G.R. No. 171101 Hacienda Luisita, Inc., et al., petitioners v. Presidential Agrarian Reform Council, et al.,
respondents.
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SEPARATE OPINION
MENDOZA, J.:
I fully concur with the well-explained position of Chief Justice Renato
Corona that the Stock Distribution Plan (SDP)
is unconstitutional as it is inconsistent with the basic concept of agrarian
reform. Land reform entails land
distribution to those who till the land. If there is no actual land
distribution, there is no land reform.
Indeed, the distribution of shares of stock, not land, cannot be
considered as compliance with the constitutional provision on agrarian reform.
Section 31 of Republic Act (R.A.) No.
6657, which allows stock distribution, directly and explicitly contravenes
Section 4, Article XIII of the Constitution. Doubtless, the SDP of petitioner Hacienda
Luisita, Inc. (HLI), which has as its basis Section 31 of R.A. No. 6657,
is unconstitutional.
Under the SDP, instead of being
given lands, the Farmworkers/Beneficiaries (FWBs)
were given shares of stocks in HLI, by which scheme, being in the minority, they
have absolutely no control over the land.
In fact, they can lose it. A case in point is the segregation and conversion
of 300 hectares of HLI land from agricultural to non-agricultural purposes.
When the 300 hectares were converted, transferred, mortgaged, and sold to pay
an indebtedness, the FWBs had no say about it and effectively lost a big chunk
of their land.
In a genuine land reform, the qualified
FWBs should be given, directly or collectively, ownership of the land they till
with all legal rights and entitlement, subject only to the limitations under
the law, like the retention limits, expropriation and payment of just
compensation. Under a collective ownership, if they are not in control of the
cooperative or association, it cannot be considered a compliance with the law.
At any rate, as the majority is of the view that the constitutionality of
the SDP cannot be assailed in this case as it is not the lis mota, I
agree with the ponencia that FWBs are
real parties-in-interest and that the Presidential Agrarian Reform Council
(PARC) has the power and authority to revoke the SDP. I am also of the considered position that there
has been serious violations of the Stock Distribution Option Agreement (SDOA). The reasons, some contained in
the Terminal Report, dated
1] The man days method of
computation, adopted in computing the number of shares to which each FWB is
entitled, prejudiced the original qualified FWBs numbering about 6,296 and
denied them of their rights under the law. When their numbers increased to
10,502 through the years under the man days method, the value of the shares
of the original FWBs was effectively diluted.
Under the man-days system, the
FWBs could be denied the opportunity to be granted shares of stock by just being
not allowed to work altogether under the guise of rotation. There is also no
guarantee that they would receive their due if they get retrenched or retired.
2]
The 30-year time frame for stock transfer extended the period for HLI to
complete the distribution of the 118,391,976.85 shares and, thus, violated the
compliance periods provided under Section 31 of the CARL and Section 11 of AO
No. 10-1988. Per Section 11, the
approved stock distribution plan shall be implemented within three (3) months
from receipt by the corporate landowner of the approval thereof by the PARC and
the transfer of the shares of stocks in the names of the qualified
beneficiaries shall be recorded in the stock and transfer books and submitted
to the Securities and Exchange Commission (SEC) within sixty (60) days
from the said implementation of the stock distribution plan.
3] The agricultural land
involved has not been maintained as unfragmented. At least 500 hectares
thereof have been carved out after its land use has been converted to
non-agricultural uses.
4] There was no DAR verification and audit of the values
of the agricultural lands and petitioner HLIs total assets. Thus, the value of the supposed shares of the
FWBs in HLI is suspect.
5] HLI failed to comply with
its obligation to grant 3% of the gross sales every year as production sharing
benefit on top of the workers salaries.
6] HLI failed to comply with
its undertaking to distribute homelots to all the FWBs under the SDOA.
Moreover, as stated in the Terminal Report, the FWBs did not have any participation
in the valuation of the agricultural land for the purpose of determining its
proportionate equity in relation to the total assets of the corporation.
Pending the issuance of the corresponding shares of stocks, the FWBs
remain ordinary farmers and/or farmworkers and the land remains under the full
ownership and control of the original owner, the HLI/TADECO. Per Terminal
Report, there was no compliance with the representations/warranties made under
section 5(a) and (b) of said Administrative Order No. 10. As claimed by HLI
itself, the corporate activity has already stopped so that the contemplated
profitability, increased income and greater benefits enumerated in the SDP have
remained mere illusions.
