This case involves the compulsory acquisition of Hacienda Luisita by the Philippine government under the Comprehensive Agrarian Reform Program. Hacienda Luisita was originally owned by Spanish landowners and later sold to Tarlac Development Corporation (TADECO) in 1957. As a condition of the sale, TADECO was required to eventually subdivide and sell the land to tenants. However, TADECO did not comply with this condition. In the 1980s, the Marcos administration filed a case seeking to acquire Hacienda Luisita for redistribution but later withdrew the case. In 1988, the Comprehensive Agrarian Reform Law was passed, mandating the acquisition and redistribution of private agricultural
This case involves the compulsory acquisition of Hacienda Luisita by the Philippine government under the Comprehensive Agrarian Reform Program. Hacienda Luisita was originally owned by Spanish landowners and later sold to Tarlac Development Corporation (TADECO) in 1957. As a condition of the sale, TADECO was required to eventually subdivide and sell the land to tenants. However, TADECO did not comply with this condition. In the 1980s, the Marcos administration filed a case seeking to acquire Hacienda Luisita for redistribution but later withdrew the case. In 1988, the Comprehensive Agrarian Reform Law was passed, mandating the acquisition and redistribution of private agricultural
This case involves the compulsory acquisition of Hacienda Luisita by the Philippine government under the Comprehensive Agrarian Reform Program. Hacienda Luisita was originally owned by Spanish landowners and later sold to Tarlac Development Corporation (TADECO) in 1957. As a condition of the sale, TADECO was required to eventually subdivide and sell the land to tenants. However, TADECO did not comply with this condition. In the 1980s, the Marcos administration filed a case seeking to acquire Hacienda Luisita for redistribution but later withdrew the case. In 1988, the Comprehensive Agrarian Reform Law was passed, mandating the acquisition and redistribution of private agricultural
This case involves the compulsory acquisition of Hacienda Luisita by the Philippine government under the Comprehensive Agrarian Reform Program. Hacienda Luisita was originally owned by Spanish landowners and later sold to Tarlac Development Corporation (TADECO) in 1957. As a condition of the sale, TADECO was required to eventually subdivide and sell the land to tenants. However, TADECO did not comply with this condition. In the 1980s, the Marcos administration filed a case seeking to acquire Hacienda Luisita for redistribution but later withdrew the case. In 1988, the Comprehensive Agrarian Reform Law was passed, mandating the acquisition and redistribution of private agricultural
conversion of said hacienda from FACTS: agricultural to non-agricultural land. - Application denied. Petitioner Roxas & Co. is a domestic - Original TCT was replaced with corporation and is the registered owner of CLOA (Certificate of Land three haciendas: Haciendas Palico, Banilad Ownership Award, registered with and Caylaway, all located in the DAR) and compensated with Municipality of Nasugbu, Batangas. appropriate value thru LBP Trust Accounts. The events of this case occurred during the incumbency of then President Corazon C. HACIENDA BANILAD: Aquino. In February 1986, President Aquino - Same with Hacienda Palico. issued Proclamation No. 3 promulgating a Provisional Constitution. President Aquino HACIENDA CAYLAWAY signed on July 22, 1987, Proclamation No. - Voluntarily offered to the 131 instituting a Comprehensive Agrarian government. Reform Program and Executive Order No. 229 providing the mechanisms necessary to On August 24, 1993, petitioner instituted initially implement the program. Case No. N-0017-96-46 (BA) with respondent DAR Adjudication Board On July 27, 1987, the Congress of the (DARAB) praying for the cancellation of the Philippines formally convened and took CLOAs issued by respondent DAR in the over legislative power from the name of several persons. Petitioner alleged President. This Congress passed Republic that the Municipality of Nasugbu, where the Act No. 6657, the Comprehensive Agrarian haciendas are located, had been declared a Reform Law (CARL) of 1988. The Act was tourist zone, that the land is not suitable for signed by the President on June 10, 1988 agricultural production, and that the and took effect on June 15, 1988. Sangguniang Bayan of Nasugbu had reclassified the land to non-agricultural. Before the laws effectivity, on May 6, 1988, petitioner filed with respondent DAR a In a Resolution dated October 14, 1993, voluntary offer to sell Hacienda Caylaway respondent DARAB held that the case pursuant to the provisions of E.O. No. 229. involved the prejudicial question of whether Haciendas Palico and Banilad were later the property was subject to agrarian reform, placed under compulsory acquisition by hence, this question should be submitted to respondent DAR in accordance with the the Office of the Secretary of Agrarian CARL. Reform for determination.
