VOL. 367, OCTOBER 12, 175
Court of Appeals
2001
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
G.R. No. 112526. October 12, 2001.*
STA. ROSA REALTY DEVELOPMENT CORPORATION, petitioner, vs. COURT OF
APPEALS, JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P.
AYENDE, LETICIA P. BALAT, FILOMENA B. BATINO, ANICETO A. BURGOS,
JAIME A. BURGOS, FLORENCIA CANUBAS, LORETO A. CANUBAS, MAXIMO A.
CANUBAS, REYNALDO CARINGAL, QUIRINO C. CASALME, BENIGNO A.
CRUZAT, ELINO A. CRUZAT, GREGORIO F. CRUZAT, RUFINO C. CRUZAT,
SERGIO CRUZAT, SEVERINO F. CRUZAT, VICTORIA DE SAGUN, SEVERINO DE
SAGUN, FELICISIMO A. GONZALES, FRANCISCO A. GONZALES, GREGORIO
GONZALES, LEODEGARIO N. GONZALES, PASCUAL P. GONZALES, ROLANDO
A. GONZALES, FRANCISCO A. JUANGCO, GERVACIO A. JUANGCO, LOURDES U.
LUNA, ANSELMO M. MANDANAS, CRISANTO MANDANAS EMILIO M.
MANDANAS, GREGORIO A. MANDANAS, MARIO G. MANDANAS, TEODORO
MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO B. MARQUEZ, ARMANDO
P. MATIENZO, DANIEL D. MATIENZO, MAXIMINO MATIENZO, PACENCIA P.
MATIENZO, DOROTEA L. PANGANIBAN, JUANITO T. PEREZ, MARIANITO T.
PEREZ, SEVERO M. PEREZ, INOCENCIA S. PASQUIZA, BIENVENIDO F. PETATE,
IGNACIO F. PETATE, JUANITO PETATE, PABLO A. PLATON, PRECILLO V.
PLATON, AQUILINO B. SUBOL, CASIANO T. VILLA, DOMINGO VILLA, JUAN T.
VILLA, MARIO C. VILLA, NATIVIDAD A. VILLA, JACINTA S. ALVARADO,
RODOLFO ANGELES, DOMINGO A. CANUBAS, EDGARDO L. CASALME,
QUIRINO DE LEON, LEONILO M. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R.
LANGUE, QUINTILLANO LANGUE, REYNALDO LANGUE, ROMEO S. LANGUE,
BONIFACIO VILLA, ROGELIO AYENDE, ANTONIO B. FERNANDEZ, ZACARLAS
HERRERA, ZACARIAS HERRERA, REYNARIO U. LAZO, AGAPITO MATIENZO,
DIONISIO F. PETATE, LITO G. REYES, JOSE M. SUBOL, CELESTINO G. TOPINO,
ROSA C. AMANTE, SOTERA CASALME, REMIGIO M. SILVERIO, THE
_______________
*
 FIRST DIVISION.
176
176 SUPREME COURT REPORTS
ANNOTATED
Sta. Rosa Realty Development
1|Page
Corporation vs.
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 the maximum area allowed, there is also a taking under the
power of eminent domain. The taking contemplated is not mere limitation on the use of the
land. What is required is the surrender of the title to and physical possession of the excess
and all beneficial rights accruing to the owner in favor of the farmer beneficiary.
Same; Same; Same; The law requires payment of just compensation in cash or Land
Bank of the Philippines (LBP) bonds, not by trust account.—In the case at bar, DAR has
executed the taking of the property in question. However, payment of just compensation
was not in accordance with the procedural requirement. The law required payment in cash
or LBP bonds, not by trust account as was done by DAR In Association of Small
Landowners in the Philippines v. Secretary of Agrarian Reform, we held that “The CARP
Law, for its part, conditions the transfer of posses-
177
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OCTOBER 12, 2001
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
 sion and ownership of the land to the government on receipt of the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash or LBP
bonds with an accessible bank. Until then, title also remains with the landowner. No
outright change of ownership is contemplated either.”
