Natalia Realty, Inc. vs. Department of Agrarian Reform

Lands already classified for residential, commercial, or industrial use by the Housing and Land Use Regulatory Board or its predecessor agencies prior to 15 June 1988 are not "agricultural lands" within the meaning of R.A. 6657 and are excluded from the coverage of the Comprehensive Agrarian Reform Law.

Petitioner Natalia Realty, Inc. (NATALIA) owns three contiguous parcels of land totaling 125.0078 hectares in Banaba, Antipolo, Rizal, covered by Transfer Certificate of Title No. 31527. On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares across the Municipalities of Antipolo, San Mateo, and Montalban as the Lungsod Silangan Townsite, a reservation designed to absorb Metro Manila's population overspill. Private landowners within the reservation were permitted to develop their properties into low-cost housing subdivisions. Petitioner Estate Developers and Investors Corporation (EDIC), as developer of the NATALIA properties, secured preliminary approvals, locational clearances, and development permits from the Human Settlements Regulatory Commission — later renamed the Housing and Land Use Regulatory Board (HLURB) per Executive Order No. 90 — for three phases of what became the Antipolo Hills Subdivision. All permits were issued in 1982, 1983, and 1986, respectively, each prior to the effectivity of R.A. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), on 15 June 1988.

Petitioner Natalia Realty, Inc. owns three contiguous parcels of land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares, and 2.7080 hectares — totaling 125.0078 hectares — 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 in the Municipalities of Antipolo, San Mateo, and Montalban as townsite areas to absorb the population overspill in the metropolis, 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, as developer of the NATALIA properties, applied for and was granted preliminary approval and locational clearances by the Human Settlements Regulatory Commission. Petitioners first secured favorable recommendations from the Lungsod Silangan Development Corporation, the agency tasked to oversee implementation of the townsite reservation development, before applying for the necessary permits. The permit for Phase I of the subdivision project, consisting of 13.2371 hectares, was issued sometime in 1982; for Phase II, with an area of 80,000 hectares, on 13 October 1983; and for Phase III, consisting of the remaining 31.7707 hectares, on 25 April 1986. In all permits granted, the Commission stated that the applications were in "conformance," "conformity," or "conforming" with the implementing Standards, Rules and Regulations of P.D. 957 (The Subdivision and Condominium Buyers Protective Decree). Development permits were likewise issued after petitioners complied with all requirements. The NATALIA properties thus became the Antipolo Hills Subdivision.

On 15 June 1988, R.A. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), went into effect. Conformably therewith, respondent DAR, through its Municipal Agrarian Reform Officer, issued on 22 November 1990 a Notice of Coverage over the undeveloped portions of the Antipolo Hills Subdivision, consisting of roughly 90.3307 hectares. NATALIA immediately registered its objection to the Notice of Coverage, and EDIC twice wrote respondent Director Wilfredo Leano of DAR Region IV requesting its cancellation. Neither respondent Secretary nor respondent Director took action on the protest-letters.

In the interim, on 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA) filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA members. The Regional Adjudicator temporarily restrained petitioners from proceeding with subdivision development and, on 5 March 1991, issued a Writ of Preliminary Injunction. Petitioners' motion to dismiss was denied. They then elevated the matter to the DAR Adjudication Board, which on 16 December 1991 merely remanded the case to the Regional Adjudicator for further proceedings. After more than a year of official inaction on their protest-letters, petitioners instituted the present petition for certiorari before the Supreme Court, imputing grave abuse of discretion to the DAR for including undeveloped portions of the Antipolo Hills Subdivision within CARL coverage.

• Grave Abuse of Discretion: Petitioners imputed grave abuse of discretion to respondent DAR for including undeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL, arguing that the NATALIA properties had already ceased to be agricultural lands when they were included by presidential fiat in the areas reserved for the townsite reservation.
• Prior Conversion: Petitioners maintained that all relevant permits and clearances were duly secured from the proper agencies, and that the properties had been validly classified and approved for residential subdivision development prior to the effectivity of CARL on 15 June 1988.

