G.R. No. 208399 , June 23, 2021
CAT REALTY CORPORATION, PETITIONER, VS. DEPARTMENT OF AGRARIAN REFORM (DAR), CENTER FOR AGRARIAN REFORM EMPOWERMENT & TRANSFORMATION, INC. (CARET), ALTERNATIVE COMMUNITY CENTERED ORGANIZATION FOR RURAL DEVELOPMENT (ACCORD), BENJAMIN C. DE VERA, JR., AND TENORIO GARCIA, RESPONDENTS.

FACTS

The predecessor-in-interest of petitioner CAT Realty Corporation filed a petition for conversion of 23 parcels of agricultural land (386.7992 hectares) in Bayambang, Pangasinan. Then DAR Secretary Conrado Estrella issued an Order dated 04 September 1975 (Conversion Order), granting the conversion and declaring the land suitable for residential, commercial, industrial, and other urban purposes, subject to conditions including payment of disturbance compensation, allocation of homelots, and priority of employment for displaced tenants. On 15 December 2004, private respondents filed a petition for revocation of the Conversion Order, alleging that CAT Realty and its predecessor failed to develop the property and that it remained agricultural in use. Then DAR Secretary Nasser Pangandaman issued an Order dated 02 August 2006 partially revoking the Conversion Order and directing the acquisition of still agriculturally viable portions under CARP. CAT Realty’s motion for reconsideration was initially granted, reinstating the Conversion Order on 11 October 2006. However, upon private respondents’ motion, Sec. Pangandaman reinstated the partial revocation on 06 September 2007 and later denied CAT Realty’s subsequent motion on 15 August 2008. The Court of Appeals affirmed the DAR’s partial revocation. CAT Realty elevated the case via a petition for review on certiorari.

ISSUE

Whether the Court of Appeals 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.

RULING

The Supreme Court granted the petition and reversed the Court of Appeals. The Court held that the DAR Secretary gravely abused his discretion in partially revoking the 1975 Conversion Order. The grounds for revocation under the 1994 DAR Administrative Order No. 1, Series of 1994, which include failure to implement or complete the development, are inapplicable as the Conversion Order was issued in 1975 under a different legal regime (RA 3844 and RA 6389). The 1994 rules cannot be given retroactive effect to impair vested rights. The Conversion Order itself did not impose a specific period for development. Furthermore, the Court found that CAT Realty had substantially complied with the conditions of the Conversion Order by paying disturbance compensation through the provision of a subdivision and homelots. The continued agricultural use by some occupants did not negate compliance, as the Order allowed them to work on the land until development commenced. The DAR’s factual findings were not binding as they were arrived at arbitrarily. The Conversion Order remained valid, and the subject property, having been validly converted prior to the effectivity of the Comprehensive Agrarian Reform Law (CARL), was outside CARP coverage.