EN BANC

Agenda of April 24, 2012

Item No. 93

 

G.R. No. 171101 HACIENDA LUISITA, INC., et al., petitioners versus PRESIDENTIAL AGRARIAN REFORM COUNCIL, et al., respondents.

Promulgated:

 

April 24, 2012

x-----------------------------------------------------------------------------------------x

 

 

SEPARATE OPINION

(Concurring and Dissenting)

 

BRION, J.:

 

 

I concur with the ponencias ruling that the Stock Distribution Plan (SDP) of the petitioner Hacienda Luisita, Inc. (HLI), made pursuant to the agrarian reform law, Republic Act (RA) No. 6675[1] which took effect on June 15, 1988, is illegal so that an actual compulsory transfer of the HLIs agricultural lands should have taken place. I likewise agree that the date of taking for purposes of determining just compensation should be deemed to be November 21, 1989 the date when the respondent Presidential Agrarian Reform Council (PARC) erroneously approved the Stock Distribution Plan (SDP) of the petitioner HLI and its 6,596 farmworker-beneficiaries (FWBs) through Resolution No. 89-12-2.

 

Despite my overall concurrence, I still differ with some of the ponencias rulings, particularly on the legal basis of the consequences of PARCs revocation of its previous SDP approval. These consequences should be determined on the basis of clear applicable statutory provisions and the legal principles discussed below.

 

 

 

The illegality of the SDP rendered it null and void from the beginning

 

On December 22, 2005, PARC revoked its approval of the SDP through Resolution No. 2005-31-01. Although this revocation was made only in 2005, the effects should date back to 1989, considering that the basis for the revocation was primarily the illegality of the SDPs terms; the illegality rendered the SDP null and void from the very beginning and was not cured by PARCs erroneous approval. Indeed, the illegality of the terms of the SDP was apparent from its face so that PARCs approval should not have been given from the start.

 

Specifically, the man-days scheme the SDPs method in determining the number of shares of stock to which each FWB was entitled ran counter to Section 4 of Administrative Order (AO) No. 10, Series of 1988 of the Department of Agrarian Reform (DAR); this AO required the distribution of an equal number of shares of stock to each qualified beneficiary. Section 11 of the same AO mandated that the stock distribution should also be implemented within three months from receipt of the PARCs approval of the SDP, and that the transfer of the shares of stock in the name of the qualified beneficiaries should be recorded in the stock and transfer books within 60 days from the implementation of the SDP. HLIs SDP clearly and illegally provided for a 30-year distribution period.

 

Consequences of Illegality

 

A.   Compulsory coverage of HLI agricultural land

 

In the absence of any valid stock distribution plan, HLIs agricultural land became subject to compulsory coverage by 1989 the time HLI chose as its option in complying with RA No. 6657. Section 31 of RA No. 6657 states without any ambiguity that:

 

SEC. 31. Corporate Landowners. x x x

 

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]

 

HLI exercised the option granted under this provision by putting in place and securing the approval of its SDP with its FWBs on November 21, 1989. Its exercise of the stock distribution scheme, however, failed due primarily to its failure to secure PARCs approval of the SDP. The legal consequence, by the very terms of the above provision, is for the agricultural land of the corporate owners or corporation [to] be subject to the compulsory coverage of th[e] Act. Compulsory coverage the option not taken means the actual transfer of the HLI land to the FWBs which should be deemed to have taken place on November 21, 1989 when the first option HLI took failed. At that point, the rights of ownership of HLI were transferred by law to the FWBs, who should be deemed the owners of the HLI land (and who should enjoy the rights of ownership under Article 428 of the Civil Code, subject only to the restrictions and limitations that the medium of their ownership RA No. 6657 imposes).