HACIENDA PALICO: Petitioners questioned the expropriation of
- Assessed by Municipal Agrarian its properties under the CARL and the denial Officer (MARO), subjected to of due process in the acquisition of its acquisition and distribution landholdings. according to CARL. MARO – denied CA – denied; MR = denied 2. NO. Despite all this, the court has no ISSUE/S: jurisdiction to rule on the reclassification of land from 1. W/N the acquisition proceedings agricultural to non-agricultural. over the three haciendas were valid and in accordance with law; and DAR‘s failure to observe due process does 2. W/N SC has the power to rule on not give the court the power to adjudicate whether the lots were reclassified over petitioner‘s application for land from agricultural to non-agricultural. conversion. DAR is charged with the mandate of approving applications for land HELD: conversion. They have the tools and experience needed to evaluate such 1. YES. Acquisition proceedings was applications; hence, they are the proper against petitioner‘s right to due agency with which applications for land use process. conversion are lodged. DAR should be given a chance to correct their defects with First, there was an improper service of the regard to petitioner‘s right to due process. Notice of Acquisition. Notices to corporations should be served through their Petition dismissed. president, manager, secretary, cashier, agent, or any of its directors or partners. Jaime Pimintel, to whom the notice was served, was neither of those.
Second, there was no notice of coverage,
meaning, the parcels of land were not properly identified before they were taken by the DAR. Under the law, the land owner has the right to choose 5 hectares of land he wishes to retain. Upon receiving the Notice of Acquisition, the petitioner had no idea which portions of its estate were subject to compulsory acquisition.
Third, The CLOAs were issued to farmer
beneficiaries without just compensation. The law provides that the deposit must be made only in cash or LBP bonds. DAR‘s opening of a trust account in petitioner‘s name does not constitute payment. Even if later, DAR substituted the trust account with cash and LBP bonds, such does not cure the lack of notice, which still amounts to a violation of the petitioner‘s right to due process. On August 8, 1963, the Agricultural 2. Hacienda Luisita, Inc. v. PARC Land Reform Code (RA 3844) was enacted, abolishing share tenancy and converting it to CASE: leasehold tenancy. It also created the Land Band of the Philippines (LBP). However, This case is a SPECIAL CIVIL ACTION in the law‘s application was found to be the Supreme Court. This involves a Petition limited to specific areas in the Central for Certiorari and Prohibition under Rule 65 Luzon. with prayer for preliminary injunctive relief, Subsequently, Congress passed the HLI seeking to question and reverse the Code of Agrarian Reform (RA 6389) PARC Resolutions issued on December 22, declaring the entire country a land reform 2005 and May 3, 2006, and the area and automatically converting tenancy to implementing Notice of Coverage dated leasehold tenancy in all areas and reducing January 2, 2006. the retention limit from 75 Ha to 7 Ha. A month after the declaration of FACTS: Martial Law in September of 1972, In 1955, Land Reform Act [RA President Marcos issued Presidential Decree 1400] was passed which set the No. 27 which allows tenant-farmers to expropriation of all tenanted estates. purchase the land they tilled or to change In 1957, the Spanish owners of the from shared-tenancy to fixed-rent leasehold Compañia General de Tabacos de Filipinas tenancy, as a way to go about the (Tabacalera) sold to Tarlac Development “emancipation of the tillers from the Corporation (TADECO) Hacienda Luisita bondage of the soil”. and their controlling interest in the sugar On May 7, 1980, the Martial Law mill within the hacienda, the Central Administration filed a suit before the RTC Azucarera de Tarlac (CAT), to be paid in of Manila against TADECO to surrender Philippine pesos and in US dollars. Hacienda Luisita to the Ministry of Agrarian The Philippine Government, through Reform (now the DAR) for its distribution the Central Bank of the