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Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 168394             October 6, 2008

AGRARIAN REFORM BENEFICIARIES ASSOCIATION (ARBA), represented by JOSEPHINE B. OMICTIN, petitioner,
vs.
LORETO G. NICOLAS and OLIMPIO CRUZ, respondents.

D E C I S I O N

REYES, R.T., J.:

THE DUTY of the court to protect the weak and the underprivileged should not be carried out to such an extent as to deny justice to the landowner whenever truth and justice happen to be on his side.¹

This is a petition for review on certiorari of the Decision² of the Court of Appeals (CA) reinstating the decision of the Department of Agrarian Reform Adjudication Board (DARAB), Tagum City, Davao del Norte. The DARAB declared the land granted to petitioner, Agrarian Reform Beneficiaries Association (ARBA), exempt from the coverage of the Comprehensive Agrarian Reform Program (CARP). It ordered, inter alia, the cancellation of the Certificate of Land Ownership Award (CLOA) given to ARBA and reinstated the titles under the names of respondents.

The Facts

The Philippine Banking Corporation (PhilBanking) was the registered owner of two parcels of land³ located in Barangay Mintal, Davao City.⁴

On September 7, 1989, the Department of Agrarian Reform (DAR) issued a notice of coverage to PhilBanking. The DAR declared that subject parcels of land fall within the coverage of the Comprehensive Agrarian Reform Law (CARL) or Republic Act (RA) No. 6657.⁵ PhilBanking immediately filed its protest.⁶

Despite Philbanking's objections, the DAR caused the cancellation of the titles of the subject parcels of land. Ownership was transferred to the Republic of the Philippines. This was followed by the distribution of said land to the farmer-beneficiaries belonging to ARBA by virtue of a CLOA, more particularly described as Transfer Certificate of Title No. CL-143.⁷

On March 24, 1994, PhilBanking executed a deed of assignment in favor of respondents, Loreto G. Nicolas and Olimpio R. Cruz. As assignees and successors-in-interest, respondents continued PhilBanking's protest over DAR's takeover of their lands.

However, unlike PhilBanking, respondents filed their complaint⁸ before the local DARAB in Tagum City, Davao del Norte. PhilBanking instituted before the Regional Trial Court (RTC) a complaint for reinstatement of title and recovery of possession. In their complaint with the DARAB, respondents prayed for the cancellation of the CLOA and reinstatement of titles previously registered under the name of PhilBanking.

DARAB (Tagum) Ruling

On August 28, 1998, the DARAB (Tagum) rendered a decision in favor of respondents, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring the land covered by Transfer Certificate of Title No. T-162078 situated at Davao City and covered under Compulsory Coverage of the Comprehensive Agrarian Reform Program by the public respondent (DAR) as exempted;

2. Declaring the coverage of the same under CARP as mandated pursuant to Republic Act No. 6657 void ab initio;

3. Ordering the Register of Deeds of Davao City to cancel the TCT No. CL-143 issued to private respondents Agrarian Reform Beneficiaries Association (ARBA) and Farmers Association of Davao-KMPI, et al., and reinstate the title in favor of the petitioners;

4. Ordering the ARBA and Farmers Association of Davao-KMPI to choose and exercise the compensation package offered by the petitioners within five (5) days from the receipt of the decision thereof;

5. Ordering the persons acting for and in behalf of the individual ARBA and/or cooperative to voluntarily desist and vacate possession in the land mentioned under paragraph one, two and three (1, 2 and 3) hereof;

6. Counter-claim is hereby denied for lack of merit; and

7. No pronouncement as to cost.

SO ORDERED.⁹

The DARAB found the subject landholdings clearly beyond the coverage of CARL. According to the DARAB, the lands have already been re-classified as within the Urban/Urbanizing Zone (UR/URB)¹⁰ as per City Ordinance No. 363, Series of 1982. The reclassification was subsequently approved by the City Zoning Administrator¹¹ and the HLURB Regional Office.¹² Later, the reclassification was reflected in the Official Comprehensive Zoning Map of Davao City.¹³

DARAB (Central Office) Ruling

Aggrieved by the local DARAB ruling, petitioner appealed to the DARAB Central Office. Acting on the appeal, the DARAB, Central Office, overturned the decision of its local office, disposing, thus:

Under the prevailing circumstances, we uphold the validity of the questioned CLOA and subsequent registration thereof with the Registry of Deeds.

