G.R. No. 200491 - Kasamaka-Canlubang, Inc. vs. Laguna Estate Development Corp.

Case Summary (G.R. No. 200491)

Factual Background

Respondent LEDC first sought from the Ministry of Agrarian Reform (now the Department of Agrarian Reform) the conversion of ten (10) parcels with an aggregate area of 216.7394 hectares in Laguna from agricultural to residential land under RA No. 3844, as amended by P.D. No. 815. On June 4, 1979, then Minister Conrado F. Estrella issued an Order granting the request, but conditioned the conversion upon compliance with several requirements, including that development of the site commence within two (2) years from receipt of the conversion order.

On July 4, 2004, petitioner filed with the DAR a petition for revocation of the conversion order, alleging that respondent failed to develop the subject parcels of land. On September 25, 2006, then DAR Secretary Nasser C. Pangandaman issued an Order that partially revoked the conversion order as to eight (8) out of ten (10) parcels, covering an aggregate area of 66.7394 hectares, all registered in the name of Canlubang Sugar Estate.

The remaining two (2) parcels were registered in the names of respondent LEDC and Jose Yulo, Jr. and were excluded from the revocation. The exclusion was anchored on a DAR Exemption Order dated June 26, 1992, which removed those lands from the ambit of RA No. 6657.

Respondent moved for reconsideration, contending that the same legal consequence applied to the eight (8) parcels already subjected to revocation, because zoning ordinances allegedly reclassified them as non-agricultural. The DAR then conducted an ocular inspection on June 10, 2008 through its CLUPPI Committee-A, with field officials and representatives of both parties. The inspection found that, of the eight (8) parcels, two (2) parcels—identified as Lot No. 2-C under TCT No. 82523 and Lot No. 1997-X-A under TCT No. T-82517—remained undeveloped. Despite this, the CLUPPI Committee-A concluded that, with the exception of one (1) parcel—Lot No. 1-A-4 under TCT No. T-82586—respondent failed to substantially comply with the condition to develop the eight (8) parcels.

On August 8, 2008, DAR Secretary Pangandaman issued an Order affirming the earlier revocation, but excepted the land under TCT No. T-82586, as concluded by the CLUPPI Committee-A. Respondent appealed to the Office of the President (OP), which granted the appeal. In a Decision dated March 23, 2009, the OP declared the remaining seven (7) parcels exempt from CARL coverage and reinstated the Conversion Order dated June 4, 1979. Petitioner's subsequent motion for reconsideration was denied.

On October 8, 2009, petitioner filed a petition for review with the Court of Appeals, asserting that the OP erred in approving respondent’s appeal in light of the DAR findings. The Court of Appeals dismissed the petition for lack of merit in its June 27, 2011 Decision, and denied reconsideration in the January 31, 2012 Resolution.

Appellate Issues Raised by Petitioner

In this petition under Rule 45, petitioner raised two issues. First, it argued that the Court of Appeals erred in ruling that the undeveloped areas of the landholdings covered by the Estrella conversion order could no longer be considered agricultural lands. Second, it asserted that the Estrella conversion order and municipal zoning ordinances, even if claimed to have reclassified lands as non-agricultural prior to the passage of RA No. 6657, did not ipso facto change the nature of existing agricultural lands or affect the legal relationship then existing over such lands.

Petitioner’s position emphasized the DAR ocular findings that significant areas remained undeveloped. It claimed that the DAR Secretary revoked based on those findings and that the burden shifted to respondent to prove substantial compliance with the conversion conditions. It further maintained that the zoning ordinances did not alter the nature and character of the lands from agricultural status, nor disturb the pre-existing relationship between farmers and workers in the Canlubang Sugar Estate.

The Parties’ Contentions and the Focus on Review

The Court framed the case around the scope of a Rule 45 petition. It reiterated that findings of fact of the Court of Appeals are accorded the highest degree of respect and are generally conclusive. A Rule 45 petition may raise only questions of law, subject to recognized exceptions that permit reassessment of factual findings where the case falls within specified categories such as speculation, manifestly mistaken inferences, grave abuse of discretion, misapprehension of facts, conflicting findings, findings beyond the issues, findings contrary to trial court findings, conclusions without citation of specific evidence, or factual findings premised on supposed absence of evidence contradicted by the record.

The Court observed that whether respondent complied with the condition imposed by the conversion order was a question of fact. Nonetheless, it examined whether the Court of Appeals’ factual conclusions were supported by substantial evidence and whether any exception warranted re-evaluation.

