G.R. No. 112526 - Sta. Rosa Realty Development Corp. vs. Court of Appeals

Case Digest (G.R. No. 112526)
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Facts:

Ownership and Description of the Property

Petitioner Sta. Rosa Realty Development Corporation (SRRDC) was the registered owner of two parcels of land in Barangay Casile, Cabuyao, Laguna, covered by Transfer Certificate of Title Nos. 81949 and 84891, with a total area of approximately 254.6 hectares.
The property was originally presented as a vital watershed providing clean potable water to the Canlubang community and hosting a cluster of ninety light industries, thereby suggesting both environmental and industrial functions.

Initiation of Litigation and Administrative Proceedings

In December 1985, respondents initiated a civil case before the Regional Trial Court seeking an easement of right of way to and from Barangay Casile.
Responding to these issues, SRRDC simultaneously filed ejectment and forcible entry cases in the Municipal Trial Court, Cabuyao, Laguna, alleging unlawful intrusion and interference with its property rights.

The Compulsory Acquisition Process under CARP

Respondents petitioned the Department of Agrarian Reform (DAR) to compulsorily acquire the SRRDC property under the Comprehensive Agrarian Reform Program (CARP).
On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao, Laguna, issued a “Notice of Coverage” and convened a conference with petitioner’s representatives, the Land Bank of the Philippines, local agrarian reform committees, and prospective farmer beneficiaries.
Subsequently, on December 12, 1989, the Secretary of Agrarian Reform sent two notices of acquisition to SRRDC, effectively placing the property under compulsory acquisition.

Protest, Objection, and Conflicting Positions

On August 17, 1989, SRRDC filed a “Protest and Objection” with the Municipal Agrarian Reform Office, arguing that the property, being rugged with slopes of 18% and above and occupied by squatters, was unsuitable for agricultural use.
Conversely, farmer beneficiaries and local agrarian committee representatives countered that the slopes were only 5–10% and that the land was economically viable for agriculture, supported by documentation from the Department of Agriculture and the municipality.
SRRDC later reiterated its position, including its submission in April 1990 that the property should be exempt from CARP coverage on the basis that it was a watershed area subject to pending conversion proceedings.

Administrative Hearings and Valuation Proceedings

A series of administrative steps and hearings ensued, including the summary investigation report prepared by MARO and later endorsements to the Provincial Agrarian Reform Officer (PARO) and the DAR Central Office via the Bureau of Land Acquisition and Distribution (BLAD).
Petitioner continued to express concerns about the adequacy of compensation and the propriety of the acquisition procedure.
Several procedural issues surfaced, such as the reconstruction of records due to missing documents, petitions for exemption from the CARP coverage, and repeated rescheduling of hearings.

Decisions Rendered by Administrative Bodies

On December 19, 1991, the Department of Agrarian Reform Adjudication Board (DARAB) issued a decision ordering the compulsory acquisition of the SRRDC property and fixed compensation at P7,841,997.64.
The Register of Deeds was directed to cancel the existing titles and reissue new ones in the name of the Republic of the Philippines, pending the distribution of lands to qualified farmer beneficiaries.
Subsequent local court rulings (Regional Trial Court decision on January 20, 1992) upheld the eviction of respondents from the property.

Court of Appeals and Further Litigatory Developments

On November 5, 1993, the Court of Appeals affirmed the DARAB decision ordering the compulsory acquisition of the petitioner’s land.
On December 15, 1993, a temporary restraining order was issued by the Court, effectively staying the implementation of the DARAB decision pending further judicial review.
Throughout the process, SRRDC questioned both the nature of the property—specifically its classification as a watershed versus an industrial park—and the methods used in determining its just compensation, including the mode of payment (trust account versus cash or LBP bonds).

Environmental, Zoning, and Classification Issues

The property’s classification came under scrutiny: originally zoned as a “PARK” in 1979, it was later reclassified by the Sangguniang Bayan in 1994 to agricultural land, a decision that raised questions about its suitability for compulsory acquisition.
Evidence was presented showing that the disputed parcels had slopes of 18% and above, a factor that under R.A. No. 6657, Section 10 might exempt the land from coverage under the CARP.
Environmental studies, including a detailed report from the Ecosystems Research and Development Bureau (ERDB), underscored the property’s critical role in maintaining watershed integrity and highlighted the potential adverse effects of land disturbing activities.

The Interplay Between Agrarian Reform and Environmental Protection

The case raised a pivotal question about the balance between the State’s exercise of eminent domain under CARP and its responsibility to protect vital natural resources such as watersheds.
Legislative provisions under R.A. No. 6657, particularly Sections 10 and 16, and relevant administrative orders (e.g., Administrative Order Nos. 12 and 13, Series of 1989) were examined to determine whether the property should be compulsorily acquired or remain exempt due to its environmental significance.

Concluding Developments

In light of the conflicting evidence regarding the property’s slope, classification, and environmental importance, the issue remained unresolved by the administrative bodies.
The Supreme Court eventually set aside the Court of Appeals decision and remanded the case to the DARAB for re-evaluation of the nature and coverage of the disputed parcels under the CARP.

Issues:

Whether the subject property, given its dual characterization as both a potential industrial/agricultural land and a vital watershed area with high slopes, falls under the coverage of compulsory acquisition under the Comprehensive Agrarian Reform Program (CARP).

Does the environmental designation and the significant ecological role of the property exempt it from mandatory acquisition under R.A. No. 6657?
How do the contrasting classifications (zoning as “PARK” versus later agricultural designation) affect its eligibility for compulsory acquisition?

Whether the procedural due process requirements in the compulsory acquisition process were properly observed.

Was the issuance of the notice of coverage and acquisition in accordance with the mandated procedures under CARP and relevant administrative orders?
Did the valuation process and method of payment (trust account versus cash or LBP bonds) comply with the statutory requirements?

Whether the petition for exemption from CARP coverage based on the property’s terrain (steep slopes) and its watershed status is valid.

Can the evidence of slopes of 18% and over, as well as environmental reports emphasizing watershed protection, justify exemption from compulsory acquisition?
What is the proper interpretation of Section 10 of R.A. No. 6657 regarding exemptions for lands not suited for agricultural use?

The proper role and scope of environmental considerations and zoning classifications in the context of land reform acquisitions.

To what extent should the environmental impact and watershed function of a property override the agrarian reform objectives of land redistribution?
How should the evolving classification and subsequent revaluation affect the legal determination of the property’s status?

Ruling:

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Ratio:

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Case Digest (G.R. No. 112526)
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Case Digest (G.R. No. 112526)
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