VOL. 512, JANUARY 467
7881; Rules and regulations on the acquisition, valuation
24, 2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
G.R. No. 165547. January 24, 2007. *
DEPARTMENT OF AGRARIAN REFORM, as represented by
its Secretary, RENE C. VILLA, petitioner, vs. SARANGANI
AGRICULTURAL CO., INC., ACIL CORPORATION,
NICASIO ALCANTARA and TOMAS ALCANTARA,
respondents.
Agrarian Reform; Comprehensive Agrarian Reform Law (R.A.
No. 6657); A notice of coverage is not an indispensable requirement
before the Department of Agrarian Reform can acquire lots or
commercial farms, which are covered by a deferment period under
R.A. No. 6657 upon its effectivity on 15 June 1998.—With regard to
the first issue on due process, this Court holds that, under the
circumstances, a notice of coverage is not an indispensable
requirement before DAR can acquire the subject lots or commercial
farms, which are covered by a deferment period under the
Comprehensive Agrarian Reform Law (CARL) or R.A. No 6657
upon its effectivity on June 15, 1998. The pertinent provision of the
law states: Sec. 11. Commercial Farming.—Commercial farms,
which are private agricultural lands devoted to saltbeds, fruit farms,
orchards, vegetables and cutflower farms, cacao, coffee and rubber
plantations, shall be subject to immediate compulsory acquisition
and distribution after ten (10) years from the effectivity of this Act. In
the case of new farms, the ten-year period shall begin from the first
year of commercial production and operation, as determined by the
DAR. During the ten-year period, the Government shall initiate steps
necessary to acquire these lands, upon payment of just compensation
for the land and the improvements thereon, preferably in favor of
organized cooperatives or associations, which shall thereafter
manage the said lands for the workers-beneficiaries. (As amended by
1|Page
R.A.
compensation and distribution of deferred commercial farms—DAR
AO No. 09, s. 1998)
Same; Same; Local Government Units; Department of
Agrarian Reform’s (DAR’s) scope of authority in assessing land use
conversion applications is limited to examining whether the
requirements prescribed by law and existing rules and regulations
have been complied with—in accordance with E.O. No. 72, Series of
1993, and subject to
_______________
 FIRST DIVISION.
*
468
468 SUPREME
COURT REPORTS
ANNOTATED
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
the limitations prescribed by law, DAR should utilize the
comprehensive land use plans in evaluating the land use conversion
application of landowners whose lands have already been classified
by their local government for non-agricultural uses.—The
conversion of agricultural lands into non-agricultural uses shall be
strictly regulated and may be allowed only when the conditions
prescribed under R.A. No. 6657 are present. In this regard, the Court
agrees with the ratiocination of the CA that DAR’s scope of
authority in assessing land use conversion applications is limited to
examining whether the requirements prescribed by law and existing
rules and regulations have been complied with. This holds true in the
present case where, because of the creation of the Province of
Sarangani and in view of its thrust to urbanize, particularly its
provincial capital which is the Municipality of Alabel, the local
government has reclassified certain portions of its land area from
agricultural to non-agricultural. Thus, to reiterate, in accordance with
E.O. No. 72, Series of 1993, and subject to the limitations prescribed
by law, DAR should utilize the comprehensive land use plans in
evaluating the land use conversion application of respondents whose
lands have already been reclassified by the local government for non-
agricultural uses.
Same; Same; Same; The creation of a new province, and the
reclassification that was effected by one of its municipalities, does
not operate to supersede the applicable provisions of R.A. No. 6657.
—This is not to say, however, that every property of respondents
which is included in the comprehensive land use plan of the
Municipality of Alabel shall be automatically granted non-coverage.
As mentioned earlier, said application is subject to the limitations
and conditions prescribed by law. One such limitation that is present
here is that a portion of respondents’ property of 376.5424 hectares,
a portion totaling 154.622 [or 154.1622] hectares which are planted
to bananas and coconuts, are covered by CARL’s ten-year deferment
scheme, which has expired on June 15, 1998. By law, these lands are
subject to redistribution to CARP beneficiaries upon the lapse of the
tenyear period, counted from the date of the effectivity of the CARL
or R.A. No. 6657 on June 15, 1988, which was way before the
creation of the Province of Sarangani and the eventual
reclassification of the agricultural lands into non-agricultural in the
Municipality of Alabel where respondents’ properties are located. In
short, the creation of the new Province of Sarangani, and the
reclassification that was
469
VOL. 512, 469
JANUARY 24,
2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
2|Page
effected by the Municipality of Alabel did not operate to
supersede the applicable provisions of R.A. No. 6657.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Delfin B. Samson for petitioner.
