In a significant ruling, the Supreme Court affirmed that reclassifying agricultural land as a ‘farmlot subdivision’ does not automatically exempt it from the Comprehensive Agrarian Reform Program (CARP). This decision reinforces the government’s commitment to agrarian reform, ensuring that land primarily intended for agricultural activities remains subject to redistribution to qualified farmer beneficiaries. The Court emphasized that the key factor is the actual agricultural use of the land, not its formal classification. This means landowners cannot avoid CARP by simply reclassifying their land while continuing agricultural activities.

From Farms to Farmlots: Can Reclassification Sidestep Agrarian Reform?

The case of Heirs of Augusto Salas, Jr. v. Marciano Cabungcal, et al. (G.R. No. 191545, March 29, 2017) revolved around a vast tract of agricultural land owned by Augusto Salas, Jr. in Lipa City, Batangas. Salas’ land, initially spanning approximately 148 hectares, was later reclassified as a “farmlot subdivision” under Resolution No. 35 issued by the Human Settlements Regulatory Commission (HSRC) in 1981. Salas then entered into an agreement with Laperal Realty Corporation for the development, subdivision, and sale of the land. Following the enactment of Republic Act No. 6657, or the Comprehensive Agrarian Reform Law (CARL) in 1988, the Department of Agrarian Reform (DAR) sought to include Salas’ landholdings under the CARP for distribution to qualified farmer beneficiaries.

The heirs of Augusto Salas, Jr. contested this inclusion, arguing that the land’s reclassification as a farmlot subdivision prior to the effectivity of CARL exempted it from CARP coverage. They relied on Department of Justice (DOJ) Opinion No. 44, series of 1990, which stated that the DAR’s authority to approve reclassifications of agricultural lands applied only from June 15, 1988, the date CARL took effect. The central legal question was whether the reclassification of agricultural land into a “farmlot subdivision” before the effectivity of Republic Act No. 6657 exempts it from the coverage of the Comprehensive Agrarian Reform Program.

The Supreme Court, in resolving this issue, delved into the constitutional mandate for agrarian reform and the scope of Republic Act No. 6657. The 1987 Constitution, under Article II, Section 21 and Article XIII, Section 4, mandates the State to promote comprehensive rural development and agrarian reform, founded on the rights of farmers and regular farmworkers to own the lands they till. Republic Act No. 6657, enacted to fulfill this mandate, generally covers all public and private agricultural lands. Section 4 of the Act specifies that the CARP covers all alienable and disposable lands of the public domain devoted to or suitable for agriculture, all lands of the public domain exceeding five hectares, all government-owned lands devoted to or suitable for agriculture, and all private lands devoted to or suitable for agriculture, regardless of the agricultural products raised.

However, Section 10 of Republic Act No. 6657 provides for certain exemptions and exclusions, such as lands used for parks, wildlife reserves, school sites, church sites, and lands with a steep slope not developed for agriculture. The Supreme Court underscored that the law defines agricultural land as land devoted to agricultural activity and not classified as mineral, forest, residential, commercial, or industrial land. Agricultural activity includes the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry, or fish, including the harvesting of such farm products, and other farm activities performed by a farmer.

The Court emphasized that the reclassification or conversion of agricultural lands into non-agricultural lands is subject to the approval of the DAR, as stated in Section 65 of Republic Act No. 6657 and reiterated by Administrative Order No. 01-90. Prior to the effectivity of Republic Act No. 6657, local governments had the power to approve reclassification of agricultural lands, but after its enactment, the DAR’s approval became necessary.

Building on this legal framework, the Supreme Court addressed the specific issue of whether the reclassification of Salas’ land as a “farmlot subdivision” exempted it from CARP coverage. The Court noted that a farmlot is not included in the categories of commercial, residential, or industrial lands that are generally excluded from CARP. The definition of a “farmlot subdivision” under the HLURB Rules and Regulations Implementing Farmlot Subdivision Plan (HLURB Regulations) indicates that it is an “agricultural land” as defined under Republic Act No. 3844.

