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.:

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 Agrarian Reform
(DAR) for the compulsory acquisition of the SRRDC property under the CARP.

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 December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago sent two (2)
notices of acquisition11 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 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.

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.

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

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 January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision in Civil
Case No. B-233318ruling 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:

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.

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.

Consequently, petitioner questioned before the Court of Appeals DARAB's decision ordering the
compulsory acquisition of petitioner's property.25 Here, petitioner pressed the question of whether the
property was a watershed, not covered by CARP.

Article 67 of the Water Code of the Philippines (P. D. No. 1067) provides:

"Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any
ground water may be declared by the Department of Natural resources as a protected area.
Rules and Regulations may be promulgated by such Department to prohibit or control such
activities by the owners or occupants thereof within the protected area which may damage or
cause the deterioration of the surface water or ground water or 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 Resolution26 voiding the zoning classification of the land at Barangay Casile as
Park and declaring that the land is now classified as agricultural land.

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.

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.
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.