8/25/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 367 8/25/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 367

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,
VOL. 367, OCTOBER 12, 2001 175
MARIO C. VILLA, NATIVIDAD A. VILLA,
Sta. Rosa Realty Development Corporation vs. Court of JACINTA S. ALVARADO, RODOLFO ANGELES,
Appeals DOMINGO A. CANUBAS, EDGARDO L.
*
CASALME, QUIRINO DE LEON, LEONILO M.
G.R. No. 112526. October 12, 2001. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R.
LANGUE, QUINTILLANO LANGUE, REYNALDO
STA. ROSA REALTY DEVELOPMENT LANGUE, ROMEO S. LANGUE, BONIFACIO
CORPORATION, petitioner, vs. COURT OF VILLA, ROGELIO AYENDE, ANTONIO B.
APPEALS, JUAN B. AMANTE, FRANCISCO L. FERNANDEZ, ZACARLAS HERRERA, ZACARIAS
ANDAL, LUCIA ANDAL, ANDREA P. AYENDE, HERRERA, REYNARIO U. LAZO, AGAPITO
LETICIA P. BALAT, FILOMENA B. BATINO, MATIENZO, DIONISIO F. PETATE, LITO G. REYES,
ANICETO A. BURGOS, JAIME A. BURGOS, JOSE M. SUBOL, CELESTINO G. TOPINO, ROSA C.
FLORENCIA CANUBAS, LORETO A. CANUBAS, AMANTE, SOTERA CASALME, REMIGIO M.
MAXIMO A. CANUBAS, REYNALDO CARINGAL, SILVERIO, THE
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 * FIRST DIVISION.
SAGUN, FELICISIMO A. GONZALES, FRANCISCO
A. GONZALES, GREGORIO GONZALES, 176
LEODEGARIO N. GONZALES, PASCUAL P.
GONZALES, ROLANDO A. GONZALES, 176 SUPREME COURT REPORTS ANNOTATED
FRANCISCO A. JUANGCO, GERVACIO A.
JUANGCO, LOURDES U. LUNA, ANSELMO M. Sta. Rosa Realty Development Corporation vs. Court of
MANDANAS, CRISANTO MANDANAS EMILIO M. Appeals
MANDANAS, GREGORIO A. MANDANAS, MARIO
G. MANDANAS, TEODORO MANDANAS,
CONSTANCIO B. MARQUEZ, EUGENIO B. SECRETARY OF AGRARIAN REFORM,
MARQUEZ, ARMANDO P. MATIENZO, DANIEL D. DEPARTMENT OF AGRARIAN REFORM
MATIENZO, MAXIMINO MATIENZO, PACENCIA P. ADJUDICATION BOARD, LAND BANK OF THE

