VOL.

367, OCTOBER 12, 2001 175

Sta. Rosa Realty Development Corporation vs. Court of
Appeals
G.R. No. 112526. October 12, 2001. *

STA. ROSA REALTY DEVELOPMENT CORPORATION, petitioner, vs. COURT OF

APPEALS, JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA
P. AYENDE, LETICIA P. BALAT, FILOMENA B. BATINO, ANICETO A. BURGOS,
JAIME A. BURGOS, FLORENCIA CANUBAS, LORETO A. CANUBAS, MAXIMO
A. CANUBAS, REYNALDO CARINGAL, QUIRINO C. CASALME, BENIGNO A.
CRUZAT, ELINO A. CRUZAT, GREGORIO F. CRUZAT, RUFINO C. CRUZAT,
SERGIO CRUZAT, SEVERINO F. CRUZAT, VICTORIA DE SAGUN, SEVERINO
DE SAGUN, FELICISIMO A. GONZALES, FRANCISCO A. GONZALES,
GREGORIO GONZALES, LEODEGARIO N. GONZALES, PASCUAL P.
GONZALES, ROLANDO A. GONZALES, FRANCISCO A. JUANGCO, GERVACIO
A. JUANGCO, LOURDES U. LUNA, ANSELMO M. MANDANAS, CRISANTO
MANDANAS EMILIO M. MANDANAS, GREGORIO A. MANDANAS, MARIO G.
MANDANAS, TEODORO MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO
B. MARQUEZ, ARMANDO P. MATIENZO, DANIEL D. MATIENZO, MAXIMINO
MATIENZO, PACENCIA P. MATIENZO, DOROTEA L. PANGANIBAN, JUANITO
T. PEREZ, MARIANITO T. PEREZ, SEVERO M. PEREZ, INOCENCIA S.
PASQUIZA, BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO PETATE,
PABLO A. PLATON, PRECILLO V. PLATON, AQUILINO B. SUBOL, CASIANO T.
VILLA, DOMINGO VILLA, JUAN T. VILLA, MARIO C. VILLA, NATIVIDAD A.
VILLA, JACINTA S. ALVARADO, RODOLFO ANGELES, DOMINGO A. CANUBAS,
EDGARDO L. CASALME, QUIRINO DE LEON, LEONILO M. ENRIQUEZ,
CLAUDIA P. GONZALES, FELISA R. LANGUE, QUINTILLANO LANGUE,
REYNALDO LANGUE, ROMEO S. LANGUE, BONIFACIO VILLA, ROGELIO
AYENDE, ANTONIO B. FERNANDEZ, ZACARLAS HERRERA, ZACARIAS
HERRERA, REYNARIO U. LAZO, AGAPITO MATIENZO, DIONISIO F. PETATE,
LITO G. REYES, JOSE M. SUBOL, CELESTINO G. TOPINO, ROSA C. AMANTE,
SOTERA CASALME, REMIGIO M. SILVERIO, THE
_______________

* FIRST DIVISION.

176
176 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
SECRETARY OF AGRARIAN REFORM, DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD, LAND BANK OF THE PHILIPPINES, REGISTER OF
DEEDS OF LAGUNA, DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES REGIONAL EXECUTIVE DIRECTOR FOR REGION IV, and
REGIONAL AGRARIAN REFORM OFFICER FOR REGION IV, respondents.
 Agrarian Reform; Notices Required for Valid Implementation of the Comprehensive
Agrarian Reform Program (CARP).For a valid implementation of the CARP Program, two
notices are required: (1) the notice of coverage and letter of invitation to a preliminary
conference sent to the landowner, the representative of the BARC, LBP, farmer beneficiaries
and other interested parties pursuant to DAR A.O. No. 12, series of 1989; and (2) the notice
of acquisition sent to the landowner under Section 16 of the CARL.
Same; Police Power; Eminent Domain; The implementation of the Comprehensive
Agrarian Reform Law (CARL) is an exercise of the States police power and the power of
eminent domain.The importance of the first notice, that is, the notice of coverage and the
letter of invitation to a conference, and its actual conduct cannot be understated. They are
steps designed to comply with the requirements of administrative due process. The
implementation of the CARL is an exercise of the States police power and the power of
eminent domain. To the extent that the CARL prescribes retention limits to the landowners,
there is an exercise of police power for the regulation of private property in accordance with
the Constitution. But where, to carry out such regulation, the owners are deprived of lands
they own in excess of the maximum area allowed, there is also a taking under the power of
eminent domain. The taking contemplated is not mere limitation on the use of the land. What
is required is the surrender of the title to and physical possession of the excess and all
beneficial rights accruing to the owner in favor of the farmer beneficiary.
Same; Same; Same; The law requires payment of just compensation in cash or Land
Bank of the Philippines (LBP) bonds, not by trust account.In the case at bar, DAR has
executed the taking of the property in question. However, payment of just compensation was
not in accordance with the procedural requirement. The law required payment in cash or
LBP bonds, not by trust account as was done by DAR In Association of Small Landowners in
the Philippines v. Secretary of Agrarian Reform, we held that The CARP Law, for its part,
conditions the transfer of posses-
177