     Quasha, Ancheta, Peña, Nolasco for respondents.
AZCUNA, J.:
This is a petition for review  by the Department of Agrarian
1
Reform (DAR) seeking the reversal of the Decision and
Resolution, dated July 19, 2004 and September 24, 2004,
respectively, of the Court of Appeals in CA-G.R. SP No.
79899, entitled “Sarangani Agricultural Co., Inc., et al. v. Hon.
Manuel Domingo, et al.”
Respondents are the owners of the lands in question which
have been reclassified from agricultural into non-agricultural
uses by virtue of a municipal zoning ordinance, and are
included in the comprehensive land use plan of the
Municipality of Alabel.
The antecedents are as follows:
The Province of Sarangani was created pursuant to Republic
Act No. 7228 on March 16, 1992, composed of seven (7)
municipalities, namely, Alabel, Glan, Maasin, Maitum,
Malapatan, Malungon and Kiamba which were segregated
from the Province of South Cotabato. Under said Act, the
Municipality of Alabel was made the capital of the new
province where the capitol building and all other national and
provincial offices shall be established. 2
_______________
1
 Under Rule 45 of the Rules of Court.
2
 Rollo, p. 55.
 470 The Zoning Certification issued by the office of the
470 SUPREME COURT Municipal Planning and Development Council (MPDC)
REPORTS showed that respondents’ properties located at Barangay
ANNOTATED Maribulan, Alabel were among those reclassified from
Department of Agrarian agricultural and pasture land to residential, commercial
Reform vs. Sarangani institutional, light industrial and open space in the 1995-2005
Agricultural Co., Inc. land use plan of Alabel.5

_______________
On February 14, 1997, the Sangguniang Bayan of Alabel
passed Resolution No. 97-08 or “Resolution Adopting and 3
 Id.
Endorsing the Ten-Year Municipal Comprehensive 4
 Id.
5
 Id.
Development Plan (MCDP 1995-2005) of the Municipality of
Alabel and Its Land Use Development Plan and Zoning 471
Ordinance for Adoption and Approval of the Provincial VOL. 512, JANUARY 471
Governor, Honorable Priscilla L. Chiongbian, Thru The 24, 2007
Honorable Sangguniang Panlalawigan of Sarangani Province.” Department of Agrarian
On January 30, 1998, pursuant to Municipal Zoning Reform vs. Sarangani
Ordinance No. 08, Series of 1997, and to accelerate the
Agricultural Co., Inc.
development and urbanization of Alabel, the Sangguniang
On July 2, 1998, respondent Sarangani Agricultural Company,
Bayan of Alabel passed Resolution No. 98-03 reclassifying lots
Inc. (SACI) filed an application for land use conversion of the
that were located within the built-up areas, based on the 1995-
following parcels of land with an aggregate area of 1,005
2005 Land Use Plan of the municipality, from agricultural to
hectares:
non-agricultural uses.
3

On March 2, 1998, the Sangguniang Panlalawigan of Registered TCT Lot AreaArea

Sarangani approved Resolution No. 98-018 or the “Resolution Owner No. No. (Ha.)
Applied
Adopting the Ten-Year Municipal Comprehensive (Ha.)
Development Plan (MCDP 1995-2205) and the Land Use SACI T-7207 1-C 52.4365 52.4365
Development Plan and Zoning Ordinance of the Municipality SACI T 2 181.3353 181.3353
of Alabel, Sarangani Per Resolution No. 97-08 and Municipal -48807
Ordinance No. 97-08, S. of 1997 of the Sangguniang Bayan of (T-
Alabel.” A portion of the area involving 376.5424 hectares, 4807)
however, was covered by the Comprehensive Agrarian Reform SACI T 3 281.0874 281.0874
Law (R.A. No. 6657) commercial farms deferment scheme. 4

-48808

3|Page
Registered TCT Lot Area Area Registered TCT Lot Area Area
Owner No. No. (Ha.) Applied Owner No. No. (Ha.) Applied
(Ha.) (Ha.)
(T- ration (T-
4808) 4150)
SACI T 4 241.7880 241.7880 SACI Untitled 807 6.7871 6.7871
-48809 472
(T- 472 SUPREME COURT
4809) REPORTS
SACI T-48810 5 40.6738 40.6738 ANNOTATED
(T- Department of Agrarian
4810) Reform vs. Sarangani
SACI T 6 137.0340 137.0340 Agricultural Co., Inc.
-48811 Accompanying SACI’s application for conversion were the
(T- documents required under the Department of Agrarian Reform
(DAR) Administrative Order No. 7, Series of 1997. 6

4811)
Subsequently, a Site Inspection Report was prepared by the
SACI T-48812 7 12.3265 12.3265 Housing and Land Use Regulatory Board (HLURB) Regional
(T- Office (Region XI) and was indorsed to DAR Secretary
4812) Horacio R. Morales, Jr.
