Supreme Court upholds ban on conversion of agricultural lands for commercial use

MANILA, Philippines – The Supreme Court (SC) has affirmed the legality of ban on conversion of agricultural lands into commercial use imposed by the administration of former President Arroyo two years ago to address rice shortage in the country then.

The first division of the High Court chaired by Chief Justice Renato Corona junked a petition of Chamber of Real Estate and Builders Associations (CREBA) questioning the legality of Memorandum No. 88 issued by former Agrarian Reform secretary Nasser Pangandaman and approved by Mrs. Arroyo that temporarily suspended the processing and approval of all land use conversion applications nationwide.

In a unanimous decision penned by Associate Justice Jose Perez and promulgated last June 18, the Court upheld the “exclusive authority” of the Department of Agrarian Reform (DAR) to approve or disapprove conversion of agricultural lands to non-agricultural uses such as residential, commercial and industrial.

The DAR order was issued amid concerns that the worsening rice shortage at that time was an offshoot of the unabated conversion of prime agricultural lands for real estate development.

CREBA, umbrella organization of some 3,500 companies and individuals working in the real estate industry, argued that the memorandum was not a valid exercise of police power and that it was unconstitutional because it suspended the land use conversion without any basis.

The High Court, however, dismissed this argument: “It bears emphasis that said Memorandum No. 88 was issued upon the instruction of the President in order to address the unabated conversion of prime agricultural lands for real estate development because of the worsening rice shortage in the country at that time.”

“Such measure was made in order to ensure that there are enough agricultural lands in which rice cultivation and production may be carried into. The issuance of said Memorandum No. 88 was made pursuant to the general welfare of the public, thus, it cannot be argued that it was made without any basis,” it added.

Chief Justice Corona and three other members of the division – Associate Justices Presbitero Velasco Jr., Teresita Leonardo-de Castro and Mariano del Castillo – concurred in the ruling.

The Court used as basis a previous ruling that the Secretary of Agrarian Reform has the “exclusive authority” to classify and identify landholdings either for conversion or CARP (Comprehensive Agrarian Reform Program) coverage.

It pointed out that as the agency responsible for implementing the CARP, DAR is authorized by law to “establish and promulgate operational policies, rules and regulations, and priorities for agrarian reform implementation.”

The SC stressed that DAR is given such an authority as it is “mandated to preserve and maintain agricultural lands with increased productivity.”

Likewise, the court made a distinction between reclassification and conversion of agricultural lands to non-agricultural uses.

It explained that conversion is the act of changing the current use of a piece of agricultural land into some other use while reclassification is the act of specifying how agricultural lands shall be utilized for non-agricultural uses, as embodied in the land use plan, subject to the requirements and procedures for land use conversion.

The High Court said reclassification alone will not suffice to use the agricultural lands for other purposes as conversion is needed to change the current use of reclassified agricultural lands.

“For reclassified agricultural lands, therefore, to be used for the purpose to which they are intended there is still a need to change the current use thereof through the process of conversion,” it added.

The SC said that even reclassification of agricultural lands by way of Presidential Proclamations to non-agricultural uses, such as school sites, needs conversion clearance from the DAR.

With this, the SC likewise sustained the validity of DAR Administrative Order (AO) 01-02 issued by former Agrarian Reform secretary Hernani Braganza on Feb. 28, 2002, which was also questioned by CREBA.

Known as the DAR Conversion Rules, AO 01-02 sought to regulate the conversion of agricultural lands to non-agricultural uses and identify those that were wrongly exempted from the coverage of the CARP.

Braganza’s directive deemed as agricultural lands those that are “not reclassified as residential, commercial, industrial or other non-agricultural uses” before Republic Act 6657 or the CARP Law took effect on June 15, 1988.

CREBA claimed Braganza, DAR secretary during the early years of the Arroyo administration, acted without jurisdiction as he had no authority to expand or enlarge the legal definition of the term “agricultural lands” through an administrative order.

But the SC held that in issuing the conversion rules, the former agrarian reform chief only “made clear what are the lands that can be the subject of DAR’s conversion authority, thus, serving the very purpose of the land use conversion provisions of RA 6657.”

It noted that the date of effectivity of RA 6657 served as the cut-off period for automatic reclassifications or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority.

It necessarily follows that any reclassification made after June 15, 1988 can be the subject of DAR’s conversion authority, the court said.

“Having recognized the DAR’s conversion authority over lands reclassified after 15 June 1988, it can no longer be argued that the Secretary of Agrarian Reform was wrongfully given the authority and power to include ‘lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988’ in the definition of agricultural lands,” the court said. –Edu Punay (The Philippine Star)