VOL. 367, OCTOBER 12, 2001 177

Sta. Rosa Realty Development Corporation vs. Court of
Appeals
sion and ownership of the land to the government on receipt of the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds
with an accessible bank. Until then, title also remains with the landowner. No outright
change of ownership is contemplated either.
Same; Natural Resources; Watersheds; Words and Phrases; Watersheds generally are
outside the commerce of man; Watersheds may be defined as an area drained by a river and
its tributaries and enclosed by a boundary or divide which separates it from adjacent
watersheds.Watersheds may be defined as an area drained by a river and its tributaries
and enclosed by a boundary or divide which separates it from adjacent watersheds.
Watersheds generally are outside the commerce of man, so why was the Casile property titled
in the name of SRRDC? The answer is simple. At the time of the titling, the Department of
Agriculture and Natural Resources had not the declared the property as watershed area.
Same; Same; Same; Municipal Corporations; Zoning Ordinances; Police
Power; Eminent Domain; The authority of a municipality to issue zoning classification is an
exercise of its police power, not the power of eminent domain.The parcels of land in
Barangay Casile were declared as PARK by a Zoning Ordinance adopted by the
municipality of Cabuyao in 1979, as certified by the Housing and Land Use Regulatory Board.
On January 5, 1994, the Sangguniang Bayan of Cabuyao, Laguna issued a Resolution voiding
the Zoning classification of the lands at Barangay Casile as Park and declaring that the land
was now classified as agricultural land. The authority of the municipality of Cabuyao,
Laguna to issue zoning classification is an exercise of its police power, not the power of
eminent domain. A zoning ordinance is defined as a local city or municipal legislation which
logically arranges, prescribes, defines and apportions a given political subdivision into
specific land uses as present and future projection of needs.
Same; Same; Same; Lands classified as non-agricultural prior to the effectivity of the
CARL, may not be compulsorily acquired for distribution to farmer beneficiaries.In Natalia
Realty, Inc. v. Department of Agrarian Reform, we held that lands classified as non-
agricultural prior to the effectively of the CARL, may not be compulsorily acquired for
distribution to farmer beneficiaries. However, more than the classification of the subject land
as PARK is the fact that subsequent studies and survey showed that the parcels of land in
question form a vital part of a watershed area.
178

178 SUPREME COURT REPORTS

ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
Same; Same; Same; The most important product of a watershed is water which is one of
the most important human necessity; Protection of watersheds is an intergenerational
responsibility that needs to be answered now.The definition does not exactly depict the
complexities of a watershed. The most important product of a watershed is water which is
one of the most important human necessity. The protection of watersheds ensures an
adequate supply of water for future generations and the control of flashfloods that not only
damage property but cause loss of lives. Protection of watersheds is an intergenerational
responsibility that needs to be answered now.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Romulo, Mabanta, Buenaventura, Sayoc & Delos Angeles Law Offices for
petitioner.
Miguel M. Gonzales, Norberto L. Martinez and Rosemarie M. Oseteo and Free
Legal Assistance Group for private respondents.

PARDO, J.:

The case before the Court is a petition for review on certiorari of the decision of the
Court of Appeals affirming the decision of the Department of Agrarian Reform
1

Adjudication Board (hereafter, DARAB) ordering the compulsory acquisition of

2

petitioners property under the Comprehensive Agrarian Reform Program (CARP).

Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the
registered owner of two parcels of land, situated at Barangay Casile, Cabuyao,
Laguna covered by TCT Nos. 81949 and 84891, with a total area of 254.6 hectares.
According to petitioner, the parcels of land are watersheds, which provide clean
_____________
 1 In CA-G.R. SP No. 27234, promulgated on November 05, 1993, Martin, Jr., J., ponente, Chua and
Guerrero, JJ., concurring, Rollo, Vol. I, pp. 228-258.
2 DARAB (Case No. JC-IV-LAG-0001) entitled Juan Amante, et al. vs. Sta. Rosa Realty Development

Corporation, promulgated on December 19, 1991, Rollo, Vol. I, pp. 133-136.

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VOL. 367, OCTOBER 12, 2001 179
Sta. Rosa Realty Development Corporation vs. Court of
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potable water to the Canlubang community, and that ninety (90) light industries are
now located in the area. 3

Petitioner alleged that respondents usurped its rights over the property, thereby
destroying the ecosystem. Sometime in December 1985, respondents filed a civil
case with the Regional Trial Court, Laguna, seeking an easement of a right of way to
4

and from Barangay Casile. By way of counterclaim, however, petitioner sought the
ejectment of private respondents.
In October 1986 to August 1987, petitioner filed with the Municipal Trial Court,
Cabuyao, Laguna separate complaints for forcible entry against respondents. 5

After the filling of the ejectment cases, respondents petitioned the Department of
Agrarian Reform (DAR) for the compulsory acquisition of the SRRDC property under
the CARP.
On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao,
Laguna issued a notice of coverage to petitioner and invited its officials or
representatives to a conference on August 18, 1989. During the meeting, the following
6

were present: representatives of petitioner, the Land Bank of the Philippines,

PARCCOM, PARO of Laguna, MARO of Laguna, the BARC Chairman of Barangay
Casile and some potential farmer beneficiaries, who are residents of Barangay Casile,
Cabuyao, Laguna. It was the consensus and recommendation of the assembly that
the landholding of SRRDC be placed under compulsory acquisition.
On August 17, 1989, petitioner filed with the Municipal Agrarian Reform Office
(MARO), Cabuyao, Laguna a Protest and Objection to the compulsory acquisition
of the property on the ground that the area was not appropriate for agricultural
purposes. The area was rugged in terrain with slopes of 18% and above and that
______________

3 Petition, Rollo, Vol. 1, p. 10.

4 Petition, Regional Trial Court, Laguna, docketed as Civil Case No. B-2333, Rollo, Vol. I, p. 11.
5 Civil Cases Nos. 250, 258, 260, 262 and 266, p. 11.