 

B. Payment of just compensation

B.1 Taking for purposes of just compensation

 

Taking for purposes of determining just compensation necessarily took place as of 1989 not only because of the failure of the stock distribution option under Section 31 of RA No. 6657 (whose terms require the inclusion of the agricultural land under the laws compulsory coverage), but also because HLI chose to comply with the governments agrarian reform program through the SDP. The taking involved here was a revolutionary form of expropriation for purposes of agrarian reform. Expropriation under RA No. 6657 may take the form of either actual land distribution or stock distribution. HLI was only allowed to use stock distribution because of RA No. 6657, and it lost this privilege upon the invalid exercise of this option when its approval was cancelled. As I previously posited

 

[November 21, 1989] is the point in time when HLI complied with its obligation under the CARL as a corporate landowner, through the stock distribution mode of compliance. This is the point, too, when the parties themselves determined albeit under a contract that is null and void, but within the period of coverage that the CARL required and pursuant to the terms of what this law allowed that compliance with the CARL should take place. From the eminent domain perspective, this is the point when the deemed taking of the land, for agrarian reform purposes, should have taken place if the compulsory coverage and direct distribution of lands had been the compliance route taken. As the chosen mode of compliance was declared a nullity, the alternative compulsory coverage (that the SDOA was intended to replace) and the accompanying taking should thus be reckoned from [November 21, 1989.][2] [emphasis supplied]

 

Since taking in law is deemed to have occurred on November 21, 1989, the just compensation due to HLI for placing its agricultural lands under RA No. 6657s compulsory coverage should be computed as of this date.

 

B.2 Administrative and judicial determination of just compensation

 

 

The determination of the valuation of the HLI land as of 1989 is a matter that RA No. 6657 and its applicable regulation leaves with the Land Bank of the Philippines (LBP), DAR, and, ultimately, the RTC acting as Special Agrarian Court (SAC). The determination of just compensation is done at two levels: administrative determination by LBP and DAR and judicial determination by the SAC.[3]

 

Philippine Veterans Bank, Inc. v. Court of Appeals[4] outlines the procedure in determining just compensation:

 

[T]he Land Bank of the Philippines is charged with the preliminary determination of the value of lands placed under land reform program and the compensation to be paid for their taking. It initiates the acquisition of agricultural lands by notifying the landowner of the governments intention to acquire his land and the valuation of the same as determined by the Land Bank. Within 30 days from receipt of notice, the landowner shall inform the DAR of his acceptance or rejection of the offer. In the event the landowner rejects the offer, a summary administrative proceeding is held by the provincial (PARAD), the regional (RARAD) or the central (DARAB) adjudicator, as the case may be, depending on the value of the land, for the purpose of determining the compensation for the land. The landowner, the Land Bank, and other interested parties are then required to submit evidence as to the just compensation for the land. The DAR adjudicator decides the case within 30 days after it is submitted for decision. If the landowner finds the price unsatisfactory, he may bring the matter directly to the appropriate Regional Trial Court.

 

The authority of LBP to make a preliminary valuation of the land is provided under Section 1 of Executive Order (EO) No. 405 dated June 14, 1990,[5] which states:

 

SECTION 1. The Lank Bank of the Philippines shall be primarily responsible for the determination of the land valuation and compensation for all private lands suitable for agriculture under either the Voluntary Offer to Sell (VOS) or Compulsory Acquisition (CA) arrangement as governed by Republic Act No. 6657. The Department of Agrarian Reform shall make use of the determination of the land valuation and compensation by the Land Bank of the Philippines, in the performance of functions

 

After effecting the transfer of titles from the landowner to the Republic of the Philippines, the Land Bank of the Philippines shall inform the Department of Agrarian Reform of such fact in order that the latter may proceed with the distribution of the lands to the qualified agrarian reform beneficiaries within the time specified by law.

 

After the preliminary determination of the value of the land, DAR then acquires administrative jurisdiction to determine just compensation, pursuant to Rule II, Section 1 5(b) of the 2009 DARAB Rules of Procedure. The process for the preliminary determination of just compensation is fully discussed in Rule XIX of the 2009 DARAB Rules.

 

The judicial determination of just compensation commences when a petition for its determination is filed with the SAC, which has the original and primary jurisdiction pursuant to Section 57 of RA No. 6657.[6] Notably, no overlapping of jurisdiction between DARAB and SAC occurs because, as the Court explained:

 

x x x primary jurisdiction is vested in the DAR to determine in a preliminary manner the just compensation for the lands taken under the agrarian reform program, but such determination is subject to challenge before the courts. The resolution of just compensation cases for the taking of lands under agrarian reform is, after all, essentially a judicial function.[7]

 

The above process is a matter of law and regulation that the courts, including the Supreme Court, cannot deviate from. Hence, the referral of the valuation of the former HLI land under the parameters outlined in the Courts Resolution should initially be to DAR.