Nicasio T- 10 20.9149 20.9149 On March 16, 1999, the Provincial Agrarian Reform
Alcantara (10885) Council (PARC) and the Provincial Land Use Technical
T-44538 Committee (PLUTC)  conducted an inspection of the subject
7

SACI T-9210 2 12.1425 12.1425 properties. In a Memorandum dated July 9, 1999, the PLUTC
Tomas T-14359 39 10.9390 10.9390 recommended that SACI’s application be made subject to the
following conditions: 1) presentation by SACI of its
Alcantara (T-
development plan; 2) submission of the lacking documents; 3)
1185) re-survey and segregation of the property according to use or
Nicasio Untitled 53 5.0672 5.0672 project in coordination with the DAR Regional Office; and, 4)
Alcantara submission of the resulting map indicating the technical
ACIL T- 806 3.3115 3.3115 description of the area per actual use/project attested by the
Corpo- (41758) Regional Director.

4|Page
 Meanwhile, on March 22, 1999, members of the Sarangani
Agrarian Reform Beneficiaries Association, Inc. (SARBAI)
_______________
6
 These documents are the following: 1) certified true copies of Resolution
No. 98-018 of the Sangguniang Bayan of Alabel; 2) certification of the
Provincial Planning and Development Office (PPDO); 3) zoning certification
issued by the MPDC of Alabel, Sarangani stating that the properties are
included in the 1995-2005 Land Use Plan, and reclassified according to SB
Resolution No. 97-08; 4) certification issued by the Municipal Agriculturist; 5)
court clearance; 6) certification issued by the Housing and Land Use Regulatory
Board (HLURB) that the area is within an agricultural zone; and, 7) certification
issued by the National Irrigation Administration (NIA) Regional Irrigation
Manager, and field verification reports of the Provincial Irrigation Manager that
the area is not irrigated and not covered by an irrigation project (Rollo, pp. 56-
57).
7
 PLUTC is composed of representatives from the following government
agencies: the Department of Trade and Industry (DTI), Department of Tourism
(DOT), HLURB, and the PARC Secretariat.
473
VOL. 512, JANUARY 473
24, 2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
sent a letter-petition to the DAR Secretary opposing the
application for land use conversion filed by SACI. SARBAI
alleged that its members were merely forced to sign the waiver
of rights, considering that the commercial farm deferment
period ended on June 15, 1998. Later, an “Urgent Petition for
the Denial of Land Use Conversion Application of Banana
Commercial Farm of SACI” was filed by SARBAI and was
received by the PARC Secretariat on July 14, 1999.
In the March 30, 2000 deliberation of the PLUTC, the
committee agreed to recommend the disapproval of 158.0672
hectares that had been planted with bananas and coconuts. The
5|Page
committee noted that said portion of the property was still
viable for agriculture, irrigated, with Notice of Coverage, and
under protest or with opposition from SARBAI. It likewise
recommended that the decision as to the rest of the area applied
for conversion shall be deferred subject to the submission of
the following within a period of thirty (30) days: 1) a five-year
comprehensive development plan; 2) a survey plan signed by
the Regional Technical Director of Land Management Service
and noted by the DAR Regional Director (Region XI); 3)
SACI’s proof of undertaking, which will contain the package
of benefits it intends to give to the affected farm workers
except those working in the banana plantation; 4) the
concurrence of all the workers who would be affected by the
proposed conversion, which concurrence should be noted by
the Municipal Agrarian Reform Office (MARO) and
acknowledged by a notary public.
On its part, SACI contended that 1) its projects were aligned
to address the current and anticipated commercial and
residential needs of Sarangani province, and the removal of any
portion of its property included in its comprehensive
development plan will affect the viability of the plan; 2) the
banana plantations will be transformed into a socialized
housing subdivision which will be made available to the
displaced workers and the other low income earners of Alabel;
3) the company will construct and install power generation
facilities in the entire area; 4) at the time the application for
land use
474
474 SUPREME COURT
REPORTS
ANNOTATED
Department of Agrarian
Reform vs. Sarangani
 Agricultural Co., Inc. farm workers affected by showing, among others, the schedule of
conversion was filed, no Notice of Coverage was ever issued development by phase, the specific lots involved and the
corresponding proposed use [of] the conversion, concurred by the
by DAR, and the subsequent issuance of such notice was
workers/oppositors, noted by the MARO and duly notarized. The
highly irregular because the same may be issued only after the Commit-
final resolution of the application for land use conversion; and
5) the previous Order of Deferment cannot be a legal barrier to 475
the filing of an application for land use conversion. VOL. 512, JANUARY 475
On November 9, 2000, DAR Secretary Horacio R. Morales, 24, 2007
Jr. denied SACI’s application for land use conversion. The Department of Agrarian
pertinent portion of the Order reads: Reform vs. Sarangani
“. . . The proponent also submitted another DA certification stating Agricultural Co., Inc.