Trial and Administrative Findings as Anchors of the Dispute

The Court noted a central inconsistency identified by the Court of Appeals in the DAR Secretary’s ultimate order. The CLUPPI Committee-A’s ocular inspection report stated that, among the eight (8) parcels, Lot No. 2-C under TCT No. 82523 and Lot No. 1997-X-A under TCT No. T-82517 remained undeveloped. This meant that six (6) out of eight (8) parcels had been developed. Yet the DAR Secretary issued an order that, in effect, revoked the conversion as to seven (7) out of eight (8) parcels, leaving only the parcel under TCT No. T-82586 exempted from revocation.

The Court reasoned that if the DAR Secretary had based his revocation on the ocular report’s findings, the revocation would have affected only two (2) out of the eight (8) parcels that were actually found undeveloped. It therefore agreed with the Court of Appeals that the DAR Secretary’s revocation could not be sustained because it was anchored on inconsistent findings. It also considered that petitioner’s reliance on additional orders and ocular inspections, including an alleged DAR order dated September 4, 1975 and an ocular inspection dated June 27–29, 2005, did not avail petitioner because the Court of Appeals found petitioner failed to attach those documents and other pertinent evidence, such as respondent’s original site development plan and the level of accomplishment or completion, to substantiate its allegations.

Burden of Proof and the Court’s Evaluation of Evidence

While the Court recognized that petitioner asserted a shifting burden based on DAR Secretary action and petitioner’s allegations of non-development, it emphasized that petitioner still had the obligation to prove its complaint by substantial evidence. The Court treated the failure to provide convincing and satisfactory proof as fatal to petitioner’s case. It pointed out that the Office of the President found respondent to have presented satisfactory evidence that it commenced development works on the properties, including existing road networks intended for subdivision projects and ocular report confirmation of improvements such as concrete roads, drainage, and electrification. The Office of the President also noted that development-related activities continued, which prompted petitioner to seek a Cease and Desist Order.

The Court further underscored a development framework tied to subdivision work conducted in phases. It cited the Office of the President’s observation that out of the 216.7394 hectares approved for conversion into a subdivision project in 1979, only 60.8374 hectares, more or less, remained to be developed. It relied on the June 10, 2008 ocular findings that TCT No. T-82586 had been cancelled and registered in the name of Fairway Villas Development Corporation, and that multiple other TCTs were already conveyed or transferred to other persons or corporations as early as 1977. These facts, as the Court described them, supported the contention that the properties were excluded from CARP coverage because they had been converted into a residential subdivision.

Against this evidentiary backdrop, the Court found no compelling reason to disturb the Court of Appeals’ factual determinations, given the insufficiency of petitioner’s evidence and the inconsistencies in the DAR Secretary’s approach.

Zoning Ordinances and Exemption from CARL Coverage

The Court then addressed petitioner’s argument on the continued agricultural nature of the disputed lands notwithstanding zoning ordinances. It stressed that, aside from the factual evidentiary issues, the disputed lands were already removed from the ambit of CARL on the basis of zoning ordinances issued by concerned municipalities reclassifying the lands as non-agricultural, as noted by the Office of the President.

The OP’s decision relied on evidence of zoning classification and administrative acceptance, including certifications supporting exclusion from CARP coverage. These included certifications for TCT No. T-82517 issued on October 18, 2006 by the Mayor and Zoning Administrator of the City of Calamba; certifications by the Municipal Planning and Development Coordinator for the Municipality of Cabuyao dated October 16, 2006 for multiple TCTs; and a certification from the HLURB dated October 16, 2008 reflecting the conditional approval of Municipal Ordinance No. 110-54, Series of 1979 by Human Settlements Regulatory Commission Resolution No. 38-2 dated June 25, 1980.

The Court held that the power of cities and municipalities, such as the Municipality of Calamba, to adopt zoning ordinances converting lands into non-agricultural cannot be denied. It referenced Buklod ng Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc., which recognized municipal power under Section 3 of R.A. No. 2264 (Local Autonomy Act) to adopt zoning and subdivision ordinances or regulations, and linked this to Section 3(c), Chapter I of

Case Syllabus (G.R. No. 200491)

Parties and Procedural Posture

Kasamaka-Canlubang, Inc., represented by Pablito M. Egildo, filed a petition for review on certiorari under Rule 45 of the Rules of Court to reverse and set aside the Court of Appeals (CA) rulings in CA-G.R. SP No. 110585.
Laguna Estate Development Corporation (LEDC) served as respondent and defended the grant and reinstatement of the conversion order that had been partially revoked by the Department of Agrarian Reform (DAR).
The CA dismissed the petition for lack of merit on June 27, 2011, and later denied the motion for reconsideration on January 31, 2012.
The Supreme Court reviewed alleged errors of law only, consistent with Rule 45, and declined to re-evaluate the evidence absent recognized exceptions.