Same; Natural Resources; Watersheds; Words and Phrases; Watersheds generally
are outside the commerce of man; Watersheds may be defined as “an area drained by a
river and its tributaries and enclosed by a boundary or divide which separates it from
adjacent watersheds.”—Watersheds may be defined as “an area drained by a river and its
tributaries and enclosed by a boundary or divide which separates it from adjacent
watersheds.” Watersheds generally are outside the commerce of man, so why was the
Casile property titled in the name of SRRDC? The answer is simple. At the time of the
titling, the Department of Agriculture and Natural Resources had not the declared the
property as watershed area.
Same; Same; Same; Municipal Corporations; Zoning Ordinances; Police
Power; Eminent Domain; The authority of a municipality to issue zoning classification is
an exercise of its police power, not the power of eminent domain.—The parcels of land in
Barangay Casile were declared as “PARK” by a Zoning Ordinance adopted by the
municipality of Cabuyao in 1979, as certified by the Housing and Land Use Regulatory
Board. On January 5, 1994, the Sangguniang Bayan of Cabuyao, Laguna issued a
Resolution voiding the Zoning classification of the lands at Barangay Casile as Park and
declaring that the land was now classified as agricultural land. The authority of the
municipality of Cabuyao, Laguna to issue zoning classification is an exercise of its police
power, not the power of eminent domain. “A zoning ordinance is defined as a local city or
municipal legislation which logically arranges, prescribes, defines and apportions a given
political subdivision into specific land uses as present and future projection of needs.”
Same; Same; Same; Lands classified as non-agricultural prior to the effectivity of
the CARL, may not be compulsorily acquired for distribution to farmer beneficiaries.—
In Natalia Realty, Inc. v. Department of Agrarian Reform, we held that lands classified as
non-agricultural prior to the effectively of the CARL, may not be compulsorily acquired for
distribution to farmer beneficiaries. However, more than the classification of the subject
land as PARK is the fact that subsequent studies and survey showed that the parcels of land
in question form a vital part of a watershed area.
178
178 SUPREME COURT
REPORTS ANNOTATED
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
Same; Same; Same; The most important product of a watershed is water which is
one of the most important human necessity; Protection of watersheds is an
2|Page
“intergenerational responsibility” that needs to be answered now.—The definition does
not exactly depict the complexities of a watershed. The most important product of a
watershed is water which is one of the most important human necessity. The protection of
watersheds ensures an adequate supply of water for future generations and the control of
flashfloods that not only damage property but cause loss of lives. Protection of watersheds
is an “intergenerational responsibility” that needs to be answered now.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Romulo, Mabanta, Buenaventura, Sayoc & Delos Angeles Law Offices for
petitioner.
     Miguel M. Gonzales, Norberto L. Martinez and Rosemarie M. Oseteo and Free
Legal Assistance Group for private respondents.
PARDO, J.:
The case before the Court is a petition for review on certiorari of the decision of the Court
of Appeals1 affirming the decision of the Department of Agrarian Reform Adjudication
Board2 (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.
179
VOL. 367, OCTOBER 12, 179
2001
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
potable water to the Canlubang community, and that ninety (90) light industries are now
located in the area.3
 Petitioner alleged that respondents usurped its rights over the property, thereby evidenced by the Certification of the Department of Agriculture, municipality of Cabuyao,
destroying the ecosystem. Sometime in December 1985, respondents filed a civil case 4 with Laguna.8
the Regional Trial Court, Laguna, seeking an easement of a right of way to and from On September 8, 1989, MARO Belen dela Torre made a summary investigation report
Barangay Casile. By way of counterclaim, however, petitioner sought the ejectment of and forwarded the Compulsory Acquisition Folder Indorsement (CAFI) to the Provincial
private respondents. Agrarian Reform Officer (hereafter, PARO).9
In October 1986 to August 1987, petitioner filed with the Municipal Trial Court, On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the
Cabuyao, Laguna separate complaints for forcible entry against respondents.5 compulsory acquisition to the Secretary of Agrarian Reform.
