Republic of the Philippines
SUPREME COURT
EN BANC
|
HACIENDA LUISITA,
INCORPORATED, Petitioner, LUISITA INDUSTRIAL PARK
CORPORATION and RIZAL COMMERCIAL BANKING CORPORATION, Petitioners-in-Intervention, -
versus - PRESIDENTIAL AGRARIAN
REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN
REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG,
NOEL MALLARI, and JULIO SUNIGA[1] and his SUPERVISORY GROUP OF THE HACIENDA LUISITA,
INC. and WINDSOR ANDAYA, Respondents. |
|
G.R. No. 171101 Present: CARPIO, VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, ABAD, VILLARAMA, JR., PEREZ, SERENO, REYES, PERLAS-BERNABE, JJ. Promulgated: November 22, 2011 |
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R E S O L U T I O N
VELASCO, JR., J.:
For resolution are the (1) Motion for Clarification and Partial Reconsideration dated July 21,
2011 filed by petitioner Hacienda Luisita, Inc. (HLI); (2) Motion for Partial Reconsideration dated July 20, 2011 filed by
public respondents Presidential Agrarian Reform Council (PARC) and Department
of Agrarian Reform (DAR); (3) Motion for
Reconsideration dated July 19, 2011 filed by private respondent Alyansa ng
mga Manggagawang Bukid sa Hacienda Luisita (AMBALA); (4) Motion for Reconsideration dated July 21, 2011 filed by
respondent-intervenor Farmworkers Agrarian Reform Movement, Inc. (FARM); (5) Motion for Reconsideration dated July
21, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory
Group of Hacienda Luisita, Inc. (Supervisory Group) and Windsor Andaya
(collectively referred to as Mallari, et al.); and (6) Motion for Reconsideration dated July 22, 2011 filed by private
respondents Rene Galang and AMBALA.[2]
On July 5, 2011, this Court promulgated a Decision[3] in
the above-captioned case, denying the petition filed by HLI and affirming Presidential
Agrarian Reform Council (PARC) Resolution No. 2005-32-01 dated December 22,
2005 and PARC Resolution No. 2006-34-01 dated May 3, 2006 with the modification
that the original 6,296 qualified farmworker-beneficiaries of Hacienda Luisita
(FWBs) shall have the option to remain as stockholders of HLI.
In its Motion for
Clarification and Partial Reconsideration dated July 21, 2011, HLI raises
the following issues for Our consideration:
A
IT IS NOT
PROPER, EITHER IN LAW OR IN EQUITY, TO DISTRIBUTE TO THE ORIGINAL FWBs OF 6,296
THE UNSPENT OR UNUSED BALANCE OF THE PROCEEDS OF THE
(1) THE
PROCEEDS OF THE
(2) TO DISTRIBUTE THE CASH SALES PROCEEDS OF THE PORTIONS OF THE LAND ASSET TO THE FWBs, WHO ARE STOCKHOLDERS OF HLI, IS TO DISSOLVE THE CORPORATION AND DISTRIBUTE THE PROCEEDS AS LIQUIDATING DIVIDENDS WITHOUT EVEN PAYING THE CREDITORS OF THE CORPORATION;
(3) THE DOING OF SAID ACTS WOULD VIOLATE THE STRINGENT PROVISIONS OF THE CORPORATION CODE AND CORPORATE PRACTICE.
B
IT IS NOT PROPER, EITHER IN LAW OR IN EQUITY, TO RECKON THE PAYMENT OF JUST COMPENSATION FROM NOVEMBER 21, 1989 WHEN THE PARC, THEN UNDER THE CHAIRMANSHIP OF DAR SECRETARY MIRIAM DEFENSOR-SANTIAGO, APPROVED THE STOCK DISTRIBUTION PLAN (SDP) PROPOSED BY TADECO/HLI, BECAUSE:
(1) THAT PARC RESOLUTION NO. 89-12-2 DATED NOVEMBER 21, 1989 WAS NOT THE ACTUAL TAKING OF THE TADECOs/HLIs AGRICULTURAL LAND;
(2) THE RECALL OR REVOCATION UNDER RESOLUTION NO. 2005-32-01 OF THAT SDP BY THE NEW PARC UNDER THE CHAIRMANSHIP OF DAR SECRETARY NASSER PANGANDAMAN ON DECEMBER 22, 2005 OR 16 YEARS EARLIER WHEN THE SDP WAS APPROVED DID NOT RESULT IN ACTUAL TAKING ON NOVEMBER 21, 1989;
(3) TO PAY THE JUST COMPENSATION AS OF NOVEMBER 21, 1989 OR 22 YEARS BACK WOULD BE ARBITRARY, UNJUST, AND OPPRESSIVE, CONSIDERING THE IMPROVEMENTS, EXPENSES IN THE MAINTENANCE AND PRESERVATION OF THE LAND, AND RISE IN LAND PRICES OR VALUE OF THE PROPERTY.
On the other hand, PARC and DAR, through the Office of the
Solicitor General (OSG), raise the following issues in their Motion for Partial Reconsideration dated
July 20, 2011:
THE DOCTRINE OF OPERATIVE FACT DOES NOT APPLY TO THIS CASE FOR THE FOLLOWING REASONS:
I
THERE IS NO LAW OR RULE WHICH HAS BEEN INVALIDATED ON THE GROUND OF UNCONSTITUTIONALITY; AND
II
THIS DOCTRINE IS A RULE OF EQUITY WHICH MAY BE APPLIED ONLY IN THE ABSENCE OF A LAW. IN THIS CASE, THERE IS A POSITIVE LAW WHICH MANDATES THE DISTRIBUTION OF THE LAND AS A RESULT OF THE REVOCATION OF THE STOCK DISTRIBUTION PLAN (SDP).
For its part, AMBALA poses the following issues in its Motion for Reconsideration dated July
19, 2011:
I
THE MAJORITY OF THE MEMBERS OF THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT SECTION 31 OF REPUBLIC ACT 6657 (RA 6657) IS CONSTITUTIONAL.
II
THE MAJORITY OF THE MEMBERS OF THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT ONLY THE [PARCS] APPROVAL OF HLIs PROPOSAL FOR STOCK DISTRIBUTION UNDER CARP AND THE [SDP] WERE REVOKED AND NOT THE STOCK DISTRIBUTION OPTION AGREEMENT (SDOA).
III
THE MAJORITY OF THE MEMBERS OF THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN APPLYING THE DOCTRINE OF OPERATIVE FACTS AND IN MAKING THE [FWBs] CHOOSE TO OPT FOR ACTUAL LAND DISTRIBUTION OR TO REMAIN AS STOCKHOLDERS OF [HLI].
IV
THE MAJORITY OF THE MEMBERS OF THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT IMPROVING THE ECONOMIC STATUS OF FWBs IS NOT AMONG THE LEGAL OBLIGATIONS OF HLI UNDER THE SDP AND AN IMPERATIVE IMPOSITION BY [RA 6657] AND DEPARTMENT OF AGRARIAN REFORM ADMINISTRATIVE ORDER NO. 10 (DAO 10).
V
THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT THE CONVERSION OF THE AGRICULTURAL LANDS DID NOT VIOLATE THE CONDITIONS OF RA 6657 AND DAO 10.
VI
THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT PETITIONER IS ENTITLED TO PAYMENT OF JUST COMPENSATION. SHOULD THE HONORABLE COURT AFFIRM THE ENTITLEMENT OF THE PETITIONER TO JUST COMPENSATION, THE SAME SHOULD BE PEGGED TO FORTY THOUSAND PESOS (PhP 40,000.00) PER HECTARE.
VII
THE HONORABLE
COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT LUISITA INDUSTRIAL PARK CORP.
(LIPCO) AND RIZAL COMMERCIAL BANKING CORPORATION (RCBC) ARE INNOCENT PURCHASERS
FOR VALUE.
In its Motion for
Reconsideration dated July 21, 2011, FARM similarly puts forth the
following issues:
I
THE HONORABLE SUPREME COURT SHOULD HAVE STRUCK DOWN SECTION 31 OF [RA 6657] FOR BEING UNCONSTITUTIONAL. THE CONSTITUTIONALITY ISSUE THAT WAS RAISED BY THE RESPONDENTS-INTERVENORS IS THE LIS MOTA OF THE CASE.
II
THE HONORABLE SUPREME COURT SHOULD NOT HAVE APPLIED THE DOCTRINE OF OPERATIVE FACT TO THE CASE. THE OPTION GIVEN TO THE FARMERS TO REMAIN AS STOCKHOLDERS OF HACIENDA LUISITA IS EQUIVALENT TO AN OPTION FOR HACIENDA LUISITA TO RETAIN LAND IN DIRECT VIOLATION OF THE COMPREHENSIVE AGRARIAN REFORM LAW. THE DECEPTIVE STOCK DISTRIBUTION OPTION / STOCK DISTRIBUTION PLAN CANNOT JUSTIFY SUCH RESULT, ESPECIALLY AFTER THE SUPREME COURT HAS AFFIRMED ITS REVOCATION.
III
THE HONORABLE SUPREME COURT SHOULD NOT HAVE CONSIDERED [LIPCO] AND [RCBC] AS INNOCENT PURCHASERS FOR VALUE IN THE INSTANT CASE.
Mallari, et al., on the other hand, advance the following grounds in support of their Motion for Reconsideration dated July
21, 2011:
(1) THE HOMELOTS REQUIRED TO BE DISTRIBUTED HAVE ALL BEEN DISTRIBUTED PURSUANT TO THE MEMORANDUM OF AGREEMENT. WHAT REMAINS MERELY IS THE RELEASE OF TITLE FROM THE REGISTER OF DEEDS.
(2) THERE HAS BEEN NO DILUTION OF SHARES. CORPORATE RECORDS WOULD SHOW THAT IF EVER NOT ALL OF THE 18,804.32 SHARES WERE GIVEN TO THE ACTUAL ORIGINAL FARMWORKER BENEFICIARY, THE RECIPIENT OF THE DIFFERENCE IS THE NEXT OF KIN OR CHILDREN OF SAID ORIGINAL [FWBs]. HENCE, WE RESPECTFULLY SUBMIT THAT SINCE THE SHARES WERE GIVEN TO THE SAME FAMILY BENEFICIARY, THIS SHOULD BE DEEMED AS SUBSTANTIAL COMPLIANCE WITH THE PROVISIONS OF SECTION 4 OF DAO 10.
(3) THERE HAS BEEN NO VIOLATION OF THE 3-MONTH PERIOD TO IMPLEMENT THE [SDP] AS PROVIDED FOR BY SECTION 11 OF DAO 10 AS THIS PROVISION MUST BE READ IN LIGHT OF SECTION 10 OF EXECUTIVE ORDER NO. 229, THE PERTINENT PORTION OF WHICH READS, THE APPROVAL BY THE PARC OF A PLAN FOR SUCH STOCK DISTRIBUTION, AND ITS INITIAL IMPLEMENTATION, SHALL BE DEEMED COMPLIANCE WITH THE LAND DISTRIBUTION REQUIREMENT OF THE CARP.
(4) THE VALUATION OF THE LAND CANNOT BE BASED AS OF NOVEMBER 21, 1989, THE DATE OF APPROVAL OF THE STOCK DISTRIBUTION OPTION. INSTEAD, WE RESPECTFULLY SUBMIT THAT THE TIME OF TAKING FOR VALUATION PURPOSES IS A FACTUAL ISSUE BEST LEFT FOR THE TRIAL COURTS TO DECIDE.
(5) TO THOSE WHO WILL CHOOSE LAND, THEY MUST RETURN WHAT WAS GIVEN TO THEM UNDER THE SDP. IT WOULD BE UNFAIR IF THEY ARE ALLOWED TO GET THE LAND AND AT THE SAME TIME HOLD ON TO THE BENEFITS THEY RECEIVED PURSUANT TO THE SDP IN THE SAME WAY AS THOSE WHO WILL CHOOSE TO STAY WITH THE SDO.
Lastly, Rene Galang and AMBALA, through the Public Interest
Law Center (PILC), submit the following grounds in support of their Motion for Reconsideration dated July
22, 2011:
I
THE HONORABLE COURT, WITH DUE RESPECT, GRAVELY ERRED IN ORDERING THE HOLDING OF A VOTING OPTION INSTEAD OF TOTALLY REDISTRIBUTING THE SUBJECT LANDS TO [FWBs] in [HLI].
A. THE HOLDING OF A VOTING OPTION HAS NO LEGAL BASIS. THE REVOCATION OF THE [SDP] CARRIES WITH IT THE REVOCATION OF THE [SDOA].
