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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

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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.

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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 State’s 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 State’s 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
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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-

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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
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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.

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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
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private respondents.

PARDO, J.:

The case before the Court is a petition for 1review on

certiorari of the decision of the Court of Appeals affirming
the decision of the 2
Department of Agrarian Reform
Adjudication Board (hereafter, DARAB) ordering the
compulsory acquisition of petitioner’s 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

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potable water to the Canlubang community, and 3that

ninety (90) light industries are now located in the area.
Petitioner alleged that respondents usurped its rights
over the property, thereby destroying the ecosystem.4
Sometime in December 1985, respondents filed a civil case
with the Regional Trial Court, Laguna, seeking an
easement of a right of way to 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 5 separate
complaints for forcible entry against respondents.
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.
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On August 11, 1989, the Municipal Agrarian Reform

Officer (MARO) of Cabuyao, Laguna issued a notice of
coverage to petitioner and invited its officials or6
representatives to a conference on August 18, 1989.
During the meeting, the following 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.

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the occupants of the land were squatters,

7
who were not
entitled to any land as beneficiaries.
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 8
of Agriculture,
municipality of Cabuyao, Laguna.
On September 8, 1989, MARO Belen dela Torre made a
summary investigation report and forwarded the
Compulsory Acquisition Folder Indorsement (CAFI) to 9
the
Provincial Agrarian Reform Officer (hereafter, PARO).
On September 21, 1989, PARO Durante Ubeda
forwarded his endorsement of the compulsory acquisition to
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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, Land10 Bank of the Philippines for further review
and evaluation.
On December 12, 1989, Secretary of Agrarian Reform
Miriam Defensor
11
Santiago sent two (2) notices of
acquisition to petitioner, stating that petitioner’s
landholdings 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. 12
On February 6, 1990, petitioner SRRDC in two letters
separately addressed to 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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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.

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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 (CACF’s) to the
Executive Director of the DAR Adjudication Board for
proper administrative valuation. Acting on the CACF’s, 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 before13it proceeds with the
summary land valuation proceedings.
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.

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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

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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 counsel’s 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 SRRDC’s 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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land subject of the case were classified as “industrial Park”

per Sanguniang
14
Bayan Resolution No. 45-89 dated March
29, 1989.
To avert any opportunity that the DARAB might
distribute the lands to the farmer beneficiaries,
15
on April
30, 1991, petitioner filed a petition with DARAB to
disqualify private respondents as beneficiaries. However,
DARAB refused to address the issue of beneficiaries.
In the meantime, on January 20, 1992, the (Regional 16
Trial Court, Laguna, Branch 24, rendered a decision,
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finding that private respondents illegally entered the

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. 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. 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.

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“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;

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“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;
“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 17
Municipal Agrarian Reform Office of Cabuyao, Laguna.”

On January 20, 1992, the Regional Trial Court, Laguna, 18

Branch 24, rendered a decision in Civil Case No. B-2333
ruling that respondents were builders in bad faith.
On February 6, 1992, petitioner filed with the Court
19
of
Appeals a petition for review of the DARAB decision. On
November 5, 1993, the Court of Appeals 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
20
Special Agrarian Court on the issue of just
compensation.”

_____________

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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21
Hence, this petition.
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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 22
vegetation, effective today
until further orders from this Court.”

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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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:

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.
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.
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.
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.
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

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Philippines. The DAR shall thereafter proceed with the

redistribution of the land to the qualified beneficiaries.

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f.) Any party who disagrees

23
with the decision may bring the
matter to the court of 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 DAR’s 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
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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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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:

A. The Municipal Agrarian Reform Officer (MARO),

with the assistance of the pertinent Barangay
Agrarian Reform Committee (BARC), shall:

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. 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:
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a) CARP CA Form 1—MARO investigation report

b) CARP CA Form No. 2—Summary investigation
report findings and evaluation
c) CARP CA Form 3—Applicant’s Information sheet
d) CARP CA Form 4—Beneficiaries undertaking
e) CARP CA Form 5—Transmittal 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.

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.

4. Submit all completed case folders to the Provincial

Agrarian Reform Officer (PARO).

B. The PARO shall:

1. Ensure the individual case folders are forwarded to him by

his MAROs.
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.

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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. 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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190 SUPREME COURT REPORTS ANNOTATED

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The LBP representative and the MARO concerned shall be

furnished a copy each of his report.

C. DAR Central Office, specifically through the Bureau of

Land Acquisition and Distribution (BLAD), shall:

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. 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. Should the landowner accept the DAR’s 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
DARAB’s decision on just compensation, the BLAD shall
prepare and submit to the Secretary for approval the
required order of acquisition.
4. Upon the landowner’s receipt of payment, in case of
acceptance, or upon deposit of payment in the designated

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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
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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 State’s police power and the
power of eminent domain. To the extent that the CARL
prescribes reten-

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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 outright24
change of ownership is
contemplated either.”
Consequently, petitioner questioned before the Court of
Appeals DARAB’s decision ordering 25
the compulsory
acquisition of petitioner’s property. Here, petitioner
pressed the question of whether the property was a
watershed, not covered by CARP.
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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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Sta. Rosa Realty Development Corporation vs. Court of Appeals

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
26
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
27
land uses as present
and future projection of needs.”
In Natalia
28
Realty, Inc. v. Department of Agrarian
Reform, we held that lands classified as non-agricultural
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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 parcels29of land in question form a vital
part of a watershed area.

_______________

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

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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 couldn’t 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 resource—water. 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:

7.2 The Casile farmers should be relocated and given financial

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

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
Baños 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 Baños in 1993.

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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
31
the
area in question as a permanent watershed reserved.”

_____________

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

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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
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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
petitioners—the 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])

——o0o——

198

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