After the filling of the ejectment cases, respondents petitioned the Department of On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land
Agrarian Reform (DAR) for the compulsory acquisition of the SRRDC property under the Acquisition and Development, DAR forwarded two (2) Compulsory Acquisition Claim
CARP. Folders covering the landholding of SRRDC, covered by TCT Nos. T-81949 and T-84891
On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao, to the President, Land Bank of the Philippines for further review and evaluation. 10
Laguna issued a notice of coverage to petitioner and invited its officials or representatives On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago sent
to a conference on August 18, 1989. 6 During the meeting, the following were present: two (2) notices of acquisition11 to petitioner, stating that petitioner’s landholdings covered
representatives of petitioner, the Land Bank of the Philippines, PARCCOM, PARO of by TCT Nos. 81949 and 84891, containing an area of 188.2858 and 58.5800 hectares,
Laguna, MARO of Laguna, the BARC Chairman of Barangay Casile and some potential valued at P4,417,735.65 and P1,220,229.93, respectively, had been placed under the
farmer beneficiaries, who are residents of Barangay Casile, Cabuyao, Laguna. It was the Comprehensive Agrarian Reform Program.
consensus and recommendation of the assembly that the landholding of SRRDC be placed On February 6, 1990, petitioner SRRDC in two letters12 separately addressed to
under compulsory acquisition. Secretary Florencio B. Abad and the Director,
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 7
 Petition, Annex “B”, Rollo, Vol I, pp. 56-57.
was rugged in terrain with slopes of 18% and above and that 8
 Original Record, Folder I, Letter of Felicito B. Buban, Department of Agriculture,
______________ dated August 29, 1989.
9
 Ibid., Summary Investigation Report.
 Petition, Rollo, Vol. 1, p. 10.
3 10
 Original Record, Folder II.
 Petition, Regional Trial Court, Laguna, docketed as Civil Case No. B-2333, Rollo,
4 11
 Folder I, Notice of Acquisition.
Vol. I, p. 11. 12
 Ibid., Letters.
5
 Civil Cases Nos. 250, 258, 260, 262 and 266, p. 11.
6
 Petition, Annex “A”, Rollo, Vol. I, p. 55. 181
VOL. 367, OCTOBER 12, 181
180
2001
180 SUPREME COURT REPORTS
Sta. Rosa Realty Development
ANNOTATED
Corporation vs. Court of Appeals
Sta. Rosa Realty Development Bureau of Land Acquisition and Distribution, sent its formal protest, protesting not only the
Corporation vs. Court of Appeals amount of compensation offered by DAR for the property but also the two (2) notices of
the occupants of the land were squatters, who were not entitled to any land as acquisition.
beneficiaries.7 On March 17, 1990, Secretary Abad referred the case to the DARAB for summary
On August 29, 1989, the farmer beneficiaries together with the BARC chairman proceedings to determine just compensation under R.A. No. 6657, Section 16.
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

3|Page
 On March 23, 1990, the LBP returned the two (2) claim folders previously referred for
review and evaluation to the Director of BLAD mentioning its inability to value the
SRRDC landholding due to some deficiencies.
On March 28, 1990, Executive Director Emmanuel S. Galvez wrote Land Bank
President Deogracias Vistan to forward the two (2) claim folders involving the property of
SRRDC to the DARAB for it to conduct summary proceedings to determine the just
compensation for the land.
On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines stating that
its property under the aforesaid land titles were exempt from CARP coverage because they
had been classified as watershed area and were the subject of a pending petition for land
conversion.
On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2) claim
folders (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 it proceeds with the summary land valuation
proceedings.13
The issues that need to be threshed out were as follows: (1) whether the subject parcels
of land fall within the coverage of the Compulsory Acquisition Program of the CARP; and
(2) whether the petition for land conversion of the parcels of land may be granted.
On December 7, 1990, the Office of the Secretary, DAR, through the Undersecretary
for Operations (Assistant Secretary for Luzon Operations) and the Regional Director of
Region IV, submitted a
____________
13
 Folder, JC-R-IV-LAG-0001-GO, Decision DARAB, pp. 23-25.
182
182 SUPREME COURT REPORTS
ANNOTATED
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
report answering the two issues raised. According to them, firstly, by virtue of the issuance
of the notice of coverage on August 11, 1989, and notice of acquisition on December 12,
1989, the property is covered under compulsory acquisition. Secondly, Administrative
Order No. 1, Series of 1990, Section IV D also supports the DAR position on the coverage
of the said property. During the consideration of the case by the Board, there was no
pending petition for land conversion specifically concerning the parcels of land in question.
