3Republic of t!

Je ~bilippines
$upreme <!Court
:fflani!a

FIRST DIVISION

CAT REALTY CORPORATION, G.R. No. 208399

Petitioner,

- versus - Present:

DEPARTMENT OF AGRARIAN
REFORM (DAR), CENTER FOR GESMUNDO, CJ., Chairperson
AGRARIAN REFORM CAGUIOA,
EMPOWERMENT & CARANDANG,
TRANSFORMATION, INC. ZALAMEDA, and
(CARET), ALTERNATIVE GAERLAN, JJ.
COMMUNITY-CENTERED
ORGANIZATION FOR RURAL
DEVELOPMENT (ACCORD),
BENJAMIN C. DE VERA, JR., and
TENORIO GARCIA, Promulgated:

Respondents.
JUN 2 3 2021

X--------------------------------------------· ----X

DECISION

ZALAMEDA, J.:

Before the Court is a petition for review on certiorari1 under Rule 45

of the Rules of Court assailing the Decision2 dated 19 June 2012 and
Resolution3 31 July 2013 of the Court of Appeals (CA) in CA-G.R. SP No.
1 Rollo, pp. 3-28.
2 Id. at 32-42; penned by Associate Justice Fiorito S. Macalino and concurred in by Associate Justices
Remedios A. Salazar-Fernando and Ramon M. Bato, Jr. of the Second Division, Court of Appeals,
Manila.
~ Id. at 29-31; penned by Associate Justice Fiorito S, Macalino and concurred in by Associate Justices
Decision 2 G.R. No. 208399

107977, which affirmed the Order4 dated 15 August 2008 of the Secretary of
respondent Department of Agrarian Reform (DAR). In :its Order dated 15
August 2008, DAR partially revoked a previous Order5 issued on 04
September 1975 which converted twenty-three (23) parcels of agricultural
land into land suitable for residential, commercial, industrial and other urban
purposes.

Antecedents

Central Azucarera de Tarlac, the predecessor-in-interest of petitioner

CAT Realty Corporation (CAT Realty), filed a petition for conversion of 23
parcels of agricultural land, with an aggregate area of 386.7992 hectares,
located in Bayambang, Pangasinan (subject property). After conducting an
investigation of the parcels of land, then DAR Secretary Conrado Estrella
(Sec. Estrella) issued the Order dated 04 September 1975 (Conversion
Order), granting the conversion and declaring the subject property as land
suitable for residential, commercial, industrial, and other urban purposes. 6
The Order, in part, read:

In view of the foregoing, and considering the parcels of land

subject hereof to be suitable for residential, commercial, industrial or for
other urban purposes as found and recommended by the Agrarian Reform
Team, the Agrarian Reform District Office and the Department of Local
Government and Community Development, and considering also, that the
tenant-farmers, the occupant-tillers and/or squatters in the subject land are
amenable to the conversion as herein stated and the petitioner is likewise
in conformity to their terms and conditions as afore-stated, t,'le request of
the petitioner is hereby given due course and th,: parcels of land subject
hereof are hereby declared suitable for residential, commercial, industrial
or other urban purposes, subject however, to the provisions of RA. No.
3844as amended by R.A. No. 6389, P.D. 316, P.D. 553 and G.O. No. 53.

Moreover, so as not to create any conflict and/or misunderstanding

in. the future between the herein petitioner and the alleged tenants,
occupant-tillers and squatters or occupants in the residential portions of
the property, the following conditions are hereby incorporated as part of
this Order:

l. That the petitioner shall pay the bona.fide tenants the disturbance
compensation provided for by law;

Remedios A. Salazar-Fernando and Ramon M. Bato, Jr. of the Former Second Division, Court of
Appeals, Manila.
4 Id at 128-135; by Secretary Nasser Pangandaman.
5
Id. at 43-49; by then DAR Secretary Conrado F. Estrella.
6
Id. at 33.
 Decision 3 G.R. No. 208399