Philippines, aided to farmers. The RTC ordered TADECO to the buyer to obtain a dollar loan from a US surrender the hacienda to the MAR. bank. The GSIS Board of Trustees extended Then during the time of President on November 27, 1957 a PhP 5.911M loan Corazon C. Aquino, after Marcos was in favour of TADECO to pay the peso price ousted, Proclamation No. 131, Series of with a condition under GSIS Resolution No. 1987, was issued instituting a CARP. 3203, later amended by Resolution No. 356, On July 22, 1987, EO 229 was Series of 1958, which states: issued to provide for mechanisms for CARP “…the lots comprising Hacienda Luisita implementation. It also created the PARC as shall be subdivided by the applicant- its policy-making body. corporation and sold at cost to the tenants, On March 17, 1988, the OSG moved should there be any, and whenever to withdraw the government‘s case against conditions should exist warranting such TADECO, et al. action under the provisions of the Land On May 18, 1988, the CA dismissed Tenure Act.” the case the Marcos administration initially On March 31, 1958, TADECO had instituted and won against TADECO, et al. fully paid the purchase price for the However, the dismissal was conditioned that acquisition of Hacienda Luisita. there be an approval of a stock distribution plan (SDP) to be submitted, approved by On May 11, 1989, SDOA was PARC, and implemented as an alternative entered into by TADECO/HLI and 5,848 mode of land distribution, and failure to qualified FWBs. comply will cause the revival of previous On October 14, 1989, the referendum decision. conducted by DAR showed that 5,177 On June 15, 1988, the Comprehensive FWBs out of 5,315 participants opted to Agrarian Reform Law of 1988 (RA 6657) receive shares in the HLI (that‘s about took effect, providing a new process of land 97.403575% of the participants), and only classification, acquisition, and distribution. 132 chose actual land distribution. This tested the application of the law in the On November 6, 1989, the DAR Secretary current case of Hacienda Luisita. Mirriam Defensor-Santiago (now deceased) On August 23, 1988, HLI was proposed the revision of the SDP. On formed as a spin-off corporation to facilitate November 14, 1989, TADECO told DAR the SDP. Sec. MDS that the proposed revision were On March 22, 1989, a TADECO, via already in place in the SDP and MOA. a Deed of Assignment and Conveyance, Hence, On November 21, 1989, a transferred and conveyed to HLI the titles Resolution No. 89-12-2 approved the SDP over the lot in question, valued at PhP of TADECO/HLI. 196.630,000.00 (33.296% of the total asset From 1989 to 2005, HLI claimed to have of PhP 590,554,220.00). In line with extended the following benefits to FWBs: accommodating such transfer, the HLI (a) PhP 3 Billion worth of salaries, increased its capital share to PhP wages and fringe benefits; 400,000,000 at PhP1/share, PhP (b) 59 Million shares of stock 150,000,000 of which were to be issued only distribution for free to FWBs; to qualified and registered beneficiaries of (c) PhP 150M, PhP 37.5M, PhP the CARP, and the remaining 2.4M, all representing 3% of the PhP250,000,000 to any stockholder of the gross produce, the sale of 500 Ha corporation. (Obviously, the controlling of converted agricultural land of shares of FWBs are lower in this case.) HLI Hacienda Luisita, and the sale of guaranteed to the qualified beneficiaries of 80 Ha at PhP 80M for SCTEX, the SDP production-sharing that “every year respectively. they will receive, on top of their regular (d) 240 sq.m. homelots distributed compensation, an amount that approximates for free; 3% of the total gross sale from the (e) Social service benefits production of the agricultural land, whether On August 15, 1995, HLI applied for it is in the form of cash dividends or conversion of the 500 Ha land from incentive bonuses or both.” The production agricultural to industrial, which was sharing is payable irrespective of whether approved by DAR Secretary Ernesto Garilao HLI makes money or not. HLI also assured a year later, or on August 14, 1996, each family beneficiary to be guaranteed a conditioned on the payment of 3% of gross homelot of not more than 240 sq. m. in the selling price