On February 19, 1991, the Board sent a notice of hearing to all the parties interested,
setting the hearing for the administrative valuation of the subject parcels of land on March
4|Page
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
VOL. 367, OCTOBER 12, 183
2001
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
land subject of the case were classified as “industrial Park” per Sanguniang Bayan
Resolution No. 45-89 dated March 29, 1989.14
To avert any opportunity that the DARAB might distribute the lands to the farmer
beneficiaries, on April 30, 1991, petitioner filed a petition 15 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 Trial Court, Laguna, Branch 24,
rendered a decision,16 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. “1.The dismissal for lack of merit of the protest against the compulsory
coverage of the landholdings of Sta. Rosa Realty Development
 Corporation (Transfer Certificates of Title Nos. 81949 and 84891 with
an area of 254.766 hectares) in Barangay Casile, Municipality of
Cabuyao, Province of Laguna under the Comprehensive Agrarian
Reform Program is hereby affirmed;
2. “2.The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty
Development Corporation the amount of Seven Million Eight Hundred
Forty-One Thousand, Nine Hundred Ninety Seven Pesos and Sixty-
Four centavos (P7,841,997.64) for its landholdings covered by the two
(2) Transfer Certificates of Title mentioned above. Should there be a
rejection of the payment tendered, to open, if none has yet been made, a
trust account for said amount in the name of Sta. Rosa Realty
Development Corporation;
_______________
 Original Records, Folder of Exhibits III, Certification from the Office of the Deputy
14
Zoning Administrator.
15
 Vol. I, DARAB Folder, Manifestation and Motion.
16
 Petition, Annex “B”, Judgment, Judge Rodrigo V. Cosico, presiding, CA Rollo, pp.
98-111. In Civil Case Nos. 250, 258, 260, 262, and 226.
184
184 SUPREME COURT REPORTS
ANNOTATED
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
1. “3.The Register of Deeds of the Province of Laguna to cancel with
dispatch Transfer Certificate of Title Nos. 84891 and 81949 and new
one be issued in the name of the Republic of the Philippines, free from
liens and encumbrances;
2. “4.The Department of Environment and Natural Resources either
through its Provincial Office in Laguna or the Regional Office, Region
IV, to conduct a final segregation survey on the lands covered by
Transfer Certificate of Title Nos. 84891 and 81949 so the same can be
transferred by the Register of Deeds to the name of the Republic of the
Philippines;
3. “5.The Regional Office of the Department of Agrarian Reform through
its Municipal and Provincial Agrarian Reform Office to take immediate
possession on the said landholding after Title shall have been
5|Page
transferred to the name of the Republic of the Philippines, and
distribute the same to the immediate issuance of Emancipation Patents
to the farmer-beneficiaries as determined by the Municipal Agrarian
Reform Office of Cabuyao, Laguna.”17
On January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision
in Civil Case No. B-233318 ruling that respondents were builders in bad faith.
On February 6, 1992, petitioner filed with the Court of Appeals a petition for review of
the DARAB decision.19 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 Special Agrarian Court on the issue of just compensation.” 20
_____________
17
 Folder JC-R-IV-LAG-0001-C.O., Decision, penned by Benjamin T. Leong,
Chairman, concurred in by Renato B. Padilla, Lorenzo R. Reyes, Leopoldo M. Serrano, Jr.
and Josefina M. Sidiangco, members.
18
 Petition, Annex “F”, Vol I, SC Rollo, pp. 70-83.
19
 Docketed as CA-G.R. SP No. 27234.
20
 CA Rollo, Decision, Martin, Jr., J., ponente, Chua and Guerrero, JJ., concurring, pp.
499-529.
185
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Sta. Rosa Realty Development
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Hence, this petition. 21
On December 15, 1993, the Court issued a Resolution which reads:
“G.R. Nos. 112526 (Sta. Rosa Realty Development Corporation vs. Court of Appeals, et.
al.)—Considering the compliance, dated December 13, 1993, filed by counsel for
petitioner, with the resolution of December 8, 1993 which required petitioner to post a cash
bond or surety bond in the amount of P1,500,000.00 Pesos before issuing a temporary
restraining order prayed for, manifesting that it has posted a CASH BOND in the same
amount with the Cashier of the Court as evidenced by the attached official receipt No.
315519, the Court resolved to ISSUE the Temporary Retraining Order prayed for.