B. GIVING THE [FWBs] THE OPTION TO REMAIN AS STOCKHOLDERS OF HLI WITHOUT MAKING THE NECESSARY CHANGES IN THE CORPORATE STRUCTURE WOULD ONLY SUBJECT THEM TO FURTHER MANIPULATION AND HARDSHIP.
C. OTHER VIOLATIONS COMMITTED BY HLI UNDER THE [SDOA] AND PERTINENT LAWS JUSTIFY TOTAL LAND REDISTRIBUTION OF HACIENDA LUISITA.
II
THE HONORABLE
COURT, WITH DUE RESPECT, GRAVELY ERRED IN HOLDING THAT THE [RCBC] AND [LIPCO]
ARE INNOCENT PURCHASERS FOR VALUE OF THE 300-HECTARE PROPERTY IN HACIENDA
LUISITA THAT WAS SOLD TO THEM PRIOR TO THE INCEPTION OF THE PRESENT
CONTROVERSY.
Ultimately, the issues for Our consideration are the
following: (1) applicability of the operative fact doctrine; (2)
constitutionality of Sec. 31 of RA 6657 or the Comprehensive
Agrarian Reform Law of 1988; (3) coverage of compulsory acquisition; (4) just compensation; (5) sale
to third parties; (6) the violations of HLI; and (7) control over agricultural
lands.
We shall discuss these issues accordingly.
I.
Applicability of the Operative Fact
Doctrine
In their motion for partial reconsideration, DAR and PARC
argue that the doctrine of operative fact does not apply to the instant case
since: (1) there is no law or rule which has been invalidated on the ground of
unconstitutionality;[4]
(2) the doctrine of operative fact is a rule of equity which may be applied
only in the absence of a law, and in this case, they maintain that there is a
positive law which mandates the distribution of the land as a result of the
revocation of the stock distribution plan (SDP).[5]
Echoing the stance of DAR and PARC, AMBALA submits that the
operative fact doctrine should only be made to apply in the extreme case in
which equity demands it, which allegedly is not in the instant case.[6] It
further argues that there would be no undue harshness or injury to HLI in case
lands are actually distributed to the farmworkers, and that the decision which
orders the farmworkers to choose whether to remain as stockholders of HLI or to
opt for land distribution would result in inequity and prejudice to the
farmworkers.[7] The foregoing views are also similarly shared
by Rene Galang and AMBALA, through the PILC.[8] In
addition, FARM posits that the option given to the FWBs is equivalent to an
option for HLI to retain land in direct violation of RA 6657.[9]
(a)
Operative Fact Doctrine Not Limited to
Invalid or Unconstitutional
Laws
Contrary to the stance of respondents, the operative fact
doctrine does not only apply to laws subsequently declared unconstitutional or
unlawful, as it also applies to executive acts subsequently declared as invalid.
As We have discussed in Our July 5, 2011 Decision:
That the operative fact doctrine squarely applies to executive actsin this case, the approval by PARC of the HLI proposal for stock distributionis well-settled in our jurisprudence. In Chavez v. National Housing Authority, We held:
Petitioner postulates that the operative fact doctrine is inapplicable to the present case because it is an equitable doctrine which could not be used to countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues
that the existence of the various agreements implementing the SMDRP is an
operative fact that can no longer be disturbed or simply ignored, citing Rieta v. People of the
The argument of the Solicitor General is meritorious.
The operative fact doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid and must be complied with, thus:
xxx xxx xxx
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City Government's order of suspension, as we have no reason to do so, much less retroactively apply such nullification to deprive private respondent of a compelling and valid reason for not filing the leave application. For as we have held, a void act though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions done in reliance thereof. Consequently, the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached. It would indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a formal leave application.
The applicability of the operative fact doctrine to executive acts was further explicated by this Court in Rieta v. People, thus:
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754 was invalid, as the law upon which it was predicated General Order No. 60, issued by then President Ferdinand E. Marcos was subsequently declared by the Court, in Taada v. Tuvera, 33 to have no force and effect. Thus, he asserts, any evidence obtained pursuant thereto is inadmissible in evidence.
We do not agree. In Taada, the Court addressed the possible effects of its declaration of the invalidity of various presidential issuances. Discussing therein how such a declaration might affect acts done on a presumption of their validity, the Court said:
. . .. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. . . . It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to [the determination of its invalidity], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.
xxx xxx xxx
Similarly, the implementation/ enforcement of presidential decrees prior to their publication in the Official Gazette is an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration . . . that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.
The Chicot doctrine cited in Taada advocates that, prior to the nullification of a statute, there is an imperative necessity of taking into account its actual existence as an operative fact negating the acceptance of a principle of absolute retroactive invalidity. Whatever was done while the legislative or the executive act was in operation should be duly recognized and presumed to be valid in all respects. The ASSO that was issued in 1979 under General Order No. 60 long before our Decision in Taada and the arrest of petitioner is an operative fact that can no longer be disturbed or simply ignored. (Citations omitted; emphasis in the original.)
Bearing in mind that PARC Resolution No. 89-12-2[10]an
executive actwas declared invalid in the instant case, the operative fact
doctrine is clearly applicable.
Nonetheless, the minority is of the persistent view that the
applicability of the operative fact doctrine should be limited to statutes and
rules and regulations issued by the executive department that are accorded the
same status as that of a statute or those which are quasi-legislative in
nature. Thus, the minority concludes that the phrase executive act used in
the case of De Agbayani v. Philippine
National Bank[11]
refers only to acts, orders, and rules and regulations that have the force and
effect of law. The minority also made mention of the Concurring Opinion of
Justice Enrique Fernando in Municipality
of Malabang v. Benito,[12]
where it was supposedly made explicit that the operative fact doctrine applies
to executive acts, which are ultimately quasi-legislative in nature.
We disagree. For one, neither the De Agbayani case nor the
A case in point is the concurrent appointment of Magdangal B.
Elma (Elma) as Chairman of the Presidential Commission on Good Government
(PCGG) and as Chief Presidential Legal Counsel (CPLC) which was declared
unconstitutional by this Court in Public
Interest Center, Inc. v. Elma.[13] In said case, this Court ruled that the
concurrent appointment of Elma to these offices is in violation of Section 7,
par. 2, Article IX-B of the 1987 Constitution, since these are incompatible
offices. Notably, the appointment of Elma as Chairman of the PCGG and as CPLC
is, without a question, an executive act. Prior to the declaration of
unconstitutionality of the said executive act, certain acts or transactions
were made in good faith and in reliance of the appointment of Elma which cannot
just be set aside or invalidated by its subsequent invalidation.
In Tan v. Barrios,[14] this Court, in applying the operative fact doctrine, held that despite the invalidity of the jurisdiction of the military courts over civilians, certain operative facts must be acknowledged to have existed so as not to trample upon the rights of the accused therein. Relevant thereto, in Olaguer v. Military Commission No. 34,[15] it was ruled that military tribunals pertain to the Executive Department of the Government and are simply instrumentalities of the executive power, provided by the legislature for the President as Commander-in-Chief to aid him in properly commanding the army and navy and enforcing discipline therein, and utilized under his orders or those of his authorized military representatives.[16]
Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued by the executive department that are accorded the same status as that of a statute or those which are quasi-legislative in nature.
Even assuming that De
Agbayani initially applied the operative fact doctrine only to executive
issuances like orders and rules and regulations, said principle can nonetheless
be applied, by analogy, to decisions made by the President or the agencies
under the executive department. This doctrine, in the interest of justice and
equity, can be applied liberally and in a broad sense to encompass said
decisions of the executive branch. In keeping with the demands of equity, the
Court can apply the operative fact doctrine to acts and consequences that
resulted from the reliance not only on a law or executive act which is
quasi-legislative in nature but also on decisions or orders of the executive
branch which were later nullified. This Court is not unmindful that such acts
and consequences must be recognized in the higher interest of justice, equity
and fairness.
Significantly, a decision made by the President or the
administrative agencies has to be complied with because it has the force and
effect of law, springing from the powers of the President under the
Constitution and existing laws. Prior to
the nullification or recall of said decision, it may have produced acts and
consequences in conformity to and in reliance of said decision, which must be
respected. It is on this score that the operative fact doctrine should be
applied to acts and consequences that resulted from the implementation of the
PARC Resolution approving the SDP of HLI.
More importantly, respondents, and even the minority, failed
to clearly explain how the option to remain in HLI granted to individual
farmers would result in inequity and prejudice. We can only surmise that
respondents misinterpreted the option as a referendum where all the FWBs will
be bound by a majority vote favoring the retention of all the 6,296 FWBs as HLI
stockholders. Respondents are definitely
mistaken. The fallo of Our July 5,
2011 Decision is unequivocal that only those FWBs who signified their desire to
remain as HLI stockholders are entitled to 18,804.32 shares each, while those
who opted not to remain as HLI stockholders will be given land by DAR. Thus, referendum was not required but only
individual options were granted to each FWB whether or not they will remain in
HLI.
The application of the operative fact doctrine to the FWBs is
not iniquitous and prejudicial to their interests but is actually beneficial
and fair to them. First, they are granted the right to remain in HLI as stockholders
and they acquired said shares without paying their value to the
corporation. On the other hand, the
qualified FWBs are required to pay the value of the land to the Land Bank of
the Philippines (LBP) if land is awarded to them by DAR pursuant to RA
6657. If the qualified FWBs really want
agricultural land, then they can simply say no to the option. And second,
if the operative fact doctrine is not applied to them, then the FWBs will be
required to return to HLI the 3% production share, the 3% share in the proceeds
of the sale of the 500-hectare converted land, and the 80.51-hectare Subic-Clark-Tarlac
Expressway (SCTEX) lot,
the homelots and other benefits received by the FWBs from HLI. With the
application of the operative fact doctrine, said benefits, homelots and the 3%
production share and 3% share from the sale of the 500-hectare and SCTEX lots
shall be respected with no obligation to refund or return them. The receipt of these things is an operative
fact that can no longer be disturbed or simply ignored.
(b) The
Operative Fact Doctrine as Recourse in Equity
As mentioned above, respondents contend that the operative
fact doctrine is a rule of equity which may be applied only in the absence of a
law, and that in the instant case, there is a positive law which mandates the
distribution of the land as a result of the revocation of the SDP.
Undeniably, the operative fact doctrine is a rule of equity.[17]
As a complement of legal jurisdiction, equity seeks to reach and complete
justice where courts of law, through the inflexibility of their rules and want
of power to adapt their judgments to the special circumstances of cases, are
incompetent to do so. Equity regards the spirit and not the letter, the intent
and not the form, the substance rather than the circumstance, as it is
variously expressed by different courts.[18]
Remarkably, it is applied only in the absence of statutory law and never in
contravention of said law.[19]
In the instant case, respondents argue that the operative
fact doctrine should not be applied since there is a positive law,
particularly, Sec. 31 of RA 6657, which directs the distribution of the land as
a result of the revocation of the SDP. Pertinently, the last paragraph of Sec.
31 of RA 6657 states:
If within two (2) years from the approval of this Act, the land or stock
transfer envisioned above is not made or realized or the plan for such stock distribution approved by the PARC within
the same period, the agricultural land of the corporate owners or corporation
shall be subject to the compulsory coverage of this Act. (Emphasis supplied.)
Markedly, the use of the word or under the last paragraph of Sec. 31 of RA 6657 connotes that
the law gives the corporate landowner an option to avail of the stock
distribution option or to have the SDP approved within two (2) years from the
approval of RA 6657. This interpretation is consistent with the
well-established principle in statutory construction that [t]he word or is a
disjunctive term signifying disassociation and independence of one thing from
the other things enumerated; it should, as a rule, be construed in the sense in
which it ordinarily implies, as a disjunctive word.[20] In PCI
Leasing and Finance, Inc. v. Giraffe-X Creative Imaging, Inc.,[21]
this Court held:
Evidently, the letter did not make a demand for the payment of the P8,248,657.47 AND the return of the equipment; only either one of the two was required. The demand letter was prepared and signed by Atty. Florecita R. Gonzales, presumably petitioners counsel. As such, the use of or instead of and in the letter could hardly be treated as a simple typographical error, bearing in mind the nature of the demand, the amount involved, and the fact that it was made by a lawyer. Certainly Atty. Gonzales would have known that a world of difference exists between and and or in the manner that the word was employed in the letter.
A rule in statutory construction is that the word or is a disjunctive term signifying dissociation and independence of one thing from other things enumerated unless the context requires a different interpretation.[22]
In its elementary sense, or, as used in a statute, is a disjunctive article indicating an alternative. It often connects a series of words or propositions indicating a choice of either. When or is used, the various members of the enumeration are to be taken separately.[23]
The word or is a disjunctive term signifying disassociation and independence of one thing from each of the other things enumerated.[24] (Emphasis in the original.)