 

B.3 Resolution of non-just compensation issues

In the unique circumstances of this case, i.e. a case that has caused unrest and even deaths; which has been pending for administrative and judicial adjudication for at least 22 years; and which has many parties raising multiple issues arising from 22 years of developments a necessary problem area on the matter of adjudication, is the procedure in handling what has become a seeming multi-headed monster.

 

I believe that the only way left for us, on matters of procedures that this Court can act upon, is to handle the case pro hac vice, i.e., with the use of a one-time non-recurring mode appropriate only to the case, on the issues that this Court has jurisdiction to act upon pursuant to its powers to promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and procedure in all courtsand legal assistance to the underprivileged.[8]

 

Other than the issue of just compensation over which jurisdiction is a matter of law, this case faces issues of compulsory coverage, land distribution, and restitution of amounts previously paid and of homelots previously granted. All these are within the jurisdiction of this Court to adjudicate, save only for the determination of facts not yet on record that this Court is not equipped to undertake because of its limited trial capabilities.

 

In lieu of remanding all the unresolved factual issues to the judicial trial courts, we should appropriately delegate the fact-finding to the DAR from which this case originated and which has primary jurisdiction over the issue of compensation that the Court has left untouched. Consequently, we should refer to DAR (1) all non-compensation issues that we have not resolved for determination, and (2) all resolved issues for implementation. To state what is obvious in law, what we have resolved here constitute the law of the case that none of the parties and no court or administrative body can reopen, modify, alter, or amend.

 

As a matter of judicial policy[9] and practice that is now established, the DAR should apply to the fullest the mediation and conciliation efforts that the judiciary has found very effective. Save only for the legal conclusions and final factual determinations the Court has reached (e.g., the decision to distribute and the time of taking), all factual issues can be conciliated and agreed upon by mutual and voluntary action of the parties.

 

B.4 No interest on just compensation during intervening period

 

 

No interest on the amount due as just compensation may be imposed. The Court awards interests when there is delay in the payment of just compensation, not for reasons of the fact of delay, but for the consequent income that the landowner should have received from the land had there been no immediate taking by the government.[10] Apo Fruits Corporation, Inc. v. Land Bank of the Philippines[11] elaborated on this legal issue when it stated that

 

x x x the just compensation is made available to the property owner so that he may derive income from this compensation, in the same manner that he would have derived income from his expropriated property. If full compensation is not paid for property taken, then the State must make up for the shortfall in the earning potential immediately lost due to the taking, and the absence of replacement property from which income can be derived; interest on the unpaid compensation becomes due as compliance with the constitutional mandate on eminent domain and as a basic measure of fairness.

 

In the context of this case, when the LBP took the petitioners landholding without the corresponding full payment, it became liable to the petitioners for the income the landholding would have earned had they not immediately been taken from the petitioners.

 

[T]he undisputed fact is that the petitioners were deprived of their lands on December 9, 1996 (when the titles to their landholdings were cancelled and transferred to the Republic of the Philippines), and received full payment of the principal amount due them only on May 9, 2008.

 

In the interim, they received no income from their landholdings because these landholdings had been taken. Nor did they receive adequate income from what should replace the income potential of their landholdings because the LBP refused to pay interest while withholding the full amount of the principal of the just compensation due by claiming a grossly low valuation.

 

 

The above rules, however, do not apply to the present case, since HLI never lost possession and control of the land; all the incomes that the land generated were appropriated by HLI; no loss of income on the land therefore exists that should be compensated by the imposition of interest on just compensation.[12]

 

For the same reason that I oppose the imposition of interest on the just compensation due to HLI, I disagree with the view that taking should be pegged on January 6, 2006, when the Notice of Compulsory Coverage was issued. Supposedly, the rationale in pegging the period of computing the value so close or near the present market value at the time of taking is to consider the appreciation of the property, brought about by improvements in the property and other factors. x x x. It is patently iniquitous for landowners to have their real properties subject of expropriation valued several years or even decades behind.[13] To peg the taking in 1989 would allegedly make HLI suffer the loss of its lands twice, since it will be paid its property at 1989 levels and any improvements it made on the land, which appreciated its value, would be ignored.