2. That the bonafide tenants, occupant-tillers and/or squatters shall

continuously worked on the untenanted landholdings until such time
that the herein petitioner-owner shall developed and/or convert such
areas to non-agricultural or agro-urban purposes;

3. That in addition to the payment of the disturbance compensation to the

bonafide tenants, the herein petitioner-owner shall likewise allocate to
the sm.d tenants including however, the occupant-tillers-squatters a
homelot of not less than 300 square meters which ,viii be sold to them
at minimum cost which homelots shall be within the residential
portions of the subject property or in portions thereof which will not
be affected by the urban or agro-urban development of the whole
property to be determined by the petitioner-owner; and

4. That the displaced tenants, occupant-tillers or squatters or their sons

shall be given the priority of employment in any agro-industrial
project which the petitioner, the Central Azucarera de Tarlac, may
established in the land in question.

So Ordered. 7

On. 15 December 2004, respondents Center for Agrarian Reform

Empowerment & Transformation, Inc. (CARET), Alternative Community-
Centered Organization for Rural Development (ACCORD), Benjamin C. De
Vera, Jr., and Tenario Garcia (private respopdents) filed a petition for
revocation of the Conversion Order. According to private respondents, the
conversion of the subject property should be revoked on the following
grounds: (1) CAT Realty and its predecessor-in-interest failed to develop the
subject property and (2) the same remains agricultural in use. 8

Thereafter, · then DAR Secretary Nasser Pangandaman (Sec.

Pangandaman) issued an Order dated 02 August 2006 partially revoking the
Conversion Order and directing the municipal agrarian reform officer to
proceed with the acquisition of the portions of the subject property that were
still agriculturally viable under the Comprehensive Agrarian · Reform
Program (CARP), viz:

WHEREFORE, premises considered, the instant Petition for

Revocation of the Conversion Order dated 04 September 1975 issued by
then DAR Secretary Conrado Estrella involving the twenty three (23)
parcels of land with an aggregate area of 386.7992 hectares located in
Bayambang, Pangasinan is hereby PARTIALLY GRANTED as to the
areas which are undeveloped. Accordingly, the Conversion Order dated 04
September 1975 is hereby PARTIALLY REVOKED.

7 Id. at 48-49.
8 Id. at 34.
Decision 4 G.R. No. 208399

The Municipal Agrarian Reform Officer and the Provincial

Agrarian Refonn Officer concerned are hereby DIRECTED to
immediately proceed with .the acquisition of subject properties which are
still agriculturally viable under the Comprehensive Agrarian Reform
Program.

SO ORDERED. 9 [Emphases removed]

According to the Sec. Pangandarnan, there was failure to comply with

the conditions set by the Conversion Order. 10 In particular, CAT Realty
failed to convert and develop portions of the subject property, noting that the
same still remained agricultural in nature. 11

CAT Realty moved for reconsideration of the partial revocation order.

DAR granted the motion and reinstated the Conversion Order in an Order 12
dated 11 October 2006:

\X/HEREFORE premises considered, the Motion for

Reconsideration filed by the CAT Realty is hereby GRANTED. The Order
dated 02 August 2006 partially revoking the Order dated 04 September
1975 issued by former DAR Secretary Conrado Estrella is hereby SET
ASIDE. The Order dated 04 September 1975 issued by former DAR
Secretary Conrado Estrella is hereby AFFIR.I\IIED IN TOTO.

SO ORDERED.13

DAR found that CAT Realty was able to comply with the condition to
pay disturbance compensation by giving the tenants a subdivision. It also
found there was no specific period within which CAT Realty had to develop
the subject property. Moreover, DAR held that private respondents slept on
their rights and were estopped from questioning the non-development of the
subject property. 14

Consequently, private respondents moved for reconsideration. Sec.

Pangandaman again reconsidered and reinstated the partial revocation of the
Conversion Order. In his Order 15 dated 06 September 2007, Sec.
Pangandaman disposed:

WHEREFORE, premises considered, the instant Motion for

Reconsideration dated 06 November 2006, from the Order dated 11
9 ld.at62.
10 Id. at 35.
11 Id. at 62.
12 Id. at 79-83.
13 Id. at 83.
14 Id. at 36.