Rule V, Section 18 (d) of the HLURB Regulations defines a Farmlot Subdivision as a planned community intended primarily for intensive agricultural activities and secondarily for housing. This definition makes it clear that the principal use of a farmlot subdivision remains agricultural, even if it also allows for housing. The Court further noted that the HLURB Regulations provide for the minimum site criteria for a farmlot subdivision plan, which include accessibility to transportation lines, availability of community services and facilities, and the physical suitability of the site for farming activities.

The Supreme Court distinguished the case from Natalia Realty Inc. v. Department of Agrarian Reform, where lands converted to non-agricultural uses prior to the effectivity of Republic Act No. 6657 were declared outside the coverage of CARP. The Court pointed out that in Natalia Realty, the land was converted into a town site or residential land intended for residential use. In contrast, the present case involved land reclassified as a “farmlot subdivision,” intended for “intensive agricultural activities.” The reclassification of Salas’ landholding into a farmlot subdivision did not change the agricultural nature of the land, the legal relationships existing over such land, or the agricultural usability of the land.

The Court also addressed the petitioners’ argument that the definition of agricultural land under the HLURB Regulations requires that the property be used exclusively for agricultural purposes and cannot be used secondarily for housing. The Court clarified that an executive regulation cannot override a law, and that Republic Act No. 6657 does not require that a landholding must be exclusively used for agricultural purposes to be covered by CARP. What determines a tract of land’s inclusion in the program is its suitability for any agricultural activity.

Furthermore, the Court emphasized that whenever there is reasonable uncertainty in the interpretation of the law, the balance must be tilted in favor of the poor and underprivileged. Republic Act No. 6657 was enacted as social legislation, pursuant to the policy of the State to pursue a Comprehensive Agrarian Reform Program. The general policy of Republic Act No. 6657 is to cover as many lands suitable for agricultural activities as may be allowed.

FAQs

What was the key issue in this case?	The key issue was whether the reclassification of agricultural land as a farmlot subdivision prior to the effectivity of Republic Act No. 6657 exempts it from the coverage of the Comprehensive Agrarian Reform Program.
What is a farmlot subdivision?	A farmlot subdivision is a planned community intended primarily for intensive agricultural activities and secondarily for housing, as defined by the HLURB Rules and Regulations.
Did the Supreme Court rule in favor of the landowner or the farmer beneficiaries?	The Supreme Court ruled in favor of the farmer beneficiaries, affirming that the land remained subject to CARP coverage.
What was the basis for the Supreme Court’s decision?	The Court based its decision on the constitutional mandate for agrarian reform, the scope of Republic Act No. 6657, and the finding that the land was still primarily agricultural in nature, despite its reclassification.
What is the significance of Department of Justice Opinion No. 44 in this case?	Department of Justice Opinion No. 44 states that the DAR’s authority to approve reclassifications of agricultural lands applies only from June 15, 1988, the date CARL took effect; however, this did not exempt the land in question from CARP coverage.
How did the Supreme Court distinguish this case from Natalia Realty Inc. v. Department of Agrarian Reform?	The Supreme Court distinguished this case from Natalia Realty by noting that the land in Natalia Realty was converted to residential use, while the land in this case was reclassified as a farmlot subdivision intended for agricultural activities.
What are the implications of this ruling for landowners?	Landowners cannot avoid CARP coverage by simply reclassifying their land as a farmlot subdivision if the land is still primarily used for agricultural activities.
What are the implications of this ruling for farmer beneficiaries?	Farmer beneficiaries are protected by this ruling, which ensures that land primarily intended for agricultural activities remains subject to redistribution under CARP.
What government agency has the power to approve land reclassification after RA 6657?	After the effectivity of Republic Act No. 6657, the Department of Agrarian Reform (DAR) has the authority to approve the reclassification of agricultural lands.

The Supreme Court’s decision in this case underscores the importance of prioritizing the actual use of land over its formal classification when implementing agrarian reform. This ruling reinforces the government’s commitment to social justice and equitable land distribution, ensuring that farmer beneficiaries have access to land suitable for agricultural activities. It serves as a reminder that reclassifications must align with the true nature and purpose of the land, and cannot be used as a means to circumvent agrarian reform laws.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Heirs of Augusto Salas, Jr. v. Marciano Cabungcal, et al., G.R. No. 191545, March 29, 2017