Given that HLI secured approval of its SDP in November 1989,
well within the two-year period reckoned from June 1988 when RA 6657 took
effect, then HLI did not violate the last paragraph of Sec. 31 of RA 6657.
Pertinently, said provision does not bar Us from applying the operative fact
doctrine.
Besides, it should be recognized that this Court, in its July
5, 2011 Decision, affirmed the revocation of Resolution No. 89-12-2 and ruled
for the compulsory coverage of the agricultural lands of Hacienda Luisita in
view of HLIs violation of the SDP and DAO 10. By applying the operative fact
doctrine, this Court merely gave the qualified FWBs the option to remain as
stockholders of HLI and ruled that they will retain the homelots and other
benefits which they received from HLI by virtue of the SDP.
It bears stressing that the application of the operative fact
doctrine by the Court in its July 5, 2011 Decision is favorable to the FWBs
because not only were the FWBs allowed to retain the benefits and homelots they
received under the stock distribution scheme, they were also given the option
to choose for themselves whether they want to remain as stockholders of HLI or
not. This is in recognition of the fact that despite the claims of certain
farmer groups that they represent the qualified FWBs in Hacienda Luisita, none
of them can show that they are duly authorized to speak on their behalf. As We
have mentioned, To date, such authorization document, which would logically
include a list of the names of the authorizing FWBs, has yet to be submitted to
be part of the records.
II. Constitutionality
of Sec. 31, RA 6657
FARM insists that the issue of constitutionality of Sec. 31
of RA 6657 is the lis mota of the
case, raised at the earliest opportunity, and not to be considered as moot and
academic.[25]
This contention is unmeritorious. As We have succinctly
discussed in Our July 5, 2011 Decision:
While there is indeed an actual case
or controversy, intervenor FARM, composed of a small minority of 27 farmers,
has yet to explain its failure to challenge the constitutionality of Sec. 3l of
RA 6657, since as early as November 21, l989 when PARC approved the SDP of
Hacienda Luisita or at least within a reasonable time thereafter and why its
members received benefits from the SDP without so much of a protest. It was
only on December 4, 2003 or 14 years after approval of the SDP via PARC
Resolution No. 89-12-2 dated November 21, 1989 that said plan and approving
resolution were sought to be revoked, but not, to stress, by FARM or any of its
members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT
question the constitutionality of Sec. 31 of RA 6657, but concentrated on the
purported flaws and gaps in the subsequent implementation of the SDP. Even the
public respondents, as represented by the Solicitor General, did not question
the constitutionality of the provision.
On the other hand, FARM, whose 27 members formerly belonged to AMBALA,
raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its
Supplemental Comment with the Court. Thus, it took FARM some eighteen (18)
years from November 21, 1989 before it challenged the constitutionality of Sec.
31 of RA 6657 which is quite too late in the day. The FARM members slept on their rights and
even accepted benefits from the SDP with nary a complaint on the alleged
unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot now be goaded into resolving
a constitutional issue that FARM failed to assail after the lapse of a long
period of time and the occurrence of numerous events and activities which
resulted from the application of an alleged unconstitutional legal provision.
It has been emphasized in a
number of cases that the question of constitutionality will not be passed upon
by the Court unless it is properly raised and presented in an appropriate case
at the first opportunity. FARM is, therefore,
remiss in belatedly questioning the constitutionality of Sec. 31 of RA
6657. The second requirement that the
constitutional question should be raised at the earliest possible opportunity
is clearly wanting.
The last but the most important requisite that the constitutional issue
must be the very lis mota of the case
does not likewise obtain. The lis mota aspect is not present, the constitutional issue tendered not being
critical to the resolution of the case. The unyielding rule has been to avoid,
whenever plausible, an issue assailing the constitutionality of a statute or
governmental act. If some other grounds exist by which judgment can be made
without touching the constitutionality of a law, such recourse is favored. Garcia v. Executive Secretary explains
why:
Lis Mota the fourth
requirement to satisfy before this Court will undertake judicial review means
that the Court will not pass upon a question of unconstitutionality, although
properly presented, if the case can be
disposed of on some other ground, such as the application of the statute or the
general law. The petitioner must be able to show that the case cannot be
legally resolved unless the constitutional question raised is determined. This
requirement is based on the rule that every law has in its favor the
presumption of constitutionality; to justify its nullification, there must be a
clear and unequivocal breach of the Constitution, and not one that is doubtful,
speculative, or argumentative.
The lis mota in this case, proceeding from the basic positions
originally taken by AMBALA (to which the FARM members previously belonged) and
the Supervisory Group, is the alleged non-compliance by HLI with the conditions
of the SDP to support a plea for its revocation. And before the Court, the lis
mota is whether or not PARC acted in grave abuse of discretion when it
ordered the recall of the SDP for such non-compliance and the fact that the
SDP, as couched and implemented, offends certain constitutional and statutory
provisions. To be sure, any of these key issues may be resolved without
plunging into the constitutionality of Sec. 31 of RA 6657. Moreover, looking
deeply into the underlying petitions of AMBALA, et al., it is not the said section per se that is invalid, but
rather it is the alleged application of the said provision in the SDP that is
flawed.
It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis--vis the stock distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: [T]hat after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell and compulsory acquisition. Thus, for all intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional should be a moot issue. (Citations omitted; emphasis in the original.)
Based on the foregoing disquisitions, We maintain that this Court
is NOT compelled to rule on the constitutionality of Sec. 31 of RA 6657. In
this regard, We clarify that this Court, in its July 5, 2011 Decision, made no
ruling in favor of the constitutionality of Sec. 31 of RA 6657. There was,
however, a determination of the existence of an apparent grave violation of the
Constitution that may justify the resolution of the issue of constitutionality,
to which this Court ruled in the negative. Having clarified this matter, all
other points raised by both FARM and AMBALA concerning the constitutionality of
RA 6657 deserve scant consideration.
III. Coverage of Compulsory Acquisition
FARM argues
that this Court ignored certain material facts when it limited the maximum area
to be covered to 4,915.75 hectares, whereas the area that should, at the least,
be covered is 6,443 hectares,[26]
which is the agricultural land allegedly covered by RA 6657 and previously held
by Tarlac Development Corporation (Tadeco).[27]
We cannot
subscribe to this view. Since what is put in issue before the Court is the
propriety of the revocation of the SDP, which only involves 4,915.75 has. of
agricultural land and not 6,443 has., then We are constrained to rule only as
regards the 4,915.75 has. of agricultural land.
Moreover, as
admitted by FARM itself, this issue was raised for the first time by FARM in
its Memorandum dated September 24, 2010 filed before this Court.[28]
In this regard, it should be noted that [a]s a legal recourse, the special
civil action of certiorari is a limited form of review.[29]
The certiorari jurisdiction of this Court is narrow in scope as it is
restricted to resolving errors of jurisdiction and grave abuse of discretion,
and not errors of judgment.[30]
To allow additional issues at this stage of the proceedings is violative of fair
play, justice and due process.[31]
Nonetheless,
it should be taken into account that this should not prevent the DAR, under its
mandate under the agrarian reform law, from subsequently subjecting to agrarian
reform other agricultural lands originally held by Tadeco that were allegedly
not transferred to HLI but were supposedly covered by RA 6657.
DAR, however,
contends that the declaration of the area[32]
to be awarded to each FWB is too restrictive. It stresses that in agricultural
landholdings like Hacienda Luisita, there are roads, irrigation canals, and
other portions of the land that are considered commonly-owned by farmworkers,
and this may necessarily result in the decrease of the area size that may be
awarded per FWB.[33]
DAR also argues that the July 5, 2011 Decision of this Court does not give it
any leeway in adjusting the area that may be awarded per FWB in case the number
of actual qualified FWBs decreases.[34]
The argument
is meritorious. In order to ensure the proper distribution of the agricultural
lands of Hacienda Luisita per qualified FWB, and considering that matters
involving strictly the administrative implementation and enforcement of
agrarian reform laws are within the jurisdiction of the DAR,[35]
it is the latter which shall determine the area with which each qualified FWB
will be awarded.
(a)
Conversion of
Agricultural Lands
AMBALA
insists that the conversion of the agricultural lands violated the conditions
of RA 6657 and DAO 10, stating that keeping the land intact and unfragmented
is one of the essential conditions of [the] SD[P], RA 6657 and DAO 10.[36]
It asserts that this provision or conditionality is not mere decoration and is
intended to ensure that the farmers can continue with the tillage of the soil
especially since it is the only occupation that majority of them knows.[37]
We disagree.
As We amply discussed in Our July 5, 2011 Decision:
Contrary to the almost parallel stance of the respondents, keeping Hacienda Luisita unfragmented is also not among the imperative impositions by the SDP, RA 6657, and DAO 10.
The Terminal Report states that the proposed distribution plan submitted in 1989 to the PARC effectively assured the intended stock beneficiaries that the physical integrity of the farm shall remain inviolate. Accordingly, the Terminal Report and the PARC-assailed resolution would take HLI to task for securing approval of the conversion to non-agricultural uses of 500 hectares of the hacienda. In not too many words, the Report and the resolution view the conversion as an infringement of Sec. 5(a) of DAO 10 which reads: a. that the continued operation of the corporation with its agricultural land intact and unfragmented is viable with potential for growth and increased profitability.
The PARC is wrong.
In the first place, Sec. 5(a)just like the succeeding Sec. 5(b) of DAO 10 on increased income and greater benefits to qualified beneficiariesis but one of the stated criteria to guide PARC in deciding on whether or not to accept an SDP. Said Sec. 5(a) does not exact from the corporate landowner-applicant the undertaking to keep the farm intact and unfragmented ad infinitum. And there is logic to HLIs stated observation that the key phrase in the provision of Sec. 5(a) is viability of corporate operations: [w]hat is thus required is not the agricultural land remaining intact x x x but the viability of the corporate operations with its agricultural land being intact and unfragmented. Corporate operation may be viable even if the corporate agricultural land does not remain intact or [un]fragmented.[38]
It is, of course, anti-climactic to mention that DAR viewed the conversion as not violative of any issuance, let alone undermining the viability of Hacienda Luisitas operation, as the DAR Secretary approved the land conversion applied for and its disposition via his Conversion Order dated August 14, 1996 pursuant to Sec. 65 of RA 6657 which reads:
Sec. 65. Conversion of Lands.After the lapse of five years from its award
when the land ceases to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR upon
application of the beneficiary or landowner with due notice to the affected
parties, and subject to existing laws, may authorize the x x x conversion of
the land and its dispositions. x x x
Moreover, it is worth noting that the application for
conversion had the backing of 5,000 or so FWBs, including respondents Rene Galang,
and Jose Julio Suniga, then leaders of the AMBALA and the Supervisory Group,
respectively, as evidenced by the Manifesto of Support they signed and which
was submitted to the DAR.[39]
If at all, this means that AMBALA should be estopped from questioning the
conversion of a portion of Hacienda Luisita, which its leader has fully
supported.