 

Considering that HLI retained possession and control of the land, any benefit that could have been derived from such possession and control would be for HLIs account. In reality, therefore, HLI will be reaping benefits twice if the taking is pegged in 2006.

 

B.5 Amount of just compensation paid to landowner does not necessarily affect the amortizations due from FWBs

 

In this regard, I disagree with the ponencias reasoning for rejecting the view that taking occurred in 2006. The ponencia objects to a taking in 2006 because the FWBs will be made to pay higher amortizations for the lands that should have been given to them decades ago at a much lower cost. The amount of amortization that the FWBs are required to pay the government is not necessarily based on the cost of the land. DAR AO No. 6, Series of 1993[14] is the implementing rule of Section 26 of RA No. 6657.[15] Its pertinent provisions state:

 

V. GENERAL GUIDELINES

 

A.    As a general rule, land awarded pursuant to x x x R.A. 6657 shall be repaid by the Agrarian Reform Beneficiary (ARB) to LANDBANK in thirty (30) annual amortizations at six (6%) percent interest per annum. The annual amortization shall start one year from date of Certificate of Landownership Award (CLOA) registration.

B.     The payments by the ARBs for the first three (3) years shall be two and a half percent (2.5%) of AGP [Annual Gross Production] and five percent (5.0%) of AGP for the fourth and fifth years. To further make the payments affordable, the ARBs shall pay ten percent (10.0%) of AGP or the regular amortization [refers to the annuity based on the cost of the land[16] and permanent improvements at six percent (6%) interest rate per annum payable in 30 years], whichever is lower, from the sixth (6th) to the thirtieth (30th) year.

 

Construing these provisions, the Court explained in Apo Fruits[17] that

 

the payments made by the farmers-beneficiaries to the LBP are primarily based on a fixed percentage of their annual gross production or the value of the annual yield/produce of the land awarded to them. The cost of the land will only be considered as the basis for the payments made by the farmers-beneficiaries when this amount is lower than the amount based on the annual gross production.

 

Hence, the amount due to HLI as just compensation for the land is not necessarily the basis of the amount that the FWBs are required to pay the government pursuant to Section 26 of RA No. 6657.

 

C. Determination of related claims arising from compulsory coverage of the land

 

 

Other consequences must necessarily flow from the compulsory coverage of HLIs agricultural lands, deemed to have taken place on November 21, 1989.

 

First. The transfer of the land to the FWBs after compulsory coverage does not signify that the land was actually distributed to them or that that they immediately came into possession of the land as of that date. The factual reality is too clear to need further discussion and elaboration: no actual distribution actually took place and the present case is in fact with this Court today almost 22 years after distribution was due because no actual distribution took place.

 

Second. From the perspective of law, ownership and possession are two different concepts and need not necessarily be fused with the same entity at the same time. Thus, while the FWBs have collectively been the owners of the transferred property as of November 21, 1989, actual possession has not been with them either collectively or individually.

 

The reality is that possession from that time effectively rested with HLI, which continued to possess and operate the land. In fact, HLI possessed the land in the concept of an owner from November 21, 1989 pursuant to the SDP, and was only divested of possession in this concept when PARC revoked its approval of the SDP in 2005. But even then, the issue of the SDPs legality (and the nature of HLIs possession) remained legally uncertain because the PARC revocation gave rise to the present dispute which to date remains pending.

 

I conclude from all these developments that HLI, at the very least, has remained a possessor in good faith during all these times and has built and introduced improvements on the land in good faith. Its possession proceeded from its belief that it validly retained ownership of the land after choosing to adopt stock distribution option as its mode of compliance with the agrarian reform program, which option was approved (erroneously, as discussed) by PARC. Its possession, although wrongful, was in good faith. Under the Civil Code, a possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw that invalidates it.[18]

 

The relationship between the owner of the land (the FWBs starting November 21, 1989) and the builder in good faith (HLI) is governed by Article 448 of the Civil Code, which reads:

 

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

 

This provision is manifestly intended to apply only to a case where one builds, plants, or sows on land in which he believes himself to have a claim of title.[19] Generally, the owner of the land has the option of either (a) choosing to appropriate the works after payment of indemnity or (b) obliging the builder in good faith to pay the price of the land.

