NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP., PETITIONERS, VS. DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG AND DIR. WILFREDO LEANO, DAR-REGION IV, R…

Are lands already classified for residential, commercial or
industrial use, as approved by the Housing and Land Use Regulatory Board and
its precursor agencies^[1] prior
to 15 June 1988,^[2] covered by
R.A. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this petition
for certiorari, assailing the Notice of Coverage^[3] of the Department of Agrarian
Reform over parcels of land already reserved as townsite areas before the
enactment of the law.

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 80,0000 hectares, on 13 October 1983;^[5] and for
Phase III, which consisted of the remaining 31,7707 hectares, on 25 April 1986.^[6]
Petitioners 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.

On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok
Antipolo, Inc. (SAMBA, for brevity), filed a complaint against NATALIA and EDIC before the DAR Regional
Adjudicator to restrain petitioners from developing areas under
cultivation by SAMBA members.^[8] The
Regional Adjudicator temporarily restrained petitioners from proceeding with
the development of the subdivision. Petitioners then moved to
dismiss
the complaint; it was denied. Instead,
the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary
Injunction.

Petitioners NATALIA and EDIC elevated their cause to the DAR
Adjudication Board (DARAB); however, on 16 December 1991 the DARAB merely
remanded the case to the Regional Adjudicator for further proceedings.^[9]

In the interim, NATALIA wrote respondent Secretary of Agrarian
Reform reiterating its request to set aside the Notice of Coverage. Neither respondent Secretary nor respondent
Director took action on the protest-letters, thus compelling petitioners to
institute this proceeding more than a year thereafter.

NATALIA and EDIC both impute grave abuse of discretion to
respondent DAR for including undeveloped portions of the Antipolo Hills
Subdivision within the coverage of the CARL. They argue that NATALIA properties already ceased to be agricultural
lands when they were included in the areas reserved by presidential fiat for
townsite reservation.

Public respondents through the Office of the Solicitor General
dispute this contention. They maintain
that the permits granted petitioners were not valid and binding because
they did not comply with the implementing Standards, Rules and Regulations of
P.D. 957, otherwise known as “The Subdivision and Condominium Buyers’
Protective Decree,” in that no application for conversion of the NATALIA
lands from agricultural to residential was ever filed with the DAR. In other words, there was no valid conversion. Moreover, public respondents allege that the
instant petition was prematurely filed because the case instituted by SAMBA
against petitioners before the DAR Regional Adjudicator has not yet terminated. Respondents conclude, as a consequence, that
petitioners failed to fully exhaust administrative remedies available to them
before coming to court.

The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational
Clearances as well
as the Development Permits granted petitioners for Phases I, II and III of the
Antipolo Hills Subdivision reveals that contrary to the claim of public
respondents, petitioners NATALIA and EDIC did in fact comply with all the
requirements of law.

Petitioners first secured favorable recommendations from the
Lungsod Silangan Development Corporation, the agency tasked to oversee the
implementation of the development of the townsite reservation, before applying
for the necessary permits from the Human Settlements Regulatory Commission.^[10]
And, in all permits granted to petitioners, the Commission stated invariably therein that the applications
were in “conformance”^[11] or
“conformity”^[12] or
“conforming”^[13] with the
implementing Standards, Rules and Regulations of P.D. 957. Hence, the argument of public respondents
that not all of the requirements were complied with cannot be sustained.

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.

The implementing Standards, Rules and Regulations of P.D. 957
applied to all subdivisions and condominiums in general. On the other hand, Presidential Proclamation
No. 1637 referred only to the Lungsod Silangan Reservation, which
makes it a special law. It is a basic
tenet in statutory construction that between a general law and a special
law, the latter prevails.^[14]

Interestingly, the Office of the Solicitor General does not
contest the conversion of portions of the Antipolo Hills Subdivision which have
already been developed.^[15] Of course,
this is contrary to its earlier position that there was no valid conversion. The applications for the developed and
undeveloped portions of subject subdivision were similarly situated. Consequently, both did not need prior DAR
approval.