to FWBs and HLI‘s continued barrio or barangay where they reside. compliance with its undertakings under the On May 9, 1989, about 93% of the SDP. FWBs accepted and signed the proposed On December 13, 1996, HLI ceded 200 Ha SDOP. to Luisita Realty Corp. (LRC) at PhP 250 Million each in 1997 and 1998, and 300 Ha of its converted areas to Centennary issued a Notice of Coverage, which HLI Holdings, Inc. (Centennary), who later sold received 2 days after. the same to LIPCO for PhP 750 Million, the On May 3, 2006, PARC‘s Resolution denied latter acquiring it for purpose of developing MR by HLI. an industrial complex. But on June 14, 2006, the Court, acting on On November 25, 2004, LIPCO transferred HLI‘s motion, issued a TRO, enjoining the portion of the lands acquired to RCBC by implementation of PARC‘s Resolution and way of dation en pago in payment of the notice of coverage. LIPCO‘s PhP 431,634,732.10 loan. On December 2, 2006, Mallari filed a Another 80.51 Ha was later detached from manisfestation and motion, alleging that he Hacienda Luisita and acquired by the broke up with AMBALA and formed government as part of the SCTEX complex. FARM with Renato Lalic, and thus prayed About 4,335.75 Ha out of the 4,915 Ha to be allowed to intervene. In this moment, remained of the original area ceded by two factions were created due to shirt and TADECO to HLI. re-shift of allegiance, as Mallari would later With the prevailing situation, earlier in return to create an AMBALA-Noel Mallari 2003, DAR received two petitions seeking faction, leaving Renato Lalic with the rest of to renegotiate, and/or revoke the SDOA for the members in FARM. violation by the HLI of the SDOA‘s terms. On October 30, 2007, RCBC and LIPCO In the first petition, Jose Julio Suniga and intervened and alleged that the assailed Windsor Andaya (Supervisory Group of resolution effectively nullified the TCTs HLI) and 60 other supervisors alleged that under their respective names as the HLI failed to give their dividends, and their properties covered in the TCTs were share in the gross sales and proceeds of the included in the January 2, 2006 Notice of sales of the converted area 500 Ha area. Coverage. They claim that the revocation of They claimed that their lives have not SDP cannot legally affect their rights as improved contrary to the guarantees of the innocent purchasers for value. They both SDOA. asserted to have acquired vested and In the second petition (Petisyon), they call indefeasible rights over certain portions of for the revocation and nullification of the the covered properties. SDOA and the distribution of the lands. The On August 31, 2010, the Court created a Petisyon was filed by the AMBALA Mediation Panel in a bid to resolve the (composing about 80% of the 5,339 FWBs dispute but no acceptable agreement was of Hacienda Luisita). reached. DAR constituted a Special Task Force to attend to the issues relating to the SDP of ISSUES: HLI and the latter found that HLI failed to comply with their undertakings. (1) Whether or not petitioners for the On December 22, 2005, PARC affirmed the revocation/nullification of SDOA recommendation of DAR to recall/revoke (herein respondents) are real party- the SDOP of TADECO/HLI and the land be in-interests; placed under compulsory coverage or (2) Whether or not PARC has mandated land acquisition. jurisdiction to recall or revoke HLI‘s On January 2, 2006, HLI sought SDP; reconsideration. On the same day, DAR (3) Whether or not Section 31 of RA 6657 is constitutional; (4) Whether or not such recall or conferment of express power to approve revocation is a valid or proper action; SDP of agricultural land of corporate owners and necessarily includes the power to revoke or (5) Whether or not the terms and recall the approval of the plan, for to deny conditions of the SDP, as embodied PARC of such revocation power, as in this in the SDOA is valid. case, would reduce it into a toothless agency of CARP. RULINGS: On a related issue, HLI claimed that subjecting the landholding to compulsory FIRST ISSUE: distribution after the approval of its SDP results in the impairment of obligation and YES. The Supreme Court held that contract, and as such, a breach of its terms Supervisory Group, AMBALA and their and conditions is not a PARC administrative respective leaders are real parties-in-interest. matter, but one that gives rise to a cause of The SDOA identifies the ―SDP action cognizable by regular courts. The qualified beneficiaries‖ as ―the Supreme Court stressed that SDOA is a farmworkers who appears in the annual special contract imbued with public interest, payroll, inclusive of the permanent and entered into pursuant to RA 6657 and seasonal employees, who are regularly or subject to the approval and administrative periodically employed by HLI.