" Id. at 94-100.

Decision 5 G.R. No. 208399

October 2006, filed by CARET and ACCORD, represented by Ms. Beth

Cagmayo, Mr. Benjamin C. de Vera, and Mr. Tenario Garcia, et al.,
involving twenty three (23) parcels of land owned bv the Central
Azucarrera de Tarlac (CAT), with an aggregate area of 386.7992 hectares
located in Barangay Bayambang, Pangasinan, is hereby GRANTED and
the Order dated 02 August 2006, is hereby AFFIRMED in toto.

SO ORDERED. 16

Sec. Pangandaman reiterated that CAT Realty did not substantially

carry out its purpose to convert the land to commercial, industrial and
residential uses. 17

CAT Realty again sought reconsideration but the same was denied by
Sec. Pangandaman in an Order18 dated 15 August 2008. He ruled that
majority of the subject property was still agricultural and no substantial
development was introduced by petitioner. 19 The dispositive portion of said
Order reads:

WHEREFORE, premises considered, Motion for Reconsideration

and/or Supplemental Opposition and Manifestation dated 24 September
2007, from the Order dated 06 September 2007, filed by Central
Azucarrera de Tarlac Realty Corporation through its Counsel, Dominic G.
Mendoza, involving twenty three (23) parcels of_ land owned by the
Central Azucarrera de Tarlac (CAT), with an aggregate area of 386.7992
hectares located in Barangay Bayambang, Pangasinan, is hereby DENIED.
The Order dated 02 August 2006 and the Order dated 06 September 2007
are hereby AFFIRMED IN TOTO.

SO ORDERED. 20

Aggrieved, CAT Realty filed a petition for review under Rule 43 of

the Rules of Court before·the CA. 21

Ruling of the CA

The CA denied CAT Realty's petition in the assailed Decision22 dated

19 June 2012, the dispositive portion of which provides:
16 Id. at 99.
17 Id at36-37,
1' Id. at 128-136.
19 Id. atJ7.
20 Id. at 135.
21 Id. at 37.
22 Id. at 32-42.
Decision 6 G.R. No. 208399

WHEREFORE, premises considered, the instant petition is hereby

DENIED. The August 15, 2008 Order of the Secretary of the public
respondent Department of Agrarian Reform is AFFIRMED.

SO ORDERED. 23

The CA accorded respect and finality to the DAR's factual findings

that there was no substantial development on the subject property, noting
that the same was still used for agricultural purposes. Thus, there was non-
compliance with the Conversion Order. 24 CAT Realty moved for
reconsideration, but the CA denied the motion through the assailed
Resolution dated 31 July 2013. 25

Hence, the petition for review on certiorari.

Issue

CAT Realty raised the sole issue of whether the CA erred in sustaining
the DAR's partial revocation of the Conversion Order, effectively allowing
DAR to put the undeveloped areas of the subject property under the
coverage of agrarian reform. 26

Ruling of the Court

We find merit in the petition.

In Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council, 27

the Court had occasion to discuss the legislative history of agrarian reform in
the Philippines, beginning from the 1935 Constitution until the effectivity of
Republic Act (RA) No. 6577, or the Comprehensive Agrarian Reform Law
(CARL), on 15 June 1988:

Land reform, or the broader term ." agrari311 reform," has been a
government policy even before the Commonwealth era. In fact, at the
onset of the American regime, initial steps toward land reform were
23
Id. at 42.
24 Id. at 41.
25 Id. at pp. 29-31.
26
ld. at 13.
27
668Phil.365(20ll);G.R.No.171101,05July2011 [PerJ.Vela.sco,Jr.].
Decision 7 G.R. No. 208399

already taken to address social unrest. Then. under the 1935 Constitution
. '
specific provisions on social justice and expropriation of landed estates for
distribution to tenants as a solution to land ownership and tenancy issues
were incorporated.