WHEREFORE, the decision appealed from is hereby REVERSED AND SET ASIDE.

SO ORDERED.¹⁴

The DARAB pointed out that the DAR followed proper procedures to effect compulsory land acquisition, from the issuance of a notice of coverage to the actual distribution of CLOAs. The DARAB noted that PhilBanking did not even pose any objection to the acquisition of the property for inclusion in the CARP; and that as PhilBanking's assignees, respondents could not argue that they were not accorded due process.

Respondents then filed a motion for reconsideration and a supplemental motion for reconsideration. Both were subsequently denied by the DARAB.¹⁵

Dissatisfied with the Central DARAB ruling, respondents elevated the matter to the CA.¹⁶

In their appeal, respondents essentially contended, among others, that the DARAB (Central Office) erred in ruling that the subject parcels of lands were within the coverage of RA No. 6657, more popularly known as the CARL.

CA Disposition

On October 12, 2004, the CA granted the appeal. The fallo of the CA decision runs in this wise:

WHEREFORE, premises considered, the questioned Decision dated 24 September 2001 rendered by public respondent DARAB is hereby REVERSED and SET ASIDE and a new one entered:

1. Ordering the Register of Deeds of Davao City to cancel TCT No. CL-143 (CLOA No. 00044912);

2. Ordering the Register of Deeds of Davao City to reinstate Transfer Certificate of Title Nos. T-162077 and T-162078 in the name of PhilBanking;

3. Maintaining the private respondents members of the ARBA and Farmers Association of Davao-KMPI in their peaceful possession and cultivation over their respective landholdings in this case if they and/or predecessors-in-interest were already tenants over the same prior to June 15, 1988; and

4. Declaring the parcels of land in question as exempted from the coverage of CARL.

No pronouncements as to costs.

SO ORDERED.¹⁷

The CA reiterated that the subject parcels of lands have long been reclassified as being within an urban zone before the enactment of RA No. 6657.¹⁸ Not being agricultural land, the subject lands are clearly not within the scope of the CARL.¹⁹ It cited with approval the local DARAB ruling:

The subject parcels of land are not within the coverage of the Comprehensive Agrarian Reform Law (CARL), hence, their having been subjected to CARP are (sic) patently erroneous. The subject parcels of lands has (sic) already been re-classified within an Urban/Urbanizing Zone (UR/URB) as per approved Official Comprehensive Zoning Map of the City of Davao as embodied in the City Ordinance No. 363, series of 1982. As such, the subject parcels of land are considered "non-agricultural" in classification and may be utilized for residential, commercial and industrial purposes (sic) attached thereto as Annexes "C" and "D" are the Certifications issued by Davao City Zoning Administrator Hector L. Esguerra and Region XI Officer Rey T. Lopez of the Housing & Land Use Regulatory Board.

The fact that it has been re-classified as within the urban/urbanizing zone by the local government of the City of Davao as early as 1982 or prior to the effectivity of the CARL in June 1988 (sic) clearly shows that the area is beyond the coverage of RA 6657. Hence, the said property can no longer be subjected to compulsory acquisition. This position finds support in Opinion No. 44, Series of 1990 of the Honorable Justice Secretary Franklin W. Drilon, the salient portion of said Legal Opinion is hereby quoted, thus:

The authority of the Department of Agrarian Reform to reclassify or approve conversion of agricultural lands to non-agricultural uses may be exercised only from the date of effectivity of RA 6657 on June 15, 1988.

