Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
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, ZACARIAS HERRERA,
ZACARIAS HERRERA, REYNARIO U.

LAZO, AGAPITO MATIENZO, DIONISIO F.

PETATE, LITO G. REYES, JOSE M. SUBOL,
CELESTINO G. TOPI NO, ROSA C.
AMANTE, SOTERA CASALME, REMIGIO
M. SILVERIO, THE 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.
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 potable
water to the Canlubang community, and that
ninety (90) light industries are now located in
the area.3
Petitioner alleged that respondents usurped
its rights over the property, thereby
destroying the ecosystem. Sometime in
December 1985, respondents filed a civil
case4 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 respondents.5
After the filing of the ejectment cases,
respondents petitioned the Department of
1

Agrarian Reform (DAR) for the compulsory

acquisition of the SRRDC property under the
CARP.
On August 11, 1989, the Municipal Agrarian
Reform Officer (MARO) of Cabuyao, Laguna
issued a notice of coverage to petitioner and
invited its officials or representatives to a
conference on August 18, 1989.6 During the
meeting, the following were present:
representatives of petitioner, the Land Bank
of the Philippines, PARCCOM, PARO of
Laguna, MARO of Laguna, the BARC
Chairman of Barangay Casile and some
potential farmer beneficiaries, who are
residents of Barangay Casile, Cabuyao,
Laguna.
It was the
consensus and
recommendation of the assembly that the
landholding of SRRDC be placed under
compulsory acquisition.
On August 17, 1989, petitioner filed with the
Municipal Agrarian Reform Office (MARO),
Cabuyao, Laguna a "Protest and Objection"
to the compulsory acquisition of the property
on the ground that the area was not
appropriate for agricultural purposes. The
area was rugged in terrain with slopes of
18% and above and that the occupants of
the land were squatters, who were not
entitled to any land as beneficiaries.7
On August 29, 1989, the farmer beneficiaries
together with the BARC chairman answered
the protest and objection stating that the
slope of the land is not 18% but only 5-10%
and that the land is suitable and
economically viable for agricultural purposes,
as evidenced by the Certification of the
Department of Agriculture, municipality of
Cabuyao, Laguna.8
On September 8, 1989, MARO Belen dela
Torre made a summary investigation report
and forwarded the Compulsory Acquisition
Folder Indorsement (CAFI) to the Provincial
Agrarian Reform Officer (hereafter, PARO). 9
On September 21, 1989, PARO Durante
Ubeda forwarded his endorsement of the
compulsory acquisition to the Secretary of
Agrarian Reform.

On November 23, 1989, Acting Director

Eduardo C. Visperas of the Bureau of Land
Acquisition and Development, DAR forwarded
two (2) Compulsory Acquisition Claim Folders
covering the landholding of SRRDC, covered
by TCT Nos. T-81949 and T-84891 to the
President, Land Bank of the Philippines for
further review and evaluation.10
On December 12, 1989, Secretary of
Agrarian Reform Miriam Defensor Santiago
sent two (2) notices of acquisition 11 to
petitioner,
stating
that
petitioner's
landholdings covered by TCT Nos. 81949 and
84891, containing an area of 188.2858 and
58.5800 hectares, valued at P4,417,735.65
and P1,220,229.93, respectively, had been
placed under the Comprehensive Agrarian
Reform Program.
On February 6, 1990, petitioner SRRDC in
two
letters12 separately
addressed
to
Secretary Florencio B. Abad and the Director,
Bureau of Land Acquisition and Distribution,
sent its formal protest, protesting not only
the amount of compensation offered by DAR
for the property but also the two (2) notices
of acquisition.
On March 17, 1990, Secretary Abad referred
the case to the DARAB for summary
proceedings to determine just compensation
under R. A. No. 6657, Section 16.
On March 23, 1990, the LBP returned the two
(2) claim folders previously referred for
review and evaluation to the Director of
BLAD mentioning its inability to value the
SRRDC landholding due to some deficiencies.
On March 28, 1990, Executive Director
Emmanuel S. Galvez wrote Land Bank
President Deogracias Vistan to forward the
two (2) claim folders involving the property
of SRRDC to the DARAB for it to conduct
summary proceedings to determine the just
compensation for the land.
On April 6, 1990, petitioner sent a letter to
the Land Bank of the Philippines stating that
its property under the aforesaid land titles
were exempt from CARP coverage because
they had been classified as watershed area
and were the subject of a pending petition
for land conversion.
2