“The Court therefore, resolved to restrain: (a) the Department of Agrarian Reform
Adjudication Board from enforcing its decision dated December 19, 1991 in DARAB Case
No. JC-R-IV-LAG-0001, which was affirmed by the Court of Appeals in a Decision dated
November 5, 1993, and which ordered, among others, the Regional Office of the
Department of Agrarian Reform through its Municipal and Provincial Reform Office to
take immediate possession of the landholding in dispute after title shall have been
transferred to the name of the Republic of the Philippines and to distribute the same
through the immediate issuance of Emancipation Patents to the farmer-beneficiaries as
determined by the Municipal Agrarian Officer of Cabuyao, Laguna, (b) The Department of
Agrarian Reform and/or the Department of Agrarian Reform Adjudication Board, and all
persons acting for and in their behalf and under their authority from entering the properties
involved in this case and from introducing permanent infrastructures thereon; and (c) the
private respondents from further clearing the said properties of their green cover by the
cutting or burning of trees and other vegetation, effective today until further orders from
this Court.”22
The main issue raised is whether the property in question is covered by CARP despite the
fact that the entire property was formed part of a watershed area prior to the enactment of
R.A. No. 6657.
______________
 Petition filed on November 24, 1993. G.R. No. 112526, Rollo, Vol. I, pp. 2-52. On
21
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.
186
186 SUPREME COURT REPORTS
ANNOTATED
Sta. Rosa Realty Development
Corporation vs. Court of Appeals
Under Republic Act No. 6657, there are two modes of acquisition of private land:
compulsory and voluntary. In the case at bar, the Department of Agrarian Reform sought
the compulsory acquisition of subject property under R.A. No. 6657, Section 16, to wit:
“Sec. 16. Procedure for Acquisition of Private Lands.—For purposes of acquisition of
private lands, the following procedures shall be followed:
1. a.)After having identified the land, the landowners and the
beneficiaries, the DAR shall send its notice to acquire the land to the
owners thereof, by personal delivery or registered mail, and post the
same in a conspicuous place in the municipal building and barangay
hall of the place where the property is located. Said notice shall contain
the offer of the DAR to pay corresponding value in accordance with the
6|Page
valuation set forth in Sections 17, 18, and other pertinent provisions
hereof.
2. b.)Within thirty (30) days from the date of the receipt of written notice
by personal delivery or registered mail, the landowner, his administrator
or representative shall inform the DAR of his acceptance or rejection of
the offer.
3. c.)If the landowner accepts the offer of the DAR, the LBP shall pay the
landowner the purchase price of the land within thirty (30) days after he
executes and delivers a deed of transfer in favor of the government and
other muniments of title.
4. d.)In case of rejection or failure to reply, the DAR shall conduct
summary administrative proceedings to determine the compensation for
the land requiring the landowner, the LBP and other interested parties
to submit fifteen (15) days from receipt of the notice. After the
expiration of the above period, the matter is deemed submitted for
decision. The DAR shall decide the case within thirty (30) days after it
is submitted for decision.
5. e.)Upon receipt by the landowner of the corresponding payment, or, in
case of rejection or no response from the landowner, upon the deposit
with an accessible bank designated by the DAR of the compensation in
cash or in LBP bonds in accordance with this act, the DAR shall make
immediate possession of the land and shall request the proper Register
of Deeds to issue Transfer Certificate of Titles (TCT) in the name of the
Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
187
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Sta. Rosa Realty Development
Corporation vs. Court of Appeals
1. f.)Any party who disagrees with the decision may bring the matter to
the court23 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 Administrative Order No. 12, series of 1989, which set the operating procedure in the
property is located. identification of such lands. The procedure is as follows:
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 1. A.The Municipal Agrarian Reform Officer (MARO), with the
offer. assistance of the pertinent Barangay Agrarian Reform Committee
If the landowner accepts, he executes and delivers a deed of transfer in favor of the (BARC), shall:
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 1. 1.Update the masterlist of all agricultural lands covered under the
the purchase price. If the landowner accepts, he executes and delivers a deed of transfer in CARP in his area of responsibility; the masterlist should include such
favor of the government and surrenders the certificate of title. Within thirty days from the information as required under the attached CARP masterlist form which
execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays the owner shall include the name of the landowner, landholding area, TCT/OCT
the purchase price. If the landowner rejects the DAR’s offer or fails to make a reply, the number, and tax declaration number.
