Marcelo vs. Samahang Magsasaka ng Barangay San Mariano

A property is exempt from CARP coverage only if it was classified or reclassified as residential (or mineral, forest, commercial, or industrial) in a town plan or zoning ordinance approved by the HLURB or its predecessor agency prior to June 15, 1988, and the applicant bears the burden of proving such classification by substantial evidence. A mere certificate of registration and license to sell issued by the NHA, a Sangguniang Bayan resolution ratifying a subdivision as residential, or HLURB certifications confirming the existence of such NHA issuances — none of which constitute or prove a duly approved zoning ordinance predating the CARL — are insufficient to establish exemption.

Petitioners are the Marcelo family — Elfleda, Albert, Napoleon, Eden, Severiano, Celia, and Leo, all surnamed Marcelo — represented by their parents, spouses Severiano and Celia Marcelo. They are registered owners of six parcels of land totaling 114.7030 hectares in Barangay San Mariano, Municipality of San Antonio, Nueva Ecija, covered by TCT Nos. NT-47472, NT-47473, and NT-216355. Respondent is Samahang Magsasaka ng Barangay San Mariano, represented by Godofredo Ermita, an organization of farmer-beneficiaries identified by the DAR for coverage under the Comprehensive Agrarian Reform Program. The dispute centers on whether the subject landholdings were validly reclassified as residential prior to June 15, 1988 — the effectivity date of Republic Act No. 6657 (CARL) — such that they fall outside the scope of compulsory agrarian reform coverage.

Petitioners are the registered owners of six parcels of land totaling 114.7030 hectares located in Barangay San Mariano, Municipality of San Antonio, Nueva Ecija, covered by TCT Nos. NT-47472, NT-47473, and NT-216355, with dates of registration ranging from August 2, 1963 to March 14, 1991. On March 14, 1989, petitioners voluntarily offered to sell these properties to the government for redistribution under the Comprehensive Agrarian Reform Program. Notwithstanding this voluntary offer, Notices of Coverage under the Compulsory Acquisition scheme were sent on August 28, 1991 and September 6, 1991. On July 3, 1997, petitioners formally withdrew and cancelled their Voluntary Offer to Sell, manifesting their intention to continue developing the landholdings. Another Notice of Coverage was issued by the Municipal Agrarian Reform Office on March 15, 2000.

Eighty-one farmer-beneficiaries were identified by the DAR, and the Landbank of the Philippines issued Memoranda of Valuation on portions of the landholdings. Collective Certificates of Land Ownership Awards were thereafter issued to the farmer-beneficiaries. Petitioners then filed an action for cancellation of the CLOAs before the DARAB, Region III, alleging that the properties had been classified and approved as residential in 1977 and were therefore exempt from CARP coverage. The DARAB found the properties residential in nature, based on 2004 tax declaration receipts and the NHA certificate of registration and license to sell issued in 1977, and ordered the cancellation of the CLOAs. The farmer-beneficiaries appealed to the DARAB; the result of that appeal does not appear in the records.

While that appeal was pending, petitioners filed on April 8, 2005 a Petition for Non-coverage of Landholding before the DAR Regional Office, alleging that the properties were residential lands and not agricultural as defined under R.A. No. 6657. They claimed that on April 28, 1977, the NHA approved the conversion of the landholdings as Celia Subdivision, with a certificate of registration and license to sell issued in their favor. The DAR Regional Office found that petitioners' cause of action was for exemption and directed them to file an application for exemption before the DAR Secretary. Petitioners accordingly filed a Sworn Application for Exemption Clearance on April 11, 2006 before the DAR CLUPPI Office, submitting extensive documentary evidence including HLURB certifications, an NHA certificate of registration and license to sell, Sangguniang Bayan Resolution No. 2006-004, and certifications from the DA, NIA, MARO, and PARO.

Respondent Samahang Magsasaka ng Barangay San Mariano opposed the application, arguing that the landholdings were never reclassified as residential because no zoning ordinance had been approved by the HLURB prior to June 15, 1988. Respondents also submitted an HLURB Certification dated August 15, 2006, showing that the NHA certificate of registration and license to sell covered only 66,375 square meters comprising three different lots — Lot No. 1225 (TCT-29809), Lot No. 1226 (TCT No. NT-43300), and Lot No. 1227 (TCT No. NT-15456) — none of which were the subject properties. The CLUPPI Committee recommended denial based on this certification, and the DAR Secretary denied the application on March 21, 2007. Petitioners' motion for reconsideration was denied on February 4, 2008, prompting an appeal to the Office of the President.