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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 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.
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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
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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
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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 on1
certiorari of the decision of the Court of Appeals
affirming the decision of the 2Department 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
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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.
VOL. 367, OCTOBER 12, 2001
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
potable water to the Canlubang community, and that 3
ninety (90) light industries are now located in the area.
Petitioner alleged that respondents usurped its rights
over the property, thereby destroying the ecosystem.
Sometime
4
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
separate complaints for forcible entry against
5 180
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.
179
On August 17, 1989, petitioner filed with the
Municipal Agrarian Reform Office (MARO), Cabuyao,
179 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
SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
the occupants of the land were squatters,
7
who were not
entitled to any land as beneficiaries.
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On August 29, 1989, the farmer beneficiaries 8 Original Record, Folder I, Letter of Felicito B. Buban,
together with the BARC chairman answered the protest Department of Agriculture, dated August 29, 1989.
and objection stating that the slope of the land is not 9 Ibid., Summary Investigation Report.
18% but only 5-10% and that the land is suitable and 10 Original Record, Folder II.
economically viable for agricultural purposes, as 11 Folder I, Notice of Acquisition.
evidenced by the Certification of the Department8
of 12 Ibid., Letters.
Agriculture, municipality of Cabuyao, Laguna.
181
On September 8, 1989, MARO Belen dela Torre
made a summary investigation report and forwarded the
Compulsory Acquisition Folder Indorsement (CAFI) to VOL. 367, OCTOBER 12, 2001 181
the Provincial Agrarian Reform Officer (hereafter,
9
Sta. Rosa Realty Development Corporation vs. Court of
PARO).
Appeals
On September 21, 1989, PARO Durante Ubeda
forwarded his endorsement of the compulsory
acquisition to the Secretary of Agrarian Reform. Bureau of Land Acquisition and Distribution, sent its
On November 23, 1989, Acting Director Eduardo C. formal protest, protesting not only the amount of
Visperas of the Bureau of Land Acquisition and compensation offered by DAR for the property but also
Development, DAR forwarded two (2) Compulsory the two (2) notices of acquisition.
Acquisition Claim Folders covering the landholding of On March 17, 1990, Secretary Abad referred the case
SRRDC, covered by TCT Nos. T-81949 and T-84891 to to the DARAB for summary proceedings to determine
the President, Land Bank of the Philippines for further just compensation under R.A. No. 6657, Section 16.
review and evaluation.
10
On March 23, 1990, the LBP returned the two (2)
On December 12, 1989, Secretary of Agrarian claim folders previously referred for review and
Reform Miriam Defensor Santiago sent two (2) notices evaluation to the Director of BLAD mentioning its
11
of acquisition to petitioner, stating that petitioner’s inability to value the SRRDC landholding due to some
landholdings covered by TCT Nos. 81949 and 84891, deficiencies.
containing an area of 188.2858 and 58.5800 hectares, On March 28, 1990, Executive Director Emmanuel
valued at P4,417,735.65 and P1,220,229.93, S. Galvez wrote Land Bank President Deogracias Vistan
respectively, had been placed under the Comprehensive to forward the two (2) claim folders involving the
Agrarian Reform Program. property of SRRDC to the DARAB for it to conduct
On12 February 6, 1990, petitioner SRRDC in two summary proceedings to determine the just
letters separately addressed to Secretary Florencio B. compensation for the land.
Abad and the Director, 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
7 Petition, Annex “B”, Rollo, Vol I, pp. 56-57.

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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 before it13proceeds 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.
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
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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 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
183
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VOL. 367, OCTOBER 12, 2001
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
land subject of the case were classified as “industrial
Park” per Sanguniang14 Bayan Resolution No. 45-89
dated March 29, 1989.
To avert any opportunity that the DARAB might
distribute the lands to the farmer beneficiaries, on April
15
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 (Regional16
Trial Court, Laguna, Branch 24, rendered a decision,
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;
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183 “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
“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;
“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
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the same can be transferred by the Register of Deeds 185

to the name of the Republic of the Philippines;
“5. The Regional Office of the Department of Agrarian VOL. 367, OCTOBER 12, 2001 185
Reform through its Municipal and Provincial
Agrarian Reform Office to take immediate possession Sta. Rosa Realty Development Corporation vs. Court of
on the said landholding after Title shall have been Appeals
transferred to the name of the Republic of the 21

Philippines, and distribute the same to the immediate Hence, this petition.
issuance of Emancipation Patents to the farmer- On December 15, 1993, the Court issued a
beneficiaries as determined by the Municipal Resolution which reads:
17
Agrarian Reform Office of Cabuyao, Laguna.”
“G.R. Nos. 112526 (Sta. Rosa Realty Development
On January 20, 1992, the Regional Trial Court, Laguna, Corporation vs. Court of Appeals, et. al.)—Considering the
Branch 24, rendered a decision in Civil Case No. B- compliance, dated December 13, 1993, filed by counsel for
18
2333 ruling that respondents were builders in bad faith. petitioner, with the resolution of December 8, 1993 which
On February 6, 1992, petitioner filed with the Court required petitioner to post a cash bond or surety bond in the
of Appeals a petition for review of the DARAB amount of P1,500,000.00 Pesos before issuing a temporary
19
decision. On November 5, 1993, the Court of Appeals restraining order prayed for, manifesting that it has posted a
promulgated a decision affirming the decision of CASH BOND in the same amount with the Cashier of the
DARAB. The decretal portion of the Court of Appeals Court as evidenced by the attached official receipt No.
decision reads: 315519, the Court resolved to ISSUE the Temporary
Retraining Order prayed for.
“WHEREFORE, premises considered, the DARAB decision “The Court therefore, resolved to restrain: (a) the
dated September 19, 1991 is AFFIRMED, without prejudice Department of Agrarian Reform Adjudication Board from
to petitioner Sta. Rosa Realty Development Corporation enforcing its decision dated December 19, 1991 in DARAB
ventilating its case with the Special Agrarian Court on the Case No. JC-R-IV-LAG-0001, which was affirmed by the
20
issue of just compensation.” 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
17 Folder JC-R-IV-LAG-0001-C.O., Decision, penned by Benjamin landholding in dispute after title shall have been transferred to
T. Leong, Chairman, concurred in by Renato B. Padilla, Lorenzo R. the name of the Republic of the Philippines and to distribute
Reyes, Leopoldo M. Serrano, Jr. and Josefina M. Sidiangco, members. the same through the immediate issuance of Emancipation
18 Petition, Annex “F”, Vol I, SC Rollo, pp. 70-83. Patents to the farmer-beneficiaries as determined by the
19 Docketed as CA-G.R. SP No. 27234. Municipal Agrarian Officer of Cabuyao, Laguna, (b) The
20 CA Rollo, Decision, Martin, Jr., J., ponente, Chua and Guerrero, Department of Agrarian Reform and/or the Department of
JJ., concurring, pp. 499-529. Agrarian Reform Adjudication Board, and all persons acting