In 1955, the Land Reform Act (Republic Act No. [RA,] 1400) was
passed, setting in motion the expropriation of all tenanted estates.

On August 8, 1963, the Agricultural Land Reform Code (RA 3844)

was enacted, abolishing share tenancy and converting all instances of
share tenancy into leasehold tenancy. RA 3844 created the Land Bank of
the Philippines (LBP) to provide support in all phases of agrarian reform.

As its major thrust, RA 3844 aimed to create a system of owner-

cultivatorship in 1ice and com, supposedly to be accomplished by
expropriating lands in excess of 75 hectares for their eventual resale to
tenants. The law, however, had this restricting feature: its operations were
confined mainly to areas in Central Luzon, and its implementation at any
level of intensity limited to the pilot project in Nueva Ecija.

Subsequently, Congress passed the Code of Agrarian Reform (RA

63 89) declaring the entire country a land reform area, and providing for
the automatic conversion of tenancy to leasehold tenancy in all areas.
From 75.hectares, the retention limit was cut down to seven hectares.

Barely a month after declaring martial law in September 1972, then

President Ferdinand Marcos issued Presidential Decree No. 27 (PD 27) for
the "emancipation of the tiller from the bondage of the soil." Based on this
issuance, tenant-farmers, depending on the size of the landholding worked
on, can either purchase the land they tilled or shift from share to fixed-rent
leasehold tenancy. While touted as 'lrevolutionary,;' the scope. of
the agrarian reform program PD 27 enunciated covered .only tenanted,
privately-owned rice and com lands.

Then came the revolutionary goven:nnent of then President

Corazon C. Aquino and the drafting and eventual ratification of the 1987
Constitution.. Its provisions foreshadowed the establishment of a legal
framework for the formulation of an expansive approach to land reform,
affecting all agricultural lands and covering both tenant-farmers and
regular farmworkers.

So it was that Proclamation No. 131, Series of 1987, was issued

instituting a comprehensive agrarian reform program (CARP) to cover all
agricultural -lands, regardless of tenurial arrangement and commodity
produced, as provided in the Constitution.

On Julv- 22 , 1987, Executive Order No. 229 (EO 229) was issued
providing, as its title indicates, the mechanisms for CARP implementation.
as
It created the Presidential Agrarian Reform Council (PARC) the highest
policy-making body that formulates all policies, rules, and regulations
necessary Ior the implementation of CARP.
Decision 8 G.R. No. 208399

On June 15, 1988, RA 6657 or

the Comprehensive Agrarian Reform Law of 1988, also known as CARL
or•· the CARP Law, took effect, ushering in a new process of land
classification, acquisition, and distri.bution. 28

Notably, the Conversion Order dated 04 September 1975 of then DAR

Sec. Estrella declaring the subject property "suitable for residential,
commercial, industrial or other urban purposes" 29 was issued pursuant to the
prevailing law during that time, which was RA 3844, 30 as amended by RA
6389. 31 The department head's authority to declare the suitable purpose of
landholdings was provided under Section 36(1) thereof:

( 1) The landholding is declared by the department head upon

recommendation of the National Planning Commission to be suited for
residential, commercial, industrial or some other urban purposes:
Provided, That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the gross harvests on
his landholding during the last five preceding calendar years
(2)

As discussed hereafter, . the Court upholds the Order dated 04

September 1975 considering that: (1) the Conversion Order has long attained
finality; thus, parties are now estopped from questioning the final and
executory conversion order, (2) CAT Realty and its predecessor-in-interest
complied with the conditions stated under the conversion order; as such,
there was no· sufficient ground to cause its partial revocation, and (3) the
subject property cannot be subject to agrarian reform since the same was
already declared suitable for non-agricultural use prior to. the effectivity of
RA6657 on 15 June 1988.

The Order dated 04 September 1975,

declaring the conversion of the subject
property as suitable for non-
agricultural purposes, has long.
attained finality.

At the outset, the Court notes that the Conversion Order dated 04
September 1975 had already attained finality.