Regarding the 300 hectares sold to Luisita Industrial Park Corporation (LIPCO) and RCBC, again I am with
the ponencia that they were buyers in
good faith and, thus, said portions should be excluded from the CARPs compulsory coverage. Records disclose that the conversion of these
lands was with the acquiescence of the FWBs and approved by the PARC after full
compliance with R.A. No. 6657 and the DARs applicable regulations. The only
dispute on this is the proceeds of the sale. After the conversion was approved,
Centennary Holdings sold it to LIPCO for P750 million. On the other hand, RCBC received
approximately 184 hectares of land from LIPCO, through a dacion en pago, in payment for LIPCOs debt amounting to P431.7
million. There is no indication that LIPCO and RCBC, both of whom exercised due
diligence, were on notice that there was a defect in the titles of the lands they
purchased. The FWBs, however, are entitled to receive the proceeds of the sales
to LIPCO and RCBC based on their value at the time of the taking plus legal
interest.
As to the
remaining 200 hectares (of the original 500 hectares converted from
agricultural to non-agricultural use with the DARs approval), which appear to
have been sold by HLI to Luisita Realty Corporation (LRC), they should
be subject to compulsory CARP coverage. Unlike LIPCO and RCBC, LRC never assailed PARC
Resolution No. 2005-32-01, or the DARs Notice of Coverage order. Its silence
and inaction may be deemed an acquiescence with the PARC decision to place the
land under the compulsory coverage of the CARP. Certainly, LRCs situation is
different from the two, particularly RCBC, who is a mortgagee and, later, payee
or purchaser in good faith. LRC, however, should be reimbursed for what it had paid
plus legal interest.
With respect to the 80 hectares expropriated by
the government for the SCTEX, there seems to be no dispute except on the disposition
of the proceeds. The portion should be
excluded from the coverage, pursuant to Section 6-A of Republic Act No. 6657, as
amended by R.A. No. 9700. Like in the purchase by LIPCO and RCBC, the proceeds should
go to the FWBs based on the value at the time of taking plus legal interest.
There being a violation of the SDOA, the petition should be denied
and PARCs Resolution No. 2005-32-01 revoking the SDP, as well as its
Resolution No. 2006-34-01, denying the petitioners motion for reconsideration
should be affirmed, with the modification that the purchase of
the 300-hectare portion by LIPCO and RCBC, as well as the expropriation of the 80-hectare
portion for the SCTEX complex, should be considered as valid. Thus, the said portions should be beyond the
compulsory CARP coverage.
As a consequence of the violations, the subject lands should be distributed
to the FWBs under the supervision of the DAR, who will determine just
compensation, after proper audit and valuation of those already given and
received and set off. Needless to state, the compensation should be with legal
interest. I agree with the position of
Justice Arturo Brion that the reckoning date for purposes of just compensation
should be
In this regard, except on the matter of the 200 hectares sold to LRC, I adopt
the reasoning of, and disposition recommended by, Justice Brion in his Separate
Concurring and Dissenting Opinion.
Further, I fully agree with the ponencia that the FWBs are
entitled to retain the salaries, wages and other benefits they received for
services rendered by them as employees of HLI.
The bottom line is that the qualified
FWBs should be given, directly or collectively, ownership of the land they till
with all legal rights and entitlement, subject only to the prescribed retention
limits, expropriation and the payment of just compensation.
The FWBs, however, who would opt to
remain as stockholders of HLI, may waive their hard-won right to actually own
the lands they till. After all, it is an
attribute of ownership subject, of course, to the limitations under the
law.
Under Section 27 of R.A. No. 6657, FWBs may sell the lands they
acquired under the CARP subject to the limitations stated therein. Thus:
SEC. 27. Transferability of Awarded Lands. -
Lands acquired by beneficiaries under this Act may not be sold, transferred or
conveyed except through hereditary succession, or to the government, or to the
LBP, or to other qualified beneficiaries for a period of ten (10) years:
Provided, however, That the children or the spouse of the transferor shall have
a right to repurchase the land from the government or LBP within a period of
two (2) years. Due notice of the availability of the land shall be given by the
LBP to the Barangay Agrarian Reform Committee (BARC) of the barangay where the
land is situated. The Provincial Agrarian Coordinating Committee (PARCCOM), as
herein provided, shall, in turn, be given due notice thereof by the BARC.
If the land has not yet been fully paid by the
beneficiary, the right to the land may be transferred or conveyed, with prior
approval of the DAR, to any heir of the beneficiary or to any other beneficiary
who, as a condition for such transfer or conveyance, shall cultivate the land
himself. Failing compliance herewith, the land shall be transferred to the LBP
which shall give due notice of the availability of the land in the manner
specified in the immediately preceding paragraph.
In the event of
such transfer to the LBP, the latter shall compensate the beneficiary in one
lump sum for the amounts the latter has already paid, together with the value
of improvements he has made on the land.
Considering, however, that more than 10 years have elapsed from
The DAR shall select the method of
determining the will of the parties and supervise it.
JOSE CATRAL
Associate Justice