• Invalid Permits: Respondents, through the Office of the Solicitor General, contended that the permits granted to petitioners were not valid and binding because petitioners did not comply with the implementing Standards, Rules and Regulations of P.D. 957, in that no application for conversion of the NATALIA lands from agricultural to residential was ever filed with the DAR — meaning there was no valid conversion.
• Premature Filing: Respondents argued that the instant petition was prematurely filed because the case instituted by SAMBA members against petitioners before the DAR Regional Adjudicator had not yet terminated, and that petitioners therefore failed to fully exhaust available administrative remedies before coming to court.

• Coverage of CARL: Whether lands already classified for residential, commercial, or industrial use, as approved by the Housing and Land Use Regulatory Board and its predecessor agencies prior to 15 June 1988, are covered by R.A. 6657.
• Exhaustion of Administrative Remedies: Whether the petition was prematurely filed due to petitioners' alleged failure to exhaust administrative remedies, given the pending SAMBA case before the DAR Regional Adjudicator.

• Coverage of CARL: No. Lands already classified for residential use prior to 15 June 1988 are not "agricultural lands" within the meaning of Section 3(c) of R.A. 6657 and are therefore outside the coverage of the Comprehensive Agrarian Reform Law.
• Exhaustion of Administrative Remedies: No. The issues in the SAMBA case (possession) differ from those in the present petition (propriety of CARL coverage), and petitioners were not required to wait indefinitely for the DAR to act on their protest-letters after nearly a year of inaction.

• Coverage of CARL: Section 4 of R.A. 6657 provides that the CARL shall cover all public and private agricultural lands. Section 3(c) defines "agricultural land" as land devoted to agricultural activity and "not classified as mineral, forest, residential, commercial or industrial land." The deliberations of the Constitutional Commission confirm this limitation — "agricultural lands" are only those which are "arable and suitable agricultural lands" and "do not include commercial, industrial and residential lands." The NATALIA properties were included in the Lungsod Silangan Reservation by Presidential Proclamation No. 1637, which created the townsite reservation for the purpose of providing additional housing, effectively converting what were erstwhile agricultural lands to residential use. All requisites were met: petitioners secured favorable recommendations from the Lungsod Silangan Development Corporation and obtained permits from the Human Settlements Regulatory Commission, which stated in each permit that the applications conformed with the implementing rules of P.D. 957. There was no need for prior DAR approval because Presidential Proclamation No. 1637, as a special law, prevails over the general implementing rules of P.D. 957. DAR's own Administrative Order No. 1, Series of 1990, defines "agricultural land" as not classified in town plans and zoning ordinances as approved by HLURB and its predecessor agencies prior to 15 June 1988 for residential, commercial, or industrial use. Since the NATALIA lands were converted prior to that date, DAR is bound by such conversion. The Secretary of Justice likewise opined that lands covered by Proclamation No. 1637, having been reserved for townsite purposes, are "not deemed 'agricultural lands' within the meaning and intent of Section 3(c) of R.A. No. 6657." The slow pace of subdivision development does not detract from the fact that these are residential lands outside the ambit of CARL — as evidenced by SAMBA members themselves filing an action to restrain the ongoing development.

• Exhaustion of Administrative Remedies: The issues raised in the SAMBA case before the DAR Regional Adjudicator differ from those in the present petition. The former involves possession; the latter concerns the propriety of including under CARL lands already converted for residential use prior to its effectivity. Moreover, petitioners were not required to wait indefinitely for public respondents to act on their letter-protests, particularly after nearly a year of official indifference that could have continued indefinitely. Under the circumstances, petitioners had to act to assert and protect their interests.