(b)
LIPCO and RCBC as Innocent
Purchasers for Value
The AMBALA, Rene Galang and the FARM are in accord that
Rizal Commercial Banking Corporation (RCBC) and Luisita Industrial Park
Corporation (LIPCO) are not innocent purchasers for value. The AMBALA, in
particular, argues that LIPCO, being a wholly-owned subsidiary of HLI, is
conclusively presumed to have knowledge of the agrarian dispute on the subject
land and could not feign ignorance of this fact, especially since they have the
same directors and stockholders.[40]
This is seconded by Rene Galang and AMBALA, through the PILC, which intimate
that a look at the General Information Sheets of the companies involved in the
transfers of the 300-hectare portion of Hacienda Luisita, specifically,
Centennary Holdings, Inc. (Centennary), LIPCO and RCBC, would readily reveal
that their directors are interlocked and connected to Tadeco and HLI.[41]
Rene Galang and AMBALA, through the PILC, also allege that with the clear-cut
involvement of the leadership of all the corporations concerned, LIPCO and RCBC
cannot feign ignorance that the parcels of land they bought are under the
coverage of the comprehensive agrarian reform program [CARP] and that the
conditions of the respective sales are imbued with public interest where normal
property relations in the Civil Law sense do not apply.[42]
Avowing that the land subject of conversion still
remains undeveloped, Rene Galang and AMBALA, through the PILC, further insist
that the condition that [t]he development of the land should be completed
within the period of five [5] years from the issuance of this Order was not
complied with. AMBALA also argues that since RCBC and LIPCO merely stepped into
the shoes of HLI, then they must comply with the conditions imposed in the
conversion order.[43]
In addition, FARM avers that among the conditions
attached to the conversion order, which RCBC and LIPCO necessarily have
knowledge of, are (a) that its approval shall in no way amend, diminish, or
alter the undertaking and obligations of HLI as contained in the [SDP] approved
on November 21, 1989; and (b) that the benefits, wages and the like, received
by the FWBs shall not in any way be reduced or adversely affected, among
others.[44]
The contentions of respondents are wanting. In the
first place, there is no denying that RCBC and LIPCO knew that the converted
lands they bought were under the coverage of CARP. Nevertheless, as We have
mentioned in Our July 5, 2011 Decision, this does not necessarily mean that
both LIPCO and RCBC already acted in bad faith in purchasing the converted
lands. As this Court explained:
It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that were previously covered by the SDP. Good faith consists in the possessors belief that the person from whom he received it was the owner of the same and could convey his title. Good faith requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another. It is the opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan, as the DAR conversion order was annotated at the back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots were validly converted to commercial or industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural lands previously covered by CARP land acquisition after the lapse of five (5) years from its award when the land ceases to be economically feasible and sound for agricultural purposes or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes. Moreover, DAR notified all the affected parties, more particularly the FWBs, and gave them the opportunity to comment or oppose the proposed conversion. DAR, after going through the necessary processes, granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and its original exclusive jurisdiction over all matters involving the implementation of agrarian reform. The DAR conversion order became final and executory after none of the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO purchased the lots in question on their honest and well-founded belief that the previous registered owners could legally sell and convey the lots though these were previously subject of CARP coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject lots. (Emphasis supplied.)
In the second place, the allegation that the converted lands remain
undeveloped is contradicted by the evidence on record, particularly, Annex X
of LIPCOs Memorandum dated September 23, 2010,[45]
which has photographs showing that the land has been partly developed.[46]
Certainly, it is a general rule that the factual findings of administrative
agencies are conclusive and binding on the Court when supported by substantial
evidence.[47] However, this rule admits
of certain exceptions, one of which is when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on record.[48]
In the third place, by arguing that the companies involved in the
transfers of the 300-hectare portion of Hacienda Luisita have interlocking
directors and, thus, knowledge of one may already be imputed upon all the other
companies, AMBALA and Rene Galang, in effect, want this Court to pierce the
veil of corporate fiction. However, piercing the veil of corporate fiction is
warranted only in cases when the separate legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime, such that in
the case of two corporations, the law will regard the corporations as merged
into one.[49] As succinctly discussed
by the Court in Velarde v. Lopez, Inc.:[50]
Petitioner argues nevertheless that jurisdiction over the subsidiary is justified by piercing the veil of corporate fiction. Piercing the veil of corporate fiction is warranted, however, only in cases when the separate legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, such that in the case of two corporations, the law will regard the corporations as merged into one. The rationale behind piercing a corporations identity is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities.
In applying the doctrine of piercing the veil of corporate fiction, the
following requisites must be established: (1) control, not merely majority or
complete stock control; (2) such control must have been used by the defendant
to commit fraud or wrong, to perpetuate the violation of a statutory or other
positive legal duty, or dishonest acts in contravention of plaintiffs legal
rights; and (3) the aforesaid control and breach of duty must proximately cause
the injury or unjust loss complained of. (Citations omitted.)
Nowhere, however, in the pleadings and other records of the case can it
be gathered that respondent has complete control over Sky Vision, not only of
finances but of policy and business practice in respect to the transaction attacked, so that Sky Vision had
at the time of the transaction no separate mind, will or existence of its own.
The existence of interlocking directors, corporate officers and shareholders is
not enough justification to pierce the veil of corporate fiction in the absence
of fraud or other public policy considerations.
Absent any allegation or proof of fraud or other
public policy considerations, the existence of interlocking directors, officers
and stockholders is not enough justification to pierce the veil of corporate
fiction as in the instant case.
And in the
fourth place, the fact that this Court, in its July 5, 2011 Decision, ordered
the payment of the proceeds of the sale of the converted land, and even of the 80.51-hectare
land sold to the government, through the Bases Conversion Development
Authority, to the qualified FWBs, effectively fulfils the conditions in the
conversion order, to wit: (1) that its approval shall in no way amend, diminish, or
alter the undertaking and obligations of HLI as contained in the SDP approved
on November 21, 1989; and (2) that the benefits, wages and the like, received
by the FWBs shall not in any way be reduced or adversely affected, among
others.
A view has also been advanced that the 200-hectare lot
transferred to Luisita Realty Corporation (LRC) should be included in the
compulsory coverage because the corporation did not intervene.
We disagree. Since
the 200-hectare lot formed part of the SDP that was nullified by PARC Resolution
2005-32-01, this Court is constrained to make a ruling on the rights of LRC
over the said lot. Moreover, the 500-hectare portion of Hacienda Luisita, of
which the 200-hectare portion sold to LRC and the 300-hectare portion
subsequently acquired by LIPCO and RCBC were part of, was already the subject
of the August 14, 1996 DAR Conversion Order. By virtue of the said conversion
order, the land was already reclassified as industrial/commercial land not
subject to compulsory coverage. Thus, if We place the 200-hectare lot sold to
LRC under compulsory coverage, this Court would, in effect, be disregarding the
DAR Conversion Order, which has long attained its finality. And as this Court
held in Berboso v. CA,[51]
Once final and executory, the Conversion Order can no longer be questioned.
Besides, to disregard the Conversion Order through the revocation of the
approval of the SDP would create undue prejudice to LRC, which is not even a
party to the proceedings below, and would be tantamount to deprivation of property
without due process of law.
Nonethess, the
minority is of the adamant view that since LRC failed to intervene in the
instant case and was, therefore, unable to present evidence supporting its good
faith purchase of the 200-hectare converted land, then LRC should be given full
opportunity to present its case before the DAR. This minority view is a
contradiction in itself. Given that LRC did not intervene and is, therefore,
not a party to the instant case, then it would be incongruous to order them to
present evidence before the DAR. Such an order, if issued by this Court, would
not be binding upon the LRC.
Moreover, LRC may
be considered to have waived its right to participate in the instant
petition since it did not intervene in the DAR proceedings for the
nullification of the PARC Resolution No. 89-12-2 which approved the SDP.
(c)
Proceeds of
the sale of the 500-hectare converted land
and of the 80.51-hectare land used for the SCTEX
As previously mentioned, We ruled in Our July 5, 2011
Decision that since the Court excluded the 500-hectare lot subject of the
August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot acquired by
the government from compulsory coverage, then HLI and its subsidiary,
Centennary, should be liable to the FWBs for the price received for said lots.
Thus:
There is a claim that, since the sale and transfer of the 500 hectares of land subject of the August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot came after compulsory coverage has taken place, the FWBs should have their corresponding share of the lands value. There is merit in the claim. Since the SDP approved by PARC Resolution No. 89-12-2 has been nullified, then all the lands subject of the SDP will automatically be subject of compulsory coverage under Sec. 31 of RA 6657. Since the Court excluded the 500-hectare lot subject of the August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot acquired by the government from the area covered by SDP, then HLI and its subsidiary, Centennary, shall be liable to the FWBs for the price received for said lots. HLI shall be liable for the value received for the sale of the 200-hectare land to LRC in the amount of PhP 500,000,000 and the equivalent value of the 12,000,000 shares of its subsidiary, Centennary, for the 300-hectare lot sold to LIPCO for the consideration of PhP 750,000,000. Likewise, HLI shall be liable for PhP 80,511,500 as consideration for the sale of the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the proceeds of the
sale of the 500-hectare land and 80.51-hectare SCTEX lot to the FWBs. We also take into account the payment of
taxes and expenses relating to the transfer of the land and HLIs statement
that most, if not all, of the proceeds were used for legitimate corporate
purposes. In order to determine once and
for all whether or not all the proceeds were properly utilized by HLI and its
subsidiary, Centennary, DAR will engage the services of a reputable accounting
firm to be approved by the parties to audit the books of HLI to determine if
the proceeds of the sale of the 500-hectare land and the 80.51-hectare SCTEX
lot were actually used for legitimate corporate purposes, titling expenses and
in compliance with the August 14, 1996 Conversion Order. The cost of the audit will be shouldered by
HLI. If after such audit, it is
determined that there remains a balance from the proceeds of the sale, then the
balance shall be distributed to the qualified FWBs.
HLI, however, takes
exception to the above-mentioned ruling and contends that it is not proper to
distribute the unspent or unused balance of the proceeds of the sale of the
500-hectare converted land and 80.51-hectare SCTEX lot to the qualified FWBs
for the following reasons: (1) the proceeds of the sale belong to the
corporation, HLI, as corporate capital and assets in substitution for the
portions of its land asset which were sold to third parties; (2) to distribute
the cash sales proceeds of the portions of the land asset to the FWBs, who are
stockholders of HLI, is to dissolve the corporation and distribute the proceeds
as liquidating dividends without even paying the creditors of the corporation;
and (3) the doing of said acts would violate the stringent provisions of the
Corporation Code and corporate practice.[52]
Apparently, HLI
seeks recourse to the Corporation Code in order to avoid its liability to the
FWBs for the price received for the 500-hectare converted lot and the 80.51-hectare SCTEX lot.
However, as We have established in Our July 5, 2011 Decision, the rights,
obligations and remedies of the parties in the instant case are primarily
governed by RA 6657 and HLI cannot shield itself from the CARP coverage merely
under the convenience of being a corporate entity. In
this regard, it should be underscored that the agricultural lands held by HLI
by virtue of the SDP are no ordinary assets. These are special assets, because,
originally, these should have been distributed to the FWBs were it not for the
approval of the SDP by PARC. Thus, the government cannot renege on its
responsibility over these assets. Likewise, HLI is no ordinary corporation as
it was formed and organized precisely to make use of these agricultural lands
actually intended for distribution to the FWBs. Thus, it cannot shield itself
from the coverage of CARP by invoking the Corporation Code. As explained by the Court:
HLI also parlays the notion that
the parties to the SDOA should now look to the Corporation Code, instead of to
RA 6657, in determining their rights, obligations and remedies. The Code, it adds, should be the applicable
law on the disposition of the agricultural
Contrary to the view of HLI, the rights, obligations and remedies of
the parties to the SDOA embodying the SDP are primarily governed by RA 6657. It should abundantly be made clear that HLI
was precisely created in order to comply with RA 6657, which the OSG aptly
described as the mother law of the SDOA and the SDP.[53]
It is, thus, paradoxical for HLI to shield itself from the coverage of CARP
by invoking exclusive applicability of the Corporation Code under the guise of
being a corporate entity.
Without in any way minimizing
the relevance of the Corporation Code since the FWBs of HLI are also
stockholders, its applicability is limited as the rights of the parties arising
from the SDP should not be made to supplant or circumvent the agrarian reform
program.
Without doubt, the Corporation
Code is the general law providing for the formation, organization and regulation
of private corporations. On the other hand, RA 6657 is the special law on
agrarian reform. As between a general and special law, the latter shall
prevailgeneralia specialibus non
derogant.[54]
Besides, the present impasse between HLI and the private respondents is not an
intra-corporate dispute which necessitates the application of the Corporation
Code. What private respondents questioned before the DAR is the proper
implementation of the SDP and HLIs compliance with RA 6657. Evidently, RA 6657
should be the applicable law to the instant case. (Emphasis supplied.)
Considering that
the 500-hectare converted land, as well as the 80.51-hectare SCTEX lot, should
have been included in the compulsory coverage were it not for their conversion
and valid transfers, then it is only but proper that the price received for the
sale of these lots should be given to the qualified FWBs. In effect, the
proceeds from the sale shall take the place of the lots.
The Court, in its July 5, 2011 Decision, however, takes into
account, inter alia, the payment of
taxes and expenses relating to the transfer of the land, as well as HLIs
statement that most, if not all, of the proceeds were used for legitimate
corporate purposes. Accordingly, We ordered the deduction of the taxes and
expenses relating to the transfer of titles to the transferees, and the
expenditures incurred by HLI and Centennary for legitimate corporate purposes,
among others.
