Agrarian Reform Reclassification As Farmlot Subdivision Does NOT Exempt Land From CARP Coverage

The Supreme Court has ruled that agricultural land reclassified as a "farmlot subdivision" before the Comprehensive Agrarian Reform Law took effect remains covered by the government's agrarian reform program. In Heirs of Augusto Salas, Jr. v. Cabungcal (G.R. No. 191545, March 29, 2017), the Court held that a farmlot subdivision is still agricultural in nature and therefore subject to distribution to qualified farmer-beneficiaries.

The case clarifies an important boundary in Philippine property law: not every pre-1988 reclassification exempts land from agrarian reform coverage. Only reclassifications to genuinely non-agricultural uses—such as residential, commercial, or industrial—can remove land from the program's reach.

The Facts of the Case

Augusto Salas, Jr. owned a 148.4354-hectare agricultural land in Lipa City, Batangas, spanning five barangays. Tenant farmers tilled the property. In 1981, the Human Settlements Regulatory Commission (HSRRC) approved Lipa City's zoning ordinance, which reclassified Salas' land as a "farmlot subdivision" for cultivation, livestock production, or agro-forestry.

In 1987, Salas contracted Laperal Realty Corporation to develop and sell the property. The land was subdivided into multiple lots under various titles, all remaining in Salas' name. After Republic Act No. 6657 (the Comprehensive Agrarian Reform Law) took effect on June 15, 1988, the Department of Agrarian Reform (DAR) included Salas' remaining lots under the Comprehensive Agrarian Reform Program (CARP). Between 1995 and 1996, Certificates of Land Ownership Award (CLOAs) were issued to farmer-beneficiaries covering about 40.8588 hectares.

Salas' heirs sought exemption, arguing that the land had been reclassified as non-agricultural before CARP's effectivity, citing Department of Justice Opinion No. 44 (1990), which held that DAR's authority to approve conversions began only on June 15, 1988.

The Issue

The central question was whether the reclassification of Salas' agricultural land as a farmlot subdivision exempted the property from CARP coverage.

The Ruling

The Supreme Court ruled against the Salas heirs, holding that the farmlot subdivision reclassification did not exempt the land from agrarian reform coverage.

The law covers all agricultural lands. Republic Act No. 6657 covers all public and private agricultural lands, as defined in Proclamation No. 131 and Executive Order No. 229. The law defines agricultural land as "land devoted to agricultural activity" and not classified as mineral, forest, residential, commercial, or industrial land.

A farmlot subdivision is agricultural. The Court examined the HLURB Rules and Regulations Implementing Farmlot Subdivision Plan, which define a farmlot subdivision as "a planned community intended primarily for intensive agricultural activities and secondarily for housing." The regulations require farmlots to be near marketplaces, suited to farming activities, and with topography, soil, and climate appropriate for planting crops. Even HLURB issuances confirmed that a farmlot subdivision is within an agricultural zone and that its principal use for farming remains unchanged.

The reclassification did not change the land's nature. The Court emphasized that while the reclassification occurred before RA 6657 took effect, it did not alter the agricultural character of the land. The DAR's Investigation Report confirmed that the lots were flat, suitable for crops, planted with corn, and surrounded by agricultural land. The farmer-beneficiaries had tilled the property for years and were paying amortizations.

Natalia Realty distinguished. The Court distinguished Natalia Realty, Inc. v. DAR, which involved land converted to residential use. Unlike Natalia, the Salas property was reclassified as a farmlot subdivision—still an agricultural use—not as residential, commercial, or industrial land.

Practical Takeaways

• Reclassification alone does not exempt land from CARP. Only reclassification to genuinely non-agricultural uses (residential, commercial, industrial) before June 15, 1988 can remove land from agrarian reform coverage.
• A farmlot subdivision is agricultural land. Under HLURB rules, a farmlot subdivision is primarily for intensive agricultural activities, not for housing or commercial development.
• DOJ Opinion No. 44 has limits. While it confirms that DAR's conversion authority began on June 15, 1988, it does not mean every pre-1988 reclassification exempts land—the reclassification must be to a non-agricultural use.
• Actual use matters. Courts look at whether the land is actually devoted to agricultural activity, not merely at paper classifications.
• Landowners should verify the nature of any reclassification. A reclassification to a "farmlot subdivision" or similar agricultural designation will not shield property from CARP coverage.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.