that 12 parcels of land (Lot Nos. 2, 3, 4, 5, 6, 7, 12, 807, 53, 10, 39
tee also requested SACI to submit details of the pomelo farm in
and 806) with an area of 816.7401 hectares, located at Maribulan,
Malandag being offered as a replacement farm for the relocation of
Alabel, Sarangani are part of expansion for urbanizing areas. Though
the farm workers. SACI was given a 30-day period to submit these
discussed on several meetings, no decision was made on the
documents.
application since the applicant was not able to comply with the
SACI, however, failed to submit the oath of undertaking to pay
documentary requirements and clarify the issues raised by the
disturbance compensation to affected workers being required by the
Committee.
Committee and as provided under DAR Administrative Order No.
[I]n [the] 30 March 2000 Meeting of the PLUTC, the Committee
01, Series of 1999. Instead, SACI submitted an undertaking executed
deliberated again [on] the subject application and agreed to
by the affected workers stating that they are amenable to the package
recommend the disapproval of 158.0672 hectares area planted to
of benefits offered by the company. Nevertheless, those who
banana[s] and coconuts. The Committee noted that said portion of
executed the deed of undertaking did not represent the majority of
the property is still viable for agriculture, irrigated, with Notice of
the farm workers. Out of the 95 regular banana workers only 45 and
Coverage and with protest or opposition from SARBAI. The
eight (8) supervisors including four (4) workers who were not
Committee also agreed to request the DAR to determine the metes
included in the workers’ master list of SACI executed a deed of
and bounds of the area planted to banana[s] and coconuts vis-à-
undertaking. As regards the 105-hectare pomelo farm, SACI failed to
vis areas devoted to other enterprises. Relative to the rest of the area
affirm whether they are going to pursue their offer. Likewise, DAR
applied for conversion, the committee deferred its decision subject to
Region XI reported that coverage of the same area is on-going, and a
the submission of a 5-year comprehensive development plan,
different group of potential beneficiaries have already been
showing among others, the schedule of development by phase, the
identified. Therefore, it could no longer be offered as a relocation
specific lots involved and the corresponding proposed use.
site. Foregoing considered, the Committee, during its 18 August
. . . The Committee acceded to the request of SACI and deferred
2000 Meeting, sustained its earlier recommendation to deny the
its recommendation to deny conversion of that portion of the
conversion of that portion of the property planted to bananas and
property planted to banana[s] and coconut[s] pending submission of
coconuts.
a manifesto or SACI’s proof of undertaking that it will compensate

6|Page
 With regard to the rest of the area, the Committee deferred its
decision subject to the delineation by the SACI of the total area that
they can develop within the allowed five-year period. Likewise, the
PLUTC is requesting the SACI to submit a revised five-year
development plan that will show the schedule of development by
phase, by year, and the proposed use for each parcel of land.
WHEREFORE, premises considered, it is hereby ordered that:
1. The application filed by the Sarangani Agricultural Company,
Inc. (SACI), represented by Cynthia Adao-Prat, involving parcels of
land planted to banana[s] and coconut[s] and with Notice of
Coverage identified as TCT Nos. T-10885 (20.9149 ha.), T-14359
(10.9390 ha.), T-41718 (3.3115 ha.), OCT No. V-19574 or T-9210
(12.1425 ha.), Lot 807 (6.7871 ha.) and portion of P-V-125 (95.00
ha.) and [an] area covered by Lot 53 (5.0672 ha.) with an aggregate
area of 154.622 [actually it is 154.1622] hectares is hereby DENIED.
The Dar Regional Office of Region XI is hereby instructed to
determine the metes and bounds of the area subject for distribution to
the qualified FWBs.
476
476 SUPREME COURT
REPORTS
ANNOTATED
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
2. The resolution of the application involving the rest of the area
applied for conversion is DEFERRED pending submission by the
applicant of a revised five-year development plan indicating the
specific use of each parcel of land.
SO ORDERED.” 8
Petitioner filed a Motion for Reconsideration of the above
decision but the same was denied by the Court of Appeals in a
Resolution, dated September 24, 2004.
