Department of agrarian Reform in expropriation matters is Section 65
of the Comprehensive Agrarian Reform Law, which reads: xxx
The opening, adverbial phrase of the provision sends signals
that it applies to lands previously placed under the agrarian reform
program as it speaks of "the lapse of five (5) years from its award."
The rules on conversion of agricultural lands found in section
4 (k) and 5 (1) of Executive Order No. 129-A, Series of 1987, cannot be
the source of the authority of the Department of Agrarian Reform to
determine the suitability of a parcel of agricultural land for the purpose
to which it would be devoted by the Department of Agrarian Reform
the exclusive authority to approve or disapprove conversions of
agricultural lands for residential, commercial or industrial uses, such
authority is limited to the applications for reclassifications submitted
by the land owners or tenant beneficiaries.
Statutes conferring the power of eminent domain to political
subdivisions cannot be broadened or constricted by implication
(Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d.
41).
To sustain the Court of Appeals would mean that the local
government units can no longer expropriate agricultural lands needed
for the construction of roads, bridges, schools hospitals etc. without
first applying for conversion of the use of the lands with the
Department f Agrarian Reform, because all of these projects would
naturally involve a change in the land use. In effect, it would then be
the Department of Agrarian Reform to scrutinize whether the
expropriation is for a public purpose or public use. (at 179-181;
underscoring supplied).
G.R. No. 138979, October 9, 2000

ERNESTO BUNYE vs. LOURDES AQUINO, CITA AQUINO and ROBERTO

AQUINO
Assailed in this petition for review is the June 15, 1999 Decision of the Court of Appeals
which modified its own decision promulgated on November 26, 1998 with regard to the size
of the homelot awarded to respondents.1
Respondents Lourdes, Cita and Roberto, all surnamed Aquino, are the children of the late
Bartolome Aquino who was instituted in 1967 as a tenant over a 16,974.50 square meter lot
located at Ilaya street, Alabang, Muntinlupa, Metro Manila belonging to Zoilo Bunye, the
father of petitioner Ernesto Bunye. Sometime in 1970, Zoilo Bunye told Bartolome Aquino to
stop cultivating 14,474.50 square meters of the land since the former was going to devote
the same to commercial uses. No disturbance compensation was paid to Bartolome Aquino,
but Zoilo Bunye permitted Bartolome Aquino to continue cultivating the remaining 2,500
square meters and promised him a homelot within the said area. Considering himself
aggrieved, Bartolome Aquino repaired to the Court of Agrarian Relations (CAR) in order to
seek judicial recognition of his tenancy status over the remaining 2,500 square meters. 2 The
CAR rendered judgment recognizing Bartolome Aquino as a tenant over 2,500 square
meters of the subject property with a fixed annual rental of P140.00. On November 5, 1976,
the Court of Appeals affirmed the CAR's decision.3 Thus, Bartolome Aquino continued in the
possession and cultivation of 2,500 square meters of Zoilo Bunye's land and he constructed
his family home on a 500 square meter area thereon.
On February 20, 1986, the then Minister of Agrarian Reform Conrado Estrella approved
Ernesto Bunye's petition for the conversion of the 2,500 square meters of land tenanted by
respondents from agricultural land to residential and commercial land. Petitioner was able to
eject respondents from 2,000 square meters of the converted land, leaving only 500 square
meters in the possession of respondents. Since petitioner sought to eject respondents from
even the 500 square meters of land they occupied, respondents filed a complaint with the
Office of the Regional Agrarian Reform Adjudicator, insisting that they are entitled to the
possession of the 500 square meters of land occupied as a homelot as part of the
compensation for the deprivation of the 16,974.5 square meters of land originally tenanted
by Bartolome Aquino.4
On April 11, 1996, the Regional Adjudicator Fe Arche-Manalang held that no tenurial
relations could exist between the parties as the land had ceased to be agricultural by virtue
of its conversion in 1986, even before Bartolome Aquino's death in 1988. Correspondingly,
respondents cannot claim entitlement to possession of the homelot originally granted to their
father since the right to the same is co-terminous with the existence of an agricultural
leasehold relationship. Petitioner was ordered to pay respondents disturbance compensation
for the latter's dispossession from 2,500 square meters of tenanted land. The Regional
Adjudicator also awarded a 75 square meter homelot to respondents but only as an
alternative relief in the event that the disturbance compensation could not be computed. The
factual findings and conclusions of the Regional Adjudicator are set out below
Before delving into the merits of the first issue cited above, the following undisputed
facts must be borne in mind:
1. Bartolome Aquino's tenancy status over a 2,500 sq. m. portion of the property
presently registered in the name of Z. E. Bunye and Sons Realty Estate Corporation
under TCT No-S-77427 was affirmed by the Court of Appeals in a decision rendered
as early as November 5, 1976;