 

Considering that the HLI land is, by law, subject to compulsory acquisition, the FWBs can no longer now exercise the option of obliging HLI to pay for the price of the land, and are thus left only with the first option of appropriating the works upon payment of indemnity pursuant to Articles 546 and 548. These provisions state:

Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.

 

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

 

x x x x

 

Article 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.

 

The necessary expenses are those made for the proper preservation of the land and the improvements introduced, or those without expenses without which the land and the improvements would have been lost.[20] These expenses include the taxes paid on the land and all other charges on the land.[21] Useful expenses, on the other hand, are the expenses incurred to give greater utility or productivity to the land and its improvements.[22] Among others, these include the cost of roads, drainage, lighting, and other fixtures that HLI introduced into the land that increased its value and its eventual purchase price to third parties. Pursuant to Article 448 of the Civil Code above, all these improvements HLI can retain until it is reimbursed. Under the unique facts of this case, this indemnity should be paid together with the payment for just compensation and should be included in the total reckoning of what the parties owe one another.

 

A twist in this case is the conveyance to third parties (LIPCO/RCBC, the government for SCTEX, and, if proven to be a valid transfer, to LRC), of part of the converted agricultural land by HLI while it was still in possession in the concept of an owner. As already held by the majority in its previous ruling on this case, the alienation to the third parties is valid as the latter were purchasers for value in good faith; these converted agricultural lands are excluded from the land reform coverage and distribution because of the intervening valid transfer. One seeming problem this conclusion, however, leaves is on the question of the purchase price who should now get the purchase price in light of the change of the parties circumstances under the revoked SDP?

 

I take the view that the rule that prevailed with respect to the land and the improvements should still prevail. Thus, the third parties purchase price should be credited to the FWBs as owners. The value of the improvements introduced by HLI on these lands, which led to the increase in the price of the land and its eventual sale to LIPCO/RCBC and (if proven to be valid) to LRC, should be subject to the builder in good faith provision of Article 448 of the Civil Code and the payment of indemnity to HLI computed under Articles 546 and 548 of the same Code. This would be true whether the sale was voluntary (as in the case of the sale to LIPCO/RCBC/LRC) or involuntary (as in the exercise of the power of eminent domain by government in securing the land for the SCTEX). In either case, the cost of the necessary and useful expenses that gave rise to the increase in value of the land should be reimbursed to HLI as indemnity.

 

In simple mathematical terms, the computation of the amounts due the parties should run:

 

 

Amount Accruing = Purchase Price the amounts due to HLI

to FWBs by 3rd Parties (the amount of just

compensation FWBs should

pay HLI + the indemnity due

to HLI under Articles 546

and 548, etc.)

 

D. With the SDP declared revoked and illegal, mutual restitution should take place.

 

 

The consequence of the nullification of the SDPs approval should have properly been the restitution of what the parties received under the disapproved SDP; the parties must revert back to their respective situations prior to the execution of the SDP and must return whatever they received from each other under the SDP that, in legal contemplation, never took place.[23] The details of these restitutions are more fully discussed below.

 

D.1 Mutual restitution must be in accordance with law

 

In ruling on the present motion, the ponencia has apparently abandoned the view that the SDP, while illegal, should still be accorded recognition as a reality that was operative from the time it was put in place up to the time the PARC revocation. This change cannot be wrong as the operative fact doctrine applies only in considering the effects of the declaration unconstitutionality of, among others, executive acts that have the force and effect of law, i.e., those issued pursuant to a grant of quasi-legislative power. The doctrine does not apply to the exercise of quasi-adjudicatory power that PARC exercised as part of its mandate under RA No. 6657, which required its determination of facts and the applicable law in the course of implementing Section 31 of the law. Thus, the SDP, erroneously approved by PARC through Resolution No. 89-12-2, cannot be the basis for the grant of benefits to the FWBs as the approval was not in the exercise of quasi-legislative powers.

