STA.

ROSA REALTY DEVELOPMENT CORPORATION VS CA

FACTS: Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the registered owner
of two parcels of land, situated at Barangay Casile, Cabuyao, Laguna. According to petitioner, the parcels
of land are watersheds, which provide clean potable water to the Canlubang community, and that 90 light
industries are now located in the area.
Petitioner alleged that respondents usurped its rights over the property, thereby destroying the
ecosystem. Sometime in December 1985, respondents filed a civil case with the RTC, 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.
After the filing of the ejectment cases, respondents petitioned the 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. 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 MARO 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.
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 DAR.
On April 4, 1991, the initial DARAB hearing of the case was held. During the April 15, 1991 hearing, the
subdivision plan of subject property at Casile, Cabuyao, Laguna was submitted.
At the hearing on April 23, 1991, certification from Deputy Zoning Administrator 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.
To avert any opportunity that the DARAB might distribute the lands to the farmer beneficiaries, on April
30, 1991, petitioner filed a petition with DARAB to disqualify private respondents as
beneficiaries. However, DARAB refused to address the issue of beneficiaries.
In the meantime, on January 20, 1992, RTC rendered a decision, finding that private respondents illegally
entered the SRRDC property, and ordered them evicted.
On December 19, 1991, DARAB promulgated a decision dismissing the protest against the compulsory
coverage of the landholdings of SRRDC under the CARP.
On January 20, 1992, the RTC rendered a decision ruling that respondents were builders in bad faith.
On February 6, 1992, CA affirmed the decision of the DARAB ordering the compulsory acquisition of
petitioners property under the CARP.
ISSUE: WON 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.
HELD: Court REMANDED 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.
Under Republic Act No. 6657, there are two modes of acquisition of private land: compulsory and
voluntary. In the case at bar, the DAR 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
owner the purchase price. If the landowner rejects the DARs offer or fails to make a reply, the DAR conducts
summary administrative proceedings to determine just compensation for the land. The landowner, the LBP
representative and other interested parties may submit evidence on just compensation within fifteen days
from notice. Within thirty days from submission, the DAR shall decide the case and inform the owner of its
decision and the amount of just compensation.
Upon receipt by the owner of the corresponding payment, or, in case of rejection or lack of response from
the latter, the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank. The
DAR shall immediately take possession of the land and cause the issuance of a transfer certificate of title in
the name of the Republic of the Philippines. The land shall then be redistributed to the farmer
beneficiaries. Any party may question the 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.
For a valid implementation of the CARP Program, two notices are required:
(1) the notice of coverage and letter of invitation to a preliminary conference sent to the landowner,
the representative of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to
DAR A. O. No. 12, series of 1989; and
(2) the notice of acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, that is, the notice of coverage and the letter of invitation to a conference,
and its actual conduct cannot be understated. They are steps designed to comply with the requirements of
administrative due process. The implementation of the CARL is an exercise of the States police power and
the power of eminent domain. To the extent that the CARL prescribes 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.
 Consequently, petitioner questioned before the Court of Appeals DARABs decision ordering the
compulsory acquisition of petitioners property. 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 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 declared the property as watershed
area. The parcels of land in Barangay Casile were declared as PARK by a Zoning Ordinance adopted by the
municipality of Cabuyao in 1979, as certified by the Housing and Land Use Regulatory Board. On January 5,
1994, the Sangguniang Bayan of Cabuyao, Laguna issued a Resolution[26] 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 political subdivision into
specific land uses as present and future projection of needs.
In Natalia Realty, Inc. v. Department of Agrarian Reform 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.
Now, petitioner has offered to prove that the land in dispute is a watershed or part of the protected area
for watershed purposes. Ecological balances and environmental disasters in our day and age seem to be
interconnected. Property developers and tillers of the land must be aware of this deadly combination. In
the case at bar, DAR included the disputed parcels of land for compulsory acquisition simply because the
land was allegedly devoted to agriculture and was titled to SRRDC, hence, private and alienable land that
may be subject to CARP.
However, the scenario has changed, after an in-depth study, survey and reassessment. We cannot ignore
the fact that the disputed parcels of land form a vital part of an area that need to be protected for
watershed purposes. In a report of the Ecosystems Research and Development Bureau (ERDB), a research
arm of the DENR, regarding the environmental assessment of the Casile and Kabanga-an river watersheds,
they concluded that:

The Casile barangay covered by CLOA in question is situated in the heartland of both
watersheds. Considering the barangays proximity to the Matangtubig waterworks, the activities of the
farmers which are in conflict with proper soil and water conservation practices jeopardize and endanger
 the vital waterworks. Degradation of the land would have double edge detrimental effects. On the Casile
side this would mean direct siltation of the Mangumit river which drains to the water impounding
reservoir below. On the Kabanga-an side, this would mean destruction of forest covers which acts as
recharged areas of the Matang Tubig springs. Considering that the people have little if no direct interest
in the protection of the Matang Tubig structures they couldnt care less even if it would be destroyed.

The Casile and Kabanga-an watersheds can be considered a most vital life support system to thousands
of inhabitants directly and indirectly affected by it. From these watersheds come the natural God-given
precious 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.

Opinions of several government offices, recommend, 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.

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 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.