Title
Ong vs. Imperial
Case
G.R. No. 197127
Decision Date
Jul 15, 2015
Land reclassified as residential before June 15, 1988, exempt from CARP; Supreme Court upheld local government’s authority, voiding DAR’s acquisition notice.
compulsory acquisition
landowners
reclassification
A

Case Summary (G.R. No. 197127)

Factual Background: Coverage, Objections, and Competing Classifications

The MARO issued the Notice of Coverage in 1994. Petitioners responded by protesting the inclusion of the subject property, asserting that the land had long been used as grazing area for cattle and carabao and that, after deducting retention, the excess area of each landowner was only a limited portion. In the same protest, petitioners suggested that lands below 20 hectares should not be covered absent clearer legislative action.

The MARO replied that petitioners had confirmed the subject land was actually being used for coconut production, and that petitioners allegedly failed to satisfy the requirement that the land must be actually, directly and exclusively used for livestock, poultry, and swine-raising purposes. The MARO further reasoned that retention for landowners was five hectares and that the subject land had an excess area exceeding that retention, thus making it covered.

After the Notice of Acquisition in 1996, petitioners sought exemption clearance from the DAR Regional Office V on October 16, 1996, invoking reclassification of the subject property as residential built-up area based on Daet’s town plan and zoning ordinances. Petitioners submitted, among others, (i) TCT No. T-17045, (ii) location mapping materials, (iii) a certification from a Deputized Zoning Administrator (DZA) stating that the land lay within residential built-up area per Zoning Ordinance No. 4, series of 1980, (iv) a certification from the HLURB that the Daet town plan and zoning ordinance had been approved on September 21, 1978, (v) a certification from the National Irrigation Administration (NIA) that the land was not covered by an existing irrigation system or a project with firm funding commitment, and (vi) a certification from the MARO stating that the land was tenanted and that a notice of coverage and acquisition had been issued.

DAR Investigation and Denial Orders

A DAR Regional Center for Land Use Policy, Planning and Implementation (RCLUPPI) V investigation later reported established facts that the landholdings were planted with coconuts and were predominantly agricultural; that they were tenanted by specified tenants; that the landowners executed a deed undertaking for disturbance compensation; that the area had been reclassified as residential prior to June 15, 1988; that the conversion application had not been placed under P.D. No. 27; that notices of coverage had been issued under R.A. No. 6657; and that the land was not irrigated or scheduled for irrigation rehabilitation nor irrigable with firm funding commitment.

Despite stating that the area had been reclassified prior to June 15, 1988, the investigation team recommended denial of exemption. DAR Region V Director Dalugdug concurred, denying the exemption because the subject property had been placed under compulsory coverage and because the land could no longer fit within the residential built-up allocation under the 1978 land use plan.

Subsequently, DAR Secretary Horacio R. Morales, Jr. issued an order dated February 2, 2000, denying petitioners’ exemption application. The denial emphasized that petitioners had failed to establish substantial evidence supporting the claim that the subject land was part of the built-up residential reserve, noting that the official residential built-up area allocation from the 1978 plan had long been exhausted and that the subject land remained agricultural based on the 1978 plan. The denial also pointed to the requirement that applications for exemption must be supported by an HLURB certification that the pertinent zoning ordinance had been approved by the board prior to June 15, 1988. It found no proof that the later zoning plan or 1982 land use plan had been approved by the HLURB.

Upon motion for reconsideration, DAR Secretary Hernani A. Braganza issued an order dated June 20, 2002 maintaining the denial, stating that the Deputized Zoning Administrator’s opinion had insufficient basis against DAR’s clear findings.

Office of the President: Reversal and Approval of Exemption Clearance

Petitioners then appealed the DAR orders to the Office of the President. In its decision dated September 5, 2005, the Office of the President treated the main issue as whether the property had been reclassified as residential such that it would be outside CARP coverage. It concluded that DAR Secretaries had relied on assumptions regarding exhaustion of residential allocations that pertained to original residential areas totaling 278.465 hectares, and not to the additional built-up residential areas totaling 556.93 hectares that included the subject property as pointed out by the DZA.

