Farmlot Reclassification Does NOT Exempt Land From Agrarian Reform

The Supreme Court has settled a recurring question for landowners: does having your agricultural land reclassified as a "farmlot subdivision" before the Comprehensive Agrarian Reform Law took effect exempt it from coverage? In Heirs of Augusto Salas, Jr. v. Cabungcal (G.R. No. 191545, March 29, 2017), the Court answered with a clear no—reclassification alone does not change the land's agricultural nature, and it remains subject to the government's agrarian reform program.

The Facts of the Case

Augusto Salas, Jr. owned a 148-hectare agricultural property in Lipa City, Batangas, which he inherited and held under Transfer Certificate of Title No. T-2807. In 1981, the Human Settlements Regulatory Commission (HSRC)—the predecessor of the Housing and Land Use Regulatory Board (HLURB)—approved Lipa City's zoning plan, reclassifying Salas' land as a "farmlot subdivision" intended for cultivation, livestock production, or agro-forestry.

In 1987, Salas entered into an agreement with Laperal Realty Corporation to develop and sell the property. He subdivided the land into multiple lots, some of which were sold to third parties. By 1991, 16 lots totaling about 82.5 hectares remained under Salas' name.

Meanwhile, tenant farmers continued tilling the land. When the Department of Agrarian Reform (DAR) issued Notices of Coverage and eventually distributed portions of the property to farmer-beneficiaries through Certificates of Land Ownership Award (CLOAs), Salas' heirs protested. They argued that because the land had been reclassified as a farmlot subdivision before Republic Act No. 6657 took effect on June 15, 1988, it should be exempt from agrarian reform coverage.

The Legal Issue

The central question was whether the reclassification of agricultural land as a farmlot subdivision—done before RA 6657's effectivity—exempts the property from the Comprehensive Agrarian Reform Program (CARP).

The Supreme Court's Ruling

The Court ruled against the Salas heirs, holding that the reclassification did not remove the land from CARP coverage.

Agricultural land defined. Under RA 6657, agricultural land refers to land devoted to agricultural activity and not classified as mineral, forest, residential, commercial, or industrial land. Agricultural activity includes cultivation of the soil, planting of crops, growing of fruit trees, and raising of livestock, poultry, or fish.

A farmlot is still agricultural. The Court examined the HLURB's own regulations defining a "farmlot subdivision" as "a planned community intended primarily for intensive agricultural activities and secondarily for housing." The HLURB rules require farmlot sites to be near markets, suitable for farming, and accessible to transportation. Even the HLURB itself later clarified that devoting agricultural land to a farmlot subdivision does not change its principal use for agricultural activities.

The distinction from prior cases. The Court distinguished this case from Natalia Realty, Inc. v. Department of Agrarian Reform, where land converted to residential or commercial use before June 15, 1988 was excluded from CARP. In those cases, the reclassification changed the land's use to non-agricultural purposes. Here, the reclassification to a farmlot subdivision kept the land's agricultural character intact—it merely allowed small-scale farming and limited housing on the same agricultural land.

Evidence of actual agricultural use. The DAR's investigation confirmed that the lots were flat, suitable for planting, and had been tilled by farmer-beneficiaries for years. Some portions were planted with corn, and adjacent areas were also agricultural. This evidence showed the land remained devoted to agricultural activity.

Practical Takeaways

• Reclassification is not a magic shield. Having your land reclassified as a farmlot subdivision—even before RA 6657—does not automatically exempt it from agrarian reform if the land remains agricultural in nature and use.

• The key question is actual use. What matters is whether the land is devoted to agricultural activity. If farmers are tilling it, it is agricultural land regardless of what the zoning ordinance says.

• Only true non-agricultural conversions count. Lands genuinely converted to residential, commercial, or industrial use before June 15, 1988 may be excluded from CARP, as in Natalia Realty. But a farmlot subdivision is not a residential, commercial, or industrial classification.

• Document your land's actual use. Landowners seeking exemption should be prepared to show that the land is genuinely not used for agriculture—not merely that a government agency reclassified it on paper.

• Tenant farmers' rights are protected. The Court emphasized that reclassification cannot defeat the rights of farmer-beneficiaries who have long tilled the land and received CLOAs under the agrarian reform program.

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