2. On February 20, 1986, the said 2,500 sq. m. was approved for conversion subject
to the payment of disturbance compensation to the affected tenant;
3. As found in the ocular inspection and investigation report incorporated in the
aforementioned Order of Conversion dated February 20, 1986, only about 500 sq. m.
remained devoted to agricultural cultivation, the rest being utilized for residential use
by the identified tenant Bartolome Aquino.
Against this backdrop, the only inevitable conclusions that can be drawn are: 1) at
the time of the original tenant Bartolome Aquino's death in 1988, the property in
question ceased to be agricultural in nature and character by virtue of its conversion
to non-agricultural use in 1986; 2) since no valid tenurial relations can continue to
exist on land that is no longer agricultural it follows that no tenancy relationship can
possibly devolve by way of succession upon the tenant's surviving heirs with his
death in 1988 as envisioned in Section 9 of RA 3844, as amended. As things now
stand, Complainants cannot even demand the right to continue in the exclusive
possession and enjoyment of any homelot awarded to their late father as the same is
co-terminous with the existence of a legitimate tenancy or agricultural leasehold
relationship (Vide, Section 22 (3), RA 1199 as amended) which is not the situation
obtaining in the case at bar. All they can hope for is to claim payment of disturbance
compensation which was denied in 1986 to their father during his lifetime equivalent
to five times the average of the gross harvests on the landholding during the last
preceding calendar years (Vide, Section 36 (1) of RA 3844 as amended). Even
assuming arguendo that the late tenant was promised a homelot consisting of 500
sq. m. in lieu of a disturbance compensation, such verbal agreement is
unenforceable as it is not contained in a public document as required by law.
Viewed in the light of the foregoing discussion, the first and second issues can only
be resolved adversely against the Complainants EXCEPT in the matter of payment
of disturbance compensation to which they are fully entitled. However, by way of
alternative relief since no production data is extant in the records upon which the said
computation can be based, this Office in the exercise of its equity jurisdiction, deems
it appropriate to award to the Complainants in lieu thereof a homelot consisting of 75
sq. m. as originally offered by the Respondent in their initial exploratory talks on the
possibility of an amicable settlement or compromise. 5
xxx

xxx

xxx

On June 10, 1998, the Department of Agrarian Reform Adjudication Board (DARAB) affirmed
the Regional Adjudicator's decision.6
Respondents elevated the matter before the Court of Appeals. Although the Court of Appeals
modified the DARAB's decision by providing that disturbance compensation should be paid
for the entire 16,974.50 square meters of the subject property, it upheld the award of 75
square meters in favor of respondents in lieu of disturbance compensation. The appellate
court explained in its November 26, 1998 decision that
There is nothing in the records to show that Zoilo Bunye granted Bartolome Aquino a
homelot of 500 sq. m. as claimed by the heirs of the latter. The evidence shows that
Bunye converted 14,474.50 out of his 16,924.50 sq. m. landholding for commercial
purposes and left 2,500 sq. m. to be cultivated by his tenant Bartolome Aquino
promising him a homelot therein without specifying the area. The fact that Aquino set