The authority of the DAR is limited only to all public and private agricultural lands and other lands of the public domain suitable for agriculture under Section 4 of RA 6657. Corollary, Section 3(c) of RA 6657 specifically defines agricultural land as that devoted to agricultural activity as defined in this act and not classified as mineral, residential, commercial, or industrial.²⁰

In ruling against petitioners and in favor of respondents, the CA applied Department of Justice (DOJ) Opinion No. 44 and this Court's ruling in Natalia Realty, Inc. v. Department of Agrarian Reform.²¹ In both, the correct meaning and appreciation of what an agricultural land is were clarified. Natalia also laid the doctrine that once land has been classified as non-agricultural, it becomes outside the coverage of CARL.²²

Issues

Petitioners have resorted to the present recourse and assign to the CA the following errors:

I

THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING FORTHWITH THE PRESENT CASE FOR LACK OF A CAUSE OF ACTION, THE RESPONDENTS HEREIN NOT HAVING SHOWN THAT THERE WAS A VALID AND LAWFUL TRANSFER OF SUBJECT REALTY TO THEM TO BE POSSESSED OF THE REQUISITE PERSONALITY TO SUE.

II

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE NATALIA CASE APPLIES IN THE PRESENT CASE ON THE BASIS OF THE BARE ALLEGATION SANS EVIDENCE TO SHOW THAT THE TWO CASES ARE SIMILAR.

III

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE SUBJECT PARCELS OF LAND AS EXEMPTED FROM THE COVERAGE OF CARL CONTRARY TO THE EVIDENCE AND THE FINDING OF FACTS OF THE DARAB BOARD THAT ARE MANDATED BY LAW AS "FINAL AND CONCLUSIVE" IF SUPPORTED BY SUBSTANTIAL EVIDENCE (RA 6657, SEC. 54, PAR. 2).

IV

THE HONORABLE COURT OF APPEALS ERRED IN DISREGARDING THE MANDATE OF THE LAND REFORM LAW, RA 6657 TO ADMIT THE FINDINGS OF FACT OF DAR AS "FINAL AND CONCLUSIVE."²³ (Underscoring supplied)

Our Ruling

Before We rule on the issues, there is a need to discuss the propriety of petitioner's appeal. As aptly indicated in its pleading, this is a petition for review under Rule 45 of the Rules of Court. However, a perusal of the errors ascribed by petitioner to the CA shows that they all pertain to allegations of abuse of discretion. In fact, petitioner clearly stated that "all three errors constitute abuse of discretion amounting to lack or in excess of jurisdiction."²⁴

This Court has consistently elaborated on the difference between Rule 45 and 65 petitions. A petition for review on certiorari under Rule 45 is an ordinary appeal. It is a continuation of the case from the CA, Sandiganbayan, RTC, or other courts. The petition must only raise questions of law which must be distinctly set forth and discussed.

A petition for certiorari under Rule 65 is an original action. It seeks to correct errors of jurisdiction. An error of jurisdiction is one in which the act complained of was issued by the court, officer, or quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack of or in excess of jurisdiction. The purpose of the remedy of certiorari is to annul void proceedings; prevent unlawful and oppressive exercise of legal authority; and provide for a fair and orderly administration of justice.

Applying the foregoing, errors in the appreciation of evidence may only be reviewed by appeal and not by certiorari because they do not involve any jurisdictional ground. Likewise, errors of law do not involve jurisdiction and may only be corrected by ordinary appeal.

Notwithstanding the apparent procedural blunder, We opt to resolve the petition on its merits. Now, to answer the issues raised by petitioner in seriatim. The third and fourth issues being interrelated, they shall be discussed jointly.

Respondents are the lawful assignees and successors-in-interest of PhilBanking. Hence, they have a valid cause of action.