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 report answering the
two issues raised.
According to them, firstly, by virtue of the
issuance of the notice of coverage on August
11, 1989, and notice of acquisition on
December 12, 1989, the property is covered
under compulsory acquisition. Secondly,
Administrative Order No. 1, Series of 1990,
Section IV D also supports the DAR position
on the coverage of the said property. During
the consideration of the case by the Board,
there was no pending petition for land
conversion
specifically
concerning
the
parcels of land in question.
On February 19, 1991, the Board sent a
notice of hearing to all the parties interested,
setting the hearing for the administrative
valuation of the subject parcels of land on
March 6, 1991. However, on February 22,
1991, Atty. Ma. Elena P. Hernandez-Cueva,
counsel for SRRDC, wrote the Board
requesting for its assistance in the
reconstruction of the records of the case
because the records could not be found as
her co-counsel, Atty. Ricardo Blancaflor, who
originally handled the case for SRRDC and
had possession of all the records of the case
was on indefinite leave and could not be

contacted. The Board granted 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 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 petition15 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,16finding 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:
3

"WHEREFORE, based on the foregoing

premises, the Board hereby orders:
"1. The dismissal for lack of merit of the
protest against the compulsory coverage of
the landholdings of Sta. Rosa Realty
Development
Corporation
(Transfer
Certificates of Title Nos. 81949 and 84891
with an area of 254.766 hectares) in
Barangay Casile, Municipality of Cabuyao,
Province of Laguna under the Comprehensive
Agrarian Reform Program is hereby affirmed;
"2. The Land Bank of the Philippines (LBP) to
pay
Sta.
Rosa
Realty
Development
Corporation the amount of Seven Million
Eight Hundred Forty-One Thousand, Nine
Hundred Ninety Seven Pesos and Sixty-Four
centavos (P7,841,997.64) for its landholdings
covered by the two (2) Transfer Certificates
of Title mentioned above. Should there be a
rejection of the payment tendered, to open,
if none has yet been made, a trust account
for said amount in the name of Sta. Rosa
Realty Development Corporation;
"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 the same can be transferred by the
Register of Deeds to the name of the
Republic of the Philippines;
"5. The Regional Office of the Department of
Agrarian Reform through its Municipal and
Provincial Agrarian Reform Office to take
immediate
possession
on
the
said
landholding after Title shall have been
transferred to the name of the Republic of
the Philippines, and distribute the same to
the immediate issuance of Emancipation
Patents to the farmer-beneficiaries as
determined by the Municipal Agrarian Reform
Office of Cabuyao, Laguna."17
On January 20, 1992, the Regional Trial
Court, Laguna, Branch 24, rendered a
decision in Civil Case No. B-2333 18 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."20Hence, 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
farmerbeneficiaries as determined by the Municipal
Agrarian Officer of Cabuyao, Laguna, (b) The
Department of Agrarian Reform and/or the
Department of Agrarian Reform Adjudication
4