The OP reversed the DAR Secretary and granted the exemption, giving weight to Sangguniang Bayan Resolution No. 2006-004, the CLUPPI Field Inspection Report, and various agency certifications. The CA, however, reversed the OP and reinstated the DAR Secretary's denial, noting discrepancies in the documentary evidence — including the Sangguniang Bayan's own certification denying the existence of Resolution No. 2006-004 and the Office of the Vice-Governor's certification that the same resolution number pertained to the riprapping of Along-Along creek. The CA also considered the MPDC's letter stating there was no record of any classification of the subject properties prior to June 15, 1988, and that the Comprehensive Land Use Plan and Zoning Ordinance was approved only in 2002, classifying the properties as agricultural.

• No Discrepancy in Documentary Evidence: Petitioners argued that the CA erred in declaring discrepancies and inconsistencies in their documentary evidence. They maintained that the HLURB Certification dated August 15, 2006 pertained to a different set of lots and not the subject properties, and that there was therefore no inconsistency in their submissions.
• Substantial Evidence of Residential Classification: Petitioners asserted that the CA committed reversible error in sustaining respondents' claim that the land remained agricultural despite substantial evidence to the contrary, including the NHA certificate of registration and license to sell issued on April 28, 1977, Sangguniang Bayan Resolution No. 2006-004 dated March 15, 2006, the MPDC Certification dated April 10, 2006, and the Affidavit dated September 7, 2005 of a retired MPDC.
• Existence of Sangguniang Bayan Resolution No. 2006-004: Petitioners clarified that Resolution No. 2006-004 dated March 15, 2006 — ratifying Celia Subdivision as residential — is distinct from Resolution No. 2006-004 dated January 2, 2006, which pertained to the riprapping of Along-Along creek, despite both bearing the same resolution number. They pointed to a certification from the Sangguniang Panlalawigan Secretary confirming receipt of the March 15, 2006 resolution on November 14, 2007.
• 2002 Comprehensive Land Use Plan and Zoning Ordinance: Petitioners also relied on Sangguniang Bayan Resolution No. 2002-054 dated July 22, 2002 and Sangguniang Panlalawigan Resolution No. 265-Ss-2002 dated September 23, 2002, which approved the Comprehensive Development Plan and Zoning Ordinance for San Antonio, Nueva Ecija.

• Improper Factual Issues in Rule 45 Petition: Respondents sought dismissal of the petition for raising factual issues improper in a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
• No Valid Reclassification Prior to June 15, 1988: Respondents argued that the landholdings were never reclassified as residential because no zoning ordinance had been approved by the HLURB prior to June 15, 1988 containing such reclassification.
• Misrepresentation on NHA Issuances: Respondents averred that petitioners committed grave misrepresentation in submitting the NHA certificate of registration and license to sell as purportedly covering the subject properties, when the HLURB Certification dated August 15, 2006 confirmed that those issuances covered only 66,375 square meters comprising three entirely different lots.
• Nullification of Inconsistent HLURB Certifications: Respondents submitted the HLURB Certification dated April 25, 2007, which nullified the previous HLURB Certifications relied upon by petitioners and reiterated that the town plan and zoning ordinance of San Antonio had not been approved by the HLURB.

• Factual Review: Whether the Supreme Court may review the factual findings of the Court of Appeals in a Rule 45 petition.
• Exemption from CARP Coverage: Whether petitioners proved by substantial evidence that the subject properties were classified or reclassified as residential prior to June 15, 1988, such that they are exempt from CARP coverage.

• Factual Review: Yes. While factual issues are generally beyond the province of the Court in a Rule 45 petition, an exception applies when the factual findings of the government agency and the CA are conflicting, as in this case.
• Exemption from CARP Coverage: No. Petitioners failed to discharge the burden of proving that the properties were classified as residential in a zoning ordinance approved by the HLURB prior to June 15, 1988. None of the documents submitted — the NHA certificate of registration and license to sell, Sangguniang Bayan Resolution No. 2006-004, or the HLURB certifications — established a valid reclassification predating the CARL.

• Factual Review: The general rule is that factual issues are beyond the province of the Supreme Court in a Rule 45 petition. However, established jurisprudence recognizes exceptions, including when the factual findings of the government agency and the CA are conflicting. Here, the OP found the properties residential and granted exemption, while the CA found no sufficient proof of residential classification prior to June 15, 1988 and denied exemption. This conflict warranted a re-examination of the facts by the Court.

• Exemption from CARP Coverage: Coverage under the CARP is the general rule; the applicant bears the burden of proving exemption. Under Section 3(c) of R.A. No. 6657, "agricultural land" is land devoted to agricultural activity and not classified as mineral, forest, residential, commercial, or industrial land. DAR A.O. No. 01, series of 1990 further elaborates that agricultural lands are those not classified in town plans and zoning ordinances as approved by the HLURB or its predecessor agencies prior to June 15, 1988 for residential, commercial, or industrial use. The concurrence of two conditions is required: first, the land has been classified in town plans and zoning ordinances as residential; and second, the town plan and zoning ordinance embodying the classification has been approved by the HLURB or its predecessor agency prior to June 15, 1988.