aside and occupied upon his own decision 500 sq. m. as his homelot does not entitle
him to the same area as a matter of right, absent a specific grant from Bunye.
However, there seems to be no question that Bartolome Aquino did not receive
disturbance compensation for the 14,974.50 sq. m. of which he was dispossessed;
neither were his heirs paid any such compensation for the 2,500 sq. m. left which
Ernesto Bunye also had converted into a commercial lot.
The DARAB did not err when it affirmed the decision of the Regional Adjudicator
granting the petitioners disturbance compensation. However, the decision did not
specify the area for which such compensation is to be paid. We believe that the
compensation should be for the entire 16,974.50 sq. m. previously tenanted by
Bartolome Aquino and later by his heirs, since it is admitted that the tenant was not
paid such disturbance compensation when the land was converted into a commercial
area.
We likewise agree with the DARAB when it set aside an area of 75 sq. m. as the
homelot for the heirs of Aquino. The area is reasonable enough considering the
purpose for which it is intended.
The Aquinos, however, want the privilege to be able to choose whether they will avail
of the 75 sq. m. homelot or the disturbance compensation for the entire 16,974.50 to
which they are entitled in the event that they are found not entitled to the 500 sq. m.
homelot they claim. We think that this is reasonable and is not prohibited by any
existing law.
WHEREFORE, premises considered, the judgment of the Department of Agrarian
Reform Adjudication Board is AFFIRMED with the clarification that the disturbance
compensation payable shall be for the whole area of 16,974.50 sq. m. and with the
modification that the petitioners shall be allowed to choose whether they opt for the
payment of disturbance compensation or for a homelot of 75 sq. m..
No costs.
SO ORDERED.7
However, acting upon a motion for reconsideration filed by respondents, the Court of
Appeals modified its decision by increasing the size of the homelot to 500 square meters. In
its assailed decision promulgated on June 15, 1999, the appellate court ratiocinated that
xxx

xxx

xxx

The petitioners pointed out that at the time their father Bartolome Aquino gave up to
his landowner the 14,974.50 sq. m. being worked by him which was converted to
commercial use in 1970, their father was not paid any disturbance compensation, but
was promised a homelot out of the 2,500 sq. m. left; that while it is true that the
landowner had the right to choose which portion of the land tenanted should be used
as a homelot, this right was not exercised by the landowner in this case and the
choice was left to their father Bartolome Aquino which portion of the 2,500 sq. m.
would be left as his homelot.

The petitioners further argue that since the tenancy of their father Bartolome Aquino
over the land of respondent Bunye's predecessor took place before the approval of
Republic Act 3844 on August 8, 1963, his right to a homelot was governed by
Republic Act 1199 which was passed on August 30, 1954, Section 22 of which
provides:
"Sec. 22. Par. (3) The tenant shall have the right to demand for a homelot
suitable for dwelling with an area of not more than 3 percent of the area of his
landholding provided that it does not exceed one thousand square meters
and that it shall be located at a convenient and suitable place within the land
of the landholder to be designated by the latter where the tenant shall
construct his dwelling and may raise vegetables, poultry, pigs and other
animals and engage in minor industries, the products of which shall accrue to
the tenant exclusively. . . ."
Thus, they contend that three (3) percent of 16,924.80 is 507.75 sq. m. so that the
area of 500 sq. m. occupied by the late Bartolome Aquino as a homelot is just right
for the total area of 16,924.80 sq. m. being tenanted by him when 14,974.80 was
converted for commercial purposes.
We find petitioners' Motion for Reconsideration meritorious.
The Decision of this Court dated November 26, 1998 setting aside 75 square meters
of the land in question as a homelot for the petitioners is therefore modified by
increasing the area to five hundred (500) square meters.
SO ORDERED.8
Petitioner is now before this Court disputing the legality of the appellate court's decision to
increase the size of the homelot awarded to respondents to 500 square meters. It is pointed
out by petitioner that in both the April 11, 1996 DARAB decision and in the November 5,
1976 Court of Appeals decision (CA-G.R. No. 04377-CAR) the tenancy right of Bartolome
Aquino was limited to 2,500 square meters of the subject land. Thus, the size of the homelot
should have been determined based on 2,500 square meters, not 16,924.80 square meters.
Petitioner prays that the June 15, 1999 decision of the Court of Appeals be annulled, and
that we reinstate the original decision promulgated on November 26, 1998, except for that
portion decreeing that the disturbance compensation be computed based on 16,974.50
square meters of tenanted land, a matter also disputed by petitioner.9
On the other hand, respondents insist that they are entitled to 500 square meters for use as
a homelot based on the alleged promise of Zoilo Bunye to their father Bartolome Aquino of a
homelot out of the remaining 2,500 square meters, which promise was made when
Bartolome Aquino was dispossessed of 14,474.50 square meters of the total area of
16,974.50 square meters of tenanted land.10
We are unable to sustain the assailed decision of the Court of Appeals. There is nothing in
the records to support respondents' claim that Zoilo Bunye gave Bartolome Aquino 500
square meters of land to be used as a homelot. The Regional Adjudicator, the DARAB and
the Court of Appeals (in its November 26, 1998 decision) all found that the respondents were
entitled to 75 square meters of land, not because of the alleged promise by petitioner's
predecessor, but rather, in lieu of disturbance compensation for their dispossession of
tenanted land. Yet, in an unexpected reversal of its original decision, the appellate court