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
formed part of a watershed area prior to the
enactment of R. A. No. 6657.
Under Republic Act No. 6657, there are two
modes of acquisition of private land:
compulsory and voluntary. In the case at bar,
the Department of Agrarian Reform sought
the compulsory acquisition of subject
property under R. A. No. 6657, Section 16, to
wit:
"Sec. 16. Procedure for Acquisition of Private
Lands. For purposes of acquisition of
private lands, the following procedures shall
be followed:
a.) After having identified the land, the
landowners and the beneficiaries, the DAR
shall send its notice to acquire the land to
the owners thereof, by personal delivery or
registered mail, and post the same in a
conspicuous place in the municipal building
and barangay hall of the place where the
property is located. Said notice shall contain
the offer of the DAR to pay corresponding
value in accordance with the valuation set
forth in Sections 17, 18, and other pertinent
provisions hereof.
b.) Within thirty (30) days from the date of
the receipt of written notice by personal
delivery or registered mail, the landowner,
his administrator or representative shall
inform the DAR of his acceptance or rejection
of the offer.
c.) If the landowner accepts the offer of the
DAR, the LBP shall pay the landowner the
purchase price of the land within thirty (30)
days after he executes and delivers a deed
of transfer in favor of the government and
other muniments of title.
d.) In case of rejection or failure to reply, the
DAR shall conduct summary administrative

proceedings to determine the compensation

for the land requiring the landowner, the LBP
and other interested parties to submit fifteen
(15) days from receipt of the notice. After the
expiration of the above period, the matter is
deemed submitted for decision. The DAR
shall decide the case within thirty (30) days
after it is submitted for decision.
e.) Upon receipt by the landowner of the
corresponding payment, or, in case of
rejection or no response from the landowner,
upon the deposit with an accessible bank
designated by the DAR of the compensation
in cash or in LBP bonds in accordance with
this act, the DAR shall make immediate
possession of the land and shall request the
proper Register of Deeds to issue Transfer
Certificate of Titles (TCT) in the name of the
Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of
the land to the qualified beneficiaries.
f.) Any party who disagrees with the decision
may bring the matter to the court 23 of proper
jurisdiction for final determination of just
compensation.
In compulsory acquisition of private lands,
the landholding, the landowners and farmer
beneficiaries must first be identified. After
identification, the DAR shall send a notice of
acquisition to the landowner, by personal
delivery or registered mail, and post it in a
conspicuous place in the municipal building
and barangay hall of the place where the
property is located.
Within thirty (30) days from receipt of the
notice of acquisition, the landowner, his
administrator or representative shall inform
the DAR of his acceptance or rejection of the
offer.
If the landowner accepts, he executes and
delivers a deed of transfer in favor of the
government and surrenders the certificate of
title. Within thirty (30) days from the
execution of the deed of transfer, the Land
Bank of the Philippines (LBP) pays the owner
the purchase price. If the landowner accepts,
he executes and delivers a deed of transfer
in favor of the government and surrenders
the certificate of title. Within thirty days from
the execution of the deed of transfer, the
Land Bank of the Philippines (LBP) pays the
5

owner the purchase price. If the landowner

rejects the DAR's offer or fails to make a
reply,
the
DAR
conducts
summary
administrative proceedings to determine just
compensation for the land. The landowner,
the LBP representative and other interested
parties may submit evidence on just
compensation within fifteen days from
notice. Within thirty days from submission,
the DAR shall decide the case and inform the
owner of its decision and the amount of just
compensation.
Upon receipt by the owner of the
corresponding payment, or, in case of
rejection or lack of response from the latter,
the DAR shall deposit the compensation in
cash or in LBP bonds with an accessible
bank. The DAR shall immediately take
possession of the land and cause the
issuance of a transfer certificate of title in
the name of the Republic of the Philippines.
The land shall then be redistributed to the
farmer beneficiaries. Any party may question
the decision of the DAR in the special
agrarian courts (provisionally the Supreme
Court designated branches of the regional
trial court as special agrarian courts) for final
determination of just compensation.
The DAR has made compulsory acquisition
the priority mode of land acquisition to
hasten
the
implementation
of
the
Comprehensive Agrarian Reform Program
(CARP). Under Sec. 16 of the CARL, the first
step in compulsory acquisition is the
identification of the land, the landowners and
the farmer beneficiaries. However, the law is
silent on how the identification process shall
be made. To fill this gap, on July 26, 1989,
the DAR issued Administrative Order No. 12,
series of 1989, which set the operating
procedure in the identification of such lands.
The procedure is as follows:
A. The Municipal Agrarian Reform Officer
(MARO), with the assistance of the pertinent
Barangay
Agrarian
Reform
Committee
(BARC), shall:
1. Update the masterlist of all agricultural
lands covered under the CARP in his area of
responsibility; the masterlist should include
such information as required under the
attached CARP masterlist form which shall
include the name of the landowner,