DAR conducts summary administrative proceedings to determine just compensation for the 2. 2.Prepare the Compulsory Acquisition Case Folder (CACF) for each
land. The landowner, the LBP representative and other interested parties may submit title (OCT/TCT) or landholding covered under Phase I and II of the
evidence on just compensation within fifteen days from notice. Within thirty days from CARP except those for which the landowners have already filed
submission, the DAR shall decide the case and inform the owner of its decision and the applications to avail of other modes of land acquisition. A case folder
amount of just compensation. shall contain the following duly accomplished forms:
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 1. a)CARP CA Form 1—MARO investigation report
cause the issuance of a transfer certificate of title in the name of the Republic of the 2. b)CARP CA Form No. 2—Summary investigation report findings and
Philippines. The land shall then be redistributed to the farmer beneficiaries. Any party may evaluation
question the deci- 3. c)CARP CA Form 3—Applicant’s Information sheet
______________ 4. d)CARP CA Form 4—Beneficiaries undertaking
5. e)CARP CA Form 5—Transmittal report to the PARO
23
 R.A. No. 6657, Sec. 57.
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ANNOTATED Sta. Rosa Realty Development
Sta. Rosa Realty Development Corporation vs. Court of Appeals
Corporation vs. Court of Appeals The MARO/BARC shall certify that all information contained in the above-mentioned
sion of the DAR in the special agrarian courts (provisionally the Supreme Court designated forms have been examined and verified by him and that the same are true and correct.
branches of the regional trial court as special agrarian courts) for final determination of just
compensation. 1. 3.Send notice of coverage and a letter of invitation to a
The DAR has made compulsory acquisition the priority mode of land acquisition to conference/meeting to the landowner covered by the Compulsory Case
hasten the implementation of the Comprehensive Agrarian Reform Program (CARP). Acquisition Folder. Invitations to the said conference meeting shall also
Under Sec. 16 of the CARL, the first step in compulsory acquisition is the identification of be sent to the prospective farmer-beneficiaries, the BARC
the land, the landowners and the farmer beneficiaries. However, the law is silent on how representatives, the Land Bank of the Philippines (LBP) representative,
the identification process shall be made. To fill this gap, on July 26, 1989, the DAR issued

7|Page
 and the other interested parties to discuss the inputs to the valuation of 1. 1.Within three days from receipt of the case folder from the PARO,
the property. review, evaluate and determine the final land valuation of the property
covered by the case folder. A summary review and evaluation report
He shall discuss the MARO/BARC investigation report and solicit the views, objection, shall be prepared and duly certified by the BLAD Director and the
agreements or suggestions of the participants thereon. The landowner shall also ask to personnel directly participating in the review and final valuation.
indicate his retention area. The minutes of the meeting shall be signed by all participants in 2. 2.Prepare, for the signature of the Secretary or her duly authorized
the conference and shall form an integral part of the CACF. representative, a notice of acquisition (CARP Form 8) for the subject
property. Serve the notice to the landowner personally or through
1. 4.Submit all completed case folders to the Provincial Agrarian Reform registered mail within three days from its approval. The notice shall
Officer (PARO). include among others, the area subject of compulsory acquisition, and
the amount of just compensation offered by DAR.
3. 3.Should the landowner accept the DAR’s offered value, the BLAD
1. B.The PARO shall: shall prepare and submit to the Secretary for approval the order of
acquisition. However, in case of rejection or non-reply, the DAR
1. 1.Ensure the individual case folders are forwarded to him by his Adjudication Board (DARAB) shall conduct a summary administrative
MAROs. hearing to determine just compensation, in accordance with the
2. 2.Immediately upon receipt of a case folder, compute the valuation of procedures provided under Administrative Order No. 13, series of 1989.
the land in accordance with A.O. No. 6, series of 1988. The valuation Immediately upon receipt of the DARAB’s decision on just
worksheet and the related CACF valuation forms shall be duly certified compensation, the BLAD shall prepare and submit to the Secretary for
correct by the PARO and all the personnel who participated in the approval the required order of acquisition.
accomplishment of these forms. 4. 4.Upon the landowner’s receipt of payment, in case of acceptance, or
3. 3.In all cases, the PARO may validate the report of the MARO through upon deposit of payment in the designated bank, in case of rejection or
ocular inspection and verification of the property. This ocular non-response, the Secretary shall immediately direct the pertinent
inspection and verification shall be mandatory when the computed Register of Deeds to issue the corresponding Transfer Certificate of
value exceeds P500,000 per estate. Title (TCT) in the name of the Republic of the Philippines. Once the
4. 4.Upon determination of the valuation, forward the case folder, together property is transferred, the DAR, through the PARO, shall take
with the duly accomplished valuation forms and his recommendations, possession of the land for redistribution to qualified beneficiaries.”
to the Central Office.
