Natalia Realty v. DAR, Sec. Leong, and Dir.

Leano
G.R. No. 103302, August 12, 1993

Facts:
Petitioner Natalia Realty owns three contiguous parcels of land located in Banaba, Antipolo, Rizal with a total
area of 125.0078 hectares embraced in a transfer certificate title of registered of deeds.
On April 18, 1979, Presidential Proclamation (PP) 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 metropolis
designed as Lungsod Silangan Townsite. Since private landowners were allowed to develop their properties into low-cost
housing subdivisions within the reservation, Natalia Properties, through its developer Estate Developers and Investors
Corporation (EDIC), applied. The Human Settlements Regulatory Commission (HSRC) granted Natalia preliminary
approval and locational clearances for Phases I, II, and III. After Natalia complied with requirements, development
permits were also issued. Natalia properties later became Antipolo Hills Subdivision.
On June 15, 1988, Republic Act (R.A.) 6657 or Comprehensive Agrarian Reform Law of 1988 (CARL) took
effect. Respondent Department of Agrarian Reform (DAR), through Municipality Agrarian Reform Offices (MARO),
issued a notice of coverage on the undeveloped portions of the Antipolo Hills Subdivision, which roughly consisted
90.3307 hectares. Natalia immediately registered its objection to the notice of coverage. EDIC protested to Director
Wilfredo Leano of the DAR Region IV Office and wrote him twice a cancellation request of the notice of coverage.
Natalia wrote to Secretary of Agrarian Reform to reiterate its request of setting aside notice of coverage, but neither the
secretary nor the director took action. Thus, this case was filed more than a year thereafter.
Natalia imputed: (1) grave abuse of discretion to DAR for including undeveloped portions of Antipolo Hills
Subdivision within CARL coverage; (2) Natalia Properties already ceased from being agricultural lands when they
were included in the areas for townsite reservations. However, public respondents, through the Office of Solicitor General
(OSG), maintained that: (1) the permits granted to Natalia were not valid and binding because Natalia did not comply
with Implementing Standards, Rules and Regulations of Presidential Decree (P.D.) 957 or “The Subdivision and
Condominium Buyers Protective Decree”; (2) no application for conversion of Natalia lands from agricultural
residential was ever filed with the DAP; (3) the instant petition was prematurely filed because the case Samahan ng
Magsasaka sa Bundok Apolo, Inc. (SAMBA) instituted against petitioners before DAR Regional Adjudicator has not yet
terminated. Hence, they conclude that Natalia and EDIC failed to exhaust administrative remedies available to them
before coming to court.

Issue:
Whether or not the subject properties shall be covered with CARL

Held:
No, the Supreme Court ruled in favor of the petitioners. Public respondents gravely abused their discretion in
issuing the assailed notice of coverage of 22 November 1990 by lands of which they no longer have jurisdiction.
Section 4 of R.A. 6657 provides that the CARL shall “cover, regardless of tenural arrangement and commodity
produced, all public and private agricultural lands.” As to what constitutes land,” it is referred to as “land devoted to
activity as defined in this act and not classified as mineral, forest, residential, commercial, or industrial land.” As
Constitutional Commission defines, “agricultural lands” are only those lands which are “arable and suitable agricultural
lands” and “do not include commercial, industrial and residential lands.”
It is clear that the undeveloped portions of Antipolo Hills Subdivision cannot be considered agricultural lands for
these lands were intended for residential use prior the effectivity of CARL. They ceased to be agricultural upon inclusion
in Lungsod Silangan Reservation. Thus, they are outside the ambit of CARL. The areas continued to be developed as low-
cost housing subdivision.
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.
Summary:
Natalia Realty filed a petition for certiorari, assailing the Notice of Coverage of Department of Agrarian Reform
(DAR) over parcels of land already reserved as town site areas before the enactment of the law.

Additional Notes:
• Petitioners Natalia and EDIC complied with all the requirements of law. The preliminary approval,
locational clearances, and development permits granted petitioners for Phases I, II, and III of the
Antipolo Hills Subdivision. Furthermore, petitioners first secured favorable recommendations from the
Lungsod Silangan Development Corporation which was tasked to oversee townsite reservation
development implementation before applying necessary permits from HSRC. The Commission and
Housing and Land Use Regulatory Board (HLURB) stated therein that applications were in
“conformity” with PD 957. In fact, there was no need for petitioner to secure clearance or prior
approval from DAR. The Natalia Properties were within the areas set aside for the Lungsod Silangan
Reservation (LSR).

• P.P. 1637, with its purpose, in effect, converted erstwhile agricultural lands for residential use. P.D. 957
applied to all subdivisions in general, whereas P.P. 1637 referred only to the LSR which makes it a
special law. As a rule in statutory construction, special law prevails over general law.

SAMBA members filed a complaint against Natalia & EDIC before the DAR Regional Adjudicator to restrain
petitioners from developing areas under cultivation of SAMBA members.
➢ Regional Adjudicator restrained Natalia with the development of the subdivision
➢ Natalia moved to dismiss the complaint, but Natalia was denied.
➢ Regional Adjudicator issued a writ of preliminary injunction.
➢ Thereafter, Natalia and EDIC elevated their cause to DAR Adjudication Board (DARAB), but DARAB
merely remanded the case to Regional Adjudicator for further proceeding.

• Failure to exhaust administrative remedies: Issues filed by SAMBA differ from those of petitioners.
The former involved possession, whereas the latter involve propriety of including under the
operation of CARL the lands already converted prior its effectivity.