 

In law, nullification of agreements as we now undertake in our present ruling dictates that the parties should be restored to their original state prior to the execution of the nullified agreement. This is the command of Articles 1409, 1411 and 1412 of the Civil Code and it supporting jurisprudence that this Court should follow.[24] This means that (1) the 3% production share; (2) the 3% share I the proceeds of the sale of the lands; and (3) the homelots grante in relation with the revoked SDP should all be returned by the FWBs to HLI, subject to the conditions I discuss below. Hence, mutual restitution (instead of the rentention that the ponencia espouses) should take place.

 

D.2. Disposition of homelots

 

With the failure of the SDP, the question of how homelots should be handled becomes a ticklish issue, involving as it does the home where the family lives. It is in this spirit that the Court should address issue, and in the spirit of fairness that should attend all our dispositions in this case.

 

An undisputed fact is that the homelots do not form part of the 4,915 hectares covered by the SDP, and no obligation under RA No. 6657 exists for HLI to provide homelots. HLI through TADECO,[25] however, made the grant of homelots apparently as a consideration for the adoption of the SDP that does not now legally exits. From this view, the homelots may be said to have in fact been donated by HLI so that these should not be taken back.

 

In my view, the grant of the homelots outside of the requirements of RA No. 6657 cannot be denied. In fairness, however, to HLI who made the grant in the spirit of and pursuant to the SDP, the parties cannot just be left as they are. The way out of this bind is to consider the homelots already granted to both FWBs and non-FWBs as compulsory acquisitions subject to the payment of just compensation in the course of the exercise of the power of eminent domain. The valuation of just compensation for these homelots, therefore, should be an issue to be brought to the DAR for its determination together with all other issue submitted to that forum.

 

For the FWBs, the just compensation for these homelots shall be an item considered in the adjustment of the claims of HLI and the FWBs against one another. For non-FWBs who now enjoy their homelots, the matter should be submitted to DAR and to the LBP for their determination and action as these homelots are or were part of an agricultural estate that is subject to land reform.

 

D.3 Other restitutions

 

As a consequence of the nullification of the SDP, the FWBs should return the following benefits to HLI:

 

1.     the 59 million shares of stock of HLI;

2.     the P150 million representing the 3% gross sales of the production of the agricultural lands; and

3.     the P37.5 million representing the 3% proceeds from the sale of the 500 hectares of agricultural land (including the amount received as just compensation for the expropriation by the government of the land used for SCTEX).

 

The 3% proceeds from the voluntary and involuntary sale of the agricultural land shall be offset against the value received by HLI as consideration for the sale, which should be turned over to the FWBs who are considered the owners of the land as of 1989. The taxes and expenses related to the transfer of titles should likewise be deducted as the same amounts would be incurred regardless of the seller (HLI or the FWBs). As earlier discussed, adjustments should also be made to allow for the payment of indemnity for the improvements HLI introduced on the land, pursuant to Articles 448, 546, and 548 of the Civil Code. As discussed above, this task has been delegated by the Court for factual determination to the DAR.

 

To summarize, the purchase price received by HLI for the sale of portions of the land should be turned over to the FWBs less (1) the 3% proceeds from the sale already given to the FWBs, (2) the taxes and expenses related to the transfer of titles, and (3) the value of the improvements HLI introduced according to Articles 448, 546, and 548 of the Civil Code.

 

To be excluded from the benefits that should be returned to HLI are the wages and benefits that both the FWBs and non-FWBs received as employees of HLI. They are entitled to retain these as fruits of their labor; they received these as compensation earned for services rendered.

 

Conclusions and Dispositions

 

For greater clarity, I submit the following conclusions and dispositions based on my foregoing discussions.

 

1. Compulsory Coverage. The entire 4,915 hectares of land is deemed placed under COMPULSORY COVERAGE of the Comprehensive Agrarian Reform Law AS OF NOVEMBER 21, 1989, and the 6,296 qualified FWBs shall be deemed to have collectively acquired ownership rights over the land as of this date. These new owners shall enjoy all the attributes of ownership pursuant to Article 428 of the Civil Code, subject only to legal limitations. The principal limitations are those imposed under RA No. 6657 that governs agrarian reform.

 

2. Distribution. The DAR shall DISTRIBUTE the land among the 6,296 qualified FWBs pursuant to the terms of RA No. 6657, EXCLUDING:

a.     the 300 hectares of converted land acquired by LIPCO/RCBC; and

b.     the 80 hectares of land expropriated by the government for the SCTEX.