6 Petition, Annex A, Rollo, Vol. I, p. 55.

180
180 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
the occupants of the land were squatters, who were not entitled to any land as
beneficiaries. 7
 On August 29, 1989, the farmer beneficiaries together with the BARC chairman
answered the protest and objection stating that the slope of the land is not 18% but
only 5-10% and that the land is suitable and economically viable for agricultural
purposes, as evidenced by the Certification of the Department of Agriculture,
municipality of Cabuyao, Laguna. 8

On September 8, 1989, MARO Belen dela Torre made a summary investigation

report and forwarded the Compulsory Acquisition Folder Indorsement (CAFI) to the
Provincial Agrarian Reform Officer (hereafter, PARO). 9

On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the
compulsory acquisition to the Secretary of Agrarian Reform.
On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land
Acquisition and Development, DAR forwarded two (2) Compulsory Acquisition Claim
Folders covering the landholding of SRRDC, covered by TCT Nos. T-81949 and T-
84891 to the President, Land Bank of the Philippines for further review and
evaluation. 10

On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago

sent two (2) notices of acquisition to petitioner, stating that petitioners landholdings
11

covered by TCT Nos. 81949 and 84891, containing an area of 188.2858 and 58.5800
hectares, valued at P4,417,735.65 and P1,220,229.93, respectively, had been placed
under the Comprehensive Agrarian Reform Program.
On February 6, 1990, petitioner SRRDC in two letters separately addressed to
12

Secretary Florencio B. Abad and the Director,

______________

7 Petition, Annex B, Rollo, Vol I, pp. 56-57.

8 Original Record, Folder I, Letter of Felicito B. Buban, Department of Agriculture, dated August 29,
1989.
9 Ibid., Summary Investigation Report.

10 Original Record, Folder II.

11 Folder I, Notice of Acquisition.

12 Ibid., Letters.

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VOL. 367, OCTOBER 12, 2001 181
Sta. Rosa Realty Development Corporation vs. Court of
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Bureau of Land Acquisition and Distribution, sent its formal protest, protesting not
only the amount of compensation offered by DAR for the property but also the two (2)
notices of acquisition.
On March 17, 1990, Secretary Abad referred the case to the DARAB for summary
proceedings to determine just compensation under R.A. No. 6657, Section 16.
On March 23, 1990, the LBP returned the two (2) claim folders previously referred
for review and evaluation to the Director of BLAD mentioning its inability to value
the SRRDC landholding due to some deficiencies.
On March 28, 1990, Executive Director Emmanuel S. Galvez wrote Land Bank
President Deogracias Vistan to forward the two (2) claim folders involving the
property of SRRDC to the DARAB for it to conduct summary proceedings to
determine the just compensation for the land.
On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines
stating that its property under the aforesaid land titles were exempt from CARP
coverage because they had been classified as watershed area and were the subject of
a pending petition for land conversion.
On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2)
claim folders (CACFs) to the Executive Director of the DAR Adjudication Board for
proper administrative valuation. Acting on the CACFs, on September 10, 1990, the
Board promulgated a resolution asking the office of the Secretary of Agrarian Reform
(DAR) to first resolve two (2) issues before it proceeds with the summary land
valuation proceedings. 13

The issues that need to be threshed out were as follows: (1) whether the subject
parcels of land fall within the coverage of the Compulsory Acquisition Program of the
CARP; and (2) whether the petition for land conversion of the parcels of land may be
granted.
On December 7, 1990, the Office of the Secretary, DAR, through the
Undersecretary for Operations (Assistant Secretary for Luzon Operations) and the
Regional Director of Region IV, submitted a
____________

13 Folder, JC-R-IV-LAG-0001-GO, Decision DARAB, pp. 23-25.

182
182 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
report answering the two issues raised. According to them, firstly, by virtue of the
issuance of the notice of coverage on August 11, 1989, and notice of acquisition on
December 12, 1989, the property is covered under compulsory acquisition. Secondly,
Administrative Order No. 1, Series of 1990, Section IV D also supports the DAR
position on the coverage of the said property. During the consideration of the case by
the Board, there was no pending petition for land conversion specifically concerning
the parcels of land in question.
On February 19, 1991, the Board sent a notice of hearing to all the parties
interested, setting the hearing for the administrative valuation of the subject parcels
of land on March 6, 1991. However, on February 22, 1991, Atty. Ma. Elena P.
Hernandez-Cueva, counsel for SRRDC, wrote the Board requesting for its assistance
in the reconstruction of the records of the case because the records could not be found
as her co-counsel, Atty. Ricardo Blancaflor, who originally handled the case for
SRRDC and had possession of all the records of the case was on indefinite leave and
could not be contacted. The Board granted counsels request and moved the hearing
to April 4, 1991.
 On March 18, 1991, SRRDC, submitted a petition to the Board for the latter to
resolve SRRDCs petition for exemption from CARP coverage before any
administrative valuation of their landholding could be had by the Board.
On April 4, 1991, the initial DARAB hearing of the case was held and
subsequently, different dates of hearing were set without objection from counsel of
SRRDC. During the April 15, 1991 hearing, the subdivision plan of subject property
at Casile, Cabuyao, Laguna was submitted and marked as Exhibit 5 for SRRDC. At
the hearing on April 23, 1991, the Land Bank asked for a period of one month to value
the land in dispute.
At the hearing on April 23, 1991, certification from Deputy Zoning Administrator
Generoso B. Opina was presented. The certification issued on September 8, 1989,
stated that the parcels of
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VOL. 367, OCTOBER 12, 2001 183
Sta. Rosa Realty Development Corporation vs. Court of
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land subject of the case were classified as industrial Park per Sanguniang Bayan
Resolution No. 45-89 dated March 29, 1989. 14

