[O.P. Case No. 97-K-8181.  April 18, 2000.]

IN RE: APPLICATION FOR CONVERSION FROM AGRICULTURAL TO RESIDENTIAL USE OF A PARCEL OF LAND LOCATED AT IRISAN, TADIANGAN, TUBA, BENGUET,

ALPA-PCM, INC., represented .by MARIO R. ALZONA, JR., movant-appellant.

R E S O L U T I O N

          This refers to the appeal filed by ALPA-PCM, INC., represented by its President, Mario R. Alzona. Jr., thru counsel, from the Order of the Secretary, Department of Agrarian Reform (DAR), dated December 11, 1997, the decretal portion of which reads:

          "WHEREFORE, premises considered, an Order is hereby issued GRANTING the Motion for Reconsideration of movant, Mr. Mario Alzona, without prejudice to the filing of appropriate criminal action against the applicant pursuant to DOJ Opinion No. 60, Series of 1993. Movant is likewise given a stern warning that a subsequent commission of premature development activities and/or similar acts shall be meted the penalty of inclusion in the DAR's Roster of Blacklisted Applicants for Conversion."

          As recited in the order of the DAR Secretary dated December 12, 1996, the facts are as follows:

          "Records reveal that the property subject of herein application is covered by TCT No. T-32696. The application for conversion was filed on May 16, 1995 before the Regional CLUPPI. In support of the application for conversion the movant submitted the following documents, to wit:

"1.     Application for conversion from agricultural to residential of a one (1) hectare land located at Irisan, Tadiangan, Tuba, Benguet, covered by TCT No. T-32696 dated May 16, 1995;

"2.     Certification of the Provincial Irrigation Officer Borromeo P. Melchor that the land has no irrigation facilities:

"3.     Certificate of Eligibility for Land Use Conversion issued by DA-Regional Director Faustino R. Maslan;

"4.     Ordinance No. 05-94 of the Tuba Sangguniang Bayan reclassifying the subject land from agricultural to residential

"5.     Certificate of Eligibility for Land Use Conversion issued by DENR-CAR Regional Executive Director Oscar M. Hamadan; and

"6.     Development Permit issued by the Office of the Municipal Mayor of Tuba, Benguet.

          "It must be noted that Undersecretary Jose C. Medina, Jr., in his Order dated February 8, 1996 resolved the instant application by denying the aforementioned petition on the ground of pre-mature development of the subject property and for failure to comply with the requirements under A.O. No. 12, Series of 1994.

          "Not satisfied with the aforesaid decision, movant Mario R. Alzona, Jr., filed a Motion for Reconsideration dated February 21, 1996 seeking for the reconsideration of the Order denying the application for conversion."

          Upon appeal, the DAR Secretary in his order dated December 12, 1996, affirmed the denial action of Undersecretary Medina.

          Undaunted ALPA-PCM, Inc. sought a reconsideration.

          In an Order dated December 11, 1997, the decretal portion of which is reproduced at the outset, the DAR Secretary, noting that the "property would be more economically feasible for purposes other than agricultural at this point", granted the motion, but without prejudice to the filing of appropriate criminal action against the applicant.

          In its appeal, appellant admits that premature development is one of the grounds for outright denial of an application for conversion clearance. It alleges, however, that the preliminary development it undertook was based on the Development Permit issued by the Municipality of Tuba, Benguet and on its honest belief that the conversion clearance was required prior to issuance of a Certificate of Registration and License to Sell; that the application for conversion clearance was filed on May 15, 1995 prior to the application for Registration and License to Sell with the HLURB-CAR on June 16, 1995; that conversion clearance is not absolutely necessary as the use of subject land has been previously re-classified by the Municipality of Tuba from agricultural to residential by virtue of Ordinance No 5-94, citing the case of Province of Camarines Sur vs. The Court of Appeals, G.R. No. 103125, May 17, 1993; that Ordinance No. 5-94 of the Municipality of Tuba, Benguet is in consonance with Par. 3, Section 20 of the Local Government Code; and the under Section 20 of the code the power of the sanggunian does not extend to lands under the coverage of R.A. 6657 or agricultural lands distributed to agrarian reform beneficiaries.