landholding area, TCT/OCT number, and tax

declaration number.
2. Prepare the Compulsory Acquisition Case
Folder (CACF) for each title (OCT/TCT) or
landholding covered under Phase I and II of
the CARP except those for which the
landowners have already filed applications to
avail of other modes of land acquisition. A
case folder shall contain the following duly
accomplished forms:
a) CARP CA Form 1MARO investigation
report
b) CARP CA Form No 2 Summary
investigation report findings and evaluation
c) CARP CA Form 3Applicant's Information
sheet
d) CARP CA Form 4 Beneficiaries
undertaking
e) CARP CA Form 5 Transmittal report to the
PARO
The MARO/BARC shall certify that all
information
contained
in
the
abovementioned forms have been examined and
verified by him and that the same are true
and correct.
3. Send notice of coverage and a letter of
invitation to a conference/meeting to the
landowner covered by the Compulsory Case
Acquisition Folder. Invitations to the said
conference meeting shall also be sent to the
prospective farmer-beneficiaries, the BARC
representatives, the Land Bank of the
Philippines (LBP) representative, and the
other interested parties to discuss the inputs
to the valuation of the property.
He
shall
discuss
the
MARO/BARC
investigation report and solicit the views,
objection, agreements or suggestions of the
participants thereon. The landowner shall
also ask to indicate his retention area. The
minutes of the meeting shall be signed by all
participants in the conference and shall form
an integral part of the CACF.
4. Submit all completed case folders to the
Provincial Agrarian Reform Officer (PARO).
B. The PARO shall:
1. Ensure the individual case folders are
forwarded to him by his MAROs.
2. Immediately upon receipt of a case folder,
compute the valuation of the land in
accordance with A.O. No. 6, series of 1988.
The valuation worksheet and the related
CACF valuation forms shall be duly certified
correct by the PARO and all the personnel
6

who participated in the accomplishment of

these forms.
3. In all cases, the PARO may validate the
report of the MARO through ocular inspection
and verification of the property. This ocular
inspection
and
verification
shall
be
mandatory when the computed value
exceeds P500,000 per estate.
4. Upon determination of the valuation,
forward the case folder, together with the
duly accomplished valuation forms and his
recommendations, to the Central Office.
The LBP representative and the MARO
concerned shall be furnished a copy each of
his report.
C. DAR Central Office, specifically through
the Bureau of Land Acquisition and
Distribution (BLAD), shall:
1. Within three days from receipt of the case
folder from the PARO, review, evaluate and
determine the final land valuation of the
property covered by the case folder. A
summary review and evaluation report shall
be prepared and duly certified by the BLAD
Director
and
the
personnel
directly
participating in the review and final
valuation.
2. Prepare, for the signature of the Secretary
or her duly authorized representative, a
notice of acquisition (CARP Form 8) for the
subject property. Serve the notice to the
landowner personally or through registered
mail within three days from its approval. The
notice shall include among others, the area
subject of compulsory acquisition, and the
amount of just compensation offered by DAR.
3. Should the landowner accept the DAR's
offered value, the BLAD shall prepare and
submit to the Secretary for approval the
order of acquisition. However, in case of
rejection or non-reply, the DAR Adjudication
Board (DARAB) shall conduct a summary
administrative hearing to determine just
compensation, in accordance with the
procedures provided under Administrative
Order No. 13, series of 1989. Immediately
upon receipt of the DARAB's decision on just
compensation, the BLAD shall prepare and
submit to the Secretary for approval the
required order of acquisition.
4. Upon the landowner's receipt of payment,
in case of acceptance, or upon deposit of
payment in the designated bank, in case of

rejection or non-response, the Secretary shall

immediately direct the pertinent Register of
Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the
Republic of the Philippines. Once the
property is transferred, the DAR, through the
PARO, shall take possession of the land for
redistribution to qualified beneficiaries."
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 R. A. No. 6657, Section 16 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
7

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.