7|Page
Their Motion for Reconsideration of the above Order
having been denied, respondents appealed to the Office of the
President (O.P. Case No. 02-1-47.4, alleging that the Secretary
of Agrarian Reform committed serious errors in 1) finding that
a notice of coverage had been issued for the banana area of the
landholdings; 2) giving undue significance to the protest or
opposition by SARBAI; 3) requiring a deed of undertaking
even after applicant-appellant’s written commitment to pay
whatever lawful obligation SACI may incur as a consequence
of the conversion; 4) holding that farms with commercial farm
deferment cannot be applied for conversion; 5) ruling that
irrigated lands suitable for agriculture were disqualified for
conversion; and 6) ruling that applicantappellant had not
submitted a five-year development plan. 9
In a Decision dated June 30, 2003, the Office of the
President through Presidential Assistant Manuel C. Domingo
dismissed the appeal and affirmed in toto the challenged DAR
Orders. Respondents’ motion for reconsideration was
denied,  so they filed with the Court of Appeals a petition for
10
review raising substantially the same issues.
On July 19, 2004, the Court of Appeals rendered a Decision
granting the petition, the dispositive portion of which reads:
_______________
8
 Rollo, pp. 62-64.
9
 Id., at p. 67.
10
 In a Resolution dated September 12, 2003.
477
VOL. 512, JANUARY 477
24, 2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
“WHEREFORE, premises considered, the present petition is WHEN IT RULED THAT THE JUNE 16, 1998 NOTICE OF
hereby GIVEN DUE COURSE. Consequently, the assailed COVERAGE WAS ILLEGAL AS DAR ALLEGEDLY FAILED
Decision and Order dated June 30, 2003 and September 12, TO OBSERVE DUE PROCESS.
2003, respectively, of the Office of the President, as well as the _______________
Orders dated November 9, 2000 and August 28, 2002 of the
DAR Secretary are hereby REVERSED and SET ASIDE 11
 Rollo, pp. 83-84.
insofar as the DAR directs the MARO of Alabel, Sarangani to 478
proceed with the distribution of the banana and coconut areas 478 SUPREME COURT
subject of the June 16, 1998 Notice of Coverage. The Secretary REPORTS
of the Department of Agrarian Reform is hereby directed to
ANNOTATED
issue a conversion order covering the aforesaid area under the
terms and conditions as provided in pertinent guidelines of the Department of Agrarian
department. As to the rest of the area applied for conversion, Reform vs. Sarangani
action on which has been deferred, the DAR Regional Office Agricultural Co., Inc.
(DAR Region No. XI) is hereby DIRECTED to expedite the II
processing and evaluation of petitioners’ land use conversion
WHEN IT RULED THAT DAR SHOULD USE THE
application in accordance with the provisions of DAR AO
COMPREHENSIVE LAND USE PLANS AND ACCOMPANYING
No.7, Series of 1997, and DAR AO No. 01-99 whenever the ORDINANCE OF THE LOCAL SANGGUNIAN AS PRIMARY
provisions of the latter issuance are made applicable to those REFERENCE SO AS NOT TO DEFEAT THE VERY PURPOSE
applications filed before its effectivity. OF THE LOCAL GOVERNMENT UNIT (LGU) CONCERNED IN
The DAR Secretary and all officers and employees acting RECLASSIFYING CERTAIN AREAS TO ACHIEVE SOCIAL
on his behalf are hereby enjoined from proceeding with the AND ECONOMIC BENEFITS IN PURSUANCE TO ITS
distribution of petitioners’ lands under compulsory acquisition MANDATE TOWARDS THE GENERAL WELFARE.
provided in Sec. 16 of R.A. No. 6657. Whatever actions
already taken in pursuance of the June 16, 1998 Notice of III
Coverage under CARP are hereby nullified for DAR’s failure
WHEN IT FAILED TO TAKE INTO CONSIDERATION THE
to observe due process therein. BASIC PROVISIONS AND PRINCIPLES OF LAW WITH
No pronouncement as to costs. SPECIAL ATTENTION TO THE REQUIREMENTS OR
SO ORDERED.” 11
PRECONDITIONS FOR LAND
Hence, this petition alleging that the Court of Appeals erred: CLASSIFICATION/CONVERSION AND THE BASIC
I MANDATE OF THE CARP.
With regard to the first issue on due process, this Court holds
that, under the circumstances, a notice of coverage is not an

8|Page
indispensable requirement before DAR can acquire the subject
lots or commercial farms, which are covered by a deferment
period  under the Comprehensive Agrarian Reform Law
12
(CARL) or R.A. No 6657 upon its effectivity on June 15, 1998.