increased the area of the homelot to 500 square meters based merely on respondents'
insistence that Zoilo Bunye promised Bartolome Aquino a homelot within the 2,500 square
meters of tenanted land. Respondents claim that since Zoilo Bunye did not designate what
portion of the land should be used as a homelot, Bartolome Aquino had the right to decide
the matter for himself. Clearly, by relying solely on respondents' self-serving allegations, the
assailed decision is not supported by substantial evidence the requisite quantum of
evidence in agrarian cases.11 Moreover, the appellate court premised its decision to increase
the size of the homelot to 500 square meters upon an erroneous application of Republic Act
No. 1199, proceeding from respondents' allegation that the tenancy relationship between
Zoilo Bunye and Bartolome Aquino was established before the approval of Republic Act No.
3844 on August 8, 1963. It has already been established in the decision of the Regional
Adjudicator, as affirmed by the DARAB, and in the November 26, 1998 decision of the Court
of Appeals that the tenancy relation began sometime in 1967. We find no reason to overturn
this factual finding. In addition, it was admitted by respondents in their complaint filed with
the Office of the Regional Agrarian Reform Adjudicator that it was only in 1967 that Zoilo
Bunye verbally instituted Bartolome Aquino as a tenant upon his land.12 Thus, contrary to the
appellate court's declaration, the applicable law is Republic Act No. 3844 which took effect
on August 22, 1963, and not Republic Act No. 1199.
Even assuming that Zoilo Bunye did in fact promise and deliver 500 square meters of his
land to Bartolome Aquino for use as a homelot, the right of the latter to enjoy the same
ceased when the remaining 2,500 square meters of petitioner's land was converted to
residential and commercial land in 1986. Republic Act No. 3844, as amended by Republic
Act No. 6389,13 provides
SECTION 36. Possession of Landholding; Exceptions. Notwithstanding any
agreement as to the period or future surrender of the land, an agricultural lessee
shall continue in the enjoyment and possession of his landholding except when his
dispossession has been authorized by the Court in a judgment that is final and
executory if after due hearing it is shown that:
(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests
on his landholding during the last five preceding calendar years;
xxx

xxx

xxx

Neither petitioner nor respondent questioned the conversion decreed in 1986, which was a
factual finding of both the Department of Agrarian Reform and the Court of Appeals;
therefore, it should be presumed that the conversion was validly and legally done. Thus,
even before Bartolome Aquino died in 1988, tenurial relations had already been
extinguished, leaving respondents without any claim upon the homelot allegedly promised by
Zoilo Bunye to their father.
In the event that tenanted land is converted pursuant to section 36 of Republic Act No. 3844,
the only relief available to respondents is the payment of disturbance compensation
equivalent to five times the average of the gross harvests on his landholding during the last
five preceding calendar years. The award of 75 square meters of land originally granted by
the Regional Adjudicator and subsequently affirmed by the DARAB was made in lieu of
disturbance compensation for the dispossession of respondents of 2,500 square meters of