A cause of action is defined as "an act or omission of one party in violation of the legal right or rights of the other; and its essential elements are legal right of the plaintiff, correlative obligation of the defendant, and act or omission of the defendant in violation of said legal right."²⁵ The elements of a cause of action: (1) a right in favor of plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate the right; and (3) an act or omission on the part of defendant violative of the right of plaintiff or constituting a breach of an obligation to the latter.²⁶ It is only when the last element occurs that a cause of action arises.²⁷

The test of sufficiency of facts alleged in the complaint as constituting a cause of action is whether or not admitting the facts alleged, the court could render a valid verdict in accordance with the prayer of the complaint.²⁸ That in determining sufficiency of cause of action, the court takes into account only the material allegations of the complaint and no other, is not a hard and fast rule. In some cases, the court considers the documents attached to the complaint to truly determine sufficiency of cause of action.²⁹

We have ruled that a complaint should not be dismissed for insufficiency of cause of action if it appears clearly from the complaint and its attachments that plaintiff is entitled to relief.³⁰ The converse is also true. The complaint may be dismissed for lack of cause of action if it is obvious from the complaint and its annexes that plaintiff is not entitled to any relief.

As lawful assignees, respondents stand to be directly benefited or injured from the resolution of this case. To protect whatever rights and interests they may have in the subject lands, they rightfully pursued the actions initiated by their assignor, PhilBanking. Respondents' action is premised on the prior classification of the subject land as exempt from the coverage of the CARP.

Moreover, the Court notes that this is the first time the issue of cause of action, or the lack of it, was raised. The rule is well-entrenched in this jurisdiction that matters that strike at the very heart of the petition must be raised at the very first instance. Certainly, it cannot be raised for the first time on appeal.³¹

Too, this belated claim only casts doubt on petitioner's motives. It may be a futile attempt to skirt the genuine issue, which is the propriety or impropriety of the inclusion of the subject properties under the CARP.

The ruling in Natalia Realty, Inc. v. Department of Agrarian Reform³² is applicable to the present case.

We agree with the CA that the facts obtaining in this case are similar to those in Natalia Realty. Both subject lands form part of an area designated for non-agricultural purposes. Both were classified as non-agricultural lands prior to June 15, 1988, the date of effectivity of the CARL.

In Natalia, the land was within a town site area for the Lungsod Silangan Reservation by virtue of Proclamation No. 1637 (1979). The developers of the land were granted preliminary approval and clearances by the Human Settlements Regulatory Commission (HSRC) to establish a subdivision in the area.³³ Sometime after, the DAR sought to have the land included in the coverage of the CARL. The developer protested.³⁴ On appeal, this Court held that lands previously converted by government agencies to non-agricultural uses prior to the effectivity of the CARL are outside its coverage. Government agencies include the HSRC and its successor, the Housing and Land Use Regulatory Board (HLURB).³⁵

In the case under review, the subject parcels of lands were reclassified within an urban zone as per approved Official Comprehensive Zoning Map of the City of Davao. The reclassification was embodied in City Ordinance No. 363, Series of 1982. As such, the subject parcels of land are considered "non-agricultural" and may be utilized for residential, commercial, and industrial purposes. The reclassification was later approved by the HLURB.

Contrary to what petitioners think, the Natalia ruling was not confined solely to agricultural lands located within townsite reservations. It is also applicable to other agricultural lands converted to non-agricultural uses prior to the effectivity of the CARL. This is subject to the condition that the conversion was made with the approval of government agencies like the HLURB.³⁶

The Natalia ruling was reiterated in Pasong Bayabas Farmers Association, Inc. v. Court of Appeals,³⁷ Junio v. Garilao,³⁸ and De Guzman v. Court of Appeals.³⁹

In Pasong Bayabas Farmers, this Court affirmed the authority of the Municipal Council of Carmona to issue a zoning classification and to reclassify the property in question from agricultural to residential, as approved by the HSRC (now the HLURB). It held that Section 3 of RA No. 2264,⁴⁰ amending the Local Government Code, specifically empowered municipal and/or city councils, in consultation with the National Planning Commission, to adopt zoning and subdivision ordinances or regulations. Since the reclassification was validly exercised prior to the effectivity of CARL, the land is deemed exempted from the law's coverage.