The pertinent provision of the law states:
“Sec. 11. Commercial Farming.—Commercial farms, which are
private agricultural lands devoted to saltbeds, fruit farms, orchards,
vegetables and cut-flower farms, cacao, coffee and rubber
plantations, shall be subject to immediate compulsory acquisition
and distribution after ten (10) years from the effectivity of this
Act.  In the case of new farms, the ten-year period shall begin from
13
the first year of commercial production and operation, as determined
by
_______________
12
 Sec. 3. . .
(f) Deferment period refers to the ten (10) year period counted from the start of commercial
production and operation as provided in Sec. 11 of RA 6657, whereby the acquisition and
distribution of commercial farms has been postponed.
13
 Emphasis supplied.
479
VOL. 512, JANUARY 479
24, 2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
the DAR. During the ten-year period, the Government shall initiate
steps necessary to acquire these lands, upon payment of just
compensation for the land and the improvements thereon, preferably
in favor of organized cooperatives or associations, which shall
thereafter manage the said lands for the workers-beneficiaries. (As
amended by R.A. 7881; Rules and regulations on the acquisition,
valuation compensation and distribution of deferred commercial
farms—DAR AO No. 09, s. 1998)”
9|Page
DAR Administrative Order No. 9, Series of 1998,  on the Rules14
and Regulations on the Acquisition, Valuation, Compensation
and Distribution of Deferred Commercial Farms applies to all
commercial farms as defined under Section 11 of R.A. No.
6657: 15
SEC. 2. Statement of Policies.—The acquisition, valuation,
compensation, distribution, operation and management of deferred
commercial farms shall be governed by the following policies:
(a) All commercial farms whose deferment expired as of June 15,
1998 shall be subject to immediate acquisition and distribution under
the Comprehensive Agrarian Reform Program (CARP). Those whose
deferments have yet to expire will be acquired and distributed only
upon expiration of their respective deferment period as originally
determined by the Department of Agrarian reform (DAR), or earlier
if the DAR determines that the purpose for which it was deferred no
longer exists and revokes its deferment;
The process of acquisition of these commercial farms by DAR
is specifically provided under Article III, Section 9 of the
above administrative order, to wit:
“SEC. 9. Procedure for Acquisition.—The acquisition of deferred
commercial farms shall be governed by the following procedures:
(a) Voluntary Offer to Sell/Compulsory Acquisition
_______________
14
 Issued on December 23, 1998.
15
 As amended by Section 3 of Republic Act No. 7881.
480
480 SUPREME COURT
REPORTS
ANNOTATED
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
 1. 1)The Order of Deferment previously issued Governing Conversion of Agricultural
over the landholding shall serve, upon Lands to Nonagricultural Uses prescribes the guidelines for
expiration of the deferment period of the land use conversion:
subject commercial farm, as the Notice of VI.     POLICIES AND GUIDELINES
Coverage,  supported by the Compliance Work
16 A.     . . .
Program and Summary of Exceptions (Form B.     General Guidelines
A) originally submitted with the approved           . . .
b) Conversion may be allowed if at the time of the application, the lands are
deferment application. However, for record reclassified as commercial, industrial, residential or other non-agricultural
purposes, the landowner shall be served a in the new or revised town plans promulgated by the local government unit
Notice of Expiration of Deferment (Annex (LGU)
“2”) which shall contain a reminder of his right _______________
of retention, should he wish to exercise the
same; 16
 Emphasis supplied.
2. 2)In general, the procedure for acquisition shall 481
follow DAR Administrative Order No. 01, VOL. 512, JANUARY 481
Series of 1998, as amended by DAR
24, 2007
Administrative Order No. 02, Series of 1996,
entitled “Revised Rules and Procedures Department of Agrarian
governing the Acquisition of Agricultural Reform vs. Sarangani
Lands subject of Voluntary offer to Sell and Agricultural Co., Inc.
Compulsory Acquisition Pursuant to Republic and approved by the Housing and Land Use Regulatory Board (HLURB) or
by the Sangguniang Panlalawigan (SP) after June 15, 1988, in accordance
Act No. 6657,” subject to certain modifications with Section 20 of R.A. No. 7160, as implemented by MC No. 54, and
intended to expedite the process as provided Executive Order No. 72, Series of 1993  of the Office of the President.
17

herein.”
Clearly, it was unnecessary for petitioner to issue a notice of
coverage to respondents in order to place the properties in
question under CARP coverage. Hence, the contention by
respondents that due process was not duly observed by
petitioner must fail. Accordingly, the denial of the application
for conversion must be upheld.
As regards the second issue, DAR Administrative Order No.