land. Although the Court of Appeals in its November 26, 1998 Decision affirmed the grant of
75 square meters of land as reasonable, it simultaneously declared that respondents are
entitled to disturbance compensation for the entire 16,974.50 square meters of land originally
tenanted by Bartolome Aquino.
On this point, we agree with petitioner that the appellate court committed a reversible error
when it awarded disturbance compensation for 16,974.50 square meters. In 1970, Bartolome
Aquino was dispossessed of 14,474.50 square meters when the land was converted to
commercial use. Bartolome Aquino then filed a complaint with the CAR seeking to be
recognized as a tenant over the remaining 2,500 square meters of the subject land. 14 He did
not make a claim for disturbance compensation for the 14,474.50 square meters of land of
which he was dispossessed. The CAR rendered judgment recognizing Bartolome Aquino as
a tenant over 2,500 square meters of land, which decision was upheld by the Court of
Appeals (CA-G.R. No. 04377), but neither the CAR nor the appellate court awarded any
disturbance compensation. Notwithstanding, from 1976 until 1995 respondents never sought
the payment of disturbance compensation for the 14,474.50 square meters of land. Under
section 38 of Republic Act No. 3844, an action to enforce any cause of action under such law
shall be barred if not commenced within three years after such cause of action
accrued.15 Unquestionably, respondents' claim for disturbance compensation for the
14,474.50 square meters of land of which their father was dispossessed in 1970 has
prescribed. Thus, respondents are only entitled to disturbance compensation for their
dispossession of 2,500 square meters of land and we find that, in the absence of adequate
data on the land's harvests, the award of 75 square meters is a fair and adequate alternative
relief.
WHEREFORE, the June 15, 1999 Decision of the Court of Appeals is hereby SET ASIDE.
Accordingly, weREINSTATE the appellate court's November 26, 1998 Decision with the
modification that the disturbance compensation should only be paid for the dispossession of
respondents from 2,500 square meters of petitioner's land.
SO ORDERED.

G.R. No. 103302 August 12, 1993

NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP., vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR.
WILFREDO LEANO, DAR REGION IV,

Facts:
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 80,000
hectares, on 13 October 1983; 5 and for Phase III, which consisted of the remaining 31.7707
hectares, on 25 April 1986. 6 Petitioner were likewise issued development permits 7 after
complying with the requirements. Thus the NATALIA properties later became the Antipolo Hills
Subdivision.
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.
Issue: Whether or not the Notice of Coverage issued to Natalia over undeveloped portion of
Antipolo Hills is valid. Whether the land which was priorly covered by a Presidential
Proclamation reserving it as townsite residential reservation there is still a need for
conversion?
Ruling: No.
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.
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 continued
to be developed as a low-cost housing subdivision, albeit at a snail's pace.
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 lands 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.

G.R. No. 176942, August 28, 2008

NICORP MANAGEMENT AND DEVELOPMENT CORPORATION,
vs.
LEONIDA DE LEON, respondent.
x ------------------------------------------------------ x
G.R. No. 177125
August 28, 2008
SALVADOR R. LIM,
vs.
LEONIDA DE LEON, respondent.
The appellate court further held that the reclassification of the land by
the Sangguniang Panlalawigan as residential cannot be given weight
because it is only the Department of Agrarian Reform (DAR) that can
reclassify or convert an agricultural land to other uses or
classifications; and that the sale of the land by the De Leon sisters to
petitioner Lim is void because it violated Section 70 of Republic Act
(R.A.) No. 665720 or the Comprehensive Agrarian Reform Law (CARL).
Finally, the sale of the subject land to petitioners did not violate
Sections 6533 and 7334 (c) of R.A. No. 6657. There was no illegal
conversion of the land because Sec. 65 applies only to lands which
were covered by the CARP, i.e. those lands beyond the five-hectare
retention limit allowed to landowners under the law, which were
distributed to farmers-beneficiaries. In the instant case, it was not

shown that the subject land was covered by the CARP. Neither was it
shown that the sale was made to circumvent the application of R.A.
6657 or aimed at dispossessing tenants of the land that they till.