On this note, DAR claims that the [l]egitimate corporate
expenses should not be deducted as there is no basis for it, especially since
only the auditing to be conducted on the financial records of HLI will reveal
the amounts to be offset between HLI and the FWBs.[55]
The contention is unmeritorious. The possibility of an
offsetting should not prevent Us from deducting the legitimate corporate
expenses incurred by HLI and Centennary. After all, the Court has ordered for a
proper auditing [i]n order to determine once and for all whether or not all
the proceeds were properly utilized by HLI and its subsidiary, Centennary. In
this regard, DAR is tasked to engage the services of a reputable accounting
firm to be approved by the parties to audit the books of HLI to determine if
the proceeds of the sale of the 500-hectare land and the 80.51-hectare SCTEX
lot were actually used for legitimate corporate purposes, titling expenses and
in compliance with the August 14, 1996 Conversion Order. Also, it should be
noted that it is HLI which shall shoulder the cost of audit to reduce the
burden on the part of the FWBs. Concomitantly, the legitimate corporate
expenses incurred by HLI and Centennary, as will be determined by a reputable
accounting firm to be engaged by DAR, shall be among the allowable deductions
from the proceeds of the sale of the 500-hectare land and the 80.51-hectare
SCTEX lot.
We, however, find that the 3% production share should not be
deducted from the proceeds of the sale of the 500-hectare converted land
and the 80.51-hectare SCTEX lot. The 3% production share, like the homelots, was among the benefits received by
the FWBs as farmhands in the agricultural enterprise of HLI and, thus, should
not be taken away from the FWBs.
Contrarily, the minority is of the view that as a consequence
of the revocation of the SDP, the parties should be restored to their
respective conditions prior to its execution and approval, subject to the
application of the principle of set-off or compensation. Such view is patently
misplaced.
The law on contracts, i.e.
mutual restitution, does not apply to the case at bar. To reiterate, what was
actually revoked by this Court, in its July 5, 2011 Decision, is PARC
Resolution No. 89-12-2 approving the SDP. To elucidate, it was the SDP, not the
SDOA, which was presented for approval by Tadeco to DAR.[56]
The SDP explained the mechanics of the stock distribution but did not make any
reference nor correlation to the SDOA. The pertinent portions of the proposal
read:
MECHANICS OF STOCK DISTRIBUTION PLAN
Under Section 31 of Republic Act No. 6657, a corporation owning agricultural land may distribute among the qualified beneficiaries such proportion or percentage of its capital stock that the value of the agricultural land actually devoted to agricultural activities, bears in relation to the corporations total assets. Conformably with this legal provision, Tarlac Development Corporation hereby submits for approval a stock distribution plan that envisions the following:[57] (Terms and conditions omitted; emphasis supplied)
x x x x
The above stock distribution plan is hereby submitted on the basis of all these benefits that the farmworker-beneficiaries of Hacienda Luisita will receive under its provisions in addition to their regular compensation as farmhands in the agricultural enterprise and the fringe benefits granted to them by their collective bargaining agreement with management.[58]
Also, PARC Resolution No. 89-12-2 reads as follows:
RESOLUTION APPROVING THE STOCK DISTRIBUTION PLAN OF TARLAC DEVELOPMENT COMPANY/HACIENDA LUISITA INCORPORATED (TDC/HLI)
NOW THEREFORE, on motion duly seconded,
RESOLVED, as it is hereby
resolved, to approve the stock distribution plan of TDC/HLI.
UNANIMOUSLY APPROVED.[59] (Emphasis supplied)
Clearly, what was approved by PARC is the SDP and not the
SDOA. There is, therefore, no basis for this Court to apply the law on
contracts to the revocation of the said
PARC Resolution.
IV. Just Compensation
In Our July 5, 2011 Decision, We stated that HLI shall be
paid just compensation for the remaining agricultural land that will be
transferred to DAR for land distribution to the FWBs. We also ruled that the
date of the taking is November 21, 1989, when PARC approved HLIs SDP per
PARC Resolution No. 89-12-2.
In its Motion for
Clarification and Partial Reconsideration, HLI disagrees with the foregoing
ruling and contends that the taking should be reckoned from finality of the
Decision of this Court, or at the very least, the reckoning period may be
tacked to January 2, 2006, the date when the Notice of Coverage was issued by
the DAR pursuant to PARC Resolution No. 2006-34-01 recalling/revoking the
approval of the SDP.[60]
For their part, Mallari, et al. argue that the valuation of
the land cannot be based on November 21, 1989, the date of approval of the SDP.
Instead, they aver that the date of taking for valuation purposes is a
factual issue best left to the determination of the trial courts.[61]
At the other end of the spectrum, AMBALA alleges that HLI
should no longer be paid just compensation for the agricultural land that will
be distributed to the FWBs, since the Manila Regional Trial Court (RTC) already
rendered a decision ordering the Cojuangcos to transfer the control of
Hacienda Luisita to the Ministry of Agrarian Reform, which will distribute the
land to small farmers after compensating the landowners P3.988 million.[62]
In the event, however, that this Court will rule that HLI is indeed entitled to
compensation, AMBALA contends that it should be pegged at forty thousand
pesos (PhP 40,000) per hectare,
since this was the same value that Tadeco declared in 1989 to make sure that
the farmers will not own the majority of its stocks.[63]
Despite the above propositions, We maintain that the date of
taking is November 21, 1989, the date when PARC approved HLIs SDP per PARC Resolution
No. 89-12-2, in view of the fact that this is the time that the FWBs were
considered to own and possess the agricultural lands in Hacienda Luisita. To be
precise, these lands became subject of the agrarian reform coverage through the
stock distribution scheme only upon the approval of the SDP, that is, November
21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued
under compulsory acquisition. Further, any doubt should be resolved in favor of
the FWBs. As this Court held in Perez-Rosario
v. CA:[64]
It is an established social and economic fact that the escalation of poverty is the driving force behind the political disturbances that have in the past compromised the peace and security of the people as well as the continuity of the national order. To subdue these acute disturbances, the legislature over the course of the history of the nation passed a series of laws calculated to accelerate agrarian reform, ultimately to raise the material standards of living and eliminate discontent. Agrarian reform is a perceived solution to social instability. The edicts of social justice found in the Constitution and the public policies that underwrite them, the extraordinary national experience, and the prevailing national consciousness, all command the great departments of government to tilt the balance in favor of the poor and underprivileged whenever reasonable doubt arises in the interpretation of the law. But annexed to the great and sacred charge of protecting the weak is the diametric function to put every effort to arrive at an equitable solution for all parties concerned: the jural postulates of social justice cannot shield illegal acts, nor do they sanction false sympathy towards a certain class, nor yet should they deny justice to the landowner whenever truth and justice happen to be on her side. In the occupation of the legal questions in all agrarian disputes whose outcomes can significantly affect societal harmony, the considerations of social advantage must be weighed, an inquiry into the prevailing social interests is necessary in the adjustment of conflicting demands and expectations of the people, and the social interdependence of these interests, recognized. (Emphasis supplied.)
The minority contends that it is the date of the notice of
coverage, that is, January 2, 2006, which is determinative of the just
compensation HLI is entitled to for its expropriated lands. To support its
contention, it cited numerous cases where the time of the taking was reckoned
on the date of the issuance of the notice of coverage.
However, a perusal of the cases cited by the minority would
reveal that none of them involved the stock distribution scheme. Thus, said
cases do not squarely apply to the instant case. Moreover, it should be noted
that it is precisely because the stock distribution option is a distinctive
mechanism under RA 6657 that it cannot be treated similarly with that of
compulsory land acquisition as these are two (2) different modalities under the
agrarian reform program. As We have stated in Our July 5, 2011 Decision, RA
6657 provides two (2) alternative modalities, i.e., land or stock transfer,
pursuant to either of which the corporate landowner can comply with CARP.
In this regard, it should be noted that when HLI submitted
the SDP to DAR for approval, it cannot be gainsaid that the stock distribution
scheme is clearly HLIs preferred modality in order to comply with CARP. And
when the SDP was approved, stocks were given to the FWBs in lieu of land
distribution. As aptly observed by the minority itself, [i]nstead of
expropriating lands, what the government took and distributed to the FWBs were
shares of stock of petitioner HLI in proportion to the value of the
agricultural lands that should have been expropriated and turned over to the
FWBs. It cannot, therefore, be denied that upon the approval of the SDP
submitted by HLI, the agricultural lands of Hacienda Luisita became subject of
CARP coverage. Evidently, the approval of the SDP took the place of a notice of
coverage issued under compulsory acquisition.
Also, it is surprising that while the minority opines that
under the stock distribution option, title to the property remains with the
corporate landowner, which should presumably be dominated by
farmers with majority stockholdings in the corporation, it still
insists that the just compensation that should be given to HLI is to be
reckoned on January 2, 2006, the date of the issuance of the notice of
coverage, even after it found that the FWBs did not have the majority stockholdings
in HLI contrary to the supposed avowed policy of the law. In effect, what the
minority wants is to prejudice the FWBs twice. Given that the FWBs should have
had majority stockholdings in HLI but did not, the minority still wants the
government to pay higher just compensation to HLI. Even if it is the government
which will pay the just compensation to HLI, this will also affect the FWBs as
they will be paying higher amortizations to the government if the taking will
be considered to have taken place only on January 2, 2006.
The foregoing notwithstanding, it bears stressing that the
DAR's land valuation is only preliminary and is not, by any means, final and
conclusive upon the landowner. The landowner can file an original action with
the RTC acting as a special agrarian court to determine just compensation. The
court has the right to review with finality the determination in the exercise
of what is admittedly a judicial function.[65]
A view has also been advanced that HLI should pay the
qualified FWBs rental for the use and possession of the land up to the time it
surrenders possession and control over these lands. What this view fails to
consider is the fact that the FWBs are also stockholders of HLI prior to the
revocation of PARC Resolution No. 89-12-2. Also, the income earned by the
corporation from its possession and use of the land ultimately redounded to the
benefit of the FWBs based on its business operations in the form of salaries,
benefits voluntarily granted by HLI and other fringe benefits under their
Collective Bargaining Agreement. That being so, there would be unjust
enrichment on the part of the FWBs if HLI will still be required to pay rent
for the use of the land in question.
V.
There is a view that since the agricultural lands in Hacienda
Luisita were placed under CARP coverage through the SDOA scheme on May 11,
1989, then the 10-year period prohibition on the transfer of awarded lands
under RA 6657 lapsed on May 10, 1999, and, consequently, the qualified FWBs
should already be allowed to sell these lands with respect to their land
interests to third parties, including HLI, regardless of whether they have
fully paid for the lands or not.
The proposition is erroneous. Sec. 27 of RA 6657 states:
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. (Emphasis
supplied.)
To implement the
above-quoted provision, inter alia,
DAR issued Administrative Order No. 1, Series of 1989 (DAO 1) entitled Rules and Procedures Governing Land
Transactions. Said Rules set forth the rules on validity of land
transactions, to wit:
II. RULES ON VALIDITY OF LAND TRANSACTIONS
A. The following transactions are valid:
1. Those executed by the original landowner in favor of the qualified beneficiary from among those certified by DAR.
2.
Those in favor of the government, DAR or the
Land Bank of the
3. Those covering lands retained by the landowner under Section 6 of R.A. 6657 duly certified by the designated DAR Provincial Agrarian Reform Officer (PARO) as a retention area, executed in favor of transferees whose total landholdings inclusive of the land to be acquired do not exceed five (5) hectares; subject, however, to the right of pre-emption and/or redemption of tenant/lessee under Section 11 and 12 of R.A. 3844, as amended.
x x x x
4. Those executed by beneficiaries covering lands acquired under any agrarian reform law in favor of the government, DAR, LBP or other qualified beneficiaries certified by DAR.
5.
Those executed after ten (10) years from the issuance and registration of the
Emancipation Patent or Certificate of Land Ownership Award.
B. The following transactions are not valid:
1. Sale, disposition, lease management contract or transfer of possession of private lands executed by the original landowner prior to June 15, 1988, which are registered on or before September 13, 1988, or those executed after June 15, 1988, covering an area in excess of the five-hectare retention limit in violation of R.A. 6657.
2. Those covering lands acquired by the beneficiary under R.A. 6657 and executed within ten (10) years from the issuance and registration of an Emancipation Patent or Certificate of Land Ownership Award.
3. Those executed in favor of a person or persons not qualified to acquire land under R.A. 6657.
4.
5.
x x x x (Emphasis supplied.)
Without a doubt, under RA 6657 and DAO 1, the awarded lands
may only be transferred or conveyed after ten (10) years from the issuance and registration of the emancipation patent (EP) or certificate of land
ownership award (CLOA). Considering that the EPs or CLOAs have not yet been
issued to the qualified FWBs in the instant case, the 10-year prohibitive
period has not even started. Significantly, the reckoning point is the issuance of the EP or CLOA, and not the placing of the agricultural lands
under CARP coverage.