7, Series of 1997, or the Omnibus Rules and Procedures
In connection with the afore-stated administrative order,
Section 20 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, empowers the local
government units to reclassify agricultural lands:
Sec. 20. Reclassification of Lands.—(a) A city or municipality may,
through an ordinance passed by the Sanggunian after conducting
public hearings for the purpose, authorize the reclassification of
agricultural lands and provide for the manner of their utilization or
disposition in the following cases: (1) when the land ceases to be
economically feasible and sound for agricultural purposes as

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determined by the Department of Agriculture or (2) where the land
shall have substantially greater economic value for residential,
commercial, or industrial purposes, as determined by the
Sanggunian concerned: Provided, That such reclassification shall be
limited to the following percentage of the total agricultural land
area at the time of the passage of the ordinance:
1. (1)For highly urbanized and independent
component cities, FIFTEEN PERCENT (15%);
2. (2)For component cities and first to third class
municipalities, ten percent (10%), and
3. (3)For fourth to sixth class municipalities, five
percent (5%); Provided further, That agricultural
lands distributed to agrarian reform beneficiaries
pursuant to Republic Act No. 6657, otherwise
known as “The Comprehensive Agrarian Reform
Law,” shall not be affected by the said
reclassification and the conversion of such lands
into other purposes shall be governed by Section 65
of said Act.
...
_______________
17
 Executive Order No. 72 “Providing for the Preparation and
Implementation of the Comprehensive Land Use Plans of Local Government
Units Pursuant to the Local Government Code of 1991 and Other Pertinent
Laws” was issued on March 25, 1993.
482
482 SUPREME COURT
REPORTS
ANNOTATED
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
11 | P a g e
1. (c)The local government units shall in
conformity with existing laws, continue to
prepare their respective comprehensive land
use plans enacted though zoning ordinances
which shall be the primary and dominant bases
for the future use of land resources: Provided,
That the requirements for food production,
human settlements, and industrial expansion
shall be taken into consideration in the
preparation of such plans.
...
2. (e)Nothing in this section shall be construed as
repealing, amending or modifying in any
manner the provisions of R.A. No. 6657.” 18
Memorandum Circular No. 54 “Prescribing the Guidelines
Governing Section 20 of R.A. No. 7160 Otherwise Known as
the Local Government Code of 1991 Authorizing Cities and
Municipalities to Reclassify Agricultural Lands Into
NonAgricultural Uses” issued by President Fidel V. Ramos on
June 8, 1993 specified the scope and limitations on the power
of the cities and municipalities to reclassify agricultural lands
into other uses. It provided that all ordinances authorizing
reclassification of agricultural lands shall be subject to the
review and approval of the province in the case of component
cities or municipalities, or by the HLURB for highly urbanized
or independent component cities in accordance with Executive
Order No. 72, Series of 1993, thus:
“SECTION 4. Use of the comprehensive land use plans  and 19
ordinances as primary reference documents in land use conversions.
—Pursuant to RA 6657 and EO 129-A, actions on applications for
land use conversions on individual landholdings shall remain as the
responsibility of DAR, which shall utilize as its primary refer-
_______________
  Emphasis supplied.
18
 Comprehensive Land Use Plan refers to a document accompanied by maps
19
and similar illustrations which represent the community-desired pattern of
population distribution and a proposal for the future allocation of land to the various
land-using activities. It identifies the allocation, character and extent of the area’s
land and
483
VOL. 512, JANUARY 483
24, 2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
ence documents the comprehensive land use plans and
accompanying ordinance passed upon and approved by the LGUs
concerned, together with the National Land Use Policy.”
Hence, with regard to agricultural lands that have been
reclassified for non-agricultural uses by the local government
unit concerned, the CA is correct in declaring that DAR should
refer to the comprehensive land use plans and the ordinances of
the Sanggunian in assessing land use conversion applications,
thus:
“Construing Sec. 20 of the Local Government Code and the
subsequent administrative issuances implementing the same, we are
of the opinion that while the DAR retains the responsibility for
approving or disapproving applications for land use conversion filed
by individual landowners on their landholdings, the exercise of such
authority should be confined to compliance with the requirements
and limitations under existing laws and regulations, such as the
allowable percentage of agricultural [area] to be reclassified,
ensuring sufficient food production, areas non-negotiable for
conversion and those falling under environmentally critical areas or
highly restricted for conversion under the NIPAS law. Definitely, the
DAR’s power in such cases may not be exercised in such a manner
as to defeat the very purpose of the LGU concerned in reclassifying
certain areas to achieve social and economic benefits in pursuit of its
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mandate towards the general welfare. Precisely, therefore, the DAR
is required to use the comprehensive land use plans and
accompanying ordinances of the local Sanggunian as primary
references in evaluating applications for land use conversion filed by
individual landowners. In this case, petitioners have already
complied with the standard requirements laid down under the
applicable rules and regulations of the DAR. . . .” 20
_______________
the criteria employed in the determination of the land use (Revised Rules
and Regulations on the Conversion of Agricultural Lands to Non-Agricultural
Uses, DAR Administrative Order No. 01, Series of 1999).