Key Factual Allegations

LEDC requested the conversion of ten (10) parcels of land in the Province of Laguna, totaling an aggregate area of 216.7394 hectares, from agricultural to residential land under Republic Act (RA) No. 3844, as amended by P.D. No. 815.
On June 4, 1979, then Minister Conrado F. Estrella issued an Order granting the conversion request, with conditions including commencement of development within two (2) years from receipt.
On July 4, 2004, Kasamaka-Canlubang, Inc. filed a petition with the DAR seeking revocation of the conversion order, alleging non-development.
On September 25, 2006, then DAR Secretary Nasser C. Pangandaman issued an order partially revoking the conversion as to eight (8) of the ten (10) parcels, totaling 66.7394 hectares, registered in the name of Canlubang Sugar Estate.
The remaining two (2) parcels registered in the names of LEDC and Jose Yulo, Jr. were excluded from revocation because of a DAR Exemption Order dated June 26, 1992, which removed the lands from the ambit of RA No. 6657 (the Comprehensive Agrarian Reform Law (CARL) of 1988).
LEDC sought reconsideration, arguing that the eight (8) parcels were likewise outside CARL coverage based on municipal zoning ordinances allegedly reclassifying the lands as non-agricultural.
The DAR, through CLUPPI Committee-A and field personnel, conducted an ocular inspection on June 10, 2008, and found that out of the eight (8) parcels, two parcels remained undeveloped, including Lot No. 2-C (TCT No. 82523) and Lot No. 1997-X-A (TCT No. T-82517).
Despite the ocular findings, CLUPPI Committee-A declared that respondent failed to substantially comply with the development condition as to all except Lot No. 1-A-4 (TCT No. T-82586).
On August 8, 2008, DAR Secretary Pangandaman issued an order affirming revocation with the exception of the parcel under TCT No. T-82586.
LEDC appealed to the Office of the President (OP), which granted the appeal on March 23, 2009, declared the remaining seven (7) parcels exempt from CARL coverage, and reinstated the conversion order.
The petitioner’s motion for reconsideration before the OP was denied, and the petitioner then elevated the matter to the CA by petition for review, which the CA dismissed.
The Supreme Court noted that, in addition to the development issue, the disputed lands were treated as already removed from CARL coverage due to zoning classifications by the concerned municipalities.

Statutory and Doctrinal Framework

The conversion request was anchored on RA No. 3844, as amended by P.D. No. 815, and conditioned by the requirement to commence development within two years from receipt.
The core agrarian-law issue involved the CARL under RA No. 6657, including the rule in CARL, Sec. 3(c), Chapter I, that parcels reclassified for non-agricultural uses prior to June 15, 1988 are no longer considered agricultural lands subject to CARP.
The CA and the Supreme Court applied the Rule 45 limitation that only questions of law may be raised, as embodied in Section 1, Rule 45 of the 1997 Revised Rules of Civil Procedure.
The Supreme Court reiterated that findings of fact by the CA are generally accorded the highest respect and are conclusive, subject only to recognized exceptions that justify re-evaluation of facts.

Issues Raised

The petitioner argued that the CA erred in ruling that undeveloped areas of the subject lands could no longer be considered agricultural lands.
The petitioner further asserted that the Estrella conversion order and municipal zoning ordinances did not ipso facto change the nature of existing agricultural lands or disturb the legal relationship of farmers and workers existing at the time of conversion and zoning.
The underlying controversy required evaluation of whether LEDC substantially complied with the conversion order’s condition to commence development within the prescribed period.
The case also required consideration of whether municipal zoning measures effectively reclassified the lands as non-agricultural before June 15, 1988, thus taking them outside CARL coverage.

Contentions of the Parties

The petitioner contended that DAR findings from ocular investigation established significant undeveloped areas and that revocation should have stood based on non-compliance with the development condition.
The petitioner argued that any burden shifted to LEDC to show substantial compliance, and LEDC allegedly failed to overcome that burden through adequate proof.
The petitioner maintained that municipal zoning ordinances classifying the lands as non-agricultural did not change the lands’ character as agricultural, nor affect pre-existing legal relationships of farmers and workers in the Canlubang Sugar Estate.
The respondent argued that it presented sufficient evidence of commencement and related development activities, and that the CA correctly sustained the OP’s ruling.
The Supreme Court emphasized that the petitioner failed to attach or submit certain documents and evidence the CA required, including evidence comparing the original site development plan with the level of accomplishment.

Court’s Treatment of Evidence

The Supreme Court treated compliance with the conversion order’s condition to develop the site as a matter of fact that typically required examination of the evidence’s probative value.
The Court held that it was not a trier of facts and would disturb CA findings