Petitioners anchored their application on three government agencies' issuances: the NHA, the Sangguniang Bayan, and the HLURB. None sufficed. The NHA certificate of registration and license to sell covered properties other than those applied for — a fact petitioners themselves conceded. No copy of the subdivision plan as approved by the NHA and the Bureau of Lands was submitted to show the subject properties formed part of Celia Subdivision. Sangguniang Bayan Resolution No. 2006-004 was not a zoning ordinance or comprehensive land use plan; by its terms, it merely "ratified and recognized" petitioners' subdivision as residential, predicated on a MARO certification of no tenancy and the NHA issuances covering different lots. It was also enacted in 2006, well after June 15, 1988. The HLURB Certifications dated September 12, 2005 and March 22, 2006 merely confirmed the existence of the NHA certificate of registration and license to sell — which, as established, covered different properties — and did not prove HLURB approval of a town plan or zoning ordinance prior to June 15, 1988. The MPDC's letter dated September 6, 2006 certified that there was no record of any classification of the subject properties prior to June 15, 1988, and that the Comprehensive Land Use Plan and Zoning Ordinance was approved only in 2002, classifying the properties as agricultural. Tax declarations were not conclusive of the nature of the property for zoning purposes. The inevitable conclusion was that the properties remained agricultural and were not exempt from CARP coverage.

• Burden of Proof in CARP Exemption Applications — Coverage under the CARP is the general rule; the applicant bears the burden of proving that the property is exempt. Failure to discharge this burden results in the denial of the exemption application. The Court applied this by holding that petitioners failed to prove by substantial evidence that the subject properties were classified as residential prior to June 15, 1988.

• Two Conditions for CARP Exemption Based on Residential Classification — To exempt a property from CARP coverage on the ground of residential classification, two conditions must concur: (1) the land has been classified in town plans and zoning ordinances as residential, commercial, or industrial; and (2) the town plan and zoning ordinance embodying the land classification has been approved by the HLURB or its predecessor agency prior to June 15, 1988. The Court found that neither condition was satisfied.

• Valid Reclassification as Operative Fact for Exemption — To be exempt from CARP, all that is needed is one valid reclassification of the land from agricultural to non-agricultural by a duly authorized government agency before June 15, 1988, when the CARL took effect. The operative fact is the valid reclassification prior to the effectivity of the CARL, and not by how or whose authority it was reclassified. The Court found no valid reclassification had been established.

• Nature of a Zoning Ordinance — A zoning ordinance is a local city or municipal legislation which logically arranges, prescribes, defines, and apportions a given political subdivision into specific land uses as present and future projection of needs. It is an exercise of police power, not eminent domain. The Court held that Sangguniang Bayan Resolution No. 2006-004 was not a zoning ordinance because it was property-specific, did not delineate an area or district as residential, and merely acquiesced to petitioners' request to ratify their subdivision as residential.

• Tax Declarations Not Conclusive of Zoning Classification — A tax declaration is not conclusive of the nature of the property for zoning purposes; it is the classification made by the local government that prevails. The Court found the OP's reliance on the DARAB's finding based on 2004 tax declaration receipts to be misplaced.

• Exception to the Rule on Factual Review in Rule 45 Petitions — While factual issues are generally beyond the province of the Supreme Court in a Rule 45 petition, the Court may re-examine the facts when the factual findings of the government agency and the CA are conflicting.

• "Coverage under the CARP is the general rule, therefore, the applicant bears the burden of proving that the property is exempt. Petitioners fail to discharge this burden of proof, consequently, their application for exemption fails." — This passage states the fundamental principle governing CARP exemption applications and the disposition's ratio decidendi.

• "[T]o be exempt from CARP, all that is needed is one valid reclassification of the land from agricultural to non-agricultural by a duly authorized government agency before June 15, 1988, when the CARL took effect." — This formulation, quoted from Buklod Nang Magbubukid sa Lupaing Ramos, Inc. vs. E.M. Ramos and Sons, Inc., articulates the canonical test for CARP exemption based on reclassification.

• "By its terms, Sangguniang Bayan Resolution No. 2006-004 does not purport to delineate an area or district in the municipality as residential pursuant to the municipal council's power under Section 3 of the Local Autonomy Act of 1959 or under Section 447 of the Local Government Code of 1991. It is not even a comprehensive land use plan as it is curiously property-specific." — This passage distinguishes a zoning ordinance from a mere resolution ratifying a specific property's classification, a critical distinction in agrarian reform exemption cases.

• "Indubitably, petitioners fail to discharge the burden of proving that the properties were classified in the zoning ordinance and land use plan as residential, and that such zoning ordinance and land use plan were approved by the HLURB prior to June 15, 1988." — This is the Court's concluding finding on the merits, tying the two-condition test to the evidentiary record.