‖ Galang adjudication of its issuing authority— and the Supervisory group who were PARC. admittedly employed by HLI comes within Contrary to the view of HLI, the the definition of real party-in-interest under rights, obligations, and remedies of the Section 2, Rule 3 of the Rules of Court, as parties to the SDOA embodying the SDP are one benefited or injured by the judgment in governed by RA 6657 and not by the a suit, and thus, entitled to sue. Corporation Code. HLI, as pointed by the Assuming arguendo that they are not Court was made to comply with RA 6657, regular farmworkers, Article XIII of the and not to shield itself from the coverage of Constitution categorized them as “other CARP and supplant or circumvent the farmworkers” entitled to “receive a just agrarian reform program. Also as between share of the fruits” of the land. the Corporation Code, a general law and RA 6657, a special law, the latter prevails – SECOND ISSUE: generalia specialibus non derogant. What private respondents questioned before the YES. Although E0 229 expressly Dar was the proper implementation of SDP vested PARC with such authority to approve and HLI‘s compliance with RA 6657. plan for stock distribution, without explicitly Evidently, RA 6657 was the applicable law vesting it to revoke/recall an approved SDP, in this case. under the principle of necessary Also, contrary to the view of HLI implication, a basic postulate that what is that the inclusion of the agricultural land of implied in a statute is as much a part of it Hacienda Luisita under CARP coverage and as that which is expressed. To simply state the eventual distribution of the land to it, every statutory grant of power, right or FWBs amounts to the dissolution of all privilege is deemed to include all incidental corporate assets of HLI, and thus the power, right, or privilege. Following the said Corporation Code apply, the Court was not doctrine, it may be stated that the persuaded. The Court said that such inclusion and eventual distribution will not on their rights and received benefits derived automatically trigger the dissolution of HLI from the same. As early as November 21, since the value of agricultural lands in 1989 when PARC approved the SDP of relation to the total assets transferred and Hacienda Luisita or at least within a conveyed by TADECO to HLI comprises reasonable time thereafter, its members only 33.296% (meaning it does not hold the received benefits from the SDP without so majority assets of the corporation to trigger much protest. It was only on December 4, such dissolution). 2003 or 14 years after approval of the SDP via PARC Resolution No. 89-12-2 dated THIRD ISSUE: November 21, 1989 that said plan and approving resolution was sought to be In this issue on constitutionality of revoked. Furthermore, AMBALA did NOT Section 31 of RA 6657, FARM seeks to question the constitutionality of said invalidate the said provision of the law provision but focused on the flaws and gaps because it allows corporations to use stock in the subsequent implementation of the distribution as its mode of distribution or SDP. Even the public respondent Sol. Gen. transfer instead of an outright agricultural did not question it, and such question was land transfer, which they believe impairs the only raised on May 3, 2007 when it filed its fundamental right of farmers and Supplemental Comment with the Court. farmworkers envisioned under Section 4, It has been stressed by the Supreme Article XIII of the Constitution. HLI Court that the question on constitutionality counters this matter by saying that agrarian will not passed upon by the Court unless it is reform is