          Appellant also noted that under Section 65 of Republic Act (R.A.) 6657, or the Comprehensive Agrarian Reform Code, infra, under the heading "Conversion of Lands", reference is made to "after the lapse of five (5) years from its award" indicating that the saving clause refers to lands already distributed or awarded to beneficiaries; that subject land is not one which was distributed or awarded under R.A. 6657; that not being under the contemplation of R.A. 6657, a prior conversion clearance from the DAR Secretary is not even absolutely necessary; that probably an exemption certificate from the DAR would be more appropriate; and that an interpretation of Section 20 of RA 7160 requiring conversion clearance for agricultural lands, even if not awarded or distributed to beneficiaries of RA 6657, would create a situation where the powers of the local government units to reclassify would remain hostage to the ultimate discretion of the DAR to grant or withhold the conversion clearance, and thus giving the power to reclassify to the DAR Secretary contrary to the spirit and intent of the law.

          The main thrust of the appeal is whether or not there was premature development of subject property.

          We rule in the negative.

          As early as December 23, 1994, by virtue of Ordinance No. 05-94 passed by the Sangguniang Bayan of the Municipality of Tuba, Benguet, subject property was reclassified as residential land pursuant to the provisions of the Local Government Code. Subsequently, on March 3, 1995 a Development Permit was granted by the Office of the Municipal Mayor of Tuba Benguet, subject to the following conditions:

"1.        Compliance to conditions in the Subdivision Scheme.

"2.        Compliance to conditions stipulated in SB Res. No. 66-95.

"3.        Strict compliance with the Development Features as indicated in the Development Plan.

"4.        Compliance with implementing Rules of PD 952 (should be PD 957)."

          As admitted by appellant, it was after obtaining the development permit that it (appellant) started preliminary development on the property by constructing access roads leading to the property for the purpose of developing the same into a low-cost housing project for homeless postal employees. Thereafter, appellant proceeded to secure and apply for the Certificate of Registration and License to Sell, Environmental Compliance Certificate and Conversion Clearance.

          Careful evaluation of all these proceedings shows that appellant has no intention to develop the property prematurely. Development of the property was started after the issuance of the Development Permit. As the title of the permit suggests, after being issued a development permit, development should start subject to the conditions, stated in the permit.

          However, despite the permit, appellant still pursued to secure the other requirements until the request for conversion clearance was denied due to premature development. These actions of appellant only show its good intention, hence should not be penalized for trying to comply with all the requirements.

          If ever, it is the lack of coordination between the rules and regulations of the local government units and the DAR that should be blamed for the confusion. Although not exactly in point, the case of the Province of Camarines Sur vs. The Court of Appeals, 222 SCRA 173, which made a differentiation between the lands over which the local governments have the power to reclassify and the lands over which the DAR can issue conversion clearance, is very enlightening. There it was pointed out that under Sec. 20 of the Local Government Code of 1991, (R.A), the power of the local government units to reclassify lands shall not apply to agricultural lands distributed to agrarian reform beneficiaries pursuant to R.A. 6657. These lands shall be governed by Sec. 65 of said law (R.A. 6657) which provides:

          "Sec. 65.       Conversion of Lands. — After the lapse of five (5) years from its award when the land ceases to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes, the DAR, upon application of the beneficiary or the landowner, with due notice to the affected parties, and subject to existing laws, may authorize the reclassification or conversion of the land and its disposition: Provided, that the beneficiary shall have fully paid his obligation."

          Anent this provision, the Supreme Court said:

          "The opening adverbial phrase of the provision sends signals that it applies to lands previously placed under the agrarian reform program as it speaks of 'the lapse of five (5) years from the award.'

          "The rules on conversion of agricultural lands found in Section 4 (k) and 5(1) of Executive Order No. 129-A, Series of 1987 cannot be the source of the authority of the Department of Agrarian Reform to determine the suitability of a parcel of agricultural land for the purpose to which it should be devoted by the expropriating authority. While those rules vest on the Department of Agrarian Reform the exclusive authority to approve or disapprove conversions of agricultural lands for residential, commercial or industrial uses, such authority is limited to the applications submitted by the land owners or tenant beneficiaries."(Emphasis supplied.)

          WHEREFORE, premises considered, the Order appealed from is MODIFIED in the sense that Mario Alzona is discharged from liability for premature development. In all other respects, the appealed Order is hereby AFFIRMED.

          SO ORDERED.

          Manila, Philippines.

By authority of the President:

(SGD.) RONALDO B. ZAMORA

Executive Secretary

Copy furnished:

Department of Agrarian Reform

Mr. Mario Alzona, Jr.

Mr. Blas L. Dalus

Atty. Miguel B. Liceralde

Ms. Teresita D. Galacgac

Mr. Francisco L. Dagnalan