Moreover, if We maintain the position that the qualified FWBs
should be immediately allowed the option to sell or convey the agricultural
lands in Hacienda Luisita, then all efforts at agrarian reform would be
rendered nugatory by this Court, since, at the end of the day, these lands will
just be transferred to persons not entitled to land distribution under CARP. As
aptly noted by the late Senator Neptali Gonzales during the Joint Congressional
Conference Committee on the Comprehensive Agrarian Reform Program Bills:
SEN. GONZALES. My point is, as much as possible let the said lands be distributed under CARP remain with the beneficiaries and their heirs because that is the lesson that we have to learn from PD No. 27. If you will talk with the Congressmen representing Nueva Ecija, Pampanga and Central Luzon provinces, law or no law, you will find out that more than one-third of the original, of the lands distributed under PD 27 are no longer owned, possessed or being worked by the grantees or the awardees of the same, something which we ought to avoid under the CARP bill that we are going to enact.[66] (Emphasis supplied.)
Worse, by raising that the qualified beneficiaries may sell
their interest back to HLI, this smacks of outright indifference to the
provision on retention limits[67]
under RA 6657, as this Court, in effect, would be allowing HLI, the previous
landowner, to own more than five (5) hectares of agricultural land, which We
cannot countenance. There is a big difference between the ownership of
agricultural lands by HLI under the stock distribution scheme and its eventual
acquisition of the agricultural lands from the qualified FWBs under the
proposed buy-back scheme. The rule on retention limits does not apply to the
former but only to the latter in view of the fact that the stock distribution
scheme is sanctioned by Sec. 31 of RA 6657, which specifically allows
corporations to divest a proportion of their capital stock that the agricultural
land, actually devoted to agricultural activities, bears in relation to the
companys total assets. On the other hand, no special rules exist under RA
6657 concerning the proposed buy-back scheme; hence, the general rules on
retention limits should apply.
Further, the position that the qualified FWBs are now free to
transact with third parties concerning their land interests, regardless of
whether they have fully paid for the lands or not, also transgresses the second
paragraph of Sec. 27 of RA 6657, which plainly states that [i]f 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 x x x. When the words and phrases
in the statute are clear and unequivocal, the law is applied according to its
express terms.[68] Verba legis non est recedendum, or from
the words of a statute there should be no departure.[69]
The minority, however, posits that
[t]o insist that the FWBs rights sleep for a period of ten years is
unrealistic, and may seriously deprive them of real opportunities to capitalize
and maximize the victory of direct land distribution. By insisting that We
disregard the ten-year restriction under the law in the case at bar, the
minority, in effect, wants this Court to engage in judicial legislation, which
is violative of the principle of separation of powers.[70]
The discourse by Ruben E. Agpalo, in his book on statutory construction, is
enlightening:
Where the law is clear and unambiguous, it must be taken to mean exactly what it says and the court has no choice but to see to it that its mandate is obeyed. Where the law is clear and free from doubt or ambiguity, there is no room for construction or interpretation. Thus, where what is not clearly provided in the law is read into the law by construction because it is more logical and wise, it would be to encroach upon legislative prerogative to define the wisdom of the law, which is judicial legislation. For whether a statute is wise or expedient is not for the courts to determine. Courts must administer the law, not as they think it ought to be but as they find it and without regard to consequences.[71] (Emphasis supplied.)
And as aptly stated by Chief
Justice Renato Corona in his Dissenting Opinion in Ang Ladlad LGBT Party v. COMELEC:[72]
Regardless of the personal beliefs and biases of its individual members, this Court can only apply and interpret the Constitution and the laws. Its power is not to create policy but to recognize, review or reverse the policy crafted by the political departments if and when a proper case is brought before it. Otherwise, it will tread on the dangerous grounds of judicial legislation.
Considerably, this Court is left
with no other recourse but to respect and apply the law.
VI. Grounds
for Revocation of the SDP
AMBALA and FARM reiterate that
improving the economic status of the FWBs is among the legal obligations of HLI
under the SDP and is an imperative imposition by RA 6657 and DAO 10.[73]
FARM further asserts that [i]f that minimum threshold is not met, why allow
[stock distribution option] at all, unless the purpose is not social justice
but a political accommodation to the powerful.[74]
Contrary to the assertions of AMBALA and FARM, nowhere
in the SDP, RA 6657 and DAO 10 can it be inferred that improving the economic
status of the FWBs is among the legal obligations of HLI under the SDP or is an
imperative imposition by RA 6657 and DAO 10, a violation of which would justify
discarding the stock distribution option. As We have painstakingly explained in
Our July 5, 2011 Decision:
In the Terminal Report adopted by PARC, it is stated that the SDP violates the agrarian reform policy under Sec. 2 of RA 6657, as the said plan failed to enhance the dignity and improve the quality of lives of the FWBs through greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and Policies.It is the policy of the State to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and farm workers will receive the highest consideration to promote social justice and to move the nation towards sound rural development and industrialization, and the establishment of owner cultivatorship of economic-sized farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to the rights of landowners to just compensation and to the ecological needs of the nation, shall be undertaken to provide farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a share of the fruits thereof. To this end, the State shall encourage the just distribution of all agricultural lands, subject to the priorities and retention limits set forth in this Act, having taken into account ecological, developmental, and equity considerations, and subject to the payment of just compensation. The State shall respect the right of small landowners and shall provide incentives for voluntary land-sharing.
Paragraph 2 of the above-quoted provision specifically mentions that a more equitable distribution and ownership of land x x x shall be undertaken to provide farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands. Of note is the term opportunity which is defined as a favorable chance or opening offered by circumstances. Considering this, by no stretch of imagination can said provision be construed as a guarantee in improving the lives of the FWBs. At best, it merely provides for a possibility or favorable chance of uplifting the economic status of the FWBs, which may or may not be attained.
Pertinently, improving the economic status of the FWBs is neither among the legal obligations of HLI under the SDP nor an imperative imposition by RA 6657 and DAO 10, a violation of which would justify discarding the stock distribution option. Nothing in that option agreement, law or department order indicates otherwise.
Significantly, HLI draws particular attention to its having paid its FWBs, during the regime of the SDP (1989-2005), some PhP 3 billion by way of salaries/wages and higher benefits exclusive of free hospital and medical benefits to their immediate family. And attached as Annex G to HLIs Memorandum is the certified true report of the finance manager of Jose Cojuangco & Sons Organizations-Tarlac Operations, captioned as HACIENDA LUISITA, INC. Salaries, Benefits and Credit Privileges (in Thousand Pesos) Since the Stock Option was Approved by PARC/CARP, detailing what HLI gave their workers from 1989 to 2005. The sum total, as added up by the Court, yields the following numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) = PhP 2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits) = PhP 303,040. The cash out figures, as stated in the report, include the cost of homelots; the PhP 150 million or so representing 3% of the gross produce of the hacienda; and the PhP 37.5 million representing 3% from the proceeds of the sale of the 500-hectare converted lands. While not included in the report, HLI manifests having given the FWBs 3% of the PhP 80 million paid for the 80 hectares of land traversed by the SCTEX. On top of these, it is worth remembering that the shares of stocks were given by HLI to the FWBs for free. Verily, the FWBs have benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from the SDP as HLI has not anyway earned profits through the years, it cannot be over-emphasized that, as a matter of common business sense, no corporation could guarantee a profitable run all the time. As has been suggested, one of the key features of an SDP of a corporate landowner is the likelihood of the corporate vehicle not earning, or, worse still, losing money.
The Court is fully aware that one of the criteria under DAO 10 for the PARC to consider the advisability of approving a stock distribution plan is the likelihood that the plan would result in increased income and greater benefits to [qualified beneficiaries] than if the lands were divided and distributed to them individually. But as aptly noted during the oral arguments, DAO 10 ought to have not, as it cannot, actually exact assurance of success on something that is subject to the will of man, the forces of nature or the inherent risky nature of business.[75] Just like in actual land distribution, an SDP cannot guarantee, as indeed the SDOA does not guarantee, a comfortable life for the FWBs. The Court can take judicial notice of the fact that there were many instances wherein after a farmworker beneficiary has been awarded with an agricultural land, he just subsequently sells it and is eventually left with nothing in the end.
In all then, the onerous condition of the FWBs economic status, their
life of hardship, if that really be the case, can hardly be attributed to HLI
and its SDP and provide a valid ground for the plans revocation. (Citations
omitted; emphasis in the original.)
This Court, despite the above
holding, still affirmed the revocation by PARC of its approval of the SDP based
on the following grounds: (1) failure of HLI to fully comply with its
undertaking to distribute homelots to the FWBs under the SDP; (2) distribution
of shares of stock to the FWBs based on the number of man days or number of
days worked by the FWB in a years time; and (3) 30-year timeframe for the
implementation or distribution of the shares of stock to the FWBs.
Just the same, Mallari, et al.
posit that the homelots required to be distributed have all been distributed
pursuant to the SDOA, and that what merely remains to be done is the release of
title from the Register of Deeds.[76]
They further assert that there has been no dilution of shares as the corporate
records would show that if ever not all of the 18,804.32 shares were given to
the actual original FWB, the recipient of the difference is the next of kin or
children of said original FWB.[77]
Thus, they submit that since the shares were given to the same family
beneficiary, this should be deemed as substantial compliance with the
provisions of Sec. 4 of DAO 10.[78] Also, they argue that there has been no
violation of the three-month period to implement the SDP as mandated by Sec. 11
of DAO, since this provision must be read in light of Sec. 10 of Executive
Order No. 229, the pertinent portion of which reads, The approval by the PARC
of a plan for such stock distribution, and its initial implementation, shall be
deemed compliance with the land distribution requirement of the CARP.[79]
Again, the matters raised by
Mallari, et al. have been extensively discussed by the Court in its July 5,
2011 Decision. As stated:
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for corporations or business associations owning or operating farms which opted for land distribution. Sec. 30 of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of Cooperatives.The individual members of the cooperatives or corporations mentioned in the preceding section shall be provided with homelots and small farmlots for their family use, to be taken from the land owned by the cooperative or corporation.
The preceding section referred to in the above-quoted provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations.In the case of farms owned or operated by corporations or other business associations, the following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the worker-beneficiaries who shall form a workers cooperative or association which will deal with the corporation or business association. Until a new agreement is entered into by and between the workers cooperative or association and the corporation or business association, any agreement existing at the time this Act takes effect between the former and the previous landowner shall be respected by both the workers cooperative or association and the corporation or business association.
Noticeably, the foregoing provisions do not make reference to corporations which opted for stock distribution under Sec. 31 of RA 6657. Concomitantly, said corporations are not obliged to provide for it except by stipulation, as in this case.
Under the SDP, HLI undertook to subdivide and allocate for free and without charge among the qualified family-beneficiaries x x x residential or homelots of not more than 240 sq. m. each, with each family beneficiary being assured of receiving and owning a homelot in the barrio or barangay where it actually resides, within a reasonable time.
More than sixteen (16) years have
elapsed from the time the SDP was approved by PARC, and yet, it is still the
contention of the FWBs that not all was given the 240-square meter homelots
and, of those who were already given, some still do not have the corresponding
titles.
During the oral arguments, HLI
was afforded the chance to refute the foregoing allegation by submitting proof
that the FWBs were already given the said homelots:
Justice Velasco: x x x There is also an allegation that the farmer beneficiaries, the qualified family beneficiaries were not given the 240 square meters each. So, can you also [prove] that the qualified family beneficiaries were already provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please.
Other than the financial report, however, no other substantial proof showing that all the qualified beneficiaries have received homelots was submitted by HLI. Hence, this Court is constrained to rule that HLI has not yet fully complied with its undertaking to distribute homelots to the FWBs under the SDP.
On Man Days and the Mechanics of
Stock Distribution
In our review and analysis of
par. 3 of the SDOA on the mechanics and timelines of stock distribution, We
find that it violates two (2) provisions of DAO 10. Par. 3 of the
SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY.
Based on the above-quoted provision, the distribution of the shares of stock to the FWBs, albeit not entailing a cash out from them, is contingent on the number of man days, that is, the number of days that the FWBs have worked during the year. This formula deviates from Sec. 1 of DAO 10, which decrees the distribution of equal number of shares to the FWBs as the minimum ratio of shares of stock for purposes of compliance with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.The [SDP] submitted by the corporate landowner-applicant shall provide for the distribution of an equal number of shares of the same class and value, with the same rights and features as all other shares, to each of the qualified beneficiaries. This distribution plan in all cases, shall be at least the minimum ratio for purposes of compliance with Section 31 of R.A. No. 6657.
On top of the minimum ratio provided under Section 3 of this Implementing Guideline, the corporate landowner-applicant may adopt additional stock distribution schemes taking into account factors such as rank, seniority, salary, position and other circumstances which may be deemed desirable as a matter of sound company policy.
