The Supreme Court (SC) has ruled that there was nothing illegal about the ban imposed by the Arroyo administration on the conversion of agricultural lands into commercial use in a bid to address the rice shortage that hit the country two years ago.

At the same time, the High Court upheld the “exclusive authority” of the Department of Agrarian Reform (DAR) to approve or disapprove conversion of agricultural lands to non-agricultural uses as in the case of residential, commercial, and industrial development.

In a ruling promulgated last June 18, the SC’s First Division dismissed the petition questioning the legality of the memorandum issued by then Agrarian Reform Secretary Nasser Pangandaman that temporarily suspended the processing and approval of all land use conversion applications nationwide.

Upon the instruction of then President Gloria Macapagal Arroyo, Pangandaman issued Memorandum No. 88 on April 15, 2008, amid concerns that the worsening rice shortage at that time was an offshoot of the unabated conversion of prime agricultural lands for real estate development.

This prompted the Chamber of Real Estate and Builders Associations (CREBA) – the umbrella organization of some 3,500 companies and individuals working in the real estate industry – to question such move by the Executive Department before the SC.

CREBA argued that the memorandum was not a valid exercise of police power and that it was unconstitutional because it suspended the land use conversion without any basis.

The SC, however, said CREBA’s arguments “stand on hollow ground.”

“It bears emphasis that Memorandum No. 88 was issued upon the instruction of the President to address the unabated conversion of prime agricultural lands for real estate development because of the worsening rice shortage in the country at that time,” the court said in a decision penned by Associate Justice Jose P. Perez.

“Such measure was made in order to ensure that there are enough agricultural lands in which rice cultivation and production may be carried into. The issuance of Memorandum No. 88 was made pursuant to the general welfare of the public, thus, it cannot be argued that it was made without any basis,” the court added.

Chief Justice Renato C. Corona and Associate Justices Presbitero J. Velasco Jr., Teresita Leonardo-De Castro and Mariano C. Del Castillo concurred with the decision.

In the same decision, the SC sustained the validity of DAR Administrative Order (AO) 01-02 issued by former Agrarian Reform Secretary Hernani Braganza on Feb. 28, 2002, which was also questioned by CREBA.

Braganza served as DAR Secretary during the early years of the Arroyo administration.

Known as the DAR Conversion Rules, AO 01-02 sought to regulate the conversion of agricultural lands to non-agricultural uses and identify those that were wrongly exempted from the coverage of the Comprehensive Agrarian Reform Program (CARP).

Braganza’s directive deemed as agricultural lands those that are “not reclassified as residential, commercial, industrial or other non-agricultural uses” before Republic Act 6657 or the CARP Law took effect on June 15, 1988.

CREBA claimed Braganza acted without jurisdiction as he had no authority to expand or enlarge the legal definition of the term “agricultural lands” through an administrative order.

But the SC held that in issuing the conversion rules, the former agrarian reform chief only “made clear what are the lands that can be the subject of DAR’s conversion authority, thus, serving the very purpose of the land use conversion provisions of RA 6657.”

The court noted that the date of effectivity of RA6657 served as the cut-off period for automatic reclassifications or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority.

It necessarily follows that any reclassification made after June 15, 1988, can be the subject of DAR’s conversion authority, the court said.

“Having recognized the DAR’s conversion authority over lands reclassified after 15 June, 1988, it can no longer be argued that the Secretary of Agrarian Reform was wrongfully given the authority and power to include ‘lands not reclassified as residential, commercial, industrial, or other non-agricultural uses before 15 June 1988’ in the definition of agricultural lands,” the court said.

The SC ruled that Braganza did not act with grave abuse of discretion amounting to lack or excess of jurisdiction in coming up with that directive.

It cited a previous High Court ruling that the Secretary of Agrarian Reform has the “exclusive authority” to classify and identify landholdings either for conversion or CARP coverage.

The court pointed out that as the agency responsible for implementing the CARP, the DAR is authorized by law to “establish and promulgate operational policies, rules and regulations, and priorities for agrarian reform implementation.”

Likewise, the court made a distinction between reclassification and conversion of agricultural lands to non-agricultural uses.

It explained that conversion is the act of changing the current use of a piece of agricultural land into some other use, while reclassification is the act of specifying how agricultural lands shall be utilized for non-agricultural uses, as embodied in the land use plan, subject to the requirements and procedures for land use conversion.

The court said reclassification alone will not suffice to use the agricultural lands for other purposes as conversion is needed to change the current use of reclassified agricultural lands.

“For reclassified agricultural lands, therefore, to be used for the purpose to which they are intended there is still a need to change the current use thereof through the process of conversion,” the court said.

“The authority to do so is vested in the DAR, which is mandated to preserve and maintain agricultural lands with increased productivity.”

The court said that even reclassification of agricultural lands by way of Presidential Proclamations to non-agricultural uses, such as school sites, needs conversion clearance from the DAR.