 

The LRC, which never entered its appearance in this case, shall be entitled to prove before the DAR that a valid transfer of the 200 hectares of converted land in its favor took place. If the DAR finds that LRC is a purchaser in good faith and for value, the 200 hectares of converted land shall likewise be excluded from the land to be distributed among qualified FWBs.

 

3. Just Compensation. The DAR is likewise ORDERED to determine the amount of just compensation that HLI is entitled for the entire 4,915.75 hectares of agricultural land, based on its value at the time of taking November 21, 1989; no interest shall be imposed on this amount as discussed above. The amount of just compensation shall include the indemnities due to HLI under Article 546 and 548 of the Civil Code for the useful and necessary expenses incurred for the lands under compulsory coverage.

 

The DAR is also ORDERED to determine the amount just compensation on the homelots that will be retained by the FWBs, based on their value at the time of taking November 21, 1989.

 

4. Other Payments. HLI shall REMIT to the FWBs the purchase price of the:

a.     300 hectares of converted land conveyed to LIPCO/RCBC;

b.     80 hectares of land taken over by government; and

c.      if DAR finds that there was a valid transfer, 200 hectares of converted land conveyed to LRC.

 

The amount of taxes and expenses related to the sale shall be deducted from the purchase price. The indemnities due to HLI under Article 546 and 548 of the Civil Code representing the useful and necessary expenses incurred for the lands and improvements conveyed to third parties shall also be deducted from the purchase price. The amounts deducted shall be retained by HLI.

 

5. Restituted Amounts and Benefits. The FWBs shall likewise return to HLI the following amounts paid pursuant to the failed SDP:

 

a.     the P37.5 million, representing the 3% share in the sale of portions of the land; and

b.     the P150 million, representing the 3% production share;

 

The value of the 3% share in the proceeds of the sale of the lands and 3% production share shall depend on the amount actually received by the FWBs, to be determined by the DAR, and not the amount HLI claims that it gave to the FWBs. The actual amounts of received by the FWBs may be off-set against the purchase price of the sale of the lands that HLI must turn over to the FWBs.

 

All the FWBs shall return to HLI the 59 million shares of stock. They are, however, entitled to retain all the salaries, wages and other benefits received as employees of HLI.

 

6. Conciliation and Set-Off. The DAR shall exercise its authority in the determination of just compensation as mandated by law, and the authority delegated by the Supreme Court to undertake the determination of facts and the adjustment of the parties claims other than just compensation, including matters of set-off of the parties claims and the possibility of settlement through mediation and conciliation. The DAR, hopefully, shall seriously attempt at their level for mediation and conciliation for, ultimately, the agreement between and among the parties will best, in the quickest time, resolve the case.

 

The DAR shall undertake its delegated authority on matters other than just compensation and report its results to this Court for its final disposition within one (1) year from this referral. This ruling is immediately final and no further pleadings shall be entertained.

 

 

ARTURO D. BRION

Associate Justice

 

 

 


[1] Comprehensive Agrarian Reform Law of 1988.

[2] J. Brion, Separate Concurring and Dissenting Opinion to the Resolution dated November 22, 2011.

[3] Philippine Veterans Bank v. Court of Appeals, G.R. No. 132767, January 18, 2000.

[4] Ibid.

[5] Entitled Vesting in the Land Bank of the Philippines the Primary Responsibility to Determine the Land Valuation and Compensation for All Lands Covered Under Republic Act No. 6657, Known as the Comprehensive Agrarian Reform Law of 1988.

[6] Section 57. Special Jurisdiction. The Special Agrarian Court shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. x x x

The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision.

[7] Philippine Veterans Bank v. Court of Appeals, supra note 3.

[8] CONSTITUTION, Article VIII, Section 5(5).

[9] See RA No. 9285 or the Alternative Dispute Resolution Act of 2004, which recognized the authority of the Supreme Court to adopt any Alternative Dispute Resolution system, such as mediation, conciliation, arbitration, or any combination thereof as a means of achieving speedy and efficient means of resolving cases pending before all courts in the Philippines which shall be governed by such rules as the Supreme Court may approve from time to time.