• General Law vs. Special Law — Between a general law and a special law, the latter prevails. The Court applied this principle to hold that Presidential Proclamation No. 1637, which specifically governed the Lungsod Silangan Reservation, prevailed over the general implementing Standards, Rules and Regulations of P.D. 957, which applied to all subdivisions and condominiums in general. Consequently, compliance with the special law's requirements sufficed, and no separate DAR conversion approval was necessary.
• Definition of "Agricultural Land" under R.A. 6657 — "Agricultural land" refers to land devoted to agricultural activity as defined in R.A. 6657 and not classified as mineral, forest, residential, commercial, or industrial land. The Constitutional Commission deliberations confirm that "agricultural lands" are only "arable and suitable agricultural lands" and do not include commercial, industrial, and residential lands. Lands previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than DAR are outside CARL's coverage. DAR's own Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses (Administrative Order No. 1, Series of 1990) define "agricultural land" as not classified in town plans and zoning ordinances as approved by HLURB and its predecessor agencies prior to 15 June 1988 for residential, commercial, or industrial use.
• Exception to Exhaustion of Administrative Remedies — The doctrine of exhaustion of administrative remedies does not apply where the issues in the pending administrative case differ from those raised in the judicial petition, or where the administrative agency has failed to act on a party's protests for an unreasonable period, rendering further waiting futile.

• "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." — This passage articulates the ratio decidendi: the decisive point that classification for residential use by competent authority prior to CARL's effectivity removed the lands from the statutory definition of "agricultural land."
• "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." — This formulation establishes the broader principle that conversion effected by agencies other than DAR prior to 15 June 1988 is binding on DAR and excludes the land from CARL coverage.
• "It is a basic tenet in statutory construction that between a general law and a special law, the latter prevails." — This is the canonical statement of the general-vs.-special-law doctrine as applied in the case, resolving the conflict between P.D. 957's general implementing rules and Presidential Proclamation No. 1637's special reservation framework.

• Luz Farms vs. Secretary of the Department of Agrarian Reform, G.R. No. 86889, 4 December 1990, 192 SCRA 51 — Cited for the Constitutional Commission deliberations confirming that "agricultural lands" do not include commercial, industrial, and residential lands, thereby supporting the Court's interpretation of Section 3(c) of R.A. 6657.
• National Power Corporation vs. Presiding Judge, RTC, Br. XXV, G.R. No. 72477, 16 October 1990, 190 SCRA 477 — Cited as authority for the principle that between a general law and a special law, the latter prevails.
• Rocamora vs. RTC-Cebu, Br. VIII, G.R. No. 65037, 23 November 1988, 167 SCRA 615 — Cited in support of the proposition that petitioners need not wait indefinitely for administrative agencies to act on their protests before seeking judicial relief.

• Section 4, R.A. 6657 (Comprehensive Agrarian Reform Law of 1988) — Provides that the CARL shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands. The Court interpreted this provision in light of the statutory definition of "agricultural land" to exclude lands already classified for residential use prior to CARL's effectivity.
• Section 3(c), R.A. 6657 — Defines "agricultural land" as land devoted to agricultural activity as defined in the Act and not classified as mineral, forest, residential, commercial, or industrial land. This definition was the textual basis for excluding the NATALIA properties from CARL coverage.
• Presidential Proclamation No. 1637 (18 April 1979) — Set aside 20,312 hectares in Antipolo, San Mateo, and Montalban as the Lungsod Silangan Townsite to absorb Metro Manila's population overspill. The Court treated this as a special law that effectively converted the covered lands to residential use, prevailing over the general implementing rules of P.D. 957.
• P.D. 957 (The Subdivision and Condominium Buyers Protective Decree) — Its implementing Standards, Rules and Regulations were cited by respondents as requiring DAR conversion approval. The Court found that petitioners had complied with all requirements of P.D. 957 as confirmed by the Human Settlements Regulatory Commission in each permit issued, and that as a general law it yielded to the special law embodied in Proclamation No. 1637.
• DAR Administrative Order No. 1, Series of 1990 (Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses) — DAR's own definition of "agricultural land" as not classified in town plans and zoning ordinances as approved by HLURB and its predecessor agencies prior to 15 June 1988 for residential, commercial, or industrial use. The Court used this provision against DAR, holding that since the NATALIA lands were converted prior to 15 June 1988, DAR was bound by such conversion.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo, Quiason, Puno, and Vitug, JJ., concurred.