To avert any opportunity that the DARAB might distribute the lands to the farmer
beneficiaries, on April 30, 1991, petitioner filed a petition with DARAB to disqualify
15

private respondents as beneficiaries. However, DARAB refused to address the issue

of beneficiaries.
In the meantime, on January 20, 1992, the (Regional Trial Court, Laguna, Branch
24, rendered a decision, finding that private respondents illegally entered the
16

SRRDC property, and ordered them evicted.

On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum
directing the Land Bank of the Philippines to open a trust account in favor of SRRDC,
for P5,637,965.55, as valuation for the SRRDC property.
On December 19, 1991, DARAB promulgated a decision, the decretal portion of
which reads:
WHEREFORE, based on the foregoing premises, the Board hereby orders:

1. 1.The dismissal for lack of merit of the protest against the compulsory coverage of
the landholdings of Sta. Rosa Realty Development Corporation (Transfer Certificates
of Title Nos. 81949 and 84891 with an area of 254.766 hectares) in Barangay Casile,
Municipality of Cabuyao, Province of Laguna under the Comprehensive Agrarian
Reform Program is hereby affirmed;
2. 2.The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty Development
Corporation the amount of Seven Million Eight Hundred Forty-One Thousand, Nine
Hundred Ninety Seven Pesos and Sixty-Four centavos (P7,841,997.64) for its
landholdings covered by the two (2) Transfer Certificates of Title mentioned above.
Should there be a rejection of the payment tendered, to open, if none has yet been
made, a trust account for said amount in the name of Sta. Rosa Realty Development
Corporation;

_______________
 14 Original Records, Folder of Exhibits III, Certification from the Office of the Deputy Zoning
Administrator.
15 Vol. I, DARAB Folder, Manifestation and Motion.

16 Petition, Annex B, Judgment, Judge Rodrigo V. Cosico, presiding, CA Rollo, pp. 98-111. In Civil Case

Nos. 250, 258, 260, 262, and 226.

184
184 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals

1. 3.The Register of Deeds of the Province of Laguna to cancel with dispatch Transfer
Certificate of Title Nos. 84891 and 81949 and new one be issued in the name of the
Republic of the Philippines, free from liens and encumbrances;
2. 4.The Department of Environment and Natural Resources either through its
Provincial Office in Laguna or the Regional Office, Region IV, to conduct a final
segregation survey on the lands covered by Transfer Certificate of Title Nos. 84891
and 81949 so the same can be transferred by the Register of Deeds to the name of
the Republic of the Philippines;
3. 5.The Regional Office of the Department of Agrarian Reform through its Municipal
and Provincial Agrarian Reform Office to take immediate possession on the said
landholding after Title shall have been transferred to the name of the Republic of
the Philippines, and distribute the same to the immediate issuance of Emancipation
Patents to the farmer-beneficiaries as determined by the Municipal Agrarian Reform
Office of Cabuyao, Laguna. 17

On January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a
decision in Civil Case No. B-2333 ruling that respondents were builders in bad faith.
18

On February 6, 1992, petitioner filed with the Court of Appeals a petition for
review of the DARAB decision. On November 5, 1993, the Court of Appeals
19

promulgated a decision affirming the decision of DARAB. The decretal portion of the
Court of Appeals decision reads:
WHEREFORE, premises considered, the DARAB decision dated September 19, 1991 is
AFFIRMED, without prejudice to petitioner Sta. Rosa Realty Development Corporation
ventilating its case with the Special Agrarian Court on the issue of just compensation. 20

_____________

17 Folder JC-R-IV-LAG-0001-C.O., Decision, penned by Benjamin T. Leong, Chairman, concurred in by

Renato B. Padilla, Lorenzo R. Reyes, Leopoldo M. Serrano, Jr. and Josefina M. Sidiangco, members.
18 Petition, Annex F, Vol I, SC Rollo, pp. 70-83.

19 Docketed as CA-G.R. SP No. 27234.

20 CA Rollo, Decision, Martin, Jr., J., ponente, Chua and Guerrero, JJ., concurring, pp. 499-529.

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VOL. 367, OCTOBER 12, 2001 185
Sta. Rosa Realty Development Corporation vs. Court of
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Hence, this petition. 21

On December 15, 1993, the Court issued a Resolution which reads:

G.R. Nos. 112526 (Sta. Rosa Realty Development Corporation vs. Court of Appeals, et. al.)
Considering the compliance, dated December 13, 1993, filed by counsel for petitioner, with
the resolution of December 8, 1993 which required petitioner to post a cash bond or surety
bond in the amount of P1,500,000.00 Pesos before issuing a temporary restraining order
prayed for, manifesting that it has posted a CASH BOND in the same amount with the
Cashier of the Court as evidenced by the attached official receipt No. 315519, the Court
resolved to ISSUE the Temporary Retraining Order prayed for.
The Court therefore, resolved to restrain: (a) the Department of Agrarian Reform
Adjudication Board from enforcing its decision dated December 19, 1991 in DARAB Case No.
JC-R-IV-LAG-0001, which was affirmed by the Court of Appeals in a Decision dated
November 5, 1993, and which ordered, among others, the Regional Office of the Department
of Agrarian Reform through its Municipal and Provincial Reform Office to take immediate
possession of the landholding in dispute after title shall have been transferred to the name
of the Republic of the Philippines and to distribute the same through the immediate issuance
of Emancipation Patents to the farmer-beneficiaries as determined by the Municipal
Agrarian Officer of Cabuyao, Laguna, (b) The Department of Agrarian Reform and/or the
Department of Agrarian Reform Adjudication Board, and all persons acting for and in their
behalf and under their authority from entering the properties involved in this case and from
introducing permanent infrastructures thereon; and (c) the private respondents from further
clearing the said properties of their green cover by the cutting or burning of trees and other
vegetation, effective today until further orders from this Court. 22

The main issue raised is whether the property in question is covered by CARP despite
the fact that the entire property was formed part of a watershed area prior to the
enactment of R.A. No. 6657.
______________

21 Petition filed on November 24, 1993. G.R. No. 112526, Rollo, Vol. I, pp. 2-52. On September 28, 1994,

the Court gave due course to the petition G.R. No. 112526, Rollo, Vol. II, pp. 780-781.
22 Resolution, Rollo, pp. 296-300.

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186 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
Under Republic Act No. 6657, there are two modes of acquisition of private land:
compulsory and voluntary. In the case at bar, the Department of Agrarian Reform
sought the compulsory acquisition of subject property under R.A. No. 6657, Section
16, to wit:
Sec. 16. Procedure for Acquisition of Private Lands.For purposes of acquisition of private
lands, the following procedures shall be followed:

1. a.)After having identified the land, the landowners and the beneficiaries, the DAR
shall send its notice to acquire the land to the owners thereof, by personal delivery
or registered mail, and post the same in a conspicuous place in the municipal
building and barangay hall of the place where the property is located. Said notice
shall contain the offer of the DAR to pay corresponding value in accordance with the
valuation set forth in Sections 17, 18, and other pertinent provisions hereof.
 2. b.)Within thirty (30) days from the date of the receipt of written notice by personal
delivery or registered mail, the landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the offer.
3. c.)If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the
purchase price of the land within thirty (30) days after he executes and delivers a
deed of transfer in favor of the government and other muniments of title.
4. d.)In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land requiring the
landowner, the LBP and other interested parties to submit fifteen (15) days from
receipt of the notice. After the expiration of the above period, the matter is deemed
submitted for decision. The DAR shall decide the case within thirty (30) days after it
is submitted for decision.
5. e.)Upon receipt by the landowner of the corresponding payment, or, in case of rejection
or no response from the landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in LBP bonds in accordance
with this act, the DAR shall make immediate possession of the land and shall request
the proper Register of Deeds to issue Transfer Certificate of Titles (TCT) in the name
of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.

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Sta. Rosa Realty Development Corporation vs. Court of
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1. f.)Any party who disagrees with the decision may bring the matter to the court of 23

proper jurisdiction for final determination of just compensation.

In compulsory acquisition of private lands, the landholding, the landowners and

farmer beneficiaries must first be identified. After identification, the DAR shall send
a notice of acquisition to the landowner, by personal delivery or registered mail, and
post it in a conspicuous place in the municipal building and barangay hall of the place
where the property is located.
Within thirty (30) days from receipt of the notice of acquisition, the landowner, his
administrator or representative shall inform the DAR of his acceptance or rejection
of the offer.
If the landowner accepts, he executes and delivers a deed of transfer in favor of the
government and surrenders the certificate of title. Within thirty (30) days from the
execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays the
owner the purchase price. If the landowner accepts, he executes and delivers a deed
of transfer in favor of the government and surrenders the certificate of title. Within
thirty days from the execution of the deed of transfer, the Land Bank of the
Philippines (LBP) pays the owner the purchase price. If the landowner rejects the
DARs offer or fails to make a reply, the DAR conducts summary administrative
proceedings to determine just compensation for the land. The landowner, the LBP
representative and other interested parties may submit evidence on just
compensation within fifteen days from notice. Within thirty days from submission,
the DAR shall decide the case and inform the owner of its decision and the amount of
just compensation.
Upon receipt by the owner of the corresponding payment, or, in case of rejection or
lack of response from the latter, the DAR shall deposit the compensation in cash or
in LBP bonds with an accessible bank. The DAR shall immediately take possession
of the land and cause the issuance of a transfer certificate of title in the name of the
Republic of the Philippines. The land shall then be redistributed to the farmer
beneficiaries. Any party may question the deci-
______________

23 R.A. No. 6657, Sec. 57.

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188 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
sion of the DAR in the special agrarian courts (provisionally the Supreme Court
designated branches of the regional trial court as special agrarian courts) for final
determination of just compensation.
The DAR has made compulsory acquisition the priority mode of land acquisition
to hasten the implementation of the Comprehensive Agrarian Reform Program
(CARP). Under Sec. 16 of the CARL, the first step in compulsory acquisition is the
identification of the land, the landowners and the farmer beneficiaries. However, the
law is silent on how the identification process shall be made. To fill this gap, on July
26, 1989, the DAR issued Administrative Order No. 12, series of 1989, which set the
operating procedure in the identification of such lands. The procedure is as follows:

1. A.The Municipal Agrarian Reform Officer (MARO), with the assistance of the
pertinent Barangay Agrarian Reform Committee (BARC), shall:

1. 1.Update the masterlist of all agricultural lands covered under the CARP in
his area of responsibility; the masterlist should include such information as
required under the attached CARP masterlist form which shall include the
name of the landowner, landholding area, TCT/OCT number, and tax
declaration number.
2. 2.Prepare the Compulsory Acquisition Case Folder (CACF) for each title
(OCT/TCT) or landholding covered under Phase I and II of the CARP except
those for which the landowners have already filed applications to avail of
other modes of land acquisition. A case folder shall contain the following duly
accomplished forms:

1. a)CARP CA Form 1MARO investigation report

2. b)CARP CA Form No. 2Summary investigation report findings and
evaluation
3. c)CARP CA Form 3Applicants Information sheet
 4. d)CARP CA Form 4Beneficiaries undertaking
5. e)CARP CA Form 5Transmittal report to the PARO

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The MARO/BARC shall certify that all information contained in the above-mentioned forms
have been examined and verified by him and that the same are true and correct.

1. 3.Send notice of coverage and a letter of invitation to a conference/meeting to the

landowner covered by the Compulsory Case Acquisition Folder. Invitations to the
said conference meeting shall also be sent to the prospective farmer-beneficiaries,
the BARC representatives, the Land Bank of the Philippines (LBP) representative,
and the other interested parties to discuss the inputs to the valuation of the property.

He shall discuss the MARO/BARC investigation report and solicit the views, objection,
agreements or suggestions of the participants thereon. The landowner shall also ask to
indicate his retention area. The minutes of the meeting shall be signed by all participants in
the conference and shall form an integral part of the CACF.

1. 4.Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO).

1. B.The PARO shall:

1. 1.Ensure the individual case folders are forwarded to him by his MAROs.
2. 2.Immediately upon receipt of a case folder, compute the valuation of the land in
accordance with A.O. No. 6, series of 1988. The valuation worksheet and the related
CACF valuation forms shall be duly certified correct by the PARO and all the
personnel who participated in the accomplishment of these forms.
3. 3.In all cases, the PARO may validate the report of the MARO through ocular
inspection and verification of the property. This ocular inspection and verification
shall be mandatory when the computed value exceeds P500,000 per estate.
4. 4.Upon determination of the valuation, forward the case folder, together with the duly
accomplished valuation forms and his recommendations, to the Central Office.

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The LBP representative and the MARO concerned shall be furnished a copy each of his
report.

1. C.DAR Central Office, specifically through the Bureau of Land Acquisition and
Distribution (BLAD), shall:
 1. 1.Within three days from receipt of the case folder from the PARO, review, evaluate
and determine the final land valuation of the property covered by the case folder. A
summary review and evaluation report shall be prepared and duly certified by the
BLAD Director and the personnel directly participating in the review and final
valuation.
2. 2.Prepare, for the signature of the Secretary or her duly authorized representative, a
notice of acquisition (CARP Form 8) for the subject property. Serve the notice to the
landowner personally or through registered mail within three days from its approval.
The notice shall include among others, the area subject of compulsory acquisition,
and the amount of just compensation offered by DAR.
3. 3.Should the landowner accept the DARs offered value, the BLAD shall prepare and
submit to the Secretary for approval the order of acquisition. However, in case of
rejection or non-reply, the DAR Adjudication Board (DARAB) shall conduct a
summary administrative hearing to determine just compensation, in accordance
with the procedures provided under Administrative Order No. 13, series of 1989.
Immediately upon receipt of the DARABs decision on just compensation, the BLAD
shall prepare and submit to the Secretary for approval the required order of
acquisition.
4. 4.Upon the landowners receipt of payment, in case of acceptance, or upon deposit of
payment in the designated bank, in case of rejection or non-response, the Secretary
shall immediately direct the pertinent Register of Deeds to issue the corresponding
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines.
Once the property is transferred, the DAR, through the PARO, shall take possession
of the land for redistribution to qualified beneficiaries.