In the more recent case of Junio, this Court likewise recognized the authority of the City Council of Bacolod to reclassify agricultural land as residential. Under Resolution No. 5153-A, the City Council of Bacolod reclassified the subject landholding as residential before the effectivity of the CARL. This was subsequently affirmed by the HSRC. No longer an agricultural land, it can not be subject to compulsory acquisition by the DAR for its agrarian reform program.

The findings of facts of the DARAB Central Office were not supported by substantial evidence and can not be deemed final and conclusive.

Petitioners argue that the CA should have accorded due respect and finality to the findings of facts of the DARAB Central Office.

We are not persuaded. Section 54 of the RA No. 6657 provides that any [DAR] "decision, order, award, or ruling on any agrarian dispute or any matter pertaining to its application, implementation, enforcement, or interpretation and other pertinent laws on agrarian reform may be brought to the CA by certiorari." It also provides that "the findings of fact of the DAR shall be final and conclusive if based on substantial evidence."

Verily, for the DARAB findings of fact to be considered final and conclusive, they must be supported by substantial evidence. This, the CA found wanting.

In ruling against respondents, the DARAB pointed out that they were in no position to raise the issue of denial of due process.⁴¹ It pointed out that when the DAR compulsorily acquired the subject parcels of land, respondents were not the designated assignees of PhilBanking yet. Respondents only became so three (3) years after DAR's acquisition.⁴² Also, the DARAB explained that PhilBanking did not register any objection when the lands in dispute were placed under the coverage of CARL and CLOAs were subsequently distributed.⁴³

As correctly ruled by the CA, the DARAB's findings are not supported by substantial evidence. Respondents' call for due process pertained to the manner of how DAR hastily obtained the subject lands, which then belonged to PhilBanking, their assignor. Respondents raised the issue of the denial of due process with clear reference to their assignor. Doing so was consistent with their intent to continue their assignor's protests and protect their rights as assignees.

It was erroneous for DARAB to conclude that PhilBanking did not oppose the DAR's acquisition of its lands. The records bear out that PhilBanking vigorously protested the inclusion of its lands in the CARP. Only, PhilBanking opted to file its complaint for reinstatement of title and recovery of possession immediately with the RTC. The matter went all the way up to the CA, which ultimately ruled that courts have no jurisdiction. PhilBanking failed to exhaust the available administrative remedies, in the DARAB. Still, PhilBanking showed strong and vehement opposition to the inclusion of its lands within the coverage of CARL.

Measured by the foregoing yardstick, the DARAB failed to support its findings of fact with substantial evidence. Evidently, its findings of fact can not be considered final and conclusive.

This Court can not sit idly and allow a government instrumentality to trample on the rights of bona fide landowners in the blind race for what it proclaims as social justice. As Justice Isagani Cruz succinctly held, social justice is to be afforded to all:

x x x social justice - or any justice for that matter - is for the deserving whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to tilt the balance in favor of the poor simply because they are poor, to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to prefer the poor simply because they are poor, or to eject the rich simply because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the law.⁴⁴

WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED. Costs against petitioners.

SO ORDERED.

RUBEN T. REYES
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice	MINITA V. CHICO-NAZARIO Associate Justice
ANTONIO EDUARDO B. NACHURA Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

REYNATO S. PUNO
Chief Justice

Footnotes

¹ Land Bank of the Philippines v. Court of Appeals, G.R. Nos. 118712 & 118745, October 6, 1995, 249 SCRA 149.

² Docketed as CA-G.R. SP No. 70357. Penned by Associate Justice Arturo G. Tayag, with Associate Justices Estela M. Perlas-Bernabe and Edgardo A. Camello, concurring.

³ Covered by Transfer Certificate of Title (TCT) Nos. 162077 & 162078, respectively. TCT No. 162077 contains Thirty-One Thousand Three Hundred Seventy-Four (31,374) square meters (sq m); while TCT No. 162078 contains Three Hundred Ninety-Seven Thousand Nine Hundred Forty (397,940) sq m.

⁴ Rollo, p. 28.

⁵ Effective on June 15, 1988.

⁶ Id.

⁷ Id.

⁸ Docketed as DARAB Case No. XI-1482-DC-98.