The Office of the President favored the DZA’s expertise, held that land classification within jurisdiction belonged to the local government unit, and ruled that the MARO’s issuance of a notice of acquisition was flawed because the land had already been reclassified as residential prior to June 1988 and therefore could not be subject to a notice covering only agricultural lands. It characterized the notice of acquisition as void ab initio.

In a subsequent March 3, 2006 order, the Office of the President denied respondents’ intervention and motion for reconsideration. It ruled that respondents had reasonable opportunity to intervene because DAR’s process under DOJ Opinion No. 44 and DAR Administrative Order No. 06, series of 1994 included notice and an ocular inspection stage with tenant-related reporting.

Court of Appeals: Reversal on Exemption Clearance Requirements

Respondents elevated the matter to the Court of Appeals through a Rule 43 petition. On November 30, 2010, the Court of Appeals held that the Office of the President committed reversible error in reversing the DAR Secretaries, but it still denied exemption on a different ground. It agreed that while lands reclassified as residential prior to June 15, 1988 could not be subjected to compulsory acquisition by DAR, it would not sustain exemption because petitioners allegedly failed to comply with exemption requirements.

The Court of Appeals focused on DAR Administrative Order No. 6, series of 1994, which required an accompanying HLURB certification that the pertinent zoning ordinance had been approved before June 15, 1988. It acknowledged that respondents did file an HLURB certification but found “glaring inconsistencies” between the HLURB certification and the DZA certification. In particular, the Court of Appeals noted that the DZA certification cited Zoning Ordinance No. 4, series of 1980, while the HLURB certification stated that the town plan and zoning ordinance had been approved on September 21, 1978. The Court of Appeals reasoned that approval by the HLURB in 1978 could not logically refer to a zoning ordinance passed in 1980, and thus found that the proper HLURB approval for Zoning Ordinance No. 4, series of 1980 was not shown. It consequently concluded that petitioners failed to prove exemption and that the subject land remained agricultural as found by the DAR Secretary.

It denied petitioners’ motion for reconsideration.

Issues Before the Supreme Court and Petitioners’ Theory

Petitioners assigned issues framed as questions of law. They argued that the Court of Appeals erred in holding that the subject property was not exempt from CARP coverage and that it had improperly ruled on an issue not assigned as an error on appeal. Petitioners also contended that the Court of Appeals allowed respondents to intervene beyond the period allowed by the Rules of Court.

On the substantive CARL exemption requirement, petitioners argued that the apparent discrepancy between HLURB approval and the year of the zoning ordinance should be understood in the context of the evolution of planning bodies in the early years of town planning and zoning in the Philippines. They asserted that NCCTPHZ and HSRC mechanisms had earlier approved land use plans, and they maintained that, at the time of the 1980 zoning ordinance, the HLURB had not yet existed in its later form. Petitioners further argued that requiring HLURB approval for the zoning ordinance was absurd and legally unnecessary in light of R.A. No. 6657, particularly Section 3(c) and Section 4, and in view of the authority of local government to reclassify.

They also submitted, alternatively, that even if HLURB approval were required, the local reclassification based on the approved town plan should be deemed sufficient.

The Supreme Court’s Ruling: Exemption Sustained

The Supreme Court granted the petition. It reinstated the Office of the President’s September 5, 2005 decision and its March 3, 2006 order.

First, the Court addressed and rejected petitioners’ challenge to respondents’ intervention beyond the period under the Rules of Court. It acknowledged that the Court of Appeals found respondents to be farmer-beneficiaries with substantial rights and interests directly affected by the Office of the President’s decision, and found that their participation could not be adequately protected in another proceeding. The Supreme Court held that it saw no reason to disturb the Court of Appeals’ exercise of discretion on intervention.

Second, the Supreme Court disagreed with the Court of Appeals’ substantive disposition on whether the property was exempt. The Court reiterated that exemption from CARP requires only one valid reclassification of land from agricultural to non-agricultural by a duly authorized government agency before June 15, 1988, when the CARL took effect. The Court treated the local government’s reclassification power as duly authorized by law, citing the recognition in the DAR Handbook for CARP Implementors of local government authority under R.A. No. 7160 and relying on jurisprudence holding that local governments have the power to reclassify agricultural lands into non-agricultural lands.

Third, the Court emphasized that the Court of Appeals had decided the case based on a ground neither fo

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