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Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian
Reform Officer (MARO) keep an updated master list of all agricultural lands under
the CARP in his area of responsibility containing all the required information. The
MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered
by CARP. The MARO then sends the landowner a Notice of Coverage and a letter
of invitation to a conference/meeting over the land covered by the CACF. He also
sends invitations to the prospective farmer-beneficiaries, the representatives of the
Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines
(LBP) and other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of the parties. At
the meeting, the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform
Officer (PARO) who shall complete the valuation of the land. Ocular inspection and
verification of the property by the PARO shall be mandatory when the computed
value of the estate exceeds P500,000.00. Upon determination of the valuation, the
PARO shall forward all papers together with his recommendation to the Central
Office of the DAR. The DAR Central Office, specifically, the Bureau of Land
Acquisition and Distribution (BLAD) shall prepare, on the signature of the Secretary
or his duly authorized representative, a notice of acquisition of the subject property.
From this point, the provisions of Section 16 of R.A. No. 6657 shall apply.
For a valid implementation of the CARP Program, two notices are required: (1) the
notice of coverage and letter of invitation to a preliminary conference sent to the
landowner, the representative of the BARC, LBP, farmer beneficiaries and other
interested parties pursuant to DAR A.O. No. 12, series of 1989; and (2) the notice of
acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, that is, the notice of coverage and the letter of
invitation to a conference, and its actual conduct cannot be understated. They are
steps designed to comply with the requirements of administrative due process. The
implementation of the CARL is an exercise of the States police power and the power
of eminent domain. To the extent that the CARL prescribes reten-
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192 SUPREME COURT REPORTS ANNOTATED
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tion limits to the landowners, there is an exercise of police power for the regulation
of private property in accordance with the Constitution. But where, to carry out such
regulation, the owners are deprived of lands they own in excess of the maximum area
allowed, there is also a taking under the power of eminent domain. The taking
contemplated is not mere limitation on the use of the land. What is required is the
surrender of the title to and physical possession of the excess and all beneficial rights
accruing to the owner in favor of the farmer beneficiary.
In the case at bar, DAR has executed the taking of the property in question.
However, payment of just compensation was not in accordance with the procedural
requirement. The law required payment in cash or LBP bonds, not by trust account
as was done by DAR.
In Association of Small Landowners in the Philippines v. Secretary of Agrarian
Reform, we held that The CARP Law, for its part, conditions the transfer of
possession and ownership of the land to the government on receipt of the landowner
of the corresponding payment or the deposit by the DAR of the compensation in cash
or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. No outright change of ownership is contemplated either. 24

Consequently, petitioner questioned before the Court of Appeals DARABs decision

ordering the compulsory acquisition of petitioners property. Here, petitioner pressed
25

the question of whether the property was a watershed, not covered by CARP.
Article 67 of the Water Code of the Philippines (P.D. No. 1067) provides:
Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any
ground water may be declared by the Department of Natural resources as a protected area.
Rules and Regulations may be promulgated by such Department to prohibit or control such
activities by the owners or occupants thereof within the protected area which may damage
or cause the deterioration of the surface water or ground water or
______________
 24 175 SCRA 343, 391 (1989).
25 In CA-G.R. SP No. 27234.

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interfere with the investigation, use, control, protection, management or administration of
such waters.

Watersheds may be defined as an area drained by a river and its tributaries and
enclosed by a boundary or divide which separates it from adjacent watersheds.
Watersheds generally are outside the commerce of man, so why was the Casile
property titled in the name of SRRDC? The answer is simple. At the time of the
titling, the Department of Agriculture and Natural Resources had not the declared
the property as watershed area. The parcels of land in Barangay Casile were declared
as PARK by a Zoning Ordinance adopted by the municipality of Cabuyao in 1979,
as certified by the Housing and Land Use Regulatory Board. On January 5, 1994, the
Sangguniang Bayan of Cabuyao, Laguna issued a Resolution voiding the Zoning 26

classification of the lands at Barangay Casile as Park and declaring that the land was
now classified as agricultural land.
The authority of the municipality of Cabuyao, Laguna to issue zoning classification
is an exercise of its police power, not the power of eminent domain. A zoning
ordinance is defined as a local city or municipal legislation which logically arranges,
prescribes, defines and apportions a given political subdivision into specific land uses
as present and future projection of needs. 27

In Natalia Realty, Inc. v. Department of Agrarian Reform, we held that lands28

classified as non-agricultural prior to the effectively of the CARL, may not be

compulsorily acquired for distribution to farmer beneficiaries.
However, more than the classification of the subject land as PARK is the fact that
subsequent studies and survey showed that the parcels of land in question form a
vital part of a watershed area. 29

_______________

26 Comment of private respondents, Annex 1, Rollo, Vol. I, pp. 331-332.

27 P.D. No. 449, Sec. 4 (b).
28 225 SCRA 278, 283 [1993].

29 Petition, Annex K (Annex B of), G.R. No. 112526, Rollo, Vol. I, p. 225; Reply, Annex G, G.R. No.

112526, Rollo, Vol. I, pp. 455-521.

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Now, petitioner has offered to prove that the land in dispute is a watershed or part
of the protected area for watershed purposes. Ecological balances and environmental
disasters in our day and age seem to be interconnected. Property developers and
tillers of the land must be aware of this deadly combination. In the case at bar, DAR
included the disputed parcels of land for compulsory acquisition simply because the
land was allegedly devoted to agriculture and was titled to SRRDC, hence, private
and alienable land that may be subject to CARP.
However, the scenario has changed, after an in-depth study, survey and
reassessment. We cannot ignore the fact that the disputed parcels of land form a vital
part of an area that need to be protected for watershed purposes. In a report of the
Ecosystems Research and Development Bureau (ERDB), a research arm of the
DENR, regarding the environmental assessment of the Casile and Kabanga-an river
watersheds, they concluded that:
The Casile barangay covered by CLOA in question is situated in the heartland of both
watersheds. Considering the barangays proximity to the Matangtubig waterworks, the
activities of the farmers which are in conflict with proper soil and water conservation
practices jeopardize and endanger the vital waterworks. Degradation of the land would have
double edge detrimental effects. On the Casile side this would mean direct siltation of the
Mangumit river which drains to the water impounding reservoir below. On the Kabanga-an
side, this would mean destruction of forest covers which acts as recharged areas of the
Matang Tubig springs. Considering that the people have little if no direct interest in the
protection of the Matang Tubig structures they couldnt care less even if it would be
destroyed.
The Casile and Kabanga-an watersheds can be considered a most vital life support system
to thousands of inhabitants directly and indirectly affected by it. From these watersheds
come the natural God-given precious resourcewater. x x x x x
Clearing and tilling of the lands are totally inconsistent with sound watershed
management. More so, the introduction of earth disturbing activities like road building and
erection of permanent infrastructures. Unless the pernicious agricultural activities of the
Casile farmers are immediately stopped, it would not be long before these watersheds would
cease to be of value. The impact of watershed degredation threatens the livelihood of
thousands of people dependent upon it. Toward this, we hope
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that an acceptable comprehensive watershed development policy and program be
immediately formulated and implemented before the irreversible damage finally happens.
Hence, the following are recommended:

1. 7.2The Casile farmers should be relocated and given financial assistance.

2. 7.3Declaration of the two watersheds as critical and in need of immediate
rehabilitation.
3. 7.4A comprehensive and detailed watershed management plan and program be
formulated and implemented by the Canlubang Estate in coordination with
pertinent government agencies. 30

The ERDB report was prepared by a composite team headed by Dr. Emilio Rosario,
the ERDB Director, who holds a doctorate degree in water resources from U.P. Los
Baos in 1987; Dr. Medel Limsuan, who obtained his doctorate degree in watershed
management from Colorado University (US) in 1989; and Dr. Antonio M. Dano, who
obtained his doctorate degree in Soil and Water Management Conservation from U.P.
Los Baos in 1993.
Also, DENR Secretary Angel Alcala submitted a Memorandum for the President
dated September 7, 1993 (Subject: PFVR HWI Ref.: 933103 Presidential Instructions
on the Protection of Watersheds of the Canlubang Estates at Barrio Casile, Cabuyao,
Laguna) which reads:
It is the opinion of this office that the area in question must be maintained for watershed
purposes for ecological and environmental considerations, among others. Although the 88
families who are the proposed CARP beneficiaries will be affected, it is important that a
larger view of the situation be taken as one should also consider the adverse effect on
thousands of residents downstream if the watershed will not be protected and maintained for
watershed purposes.
The foregoing considered, it is recommended that if possible, an alternate area be
allocated for the affected farmers, and that the Canlubang Estates be mandated to protect
and maintain the area in question as a permanent watershed reserved. 31

_____________

30 Reply, Annex A, Rollo, Vol. II, pp. 583-584.

31 Rollo, Vol. I, Memorandum, Secretary Alcala to FVR, p. 225.

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The definition does not exactly depict the complexities of a watershed. The most
important product of a watershed is water which is one of the most important human
necessities. The protection of watersheds ensures an adequate supply of water for
future generations and the control of flashfloods that not only damage property but
cause loss of lives. Protection of watersheds is an intergenerational responsibility
that needs to be answered now.
Another factor that needs to be mentioned is the fact that during the DARAB
hearing, petitioner presented proof that the Casile property has slopes of 18% and
over, which exempted the land from the coverage of CARL. R.A. No. 6657, Section 10,
provides:
Section 10. Exemptions and Exclusions.Lands actually, directly and exclusively used and
found to be necessary for parks, wildlife, forest reserves, reforestration, fish sanctuaries and
breeding grounds, watersheds and mangroves, national defense, school sites and campuses
including experimental farm stations operated by public or private schools for educational
purposes, seeds and seedlings research and pilot production centers, church sites and
convents appurtenent thereto, communal burial grounds and cemeteries, penal colonies and
penal farms actually worked by the inmates, government and private research and
quarantine centers, and all lands with eighteen percent (18%) slope and over,except those
already developed shall be exempt from coverage of this Act.
Hence, during the hearing at DARAB, there was proof showing that the disputed
parcels of land may be excluded from the compulsory acquisition coverage of CARP
because of its very high slopes.
To resolve the issue as to the true nature of the parcels of land involved in the case
at bar, the Court directs the DARAB to conduct a re-evaluation of the issue.
IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of Appeals
in CA-G.R. SP No. 27234.
In lieu thereof, the Court REMANDS the case to the DARAB for re-evaluation and
determination of the nature of the parcels of land involved to resolve the issue of its
coverage by the Comprehensive Land Reform Program.
In the meantime, the effects of the CLOAs issued by the DAR to supposed farmer
beneficiaries shall continue to be stayed by the
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temporary restraining order issued on December 15, 1993, which shall remain in
effect until final decision on the case.
No costs.
SO ORDERED.
Davide, Jr. (C.J.) and Ynares-Santiago, JJ., concur.
Puno, J., No part due to relationship.
Kapunan, J., On official leave.
Judgment set aside, case remanded to DARAB.
Notes.While the right to a balanced and healthful ecology is to be found under
the Declaration of Principles and State Policies and not under the Bill of Rights, it
does not follow that it is less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and self-perpetuation
aptly and fittingly stressed by the petitionersthe advancement of which may even
be said to predate all governments and constitutions. As a matter of fact, these basic
rights need not even be written in the Constitutions for they are assumed to exist
from the inceptions of humankind. (Oposa vs. Factoran, Jr., 224 SCRA 792 [1993])
The content and the manner of just compensation provided for in Section 18 of the
CARP Law is not violative of the Constitution. (Santos vs. Land Bank of the
Philippines, 340 SCRA 59 [2000])

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