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for and in their behalf and under their authority from entering a.) After having identified the land, the landowners and
the properties involved in this case and from introducing the beneficiaries, the DAR shall send its notice to
permanent infrastructures thereon; and (c) the private acquire the land to the owners thereof, by personal
respondents from further clearing the said properties of their delivery or registered mail, and post the same in a
green cover by the cutting or burning of trees and other conspicuous place in the municipal building and
vegetation,
22
effective today until further orders from this barangay hall of the place where the property is
Court.” located. Said notice shall contain the offer of the
DAR to pay corresponding value in accordance with
The main issue raised is whether the property in the valuation set forth in Sections 17, 18, and other
question is covered by CARP despite the fact that the pertinent provisions hereof.
entire property was formed part of a watershed area
b.) Within thirty (30) days from the date of the receipt of
prior to the enactment of R.A. No. 6657.
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.
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 c.) If the landowner accepts the offer of the DAR, the
the petition G.R. No. 112526, Rollo, Vol. II, pp. 780-781. LBP shall pay the landowner the purchase price of the
22 Resolution, Rollo, pp. 296-300. land within thirty (30) days after he executes and
delivers a deed of transfer in favor of the government
186 and other muniments of title.
d.) In case of rejection or failure to reply, the DAR shall
186 SUPREME COURT REPORTS ANNOTATED conduct summary administrative proceedings to
determine the compensation for the land requiring the
Sta. Rosa Realty Development Corporation vs. Court of
landowner, the LBP and other interested parties to
Appeals
submit fifteen (15) days from receipt of the notice.
After the expiration of the above period, the matter is
Under Republic Act No. 6657, there are two modes of deemed submitted for decision. The DAR shall
acquisition of private land: compulsory and voluntary. decide the case within thirty (30) days after it is
In the case at bar, the Department of Agrarian Reform submitted for decision.
sought the compulsory acquisition of subject property
e.) Upon receipt by the landowner of the corresponding
under R.A. No. 6657, Section 16, to wit:
payment, or, in case of rejection or no response from
“Sec. 16. Procedure for Acquisition of Private Lands.—For the landowner, upon the deposit with an accessible
purposes of acquisition of private lands, the following bank designated by the DAR of the compensation in
procedures shall be followed: 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

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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.
VOL. 367, OCTOBER 12, 2001
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
f.) Any party who disagrees23
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
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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
187 parties may submit evidence on just compensation
within fifteen days from notice. Within thirty days from
187
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.
188
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
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Program (CARP). Under Sec. 16 of the CARL, the first e) CARP CA Form 5—Transmittal report to the
step in compulsory acquisition is the identification of PARO
the land, the landowners and the farmer beneficiaries.
However, the law is silent on how the identification 189
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 VOL. 367, OCTOBER 12, 2001 189
identification of such lands. The procedure is as follows: Sta. Rosa Realty Development Corporation vs. Court of
Appeals
A. The Municipal Agrarian Reform Officer
(MARO), with the assistance of the pertinent
The MARO/BARC shall certify that all information contained
Barangay Agrarian Reform Committee
in the above-mentioned forms have been examined and
(BARC), shall:
verified by him and that the same are true and correct.

