Case Digest: Natalia Realty v. DAR G. R. No. 103302, Aug 12, 1993,225 SCRA 278 (1993)

Facts:
Petitioner Natalia is the owner of three contiguous parcels of land located in Banaba, Antipolo, 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 town site reservation.
EDIC, developer of Natalia, applied for and was granted preliminary approval and locational clearances by the Human Settlements Regulatory Commission. Petitioners were likewise issued development permits after complying with the requirements. Thus the Natalia properties later became the Antipolo Hills Subdivision.
On 15 June 1988, CARL was enacted. DAR, through MARO, issued a Notice of Coverage on the undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly 90.3307 hectares.
Natalia and EDIC protested to this.

Members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA), filed a complaint against Natalia and EDIC before the DAR Regional Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA members.

DAR Regional ruled by temporarily restraining petitioners from further developing the subdivision.
Petitioners elevated their cause to DARAB but the latter merely remanded the case to the Regional Adjudicator for further proceedings
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.
Hence, this petition.
Natalia’s contention: Subject properties already ceased to be agricultural lands when they were included in the areas reserved by presidential fiat for town site reservation.
OSG’s contention: 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

Issue:
Whether or not lands already classified for residential, commercial or industrial use, as approved by the Housing and Land Use Regulatory Board and its precursor agencies prior to 15 June 1988, are covered by R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988.

Held:
NO. 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.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 continued 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 --
Republic Act no. 6657 states,  Agricultural lands refers to those devoted to agricultural activity 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 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.