28 Id
29 . Rollo, p. 48,
30 Agrarian Land Reform Code, approved on 08 August 1963.
31 Code of Agrarian Reforms of the Philippines, approved on 10 September 1971.
 Decision 9 G.R. No. 208399

In Berboso v. Court ofAppeals, 32 the Court decreed that once final and
executory, an order for land conversion can no longer be questioned.
Significantly, Berborso also involved a similar conversion order issued by
Sec. Estrella in 1975, which was sought to be cancelled only in 1992 or
seventeen (17) years after its issuance. The Court ruled that the parties were
already barred from questioning the final and executory conversion order,
viz:

x x x It was only on 9 December 1992, or after 17 years from the issuance

of the 22 January 1975 Conversion Order that they questioned the validity
of the said Conversion Order when they filed a Petition with the Office of
the DAR Secretary for the cancellation of the same. By then, the period
for petitioners Berbosos to question the Conversion Order had long since
expired. Hence, they are now barred from assailing the said Order under
the doctrine of estoppel. Estoppel by ]aches arises from the negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned or
declined to assert it. Once final and executory, the Conversion Order can
no longer be questioned. 33

Indubitably, the conversion order of the DAR was a final order,

because it res.olved the issue of whether the subject property may be
converted to non-agricultural use. Once final and executory, the conversion
order can no longer be questioned. It can no 1onger be modified or reversed.
Parties cannot assail said order without running afoul of the doctrine of
estoppel. 34 ·

Further, Section 46 Article VIII of the 2002 Comprehensive Rules on

Land Use Conversion provides that a petition for revocation must be filed
within ninety (90) days from discovery of the facts which warrant the
revocation or withdrawal, but not more that one (1) year from issuance of
the Conversion Order. 35

Clearly, private respondents failed to file the petition for revocation

within the 90-day period. Likewise, more than one (1) year had already
lapsed since issuance of the Conversion Order in 1975. At any rate, private
32 527 Phil. J.67 (2006); G.R. Nos. 141593-94, 12 July 2006 [Per J. Chico-Nazario].
33 Id.
34 Spouses Villorente i: Aplaya laiya Corp .. 494 Phil. 473 (2005); G.R. No. 145013, 31 March 2005 [Per
J. Callejo, Sr.]. ·
35 Section 46. Filing ofpetition -Any person may file a petition to revoke, and the landowner may file a
petition to withdraw, the Conversion Order before the approving authority within ninety (90) days from
discovery of facts warranting revocation or withdrawal, but not more than one ( 1) year from issuance of
the Conversion Order. when the ·petition alleges any of the grounds in the enumeration in the next
section, ihe filing period shall be wiihin ninety (90) days from discovery of such facts but not beyond
the development period stipulated in Ille Conversion Order. V,'ithin the DAR, only the Secretary may
resolve petitions that question the jurisdiction oft.he recommending body or approving authority.
Decision 10 G.R. No. 208399

respondents cannot assert that they belatedly discovered the facts to warrant
revocation_ only in 2004. Since private respondents claimed to be the
legitimate tenants who have long been occupying the subject property, 36 they
cannot simply feign ignorance. of the facts and circumstances surrounding
the subject property just for the purpose of circumventing the 90-day
prescriptive period.

In this case, · it is undisputed that private respondents or their

predecessors-in-interest failed to question the Conversion Order immediately
or soon after its issuance. Aside from. the petition for revocation filed only
on 15 December 2004, they did not avail of any remedy to assail the
Conversion Order. Applying Berboso, the Conversion Order has long
become final and executory and thus, can no longer be questioned, modified,
or reversed. Considering it took them almost thirty (30) years to assail said
order, private ·respondents are barred by estoppel from seeking its
revocation.

CAT Realty complied with the

conditions under the Conversion
Order

Even assuming that private respondents may still question the

conversion order, CAT Realty has already sufficiently complied with the
conditions stated therein. Hence, there was no valid cause for its revocation.