G.R. No. 168787, September 3, 2008

DAREPARTMENT OF AGRARIAN REFORM vs. POLO COCONUT
PLANTATION CO., INC.,
Facts:
In the late 1990s, respondent Polo Coconut Plantation Co., Inc. (PCPCI)
sought to convert 280 hectares of its Polo Coconut Plantation7 (Polo
estate) in Tanjay, Negros Oriental into a special economic zone
(ecozone) under the Philippine Economic Zone Authority (PEZA). On
December 19, 1998, PEZA issued Resolution No. 98-320 favorably
recommending the conversion of the Polo estate into an
ecozone8 subject to certain terms and conditions including the
submission of "all government clearances, endorsements and
documents required under Rule IV, Section 3 of the Rules and
Regulations to Implement Republic Act (RA) 7916."
The following year, PCPCI applied for the reclassification of its
agricultural lands into mixed residential, commercial and industrial
lands with the municipal government of Tanjay. After conducting the
prescribed hearing, the Sangguniang Bayan of Tanjay adopted
Resolution No. 344 granting PCPCI's application on November 3, 1999.
When Tanjay became a city, its Sangguniang Panglungsod adopted
Resolution No. 16 approving Tanjay's Comprehensive Land Use Plan
and Zoning Ordinance where PCPCI's real properties, including the Polo
estate, were reclassified as mixed residential, commercial and
industrial lands.
Sometime in 2003, petitioner Department of Agrarian Reform (DAR),
through Provincial Agrarian Reform Officer Stephen M. Leonidas,
notified PCPCI that 394.9020 hectares of the Polo estate had been
placed under the Comprehensive Agrarian Reform Program
(CARP)10 and would be acquired by the government.
Thereafter, Leonidas requested the Registrar of Deeds of Negros
Oriental to cancel PCPCI's certificate of title and to issue a new one in
the name of the Republic of the Philippines. He likewise asked Region
VII Regional Agrarian Reform Adjudicator Arnold C. Arrieta to determine
the just compensation due to PCPCI.11

On January 29, 2004, a new certificate of title was issued in the name
of the Republic of the Philippines.12
The next day, that title was cancelled and another was issued in the
name of petitioners in G.R. No. 169271 (petitioners-beneficiaries).13
Meanwhile, on March 11, 2004, Arrieta approved the land valuation
(P85,491,784.60)14 of the Land Bank of the Philippines for the Polo
estate. PCPCI moved for reconsideration but it was denied in an order
dated March 30, 2004.
On July 16, 2004, Leonidas informed PCPCI that a relocation survey of
the Polo estate would be conducted. PCPCI moved for the suspension
of the survey but it was denied.15
Aggrieved, PCPCI filed a petition for certiorari16 in the Court of Appeals
(CA) asserting that the DAR acted with grave abuse of discretion in
placing the Polo estate under the CARP. It argued that the Polo estate
should not be subjected to the CARP because Resolution No. 16 had
already designated it as mixed residential, commercial and industrial
land. Moreover, petitioners-beneficiaries were not qualified to receive
land under the CARP.
The DAR asserts that the reclassification of the Polo estate under
Resolution No. 16 as mixed residential, commercial and industrial land
did not place it beyond the reach of the CARP. Petitioners-beneficiaries,
on the other hand, insist that they were qualified beneficiaries. While
they were neither farmers nor regular farmworkers of PCPCI, they were
either seasonal or other farmworkers.
Ruling:
In Ros v. DAR,23 we held that reclassified agricultural lands must
undergo the process of conversion in the DAR24 before they may be
used for other purposes.25 Since the DAR never approved the
conversion of the Polo estate from agricultural to another use, the land
was never placed beyond the scope of the CARP.
The approval of the DAR for the conversion of agricultural land into an
industrial estate is a condition precedent for its conversion into an
ecozone.26 A proposed ecozone cannot be considered for Presidential
Proclamation unless the landowner first submits to PEZA a land use
conversion clearance certificate from the DAR.27 This PCPCI failed to do.
PEZA Resolution No. 98-320 expressly provides:

Resolved, that the application of [PCPCI] for (1) declaration of the 280hectare property in Brgy. Polo, Municipality of Tanjay, Province of
Negros Oriental as a Special Economic Zone, subject to Presidential
Proclamation, henceforth to be to be known as POLO ECOCITY- SPECIAL
ECONOMIC ZONE and (2) registration as the Developer/Owner of the
said ECOZONE is hereby APPROVED subject to the following terms and
conditions:
xxx
xxx
xxx
2. Prior to PEZA's endorsement of the subject area to the President for
proclamation as an ECOZONE, the PCPCI shall submit all government
clearances, endorsements and documents required under Rule IV,
Section 3 of the [Rules and Regulations to Implement RA 7916];
xxx
xxx
xxx
This condition proves that the favorable recommendation of PEZA did
not ipso facto change the nature of the Polo estate. The property
remained as agricultural land and, for this reason, was still subject to
the CARP.
In fact, Resolution No. 16 did not exempt PCPCI's agricultural lands
(including the Polo estate) from the CARP. Section 20 of the Local
Government Code28 provides that a city or municipality can reclassify
land only through the enactment of an ordinance. In this instance,
reclassification was undertaken by mere resolution;29 thus, it was
invalid.