• Natalia Realty vs. Department of Agrarian Reform, 296-A Phil. 271 (1993) — Controlling precedent followed. The Court held that lands previously converted by government agencies, other than DAR, to non-agricultural uses prior to the effectivity of R.A. No. 6657 were outside the coverage of said law. This principle undergirded the Court's analysis of what constitutes a valid reclassification for exemption purposes.

• Pasong Bayabas Farmers Association vs. Court of Appeals, 473 Phil. 64 (2004) — Followed. The Court affirmed the authority of the Municipal Council of Carmona to issue a zoning classification and reclassify property from agricultural to residential as approved by the HSRC (now HLURB), illustrating the type of valid reclassification that qualifies for exemption.

• Buklod Nang Magbubukid sa Lupaing Ramos, Inc. vs. E.M. Ramos and Sons, Inc., 661 Phil. 34 (2011) — Followed and extensively quoted. The Court held that only one valid reclassification by a duly authorized government agency before June 15, 1988 is needed for exemption, and explained the nature of zoning ordinances. This case provided the canonical formulation of the exemption test and the definition of zoning applied in the present decision.

• Ong vs. Imperial, 764 Phil. 92 (2015) — Followed. The Court held that the operative fact for exemption is the valid reclassification from agricultural to non-agricultural prior to the effectivity of the CARL, regardless of how or by whose authority it was reclassified. Also cited for the principle that it is not within the power of a local government unit to convert agricultural lands to non-agricultural uses; its power is to reclassify lands subject to certain limitations.

• Heirs of Luis A. Luna vs. Afable, 702 Phil. 146 (2013) — Followed. The Court explained that the more important documentary requirements for exemption are certifications from the HLURB and the zoning administrator, and that the slope, irrigation, or topography of the land lose significance if the land is non-agricultural. This case guided the Court's assessment of which documentary evidence is most material.

• Junio vs. Garilao, 503 Phil. 154 (2005) — Followed. Cited for the principle that a tax declaration is not conclusive of the nature of the property for zoning purposes, and for the application of Natalia Realty to real estates not located within townsite reservations but converted to non-agricultural uses prior to the CARL's effectivity.

• Section 4, Chapter II, R.A. No. 6657 (Comprehensive Agrarian Reform Law) — Defines the scope of CARP coverage as all public and private agricultural lands. The Court applied this provision as the statutory basis for the general rule that the subject properties, being agricultural, fall within CARP coverage.

• Section 3(c), R.A. No. 6657 — Defines "agricultural land" as "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land." The Court used this definition to establish the legal framework for determining whether the subject properties are agricultural or exempt.

• DAR A.O. No. 01, Series of 1990 — Elaborates on the definition of agricultural lands, specifying that they are those not classified in town plans and zoning ordinances as approved by the HLURB or its predecessor agencies prior to June 15, 1988 for residential, commercial, or industrial use. The Court derived the two-condition test for exemption from this administrative issuance.

• DAR A.O. No. 06, Series of 1994 — Implements DOJ Opinion No. 044, Series of 1990, providing that all lands already classified as commercial, industrial, or residential before June 15, 1988 no longer need conversion clearance. The Court cited this as part of the regulatory framework governing exemption applications.

• DAR A.O. No. 04, Series of 2003 — Prescribes the rules and documentary requirements for exemption of lands from CARP coverage. The Court applied this as the governing rules at the time petitioners filed their application in 2006, enumerating the required submissions including HLURB certification on actual zoning classification citing the municipal or city zoning ordinance number and date of HLURB approval.

• Section 447, R.A. No. 7160 (Local Government Code of 1991) — Empowers the Sangguniang Bayan to adopt a comprehensive land use plan, reclassify land, and enact integrated zoning ordinances. The Court cited this to establish the nature and scope of the municipal council's authority, distinguishing it from the mere resolution petitioners submitted.

• Section 20, R.A. No. 7160 (Local Government Code of 1991) — Governs the reclassification of agricultural lands by cities and municipalities, including the percentage limitations and the requirement that reclassification be enacted through an ordinance after public hearing. The Court referenced this provision to underscore that the Sangguniang Bayan's power is to reclassify through ordinance, not merely to ratify a specific property's classification by resolution.

• Section 3, Local Autonomy Act of 1959 — The precursor of the Local Government Code's provisions on zoning, authorizing municipal councils to adopt zoning and subdivision ordinances subject to the approval of the municipal mayor. The Court cited this to show the historical statutory basis for municipal zoning authority.

Carpio (Acting Chief Justice per Special Order No. 2703 dated September 10, 2019, Chairperson), Caguioa, Lazaro-Javier, and Zalameda, JJ., concurred.