To reiterate, the Conversion Order was issued pursuant to RA 3844, as

amended by RA 6389. Prior to its amendment, Section 36(1) of R.A. No.
3844 originally specified a period for conversion by the landholder:

SEC. 36. Possession of Landholding; Exceptions . .- Notwithstanding any

agreement as to the period or future surrender, of the land, an agricultural
lessee shall continue in the enjoyment and possession of his landholding
except when his dispossession has been authorized by the Court in a
judgment that is final and executory if after due hearing it is shown that:

(1) The agricultural lessor-o"'ner or a member of his immediate

family will personally cultivate the landholding or will convert the
landholding, if suitably located, into residential, factory, hospital or school
site or other useful non-agricultural purposes: Provided; That the
agricultural lessee shall be entitled to di~turbance compensation equivalent
to five years rental on his landholding in addition to his rights under
Sections twenty-five and thirty-four, except when the land owned and
leased by the agricultural lessor, is not more than. five hectares, in which
case instead of disturbance compensation the lessee may be entitled to an
36
Rollo, p..234.
 Decision 11 G.R. No. 208399

advanced notice of at least one agricultural year before ejectment

proceedings are filed against him: Provided, further, That sh~uld the
landholder not cultivate the land himself for three years or fail to
substantially carry out such conversion within one year after the
dispossession of the tenant, it shall be presumed that he acted in bad
faith and the tenant shall have the right to demand possession of the
land and recover damages for any loss incurred by him because of
said dispossessions. (Emphasis supplied.)

However, the above-quoted provision of RA 3844 was later amended

by RA 6389 on 10 September 1971, to read:

SEC. 36. Possession of Landholding; Exceptions. - Notwithstanding any

agreement as to the period or future surrender, of the land, an agricultural
lessee shall continue in the enjoyment and possession of his landholding
except when his dispossession has been authorized by the Court in a
judgment that is final and executory if after due hearing it is shown that:

(1) The landholding is declared by the department head upon

recommendation of the National Planning Commission to be suited for
residential, commercial, industrial or some other urban purposes:
Provided, -That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the gross harvests on
his landholding during the last five preceding calendar years;

Significantly, the condition imposed on the landowner to implement

the conversion of the agricultural land to non-agricultural purposes within a
certain period was deleted in RA 6389. With the enactment of the
amendatory law, the remedy left available to the tenant is to claim
disturbance conipensation. 37 The same conditions are explicitly found under
the terms of the Conversion Order, to wit:

x x x the following conditions are hereby incorporated as part of this

Order:

1. That the petitioner shall pay the bouafide tenants the disturbance
co_mpensation provided for by law;

2. That the bonafide tenants, occupant-tillers and/or squatters shall

continuously l\Orked on the untenanted landholdings until such time
that the he;ein petitioner-owner shall developed and/or convert such
areas to non-agricultural or agro-urban purposes;

3. That in addition to the payment of the disturbance compensation to the

bonafide tenants, the herein petitioner-ovmer shall likewise allocate to the
said tenants including however, the occupant-tillers-squatters a homelot of
not less than 300 square meters which will be sold to them at minimum
37 Hermosa v. Court ojAppeals, 604 Phil. 420 (20091; G,R. No. 166748, 24 April 2009 [Per J. Nachura].
Decision 12 G.R. No. 208399

cost which homelots shall be within the residential portions of the subject
property or in portions thereof ,vhich will not be affected by the urban or
agro-urban development of the whole property to be determined by the
petitioner-owner; and

4. That the displaced tenants, occupant-tillers or squatters or their sons

shall be given the priority of employment in any agro-industrial project
which the petitioner, the Central Azucarera de Tarlac, ·may established in
the land in question. 38 (Emphasis supplied.)

