G.R. No. 149422; April 10, 2003
DEPARTMENT OF AGRARIAN REFORM, petitioner vs. APEX INVESTMENT AND FINANCING CORPORATION (now SM Investment Corporation), respondent.

FACTS

Respondent Apex Investment and Financing Corporation owned several lots in Dasmariñas, Cavite. In 1994, the Municipal Agrarian Reform Office (MARO) initiated compulsory acquisition proceedings under the Comprehensive Agrarian Reform Law (R.A. No. 6657). Notices were sent to an old address where respondent no longer held office, and respondent only learned of the proceedings in 1997 from a newspaper. It promptly filed a protest with the Provincial Agrarian Reform Office (PARO), arguing its lands were residential and thus exempt, and submitted supporting certifications, including one from the municipal zoning administrator attesting to the residential classification based on a 1981 HLURB-approved land use plan.
The PARO took no immediate action on the protest for over a year. Meanwhile, respondent discovered that its title to one lot had been cancelled and a Certificate of Land Ownership Award (CLOA) had been issued to a farmer-beneficiary. This prompted respondent to file a petition for certiorari and prohibition with the Court of Appeals, which ruled in its favor, declaring the compulsory acquisition null and void. The Department of Agrarian Reform (DAR) appealed, arguing respondent failed to exhaust administrative remedies and that the lands were agricultural.

ISSUE

Whether the Court of Appeals erred in: (1) not applying the doctrine of exhaustion of administrative remedies; (2) finding a deprivation of due process; and (3) concluding the lands were residential and outside CARP coverage.

RULING

The Supreme Court affirmed the Court of Appeals’ decision with modification. On the first issue, the doctrine of exhaustion is flexible and may be disregarded. The Court found it inapplicable due to the PARO’s inordinate delay of over a year in acting on the protest and because the administrative action—cancelling the title and issuing a CLOA while the protest was pending—was patently illegal, constituting an excess of jurisdiction that warranted immediate judicial intervention.
On the second issue, the Court upheld the finding of a denial of due process. The initial notices were sent to an incorrect address, depriving respondent of the opportunity to be heard at the onset. The essence of procedural due process, which requires notice and a meaningful opportunity to be heard before property is taken, was violated.
On the third issue, the Court modified the ruling. While respondent presented a zoning certification, the factual issue of whether the lands were indeed classified as residential prior to June 15, 1988 (the effectivity of R.A. No. 6657) was never fully determined in the proceedings below. Therefore, the Supreme Court could not conclusively rule on the land’s classification. The Court affirmed the nullity of the acquisition proceedings due to the due process violation but allowed the DAR to conduct appropriate proceedings to determine the correct classification of the subject parcels of land.