1. Update the masterlist of all agricultural lands 3. Send notice of coverage and a letter of invitation to a
covered under the CARP in his area of conference/meeting to the landowner covered by the
responsibility; the masterlist should include Compulsory Case Acquisition Folder. Invitations to
such information as required under the attached the said conference meeting shall also be sent to the
CARP masterlist form which shall include the prospective farmer-beneficiaries, the BARC
name of the landowner, landholding area, representatives, the Land Bank of the Philippines
TCT/OCT number, and tax declaration number. (LBP) representative, and the other interested parties
2. Prepare the Compulsory Acquisition Case to discuss the inputs to the valuation of the property.
Folder (CACF) for each title (OCT/TCT) or
landholding covered under Phase I and II of the He shall discuss the MARO/BARC investigation report
CARP except those for which the landowners and solicit the views, objection, agreements or suggestions of
have already filed applications to avail of other the participants thereon. The landowner shall also ask to
modes of land acquisition. A case folder shall indicate his retention area. The minutes of the meeting shall be
contain the following duly accomplished signed by all participants in the conference and shall form an
forms: integral part of the CACF.

4. Submit all completed case folders to the Provincial

a) CARP CA Form 1—MARO investigation
Agrarian Reform Officer (PARO).
report
b) CARP CA Form No. 2—Summary B. The PARO shall:
investigation report findings and evaluation
c) CARP CA Form 3—Applicant’s Information 1. Ensure the individual case folders are forwarded to
sheet him by his MAROs.
d) CARP CA Form 4—Beneficiaries undertaking
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2. Immediately upon receipt of a case folder, compute 2. Prepare, for the signature of the Secretary or her duly
the valuation of the land in accordance with A.O. No. authorized representative, a notice of acquisition
6, series of 1988. The valuation worksheet and the (CARP Form 8) for the subject property. Serve the
related CACF valuation forms shall be duly certified notice to the landowner personally or through
correct by the PARO and all the personnel who registered mail within three days from its approval.
participated in the accomplishment of these forms. The notice shall include among others, the area
3. In all cases, the PARO may validate the report of the subject of compulsory acquisition, and the amount of
MARO through ocular inspection and verification of just compensation offered by DAR.
the property. This ocular inspection and verification 3. Should the landowner accept the DAR’s offered
shall be mandatory when the computed value exceeds value, the BLAD shall prepare and submit to the
P500,000 per estate. Secretary for approval the order of acquisition.
4. Upon determination of the valuation, forward the case However, in case of rejection or non-reply, the DAR
folder, together with the duly accomplished valuation Adjudication Board (DARAB) shall conduct a
forms and his recommendations, to the Central summary administrative hearing to determine just
Office. compensation, in accordance with the procedures
provided under Administrative Order No. 13, series
190 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
190 SUPREME COURT REPORTS ANNOTATED
required order of acquisition.
Sta. Rosa Realty Development Corporation vs. Court of 4. Upon the landowner’s receipt of payment, in case of
Appeals acceptance, or upon deposit of payment in the
designated bank, in case of rejection or non-response,
The LBP representative and the MARO concerned shall be the Secretary shall immediately direct the pertinent
furnished a copy each of his report. Register of Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the Republic
C. DAR Central Office, specifically through the Bureau of the Philippines. Once the property is transferred,
of Land Acquisition and Distribution (BLAD), shall: the DAR, through the PARO, shall take possession of
the land for redistribution to qualified beneficiaries.”
1. Within three days from receipt of the case folder from
the PARO, review, evaluate and determine the final 191
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 VOL. 367, OCTOBER 12, 2001 191
and the personnel directly participating in the review Sta. Rosa Realty Development Corporation vs. Court of
and final valuation. Appeals