Thus, under the prevailing law at the time, i.e., RA 6389, there was no
requirement for the landowner to develop the subject property within a
certain period. The only requisite under the law was payment of disturbance
compensation. In this case, through the Order dated 11 October 2006, then
DAR Sec. Pangandaman recognized there was indeed payment of
disturbance compensation:

Records would show that the case was filed pursuant to the
provisions of Section 36 (1) of Republic Act No. 3844 as amended by
Section 7 of RA 6389. Under said rule, it was explicit that the only
condition that the landowner has to comply with is to pay disturbance
compensation as mentioned in the Order dated 04 September 1975. Such
compliance by the applicant was mentioned in the Ocular Inspection
Report that a Tenant's subdivision was given to the tenants thus, applicant
is deemed to have complied with the sole condition provided for in the
questioned Order.

As to the issue raised by the Petitioners that five (5) years have
lapsed, yet the landowner failed to fully develop the subject property, the
same cannot be used against herein applicant since the Order itself does no
mention a period within which to develop the property. 39

· The foregoing findings were never disturbed in the subsequent

issuances of Sec. Pangandaman. In revoking the Conversion Order, the
Secretary merely reiterated that majority of the subject property was still
agricultural and that no substantial development was introduced by CAT
Realty. 40 However, the Court cannot countenance the subsequent revocation
because, aside from being final and executory, the conditions provided under
the Conversion Order were sufficiently fulfilled by CAT Realty. Pursuant to
RA 6389, the disturbance compensation was already paid to the bonafide
tenants of the subject property.

Likewise, the Conversion Order itself does not specify a period for the
full and complete development of the subject property. The conversion order
-------·------
" Rollo. pp. 48-49.
39 Id. at 8!-82.
40 Id. at 135.
 Decision 13 G.R. No. 208399

simply states the tenants shall be allowed to "continuously wor[k] on the

:untenanted landholdings until such time that the herein petitioner-0\J\lller
shall develo[p land/or_ convert such areas to non-agricultural or agro-urban
purposes." 41 Again, even the DAR Secretary recognized there was partial
development made on one-third (l/3) of the subject property. 42 Among the
improvements introduced in the subject property were:

1. A two (2) hectare portion of the subject property has been allotted and
approved by the Municipal Government of Bayarnbang to be the
relocation of its site;

2. A commercial district surrounding the new local government site is

already planned;

3. The Palm Core Realty and Development, Inc. has transformed twelve
(12) hectares ofland into the Hands of Haven Memorial Park;

4. Ground has already been broken for the construction of the Northern
Plains High End Subdivision;

5. The Central Pangasinan Electric Corporation or CENPELCO . has

a
established power plant in the property is question;

6. Petitioner also built two (2) residential subdivisions;

·7. The expansion of municipal cemetery has also been set aside;

8. Petitioner also donated the site of the Bayarnbang Water District and the
Bani Elementary School;

9. Petitioner has constructed four (4) Tenant Subdivisions~ 43

Applying the express conditions of the Conversion Order, the

unfinished development of the subject property means that tenants may still
continue to work on undeveloped portions of the subject property. Clearly,
CAT Realty cannot be deemed as non-compliant with the conditions of the
Conversion Order because the order itself, as well as the prevailing law at
the time of its issuance, did not set a period within which the owner should
completely develop tlie subject property.

The subject property cannot be subject

to agrarian reform sin<'e the same was
already declared suitable for non-
41 Jd. at 49.
41 Id at 131.
43
Id. at 10.
Decision ]4 G.R. No. 208399

agricultural use prior to the e[fectivity

ofRA 6657 on 15 June 1988

When the DAR Secretary partially revoked the Conversion Order, he

likewise erred in directing the agrarian reform officer to proceed with the
acquisition of the portions of the subject property that are still agriculturally
viable under the CARP.