 Rollo, p. 82.
20
484
484 SUPREME COURT
REPORTS
ANNOTATED
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
The conversion of agricultural lands into non-agricultural uses
shall be strictly regulated and may be allowed only when the
conditions prescribed under R.A. No. 6657 are present.  In this 21
regard, the Court agrees with the ratiocination of the CA that
DAR’s scope of authority in assessing land use conversion
applications is limited to examining whether the requirements
prescribed by law and existing rules and regulations have been
complied with. This holds true in the present case where,
because of the creation of the Province of Sarangani and in
view of its thrust to urbanize, particularly its provincial capital
which is the Municipality of Alabel, the local government has
reclassified certain portions of its land area from agricultural to
non-agricultural. Thus, to reiterate, in accordance with E.O.
No. 72, Series of 1993, and subject to the limitations prescribed
by law, DAR should utilize the comprehensive land use plans
in evaluating the land use conversion application of
respondents whose lands have already been reclassified by the
local government for non-agricultural uses.
This is not to say, however, that every property of
respondents which is included in the comprehensive land use
plan of the Municipality of Alabel shall be automatically
granted non-coverage. As mentioned earlier, said application is
subject to the limitations and conditions prescribed by law. One
such limitation that is present here is that a portion of
respondents’ property of 376.5424 hectares, a portion totaling
154.622 [or 154.1622] hectares which are planted to bananas
and coconuts, are covered by CARL’s ten-year deferment
scheme, which has expired on June 15, 1998. By law, these
lands are subject to redistribution to CARP beneficiaries upon
the lapse of the ten-year period, counted from the date of the
effectivity of the CARL or R.A. No. 6657 on June 15, 1988,
which was way before the creation of the Province of Saran-
_______________
 Article 1, Section l(c), DAR Administrative Order No. 01, Series of 1999.
21
485
VOL. 512, JANUARY 485
24, 2007
Department of Agrarian
Reform vs. Sarangani
Agricultural Co., Inc.
gani and the eventual reclassification of the agricultural lands
into non-agricultural in the Municipality of Alabel where
respondents’ properties are located.
In short, the creation of the new Province of Sarangani, and
the reclassification that was effected by the Municipality of
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Alabel did not operate to supersede the applicable provisions of
R.A. No. 6657.
Moreover, Section 20 of the LGC of 1991 on the
reclassification of lands explicitly states that “[n]othing in this
section shall be construed as repealing, amending or modifying
in any manner the provisions of R.A. No. 6657.” Thus, where
the law speaks in clear and categorical language, there is no
room for interpretation. There is only room for application. 22
In view of the foregoing, the Court deems it unnecessary to
discuss the third issue presented in the petition.
WHEREFORE, the petition is PARTLY GRANTED
insofar as the issue on due process is concerned. In connection
with this, the denial by the Department of Agrarian Reform
(DAR) of respondents’ application for conversion with regard
to the 154.622 [or 154.1622] hectares, the deferment period of
which has already expired, is AFFIRMED; and the Orders of
the DAR dated November 9, 2000 and August 28, 2002,
directing the MARO of Alabel, Sarangani to proceed with the
distribution of the banana and coconut areas subject of the June
16, 1998 Notice of Coverage, are REINSTATED. The
Decision and Resolution, dated July 19, 2004 and September
24, 2004, respectively, of the Court of Appeals in CA-G.R. SP
No. 79899, are hereby MODIFIED accordingly.
No costs.
_______________
 Cebu Portland Cement Co. v. Municipality of Naga, G.R. No. 24116,
22
August 22, 1968, 24 SCRA 708, 712.
486
48 SUPREME COURT
6 REPORTS
ANNOTATED
Seven Star Textile Company
 vs. Dy
SO ORDERED.
     Puno (C.J., Chairperson), Sandoval-
Gutierrez,  Corona and Garcia, JJ., concur.
Petition partly granted, judgment and resolution modified.
Notes.—The provision of §50 of R.A. 6657 must be
construed in harmony with §57 by considering cases involving
the determination of just compensation and criminal case for
violation of R.A. No. 6657 as excepted from the plenitude of
power conferred on the DAR. (Republic vs. Court of
Appeals, 263 SCRA 758 [1996])
A mere member of a tenant’s immediate farm household is
not entitled to a home lot. (Cecilleville Realty and Service
Corporation vs. Court of Appeals, 278 SCRA 819 [1997])

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