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190 SUPREME COURT REPORTS 2001
ANNOTATED
Sta. Rosa Realty Development
Sta. Rosa Realty Development Corporation vs. Court of Appeals
Corporation vs. Court of Appeals Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform
The LBP representative and the MARO concerned shall be furnished a copy each of his Officer (MARO) keep an updated master list of all agricultural lands under the CARP in
report. 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
1. C.DAR Central Office, specifically through the Bureau of Land then sends the landowner a “Notice of Coverage” and a “letter of invitation” to a
Acquisition and Distribution (BLAD), shall: “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
8|Page
Committee (BARC), the Land Bank of the Philippines (LBP) and other interested parties to
discuss the inputs to the valuation of the property and solicit views, suggestions, objections
or agreements of the parties. At the meeting, the landowner is asked to indicate his
retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer
(PARO) who shall complete the valuation of the land. Ocular inspection and verification of
the property by the PARO shall be mandatory when the computed value of the estate
exceeds P500,000.00. Upon determination of the valuation, the PARO shall forward all
papers together with his recommendation to the Central Office of the DAR. The DAR
Central Office, specifically, the Bureau of Land Acquisition and Distribution (BLAD) shall
prepare, on the signature of the Secretary or his duly authorized representative, a notice of
acquisition of the subject property. From this point, the provisions of Section 16 of R.A.
No. 6657 shall apply.
For a valid implementation of the CARP Program, two notices are required: (1) the
notice of coverage and letter of invitation to a preliminary conference sent to the
landowner, the representative of the BARC, LBP, farmer beneficiaries and other interested
parties pursuant to DAR A.O. No. 12, series of 1989; and (2) the notice of acquisition sent
to the landowner under Section 16 of the CARL.
The importance of the first notice, that is, the notice of coverage and the letter of
invitation to a conference, and its actual conduct cannot be understated. They are steps
designed to comply with the requirements of administrative due process. The
implementation of the CARL is an exercise of the 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 of possession
9|Page
and ownership of the land to the government on receipt of the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash or LBP
bonds with an accessible bank. Until then, title also remains with the landowner. No
outright change of ownership is contemplated either.”24
Consequently, petitioner questioned before the Court of Appeals DARAB’s decision
ordering the compulsory acquisition of petitioner’s property. 25 Here, petitioner pressed the
question of whether the property was a watershed, not covered by CARP.
Article 67 of the Water Code of the Philippines (P.D. No. 1067) provides:
“Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any
ground water may be declared by the Department of Natural resources as a protected area.
Rules and Regulations may be promulgated by such Department to prohibit or control such
activities by the owners or occupants thereof within the protected area which may damage
or cause the deterioration of the surface water or ground water or
______________
24
 175 SCRA 343, 391 (1989).
25
 In CA-G.R. SP No. 27234.
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interfere with the investigation, use, control, protection, management or administration of
such waters.”
Watersheds may be defined as “an area drained by a river and its tributaries and enclosed
by a boundary or divide which separates it from adjacent watersheds.” Watersheds
generally are outside the commerce of man, so why was the Casile property titled in the
name of SRRDC? The answer is simple. At the time of the titling, the Department of
Agriculture and Natural Resources had not the declared the property as watershed area. The
parcels of land in Barangay Casile were declared as “PARK” by a Zoning Ordinance
adopted by the municipality of Cabuyao in 1979, as certified by the Housing and Land Use
Regulatory Board. On January 5, 1994, the Sangguniang Bayan of Cabuyao, Laguna issued
a Resolution26 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.”27
 In Natalia Realty, Inc. v. Department of Agrarian Reform, 28 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.29
Now, petitioner has offered to prove that the land in dispute is a “watershed or part of the
protected area for watershed purposes.” Ecological balances and environmental disasters in
our day and age seem to be interconnected. Property developers and tillers of the land must
be aware of this deadly combination. In the case at bar, DAR included the disputed parcels
of land for compulsory acquisition simply because the land was allegedly devoted to
agriculture and was titled to SRRDC, hence, private and alienable land that may be subject
to CARP.