In Hermosa v. Court of Appeals, 44 the Court ruled that lands not

devoted to agricultural activity and those that were previously converted to
non-agricultural uses are outside the coverage of the CARL. 45 For lands
converted prior to 15 June 1988 or the date when CARL took effect, DAR is
bound by such conversion. It was therefore error to include the undeveloped
portions of subject property within the coverage of the CARL. 46 Moreover,
the CARL does not specify which specific government agency should have
done the reclassification. To be exempt from CARP, all that is needed is one
valid reclassification of the land from agricultural to non-agricultural by a
duly authorized government agency before the effectivity of the CARL on
15· June 1988. 47

Further, in Kasamaka-Canlubang, Inc. 1,: Laguna Estate Development

Corp., 48 lands already classified as commercial, industrial, or residential
before 15 June 1988, are outside the coverage of the CARL. Significantly,
Kasamaka- Canlubang, inc. involved similar factual circumstances and
antecedents to the case at bar.

In Kasamaka-Canlubang, Inc., petitioner therein also sought the

revocation of a conversion order issued on 04 June 1979 by Sec. Estrella. A
petition for revocation was filed on 04 July 2004, or around twenty-five (25)
years after conversion. Similarly, said 1979 conversion order was also
partially revoked by Sec. Pangandaman on 25 September 2006. However,
the partial revocation was reversed upon appeal to the Office of the
President (OP). The OP likewise declared the parcels of land exempt from
the coverage of CARP. Consequently, the OP reinstated Sec. Estrella's
conversion order dated 04 June 1979. Thereafter, the CA affirmed the OP's
ruling. Eventually, a petition under Rule 45 was filed before the Court; the
Court then upheld the uniform decisions of the CA and OP in the following
manner:
~----~----
Supra at note 37.
44
~--

45 Id
46 Natalia Realty, Jnc. v. Department of Agrarian Reform, G.R. No.' 103302, 12 August 1993 [Per J.
Bellosillo].
47 Buklod Nang Magbubukid sa Lupaing Ramos, Inc. v E M Ramos and Sons, Inc., 661 Phil. 34 (201 l);
G.R. Nos. 13148 l & 131624, 16 March 20 l l [Per J. Leonardo-De Castro].
48 735 Phil. 648 (2014); G ..R. No. 200491, 09 June 2014 fPerJ. Peralta]
 Decision 15 G.R. No. 208399

In view of the foregoing, this Court had, in multiple occasions,

ruled that lands already classified as commercial, industrial or residential
before the effectivity of the CARL, or June 15, 1988, are outside the
coverage thereof. In Natalia Realty, Inc. v. Department of Agrarian
Reform, for instance, we held that the DAR committed grave abuse of
discretion when it placed undeveloped portions of land intended for
residential use under the ambit of the CARL. Similarly, in Pasong
Bayabas Farmers Association, Inc. v. Court of Appeals, we nullified the
decision of the Department of Agrarian Reform Adjudication
Board (DARAB) declaring the land in dispute as agricultural and, thus,
within the coverage of the CARL, when the same had already been
reclassified as residential by several govermnent agencies prior to the
effectivity of the law. We likewise held in Junio v. Garilao that properties
identified as zonal areas not for agricultural use prior on June 15, 1988 are
exempted from CARL coverage, even without confirmation or clearance
from the DAR. 49

Applying these doctrines, it cannot be denied that the subject property

is likewise beyond the coverage of the CARL. The subject property has long
been declared suitable for residential, commercial, industrial, and other
urban purposes under the Conversion Order dated 04 September 1975. The
subject property was converted long before 15 June 1988, or before
effectivity of the CARL. Furthermore, the Conversion Order had already
attained finality and its conditions were duly complied with. Thus, the DAR
is bound by such conversion. 50 It bears repeating that once final and
executory, a conversion order can no longer be questioned. 51

WHEREFORE, the petition is GRANTED. The assailed Decision

dated 19 June 2012 and Resolution dated 31 July 2013 of the Court of
Appeals in CA-G.R. SP No. 107977 are REVERSED and SET ASIDE. The
Order dated 04 September 1975 of the Secretary of the Department of
Agrarian Reform is REINSTATED.

SO ORDERED.

ROD

49 Id
50
Supra at note 46.
51 Supra at note 32.
Decision l (l G.R. No. 208399

WE CONCUR:

Associate Justice

SAMU~~
Associate Justice

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution, 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.

SMUNDO