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.

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.

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

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 of the use of the land. What
is required is the surrender of the title to and
physical possession of the excess and all
beneficial rights accruing to the owner in
favor of the farmer beneficiary.
In the case at bar, DAR has executed the
taking of the property in question. However,
payment of just compensation was not in
accordance with the procedural requirement.
The law required payment in cash or LBP
bonds, not by trust account as was done by
DAR.
In Association of Small Landowners in the
Philippines v. Secretary of Agrarian Reform,
we held that "The CARP Law, for its part,
conditions the transfer of possession and
ownership of the land to the government on
receipt
of
the
landowner
of
the
corresponding payment or the deposit by the
DAR of the compensation in cash or LBP
bonds with an accessible bank. Until then,
title also remains with the landowner. No
outright
change
of
ownership
is
contemplated either."24

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 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 land at Barangay Casile as Park and
declaring that the land is 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
8

political subdivision into specific land uses as

present and future projection of needs." 27
In Natalia Realty, Inc. v. Department of
Agrarian Reform28 we held that lands
classified as non-agricultural prior to the
effectivity 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 that an
acceptable
comprehensive
watershed
development policy and program be
immediately formulated and implemented
before the irreversible damage finally
happens.
Hence, the following are recommended:
7.2 The Casile farmers should be relocated
and given financial assistance.
7.3 Declaration of the two watersheds as
critical
and
in
need
of
immediate
rehabilitation.
7.4 A comprehensive and detailed watershed
management
plan
and
program
be
formulated
and
implemented
by the
Canlubang Estate 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 Banos 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 Banos in 1993.
9

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
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.
Another factor that needs to be mentioned is
the fact that during the DARAB hearing,
petitioner presented proof that the Casile
property has slopes of 18% and over, which
exempted the land from the coverage of
CARL. R. A. No. 6657, Section 10, provides:
"Section 10. Exemptions and Exclusions.
Lands actually, directly and exclusively used
and found to be necessary for parks, wildlife,
forest
reserves,
reforestration,
fish
sanctuaries
and
breeding
grounds,

watersheds
and
mangroves,
national
defense,
school
sites
and
campuses
including
experimental
farm
stations
operated by public or private schools for
educational purposes, seeds and seedlings
research and pilot production centers, church
sites and convents appurtenent thereto,
communal burial grounds and cemeteries,
penal colonies and penal farms actually
worked by the inmates, government and
private research and quarantine centers, and
all lands with eighteen percent (18%) slope
and over, except those already developed
shall be exempt from coverage of this Act."
Hence, during the hearing at DARAB, there
was proof showing that the disputed parcels
of land may be excluded from the
compulsory acquisition coverage of CARP
because of its very high slopes.
To resolve the issue as to the true nature of
the parcels of land involved in the case at
bar, the Court directs the DARAB to conduct
a re-evaluation of the issue.
IN VIEW WHEREOF, the Court SETS ASIDE the
decision of the Court of Appeals in CA-G. R.
SP No. 27234.
In lieu thereof, the Court REMANDS the case
to the DARAB for re-evaluation and
determination of the nature of the parcels of
land involved to resolve the issue of its
coverage by the Comprehensive Land
Reform Program.
In the meantime, the effects of the CLOAs
issued by the DAR to supposed farmer
beneficiaries shall continue to be stayed by
the temporary restraining order issued on
December 15, 1993, which shall remain in
effect until final decision on the case.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), and YnaresSantiago, JJ., concur.
Puno, J., no part due to relationship.
Kapunan, J., on official leave.

10