Fact:

Petitioners are co-owners of a parcel of land which was subjected to compulsory acquisition
under the CARP. Respondents were identified by the DAR as qualified farmer-beneficiaries;
hence, the corresponding Certificates of Land Ownership Award (CLOAs) were generated,
issued to respondents and duly registered in their names.  Petitioners filed before the DARAB a
Petition for “Cancellation of CLOAs, Revocation of Notice of Valuation and Acquisition and
Upholding and Affirming the Classification of Subject Property and Declaring the same outside
the purview of RA No. 6657.” The petition was anchored mainly on the reclassification of the
land in question into a light intensity industrial zone pursuant to Municipal Ordinance No. 21,
series of 1981, enacted by the Sangguniang Bayan of Calapan, thereby excluding the same from
the coverage of the agrarian law.     DARAB ruled in favor of the Petitioner. Respondents
appealed to the DARAB Central Office who ruled in their favor. Petitioners filed an application
for exemption from CARP coverage of subject land DAR who ruled in their favor. Predictably,
respondents filed a MR to set aside the Order of exemption which was granted. Petitioners filed
a MR of the said Resolution which was denied. Petitioners, consequently, filed an appeal before
the Office of the President and was granted. Respondents then appealed to the CA which sets
aside the decision of the OP. Hence this petition for review wherein petitioners seek the
reversal of the aforementioned decision on the ground, among others, that the Honorable
Court of Appeals gravely erred in holding that the Decision dated December 2006 of the Office
of the President is not supported by substantial evidence. 

Issue: Whether Petitioner’s land had been reclassified as non-agricultural as early as 1981, that
is, prior to the effectivity of the CARL and, therefore, exempt from its coverage.

Held: Yes, the petitioners’ land is outside the coverage of the agrarian reform program.
Agricultural land refers to those devoted to agricultural activity as defined in RA 6657 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 (HLURB) and its preceding competent
authorities prior to 15 June 1988 for residential, commercial or industrial use.          It is
undeniable that local governments have the power to reclassify agricultural into non-
agricultural lands. Specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations in consultation with the National Planning Commission.
That a zoning ordinance, in order to validly reclassify land, must have been approved by the
HLURB prior to 15 June 1988 – is the result of Letter of Instructions No. 729, dated 9 August
1978. According to this issuance, local governments are required to submit their existing land
use plans, zoning ordinances, enforcement systems and procedures to the Ministry of Human
Settlements – one of the precursor agencies of the HLURB – for review and ratification. that
with respect to conversions of agricultural lands covered by RA 6657 to non-agricultural uses,
the authority of the DAR to approve such conversions may be exercised from the date of the
law’s effectively on June 15, 1998.” and that “all lands that were already classified as
commercial, industrial or residential before 15 June 1988 no longer need any conversion
clearance.”