In this line, the Supreme Court has promulgated various rules on mediation and conciliation including: Amended Guidelines for the Implementation of Mediation/Conciliation Proceedings in the Pilot Areas of Mandaluyong City and Valenzuela City (November 16. 1999); A.O. No. 21-2001 re: Participation in the Amicable Settlement Weeks; A.O. No. 24-2001 re: Inclusion of Additional Participants in the Amicable Settlement Weeks (March 5, 2001); A.M. No. 01-10-5-SC-PHILJA and OCA Circular No. 82-2001 re: Designating the Philippine Judicial Academy as the Component Unit of the Supreme Court of the Court-Referred, Court-Related Mediation Cases and Other Alternative Dispute Resolution Mechanisms, and Establishing the Philippine Mediation Center for the Purpose; OCA Circular No. 2-2002 re Memorandum on Policy Guidelines between OCA and IBP; Administrative Circular No. 20-2002 re Monthly Inventory and Referral of Cases for Mediation; and A.M. No. 11-1-16-SC-PHILJA re: Consolidated and Revised Guidelines to Implement the Expanded Coverage.

[10] See Apo Fruits Corporation, Inc. v. Land Bank of the Philippines, G.R. No. 164195, October 12, 2010. Also, Land Bank of the Philippines v. Soriano, G.R. Nos. 180772 and 180776, May 6, 2010, where the Court declared that

The concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also payment within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" inasmuch as the property owner is made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss.

[11] Ibid.

[12] J. Brion, Separate Concurring and Dissenting Opinion to the Resolution dated November 22, 2011.

[13] J. Sereno, Dissenting Opinion to the Resolution dated November 22, 2011.

[14] Revised Implementing Guidelines and Procedures Governing Payment of Land Amortization by Agrarian Reform Beneficiaries.

[15] 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 at six percent (6%) interest per annum. The payments for the firs three (3) years after the award may be at reduced amounts as established by the PARC : Provided, That the first five (5) annual payments may not be more than five percent (5%) of the value of the annual gross production is paid as established by the DAR. Should the scheduled annual payments after the fifth year exceed ten percent (10) of the annual gross production and the failure to produce accordingly is not due to the beneficiary's fault, the LBP may reduce the interest rate or reduce the principal obligation to make the payment affordable.

The LBP shall have a lien by way of mortgage on the land awarded to beneficiary and this mortgage may be foreclosed by the LBP for non-payment of an aggregate of three (3) annual amortizations. The LBP shall advise the DAR of such proceedings and the latter shall subsequently award the forfeited landholding to other qualified beneficiaries. A beneficiary whose land as provided herein has been foreclosed shall thereafter be permanently disqualified from becoming a beneficiary under this Act.

[16] Defined in the same AO as the amount paid or approved for payment to the landowner for the specific parcel of land and permanent crops including improvements thereon acquired and awarded to ARBs.

[17] G.R. No. 164195, April 5, 2011.

[18] CIVIL CODE, Article 526.

[19] Arturo Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Volume Two (1992 ed.), p. 111, citing Floreza v. Evangelista, 96 SCRA 130.

[20] A. Tolentino, supra note 18, at 292, citing 4 Manresa 270-271; Case, et al. v. Cruz, (S.C.), 50 Official Gazette 618, Calang, et al. v. Santos, et al. (C.A.), 50 Official Gazette 1446.

[21] Id. at 293, citing 4 Manresa 271-272.

[22] Id. at 294, citing 2 Oyuelos 298.

[23] A. Tolentino, supra note 18, at 632, citing Perez Gonzales & Alguer; 1-II Enneccerus, Kipp & Wolf 364-366; 3 Von Tuhr 311; 3 Fabres 231.

[24] Ibid.

[25] TADECO is the owner of the 6,443 hectare land; 4,916 hectares of this constitutes the agricultural land that TADECO turned over to HLI, the spin-off corporation it created to comply with Section 31 of RA No. 6657. In return, TADECO received shares of stock of HLI. The Stock Distribution Agreement (which became the basis of the SDP) executed by TADEO, HLI and the FWBs provided that the FWBs are entitled to residential or homelots of not more than 240 sqm. each, see Decision of July 5, 2011, pp. 9-14.