The above proviso gives two (2) sets or categories of shares of stock which a qualified beneficiary can acquire from the corporation under the SDP. The first pertains, as earlier explained, to the mandatory minimum ratio of shares of stock to be distributed to the FWBs in compliance with Sec. 31 of RA 6657. This minimum ratio contemplates of that proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the companys total assets. It is this set of shares of stock which, in line with Sec. 4 of DAO 10, is supposed to be allocated for the distribution of an equal number of shares of stock of the same class and value, with the same rights and features as all other shares, to each of the qualified beneficiaries.
On the other hand, the second set or category of shares partakes of a gratuitous extra grant, meaning that this set or category constitutes an augmentation share/s that the corporate landowner may give under an additional stock distribution scheme, taking into account such variables as rank, seniority, salary, position and like factors which the management, in the exercise of its sound discretion, may deem desirable.
Before anything else, it should be stressed that, at the time PARC approved HLIs SDP, HLI recognized 6,296 individuals as qualified FWBs. And under the 30-year stock distribution program envisaged under the plan, FWBs who came in after 1989, new FWBs in fine, may be accommodated, as they appear to have in fact been accommodated as evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original 1989 FWBs shall depend on the number of man days, HLI violated the afore-quoted rule on stock distribution and effectively deprived the FWBs of equal shares of stock in the corporation, for, in net effect, these 6,296 qualified FWBs, who theoretically had given up their rights to the land that could have been distributed to them, suffered a dilution of their due share entitlement. As has been observed during the oral arguments, HLI has chosen to use the shares earmarked for farmworkers as reward system chips to water down the shares of the original 6,296 FWBs. Particularly:
Justice Abad: If the SDOA did not take place, the other thing that would have happened is that there would be CARP?
Atty. Dela
Justice Abad: Thats the only point I want to know x x x. Now, but they chose to enter SDOA instead of placing the land under CARP. And for that reason those who would have gotten their shares of the land actually gave up their rights to this land in place of the shares of the stock, is that correct?
Atty. Dela
Justice Abad: Right now, also the government, in a way, gave up its right to own the land because that way the government takes own [sic] the land and distribute it to the farmers and pay for the land, is that correct?
Atty. Dela
Justice Abad: And then you gave thirty-three percent (33%) of the shares of HLI to the farmers at that time that numbered x x x those who signed five thousand four hundred ninety eight (5,498) beneficiaries, is that correct?
Atty. Dela
Justice Abad: But later on, after assigning them their shares, some workers came in from 1989, 1990, 1991, 1992 and the rest of the years that you gave additional shares who were not in the original list of owners?
Atty. Dela
Justice Abad: Did those new workers give up any right that would have belong to them in 1989 when the land was supposed to have been placed under CARP?
Atty. Dela
Justice Abad: None! You tell me. None. They gave up no rights to land?
Atty. Dela
Justice Abad: No, if they were not workers in 1989 what land did they give up? None, if they become workers later on.
Atty. Dela
Justice Abad: So why is it that the rights of those who gave up their lands would be diluted, because the company has chosen to use the shares as reward system for new workers who come in? It is not that the new workers, in effect, become just workers of the corporation whose stockholders were already fixed. The TADECO who has shares there about sixty six percent (66%) and the five thousand four hundred ninety eight (5,498) farmers at the time of the SDOA? Explain to me. Why, why will you x x x what right or where did you get that right to use this shares, to water down the shares of those who should have been benefited, and to use it as a reward system decided by the company?
From the above discourse, it is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the time of the approval of the SDP, suffered from watering down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and distribution of the HLI shares were based on man days or number of days worked by the FWB in a years time. As explained by HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not get any share at year end. The number of HLI shares distributed varies depending on the number of days the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to the original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include the original 6,296 FWBs, were given shares out of the 118,931,976.85 HLI shares representing the 33.296% of the total outstanding capital stock of HLI. Clearly, the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of man days and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved stock distribution plan within three (3) months from receipt by the corporate landowner of the approval of the plan by PARC. In fact, based on the said provision, the transfer of the shares of stock in the names of the qualified FWBs should be recorded in the stock and transfer books and must be submitted to the SEC within sixty (60) days from implementation. As stated:
Section 11. Implementation/Monitoring of Plan.The approved stock distribution plan shall be implemented within three (3) months from receipt by the corporate landowner-applicant 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 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.
It is evident from the foregoing
provision that the implementation, that is, the distribution of the shares of
stock to the FWBs, must be made within three (3) months from receipt by HLI of
the approval of the stock distribution plan by PARC. While neither of the
clashing parties has made a compelling case of the thrust of this provision,
the Court is of the view and so holds that the intent is to compel the
corporate landowner to complete, not merely initiate, the transfer process of
shares within that three-month timeframe. Reinforcing this conclusion is the
60-day stock transfer recording (with the SEC) requirement reckoned from the
implementation of the SDP.
To the Court, there is a purpose,
which is at once discernible as it is practical, for the three-month threshold.
Remove this timeline and the corporate landowner can veritably evade compliance
with agrarian reform by simply deferring to absurd limits the implementation of
the stock distribution scheme.
The argument is urged that the
thirty (30)-year distribution program
is justified by the fact that, under Sec. 26 of RA 6657, payment by
beneficiaries of land distribution under CARP shall be made in thirty (30)
annual amortizations. To HLI, said section provides a justifying dimension to
its 30-year stock distribution program.
HLIs reliance on Sec. 26 of RA 6657,
quoted in part below, is obviously misplaced as the said provision clearly
deals with land distribution.
SEC. 26. Payment by Beneficiaries.Lands awarded pursuant to this Act shall be
paid for by the beneficiaries to the LBP in thirty (30) annual amortizations x
x x.
Then, too, the ones obliged to
pay the LBP under the said provision are the beneficiaries. On the other hand,
in the instant case, aside from the fact that what is involved is stock
distribution, it is the corporate landowner who has the obligation to
distribute the shares of stock among the FWBs.
Evidently, the land transfer
beneficiaries are given thirty (30) years within which to pay the cost of the
land thus awarded them to make it less cumbersome for them to pay the
government. To be sure, the reason underpinning the 30-year accommodation does
not apply to corporate landowners in distributing shares of stock to the
qualified beneficiaries, as the shares may be issued in a much shorter period
of time.
Taking into account the above
discussion, the revocation of the SDP by PARC should be upheld for violating
DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC and the DAR
have the power to issue rules and regulations, substantive or procedural. Being
a product of such rule-making power, DAO 10 has the force and effect of law and
must be duly complied with. The PARC is,
therefore, correct in revoking the SDP. Consequently, the PARC Resolution No.
89-12-2 dated November 21, l989 approving the HLIs SDP is nullified and
voided. (Citations omitted; emphasis in the original.)
Based on the foregoing ruling, the
contentions of Mallari, et al. are either not supported by the evidence on
record or are utterly misplaced. There is, therefore, no basis for the Court to
reverse its ruling affirming PARC Resolution No. 2005-32-01 and PARC Resolution
No. 2006-34-01, revoking the previous approval of the SDP by PARC.
VII. Control
over Agricultural Lands
After having discussed and considered the different contentions
raised by the parties in their respective motions, We are now left to contend
with one crucial issue in the case at bar, that is, control over the
agricultural lands by the qualified FWBs.
Upon a review of the facts and circumstances, We realize that
the FWBs will never have control over these agricultural lands for as long as
they remain as stockholders of HLI. In Our July 5, 2011 Decision, this Court
made the following observations:
There is, thus, nothing unconstitutional in the formula prescribed by RA
6657. The policy on agrarian reform is that control over the agricultural
land must always be in the hands of the farmers. Then it falls on the shoulders of DAR and
PARC to see to it the farmers should always own majority of the common shares
entitled to elect the members of the board of directors to ensure that the
farmers will have a clear majority in the board. Before the SDP is approved, strict scrutiny
of the proposed SDP must always be undertaken by the DAR and PARC, such that
the value of the agricultural land contributed to the corporation must always
be more than 50% of the total assets of the corporation to ensure that the
majority of the members of the board of directors are composed of the farmers. The PARC composed of the President of the
In line with Our finding that control over agricultural lands must always
be in the hands of the farmers, We reconsider our ruling that the qualified
FWBs should be given an option to remain as stockholders of HLI, inasmuch as
these qualified FWBs will never gain control given the present proportion of
shareholdings in HLI.
A revisit of HLIs Proposal for Stock Distribution under CARP and the
Stock Distribution Option Agreement (SDOA) upon which the proposal was based
reveals that the total assets of HLI is PhP 590,554,220, while the value of the
4,915.7466 hectares is PhP 196,630,000.
Consequently, the share of the farmer-beneficiaries in the HLI capital
stock is 33.296% (196,630,000 divided by 590,554.220); 118,391,976.85 HLI
shares represent 33.296%. Thus, even if all the holders of the 118,391,976.85
HLI shares unanimously vote to remain as HLI stockholders, which is unlikely,
control will never be placed in the hands of the farmer-beneficiaries. Control, of course, means the majority of 50%
plus at least one share of the common shares and other voting shares. Applying the formula to the HLI
stockholdings, the number of shares that will constitute the majority is
295,112,101 shares (590,554,220 divided by 2 plus one [1] HLI share). The 118,391,976.85 shares subject to the SDP
approved by PARC substantially fall short of the 295,112,101 shares needed by
the FWBs to acquire control over HLI.
Hence, control can NEVER be attained by the FWBs. There is even no assurance that 100% of the
118,391,976.85 shares issued to the FWBs will all be voted in favor of staying
in HLI, taking into account the previous referendum among the farmers where
said shares were not voted unanimously in favor of retaining the SDP. In light of the foregoing consideration, the
option to remain in HLI granted to the individual FWBs will have to be recalled
and revoked.
Moreover, bearing in mind that with the revocation of the approval of the
SDP, HLI will no longer be operating under SDP and will only be treated as an
ordinary private corporation; the FWBs who remain as stockholders of HLI will
be treated as ordinary stockholders and will no longer be under the protective
mantle of RA 6657.
In addition to the foregoing, in view of the operative fact doctrine, all
the benefits and homelots[80] received by all the FWBs
shall be respected with no obligation to refund or return them, since, as We
have mentioned in our July 5, 2011 Decision, the benefits x x x were received
by the FWBs as farmhands in the agricultural enterprise of HLI and other fringe
benefits were granted to them pursuant to the existing collective bargaining
agreement with Tadeco.
One last point, the HLI land shall be distributed only to the
6,296 original FWBs. The remaining 4,206 FWBs are not entitled to any portion
of the HLI land, because the rights to said land were vested only in the 6,296
original FWBs pursuant to Sec. 22 of RA 6657.
In this regard, DAR shall verify the identities of the 6,296
original FWBs, consistent with its administrative prerogative to identify and
select the agrarian reform beneficiaries under RA 6657.[81]
WHEREFORE, the Motion for Partial Reconsideration dated July 20, 2011 filed by
public respondents Presidential Agrarian Reform Council and Department of
Agrarian Reform, the Motion for
Reconsideration dated July 19, 2011 filed by private respondent Alyansa ng
mga Manggagawang Bukid sa Hacienda Luisita, the Motion for Reconsideration dated July 21, 2011 filed by
respondent-intervenor Farmworkers Agrarian Reform Movement, Inc., and the Motion for Reconsideration dated July
22, 2011 filed by private respondents Rene Galang and AMBALA are PARTIALLY GRANTED with respect to the
option granted to the original farmworker-beneficiaries of Hacienda Luisita to
remain with Hacienda Luisita, Inc., which is hereby RECALLED and SET ASIDE.
The Motion for Clarification and Partial
Reconsideration dated July 21, 2011 filed by petitioner HLI and the Motion for Reconsideration dated July
21, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory
Group of Hacienda Luisita, Inc. and Windsor Andaya are DENIED.
The fallo of the
Courts July 5, 2011 Decision is hereby amended and shall read:
PARC Resolution No. 2005-32-01 dated December 22, 2005 and
Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLIs
SDP under compulsory coverage on mandated land acquisition scheme of the CARP,
are hereby AFFIRMED with the following modifications:
All
salaries, benefits, the 3% of the gross sales of the production of the
agricultural lands, the 3% share in the proceeds of the sale of the 500-hectare
converted land and the 80.51-hectare SCTEX lot and the homelots already
received by the 10,502 FWBs composed of 6,296 original FWBs and the 4,206
non-qualified FWBs shall be respected with no obligation to refund or return
them. The 6,296 original FWBs shall
forfeit and relinquish their rights over the HLI shares of stock issued to them
in favor of HLI. The HLI Corporate
Secretary shall cancel the shares issued to the said FWBs and transfer them to
HLI in the stocks and transfer book, which transfers shall be exempt from
taxes, fees and charges. The 4,206 non-qualified FWBs shall remain as
stockholders of HLI.