However, the scenario has changed, after an in-depth study, survey and reassessment.
We cannot ignore the fact that the disputed parcels of land form a vital part of an area that
need to be protected for watershed purposes. In a report of the Ecosystems Research and
Development Bureau (ERDB), a research arm of the DENR, regarding the environmental
assessment of the Casile and Kabanga-an river watersheds, they concluded that:
“The Casile barangay covered by CLOA in question is situated in the heartland of both
watersheds. Considering the barangays proximity to the Matangtubig waterworks, the
activities of the farmers which are in conflict with proper soil and water conservation
practices jeopardize and endanger the vital waterworks. Degradation of the land would
have double edge detrimental effects. On the Casile side this would mean direct siltation of
the Mangumit river which drains to the water impounding reservoir below. On the
Kabanga-an side, this would mean destruction of forest covers which acts as recharged
areas of the Matang Tubig springs. Considering that the people have little if no direct
interest in the protection of the Matang Tubig structures they 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:
1. 7.2The Casile farmers should be relocated and given financial
assistance.
2. 7.3Declaration of the two watersheds as critical and in need of
immediate rehabilitation.
3. 7.4A comprehensive and detailed watershed management plan and
program be formulated and implemented by the Canlubang Estate in
coordination with pertinent government agencies.”30
The ERDB report was prepared by a composite team headed by Dr. Emilio Rosario, the
ERDB Director, who holds a doctorate degree in water resources from U.P. Los 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 protect
and maintain the area in question as a permanent watershed reserved.” 31
_____________
30
 Reply, Annex “A”, Rollo, Vol. II, pp. 583-584.
31
 Rollo, Vol. I, Memorandum, Secretary Alcala to FVR, p. 225.
196
196 SUPREME COURT REPORTS temporary restraining order issued on December 15, 1993, which shall remain in effect
until final decision on the case.
ANNOTATED
No costs.
Sta. Rosa Realty Development SO ORDERED.
Corporation vs. Court of Appeals      Davide, Jr. (C.J.) and Ynares-Santiago, JJ., concur.
The definition does not exactly depict the complexities of a watershed. The most important      Puno, J., No part due to relationship.
product of a watershed is water which is one of the most important human necessities. The      Kapunan, J., On official leave.
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 Judgment set aside, case remanded to DARAB.
watersheds is an “intergenerational responsibility” that needs to be answered now. Notes.—While the right to a balanced and healthful ecology is to be found under the
Another factor that needs to be mentioned is the fact that during the DARAB hearing, Declaration of Principles and State Policies and not under the Bill of Rights, it does not
petitioner presented proof that the Casile property has slopes of 18% and over, which follow that it is less important than any of the civil and political rights enumerated in the
exempted the land from the coverage of CARL. R.A. No. 6657, Section 10, provides: latter. Such a right belongs to a different category of rights altogether for it concerns
“Section 10. Exemptions and Exclusions.—Lands actually, directly and exclusively used nothing less than self-preservation and self-perpetuation—aptly and fittingly stressed by
and found to be necessary for parks, wildlife, forest reserves, reforestration, fish sanctuaries the petitioners—the advancement of which may even be said to predate all governments
and breeding grounds, watersheds and mangroves, national defense, school sites and and constitutions. As a matter of fact, these basic rights need not even be written in the
campuses including experimental farm stations operated by public or private schools for Constitutions for they are assumed to exist from the inceptions of humankind. (Oposa vs.
educational purposes, seeds and seedlings research and pilot production centers, church Factoran, Jr., 224 SCRA 792 [1993])
sites and convents appurtenent thereto, communal burial grounds and cemeteries, penal The content and the manner of just compensation provided for in Section 18 of the
colonies and penal farms actually worked by the inmates, government and private research CARP Law is not violative of the Constitution. (Santos vs. Land Bank of the
and quarantine centers, and all lands with eighteen percent (18%) slope and over, except Philippines, 340 SCRA 59 [2000])
those already developed shall be exempt from coverage of this Act.”
——o0o——
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 198
very high slopes. © Copyright 2021 Central Book Supply, Inc. All rights reserved.
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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