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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)
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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-
192
192 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
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
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of possession and ownership of the land to the Watersheds may be defined as “an area drained by a
government on receipt of the landowner of the river and its tributaries and enclosed by a boundary or
corresponding payment or the deposit by the DAR of divide which separates it from adjacent watersheds.”
the compensation in cash or LBP bonds with an Watersheds generally are outside the commerce of man,
accessible bank. Until then, title also remains with the so why was the Casile property titled in the name of
landowner. No outright
24
change of ownership is SRRDC? The answer is simple. At the time of the
contemplated either.” titling, the Department of Agriculture and Natural
Consequently, petitioner questioned before the Court Resources had not the declared the property as
of Appeals DARAB’s decision ordering 25
the compulsory watershed area. The parcels of land in Barangay Casile
acquisition of petitioner’s property. Here, petitioner were declared as “PARK” by a Zoning Ordinance
pressed the question of whether the property was a adopted by the municipality of Cabuyao in 1979, as
watershed, not covered by CARP. certified by the Housing and Land Use Regulatory
Article 67 of the Water Code of the Philippines (P.D. Board. On January 5, 1994, the Sangguniang 26
Bayan of
No. 1067) provides: Cabuyao, Laguna issued a Resolution voiding the
Zoning classification of the lands at Barangay Casile as
“Art. 67. Any watershed or any area of land adjacent to any Park and declaring that the land was now classified as
surface water or overlying any ground water may be declared agricultural land.
by the Department of Natural resources as a protected area. The authority of the municipality of Cabuyao,
Rules and Regulations may be promulgated by such Laguna to issue zoning classification is an exercise of its
Department to prohibit or control such activities by the owners police power, not the power of eminent domain. “A
or occupants thereof within the protected area which may zoning ordinance is defined as a local city or municipal
damage or cause the deterioration of the surface water or legislation which logically arranges, prescribes, defines
ground water or and apportions a given political subdivision into specific
27
land uses as present and future projection of needs.”
______________ In Natalia Realty, Inc. v. Department of Agrarian
28

24 175 SCRA 343, 391 (1989).

Reform, we held that lands classified as non-
25 In CA-G.R. SP No. 27234.
agricultural prior to the effectively of the CARL, may
not be compulsorily acquired for distribution to farmer
193 beneficiaries.
However, more than the classification of the subject
land as PARK is the fact that subsequent studies and
VOL. 367, OCTOBER 12, 2001 193
survey showed that the parcels 29of land in question form
Sta. Rosa Realty Development Corporation vs. Court of a vital part of a watershed area.
Appeals

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

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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.
194
194 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
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
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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 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
195
VOL. 367, OCTOBER 12, 2001 195
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
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:
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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 Estate30 in 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.
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
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protect and maintain31 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.
196
196 SUPREME COURT REPORTS ANNOTATED
Sta. Rosa Realty Development Corporation vs. Court of
Appeals
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
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thereto, communal burial grounds and cemeteries, penal SO ORDERED.

colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers, and Davide, Jr. (C.J.) and Ynares-Santiago, JJ.,
all lands with eighteen percent (18%) slope and over, except concur.
those already developed shall be exempt from coverage of this Puno, J., No part due to relationship.
Act.” Kapunan, J., On official leave.

Hence, during the hearing at DARAB, there was proof Judgment set aside, case remanded to DARAB.
showing that the disputed parcels of land may be
excluded from the compulsory acquisition coverage of Notes.—While the right to a balanced and healthful
CARP because of its very high slopes. ecology is to be found under the Declaration of
To resolve the issue as to the true nature of the Principles and State Policies and not under the Bill of
parcels of land involved in the case at bar, the Court Rights, it does not follow that it is less important than
directs the DARAB to conduct a re-evaluation of the any of the civil and political rights enumerated in the
issue. latter. Such a right belongs to a different category of
IN VIEW WHEREOF, the Court SETS ASIDE the rights altogether for it concerns nothing less than self-
decision of the Court of Appeals in CA-G.R. SP No. preservation and self-perpetuation—aptly and fittingly
27234. stressed by the petitioners—the advancement of which
In lieu thereof, the Court REMANDS the case to the may even be said to predate all governments and
DARAB for re-evaluation and determination of the constitutions. As a matter of fact, these basic rights need
nature of the parcels of land involved to resolve the not even be written in the Constitutions for they are
issue of its coverage by the Comprehensive Land assumed to exist from the inceptions of humankind.
Reform Program. (Oposa vs. Factoran, Jr., 224 SCRA 792 [1993])
In the meantime, the effects of the CLOAs issued by The content and the manner of just compensation
the DAR to supposed farmer beneficiaries shall continue provided for in Section 18 of the CARP Law is not
to be stayed by the violative of the Constitution. (Santos vs. Land Bank of
the Philippines, 340 SCRA 59 [2000])
197
——o0o——

VOL. 367, OCTOBER 12, 2001 197 198

Sta. Rosa Realty Development Corporation vs. Court of
Appeals

temporary restraining order issued on December 15,

1993, which shall remain in effect until final decision on
the case.
No costs.
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