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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.

D E C I S I O N

PARDO,J.:

The casebefore the Court is a petition for review on certiorari of the decision

of the Court of Appeals[1]affirming the decision of the Department of Agrarian

Reform Adjudication Board[2](hereafter DARAB) ordering the compulsory

acquisition of petitioners 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

case[4] 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 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

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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 petitioners

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 letters [12] 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, Section16.

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 (CACFs) to the Executive Director of the DAR Adjudication

Board for proper administrative valuation. Acting on the CACFs, 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 counsels 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 SRRDCs 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 ZoningAdministrator Generoso B. Opina was presented. The certification issued on

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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 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. 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 RealtyDevelopment 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 badfaith.

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]

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 behalfand under their authority from entering the properties involved in this case and from

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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 offerof 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 shallmake 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 andfarmer 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 adeed 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 compensationin 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.

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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 formwhich 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 andevaluation

c) CARP CA Form 3Applicants 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 above-

mentioned forms have been examined and verified by him and that the same are true

and correct.

3. Send notice of coverage and a letter of invitation to a

conference/meeting to the landowner covered by the Compulsory Case

Acquisition Folder. Invitations to the said conference meeting shall

also be sent to the prospective farmer-beneficiaries, the BARC

representatives, the Land Bank of the Philippines (LBP)

representative, and the other interested parties to discuss the inputs to

the valuation of the property.

He shall discuss the MARO/BARC investigation report and solicit the views,

objection, agreements or suggestions of the participants thereon. The landowner

shall also ask to indicate his retention area. The minutes of the meeting shall be

signed by all participants in the conference and shall form an integral part of the

CACF.

4. Submit all completed case folders to the Provincial Agrarian Reform

Officer (PARO).

B. The PARO shall:

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

2. Immediately upon receipt of a case folder, compute the valuation of the

land in accordance with A.O. No. 6, series of 1988. The valuation

worksheet and the related CACF valuation forms shall be duly

certified correct by the PARO and all the personnel who participated

in the accomplishment of these forms.

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 DARs offered value, the BLAD shallprepare and submit to the Secretary for approval the order of

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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 DARABs decision

on just compensation, the BLAD shall prepare and submit to the

Secretary for approval the required order of acquisition.

4. Upon the landowners receipt of payment, in case of acceptance, or

upon deposit of payment in the designated bank, in case of rejection ornon-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 landcovered 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

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 aresteps 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.[24]

Consequently, petitioner questioned before the Court of Appeals DARABs

decision ordering the compulsory acquisition of petitioners 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 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

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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.[27]

In Natalia Realty, Inc. v. Department of Agrarian Reform[28]

we held that landsclassified 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 toSRRDC, 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 andwater 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.

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.

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]

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The definition does not exactly depict the complexities of a watershed. The

most important product of a watershed is water which is one of the most important

human 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, Section10, 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

witheighteen 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 Ynares-Santiago, JJ., concur.

Puno, J., no part due to relationship.Kapunan, J., on official leave.

[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.

[3] Petition,Rollo, Vol. I, p.10.

[4] Petition, Regional Trial Court, Laguna, docketed as Civil Case No. B-2333, Rollo,

Vol. I, p. 11.

[5] Civil Cases Nos. 250, 258, 260, 262 and 266, p. 11.

[6] Petition, Annex A,Rollo, Vol. I, p. 55.

[7] Petition, Annex B, Rollo, Vol. I, p. 56-57.

[8] Original Record, Folder I, Letter of Felicito B. Buban, Department of Agriculture,

dated August 29, 1989.

[9]Ibid., Summary Investigation Report.

[10] Original Record, Folder II.

[11] Folder I, Notice of Acquisition.

[12]Ibid., Letters.

[13] Folder, JC-R-IV-LAG-0001-GO, Decision DARAB, pp. 23-25.

[14] Original Records, Folder of Exhibits III, Certification from the Office of the

Deputy Zoning Administrator.

[15] Vol. I, DARAB Folder, Manifestation and Motion.

[16] Petition, Annex B, Judgment, Judge Rodrigo V. Cosico, presiding, CARollo,

pp. 98-111. In Civil Case Nos. 250, 260, 258, 262, and 266.

[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, SCRollo, pp. 70-83.

[19] Docketed as CA-G. R. SP No. 27234.

[20] CARollo, Decision, Martin, Jr.,J.,ponente, Chua and Guerrero,JJ., concurring,

pp. 499-529.

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[21] Petition filed on November 24, 1993. G.R. No. 112526, Rollo, Vol. I, pp. 2-

52. On September 28, 1994, the Court gave due course to the petition. G.R. No.

112526,Rollo, Vol. II, pp. 780-781.

[22] Resolution,Rollo, pp. 296-300.

[23] R. A. No. 6657, Sec. 57.

[24] 175 SCRA 343, 391 (1989).

[25] In CA-G. R. SP No. 27234.[26] Comment of private respondents, Annex 1,Rollo, Vol. I, p. 331-332.

[27] P. D. No. 449, Sec. 4 (b).

[28] 225 SCRA 278, 283 [1993].

[29] Petition, Annex K (Annex B of), G.R. No. 112526, Rollo, Vol. I , p. 225;

Reply, Annex G, G.R. No. 112526,Rollo, Vol. I, pp. 455-521.

[30] Reply, Annex A,Rollo, Vol. II, pp. 583-584.

[31]Rollo, Vol. I, Memorandum, Secretary Alcala to FVR, p. 225.

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