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 continue to be developed as a low-cost housing subdivision, albeit at
a snail’s pace. This can readily be
gleaned from the fact that SAMBA members even instituted an action to restrain
petitioners from continuing with such development. The enormity of the resources needed for developing a subdivision
may have delayed its completion but this does not detract from the fact that
these lands are still residential lands and outside the ambit of the CARL.

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 –

“x x x x Agricultural
land 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.

Be that as it may, the Secretary of Justice, responding to a
query by the Secretary of Agrarian Reform, noted in an Opinion^[19]
that lands covered by Presidential Proclamation No. 1637, inter alia, of which
the NATALIA lands are part, having been reserved for townsite purposes “to
be developed as human settlements by the proper land and housing agency,”
are “not deemed ‘agricultural lands’ within the meaning and intent of
Section 3 (c) of R.A. No. 6657.” Not being deemed “agricultural
lands,” they are outside the coverage of CARL.

Anent the argument that there was failure to exhaust
administrative remedies in the instant petition, suffice it to say that the
issues raised in the case filed by SAMBA members differ from those of
petitioners. The former involve
possession; the latter, the propriety of including under the operation of CARL
lands already converted for residential use prior to its effectivity.

Besides, petitioners were not supposed to wait until public
respondents acted on their letter-protests, this after sitting it out for
almost a year. Given the official indifference,
which under the circumstances could have continued forever, petitioners had to
act to assert and protect their interests.^[20]

In fine, we rule for petitioners and hold that public respondents
gravely abused their discretion in issuing the assailed Notice of Coverage
dated 22 November 1990 of lands over which they no longer have jurisdiction.

WHEREFORE, the Petition for Certiorari is GRANTED. The Notice of Coverage of 22 November
1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision
were placed under CARL coverage is hereby SET ASIDE.

SO ORDERED.

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

^[1]
National Housing Authority and Human Settlements Regulatory Commission; see C.
T. Torres v. Hibionada, G.R. No. 80916, 9 November 1990, 191 SCRA 268.

^[2]
Date of effectivity of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988.

^[3]
Annex “H”, Petition; Rollo,
p. 33.

^[4]
Annex “A”, Petition; Rollo, p. 26.

^[5]
Annex “C”, Petition; Rollo, p. 28.

^[6]
Annex “E”, Petition; Rollo, p. 30.

^[7]
Annexes “B”, “D” and “F”, Petition; Rollo,
pp. 27, 29 and 31.

^[8]
Complaint, p.
3; Rollo, p. 68.

^[9] DARAB Resolution, 16 December 1991, p. 8; Rollo,
p. 82.

^[10]
Renamed Housing and Land Use Regulatory
Board (HLURB) per E.O. No. 90, dated 17 December 1986.

^[11]
Annexes “A” and
“C”, Petition; Rollo, pp. 26 and 28.

^[12]
Annex “B”, Petition; Rollo, p. 27.

^[13]
Annexes “D” and
“E”, Petition; Rollo, pp. 29-30.

^[14]
National Power Corporation v.
Presiding Judge, RTC, Br. XXV, G.R. No. 72477, 16 October 1990, 190 SCRA 477.

^[15]
Comment, p. 8; Rollo, p. 63.

^[16]
Sec. 3 (c), R.A. 6657.

^[17]
Luz Farms v. Secretary of the
Department of Agrarian Reform, G.R. No. 86889, 4 December 1990, 192 SCRA
51, citing Record, CONCOM, 7 August 1986, Vol. III, p. 30.

^[18]
DAR Administrative Order No. 1, Series of 1990.

^[19]
Opinion No. 181, Series of 1990.

^[20]
Rocamora v. RTC-Cebu, Br. VIII,
G.R No. 65037, 23 November 1988, 167 SCRA 615.