DAR shall segregate from the HLI agricultural land with an area of
4,915.75 hectares subject of PARCs SDP-approving Resolution No. 89-12-2 the 500-hectare
lot subject of the August 14, l996 Conversion Order and the 80.51-hectare lot
sold to, or acquired by, the government as part of the SCTEX complex. After the
segregation process, as indicated, is done, the remaining area shall be turned
over to DAR for immediate land distribution to the original 6,296 FWBs or their
successors-in-interest which will be identified by the DAR. The 4,206 non-qualified FWBs are not entitled
to any share in the land to be distributed by DAR.
HLI is directed to pay the original 6,296 FWBs the consideration of PhP
500,000,000 received by it from Luisita Realty, Inc. for the sale to the latter
of 200 hectares out of the 500 hectares covered by the August 14, 1996
Conversion Order, the consideration of PhP 750,000,000 received by its owned
subsidiary, Centennary Holdings, Inc., for the sale of the remaining 300
hectares of the aforementioned 500-hectare lot to Luisita Industrial Park
Corporation, and the price of PhP 80,511,500 paid by the government through the
Bases Conversion Development Authority for the sale of the 80.51-hectare lot
used for the construction of the SCTEX road network. From the total amount of PhP 1,330,511,500
(PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP 1,330,511,500) shall
be deducted the 3% of the proceeds of said transfers that were paid to the
FWBs, the taxes and expenses relating to the transfer of titles to the
transferees, and the expenditures incurred by HLI and Centennary Holdings, Inc.
for legitimate corporate purposes. For
this purpose, DAR is ordered to engage the services of a reputable accounting
firm approved by the parties to audit the books of HLI and Centennary Holdings,
Inc. to determine if the PhP 1,330,511,500 proceeds of the sale of the three
(3) aforementioned lots were actually used or spent for legitimate corporate
purposes. Any unspent or unused balance
and any disallowed expenditures as determined by the audit shall be distributed
to the 6,296 original FWBs.
HLI
is entitled to just compensation for the agricultural land that will be
transferred to DAR to be reckoned from November 21, 1989 which is the date of
issuance of PARC Resolution No.
89-12-2. DAR and LBP are ordered to determine
the compensation due to HLI.
DAR shall submit a compliance report after
six (6) months from finality of this judgment. It shall also submit, after
submission of the compliance report, quarterly reports on the execution of this
judgment within the first 15 days after the end of each quarter, until fully
implemented.
The temporary restraining order is lifted.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
WE
CONCUR:
Please see concurring and dissenting opinion:
RENATO C. CORONA
Chief Justice
I concur
with Justice Velasco and maintain
my vehement disagreement with Justice Serenos opinion
which will put the land beyond the capacity of the farmers
to pay, based on her strained construction/interpretation
No Part, prior inhibition of
the law re: date of taking.
ANTONIO T. CARPIO TERESITA
J. LEONARDO-DE CASTRO
Associate Justice Associate Justice
I
certify the Mr. Justice Brion submitted a
Concurring and Dissenting Opinion:
ARTURO D. BRION DIOSDADO
M. PERALTA
Associate Justice
Associate Justice
With
councurring & dissenting opinion
LUCAS P. BERSAMIN MARIANO C.
Associate Justice Associate Justice
I
join C.J. R.C. Coronas opinion
ROBERTO A.
ABAD MARTIN
S. VILLARAMA, JR.
Associate Justice Associate Justice
I
maintain my positions in my separate
opinion
except as to the reckoning date
just
compensation. It should be from November 24, 1989
JOSE
Associate
Justice
Associate Justice
See Concurring and Dissenting Opinion Subject
of dissenting opinion of Justice Bersamin
MARIA
Associate Justice Associate Justice
Subj. to J. Bersamins dissenting opinion
ESTELA M. PERLAS-BERNABE
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the conclusions in the above Resolution had been reached in consultation
before the case was assigned to the writer of the opinion of the Court.
RENATO C. CORONA
Chief Justice
[1] Jose Julio Zuniga in some parts of the records.
[2] The Motion for Reconsideration dated July 22, 2011 was filed by private respondents Rene Galang and AMBALA, through Atty. Romeo T. Capulong of the Public Interest Law Center, as lead counsel for Rene Galang and as collaborating counsel of Atty. Jobert Pahilga of SENTRA for AMBALA.
[3] G.R. No. 171101, July 5, 2011; hereinafter referred to as July 5, 2011 Decision.
[4] PARC/DAR Motion for Reconsideration (MR), p. 7.
[5] PARC/DAR MR, p. 16.
[6] AMBALA MR, p. 51.
[7] AMBALA MR, pp. 55-60.
[8] Rene Galang and AMBALA MR, pp. 11-13.
[9] FARM MR, p. 47.
[10]Under PARC Resolution No. 89-12-2 dated November 21, 1989, then Secretary Miriam Defensor-Santiago approved the SDP of HLI/Tarlac Development Corporation (Tadeco).
[11] G.R. No. L-23127, April 29, 1971, 38 SCRA 429.
[12] G.R. No. L-28113, March 28, 1969, 27 SCRA 533.
[13] G.R. No. 138965, June 30, 2006, 494 SCRA 53.
[14] G.R. No. 85481-82, October 18, 1990, 190 SCRA 686.
[15] G.R. Nos. L-54558 and L-69882, May 22, 1987, 150 SCRA 144.
[16]
[17] League of Cities of the Phils. v. COMELEC, G.R. Nos. 176951, 177499 and 178056, August 24, 2010, 628 SCRA 819, 833.
[18] LCK Industries, Inc. v. Planters Development Bank, G.R. No. 170606, November 23, 2007, 538 SCRA 634, 652; cited in Land Bank of the Philippines v. Ong, G.R. No. 190755, November 24, 2010, 636 SCRA 266, 280.
[19] Brito, Sr. v. Dianala, G.R. No. 171717, December 15, 2010.
[20] Saludaga v. Sandiganbayan, G.R. No. 184537, April 23, 2010, 619 SCRA 364, 374; citing AGPALO, STATUTORY CONSTRUCTION, 2003 p. 204 and The Heirs of George Poe v. Malayan Insurance Company, Inc., G.R. No. 156302, April 7, 2009.
[21] G.R. No. 142618, July 12, 2007, 527 SCRA 405, 422.
[22] Citing Pimentel v. COMELEC, G.R. No. 126394, April 24, 1998, 289 SCRA 586, 597.
[23] Citing Centeno v. Villalon-Pornillos, G.R. No. 113092, September 1, 1994, 236 SCRA 197, 206.
[24] Citing Castillo-Co v. Barbers, G.R. No. 129952, June 16, 1998, 290 SCRA 717, 723.
[25] FARM MR, pp. 6-11, 30-36.
[26]
[27]
[28]
[29] Apostol v. CA, G.R. No. 141854, October 15, 2008, 569 SCRA 80, 92; citing Almuete v, Andres, 421 Phil 522, 531 (2001).
[30]
[31] See C.F. Sharp Crew Management, Inc. v. Espanol, Jr., G.R. No. 155903, September 14, 2007, 533 SCRA 424, 438-439.
[32] We stated in Our July 5, 2011 Decision that if a qualified FWB will choose land distribution, he or she will get 6,886.5 square meters of agricultural land in Hacienda Luisita.
[33] DAR MR, p. 37.
[34]
[35] See Soriano v. Bravo, G.R. No. 152086, December 15, 2010, 638 SCRA 403, 420.
[36] AMBALA MR, p. 67.
[37]
[38] HLI Consolidated Reply and Opposition, p. 65.
[39]
[40] AMBALA MR, p. 76.
[41] Galang MR, p. 21.
[42]
[43] AMBALA MR, p. 72.
[44] FARM MR, p. 94.
[45] Rollo, Vol. 3, pp. 3280-3323.
[46]
[47] Nicolas v. Del-Nacia Corp., G.R. No. 158026, April 23, 2008, 552 SCRA 545, 556.
[48] Bascos, Jr. v. Taganahan, G.R. No.
180666, February 18, 2009, 579 SCRA 653, 674-675.
[49] Velarde v. Lopez, Inc., G.R. No. 153886, January 14, 2004, 419 SCRA 422, 431-432; citing Tan Boon Bee & Co., Inc. v. Jarencio, 163 SCRA 205 (1988) and Yutivo Sons Hardware Co. v. CTA, 1 SCRA 160 (1961).
[50]
[51] G.R. Nos. 141593-94, July 12, 2006, 494 SCRA 583, 602.
[52] HLI MR, pp. 3-4.
[53] TSN, August 24, 2010, p. 13.
[54] Koruga v. Arcenas, G.R. Nos. 168332 and 169053, June 19, 2009, 590 SCRA 49, 68; citing In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet), Inc., PDIC v. Bureau of Internal Revenue, G.R. No. 158261, December 18, 2006, 511 SCRA 123, 141.
[55] DAR MR, p.33.
[56] As stated in the SDP:
Under Section 31 of Republic Act No. 6657, a corporation owning agricultural land may distribute among the qualified beneficiaries such proportion or percentage of its capital stock that the value of the agricultural land actually devoted to agricultural activities, bears in relation to the corporations total assets. Conformably with this legal provision, Tarlac Development Corporation hereby submits for approval a stock distribution plan that envisions the following: x x x (Rollo, p. 1322)
[57] Rollo, p. 1322; Annex AA.
[58]
[59]
[60] HLI MR, pp. 18-21.
[61] Mallari, et al. MR, pp. 3-4.
[62] AMBALA MR, p. 70.
[63]
[64] G.R. No. 140796, June 30, 2006, 494 SCRA 66, 92-93.
[65] Heirs of Lorenzo and Carmen Vidad v. Land
Bank of the
[66] Joint Congressional Conference Committee on the Comprehensive Agrarian Reform Program Bills, May 26, 1988, pp. 45-46.
[67] SEC. 6. Retention Limits. - Except as
otherwise provided in this Act, no person may own or retain, directly, any
public or private agricultural land, the size of which shall vary according to
factors governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the Presidential
Agrarian Reform Council (PARC) created hereunder, but in no case shall the
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that
he is actually tilling the land or directly managing the farm: Provided, That
landowners whose lands have been covered by Presidential Decree No. 27 shall be
allowed to keep the area originally retained by them thereunder; Provided,
further, That original homestead grantees or direct compulsory heirs who
still own the original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said homestead.
The
right to choose the area to be retained, which shall be compact or contiguous,
shall pertain to the landowner: Provided, however, That in case the area
selected for retention by the landowner is tenanted, the tenant shall have the
option to choose whether to remain therein or be a beneficiary in the same or
another agricultural land with similar or comparable features. In case the
tenant chooses to remain in the retained area, he shall be considered a
leaseholder and shall lose his right to be a beneficiary under this Act.
In case the tenant chooses to be a beneficiary in another agricultural land, he
loses his right as a leaseholder to the land retained by the landowner. The
tenant must exercise this option within a period of one (1) year from the time
the landowner manifests his choice of the area for retention.
In
all cases, the security of tenure of the farmers or farm workers on the land
prior to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract or transfer of possession of private lands executed by the original landowner in violation of this Act shall be null and void: Provided, however, That those executed prior to this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall inform the DAR within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares.
[68] Commissioner of Internal Revenue v. Central Luzon Drug Corp., G.R. No. 148512, June 26, 2006, 492 SCRA 575, 581.
[69] Philippine Amusement & Gaming Corp. v. Philippine Gaming Jurisdiction, Inc., et al., G.R. No. 177333, April 24, 2009, 586 SCRA 658, 664-665.
[70] Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue, G.R. Nos. 158885 & 170680, October 2, 2009, 602 SCRA 159, 169.
[71] R.E. Agpalo, Statutory Construction 125 (5th edition, 2003); citations omitted.
[72] G.R. No. 190582, April 8, 2010.
[73] AMBALA MR, pp. 65-66; FARM MR, p. 60.
[74] FARM MR, p. 60.
[75] TSN, August 24, 2010, p. 125.
[76] Mallari, et al. MR, p. 3.
[77]
[78]
[79]
[80] Rollo, p.
3738. These homelots do not form part of the 4,915.75 hectares of agricultural
land in Hacienda Luisita. These are part of the residential land with a total
area of 120.9234 hectares, as indicated in the SDP.
[81] See Concha v. Rubio, G.R. No. 162446, March 29, 2010, 617 SCRA 22, 31.