⁹ Rollo, pp. 29-30.

¹⁰ Records, p. 531.

¹¹ Davao City Zoning Administrator, Hector L. Esguerra.

¹² Region IX Officer, Roy T. Lopez.

¹³ Records, p. 531.

¹⁴ Rollo, p. 30.

¹⁵ Id. at 31.

¹⁶ Id.

¹⁷ Id. at 37.

¹⁸ Id. at 32-34.

¹⁹ Id. at 33.

²⁰ Id. at 32-33.

²¹ G.R. No. 103302, August 12, 1993, 225 SCRA 278.

²² Rollo, p. 33.

²³ Id. at 19.

²⁴ Id. at 3.

²⁵ Madrona, Sr. v. Rosal, G.R. No. 39120, November 21, 1991, 204 SCRA 1; Virata v. Sandiganbayan, G.R. Nos. 86926 & 86949, October 15, 1991, 202 SCRA 680; Caseñas v. Rosales, G.R. No. L-18707, February 28, 1967, 19 SCRA 462; Remitere v. Vda. de Yulo, G.R. No. L-19751, February 28, 1966, 16 SCRA 251; Community Investment and Finance Corporation v. Garcia, 88 Phil. 215 (1951); Maao Sugar Central Co. v. Barrios, 79 Phil. 666 (1947).

²⁶ China Banking Corporation v. Court of Appeals, G.R. No. 153267, June 23, 2005, 461 SCRA 162; Swagman Hotels and Travel, Inc. v. Court of Appeals, G.R. No. 161135, April 8, 2005, 455 SCRA 175; Nabus v. Court of Appeals, G.R. No. 91670, February 7, 1991, 193 SCRA 732, 747; Cole v. Gregorio, 202 Phil. 226, 236 (1982).

²⁷ Id.

²⁸ Misamis Occidental II Cooperative, Inc. v. David, G.R. No. 129928, August 25, 2005, 468 SCRA 63, 72.

²⁹ Jimenez, Jr. v. Jordana, G.R. No. 152526, November 25, 2004, 444 SCRA 250, 260-261.

³⁰ Alberto v. Court of Appeals, G.R. No. 119088, June 30, 2000, 334 SCRA 756, 770.

³¹ Coca-Cola Bottlers Phils., Inc. v. Daniel, G.R. No. 156893, June 21, 2005, 460 SCRA 494, 505, citing Lim v. Queensland Tokyo Commodities, Inc., G.R. No. 136031, January 4, 2002, 373 SCRA 31, 41.

³² Supra note 21.

³³ Natalia Realty, Inc. v. Department of Agrarian Reform, id. at 279.

³⁴ Id. at 280.

³⁵ Id. at 283-284.

³⁶ Advincula-Velasquez v. Court of Appeals, G.R. Nos. 111387 & 127497, June 8, 2004, 431 SCRA 165.

³⁷ G.R. Nos. 142359 & 142980, May 25, 2004, 429 SCRA 109.

³⁸ G.R. No. 147146, July 29, 2005, 465 SCRA 173.

³⁹ G.R. No. 156965, October 12, 2006, 504 SCRA 238.

⁴⁰ Otherwise known as the Local Autonomy Act of 1959. Section 3 of which provides:

Sec. 3. Additional powers of provincial boards, municipal boards or city councils and municipal and regularly organized municipal district councils. x x x

Municipal councils of municipalities and regularly organized municipal districts shall have authority:

Power to adopt zoning and planning ordinances. - Any provision of law to the contrary notwithstanding, Municipal Boards or City Councils in cities, and Municipal Councils in municipalities are hereby authorized to adopt zoning and subdivision ordinances or regulations for their respective cities and municipalities subject to the approval of the City Mayor or Municipal Mayor, as the case may be. Cities and municipalities may, however, consult the National Planning Commission on matters pertaining to planning and zoning.

⁴¹ Records, p. 35.

⁴² Id.

⁴³ Id.

⁴⁴ Land Bank of the Philippines v. Court of Appeals, supra note 1, at 157.

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