not only about transfer of land raised at the first or earliest possible ownership to farmers and other qualified opportunity by the proper party. beneficiaries. In terms of the lis mota of the case, Accordingly, the challenge on the the invalidity of the provision was not constitutionality of Section 31 of RA 6657 alleged, but rather it is the alleged and its counterpart provision in EO 229 application in the SDP that is flawed was failed. raised. The essential requisites for the The Supreme Court also noted that exercise of its power of judicial review Section 5 of RA 9700 superseded Section 31 include the following: of RA 6657 vis-à-vis the stock distribution (1) There is an actual case or component of said provision, where Section controversy 5 of RA 9700 provides: ―That after June (2) That the constitutional question is 30, 2009, the mode of acquisition shall be raised at the earliest possible limited to voluntary offer to sell and opportunity by the proper party or compulsory acquisition.‖ Thus, stock one with locus standi; and distribution is no longer an available option (3) The issue of constitutionality must under existing law. The issue has become be the very lis mota of the case. moot and academic. [Garcia vs. Executive Secretary, 415 The Supreme Court ruled that there SCRA 44 (2009)] appeared to have been no breach of the The Supreme Court reasoned that the fundamental law. Section 4, Article XIII of reason it failed was because of failure of the the 1987 Constitution reads: intervenors to question its constitutionality ―The State shall, by law, undertake an in the earliest opportunity, and instead, slept agrarian reform program founded on the right of the farmers and regular The SC believed that Sec. 31 of RA farmworkers, who are landless, to OWN 6657 is NOT inconsistent with the State‘s directly or COLLECTIVELY THE LANDS commitment to farmers and farmworkers to THEY TILL or, in the case of other advance their interests under the policy of farmworkers, to receive a just share of the social justice. This is believed to be the fruits thereof. To this end, the State shall modality of the legislature for collective encourage and undertake the just ownership by which the imperatives of distribution of all agricultural lands, subject social justice may be approximated, if not to such priorities and reasonable retention achieved. limits as the Congress may prescribe, taking Also as contended by FARM that into account ecological, developmental, or stock certificates do not equate to land equity considerations, and subject to the ownership, still, the Corporation Code is payment of just compensation. In clear that the FWB becomes a stockholder determining retention limits, the State shall who acquires an equitable interest in the respect the right of small landowners. The assets of the corporation, which includes the State shall further provide incentives for agricultural lands. A share of stock typifies voluntary land-sharing.‖ an aliquot part of the corporation‘s property, The law is clear – farmers and or right to share in its proceeds to the extent regular farmworkers have a right to OWN when distributed according to law and DIRECTLY OR COLLECTIVELY THE equity and that its holder is not the owner of LANDS THEY TILL. The basic law allows any part of the capital of the corporation. two modes of land distribution—direct and However, the FWBs will ultimately own the indirect ownership. No language is found in agricultural lands owned by the corporation the 1987 Constitution that disqualifies or when the latter is eventually dissolved and prohibits corporations or cooperatives of liquidated. farmers from being the legal entity through The policy of agrarian reform is that which collective ownership can be control over the agricultural land must exercised. The term ―collectively‖ is said to always be in the hands of the farmers. The allow indirect ownership of land and not just Court also reasoned that there can be no outright agricultural land transfer. This is in guarantee of a successful implementation of recognition of the fact that land reform may agrarian reform, whether there is actual become successful even if it is done through distribution or not. Accordingly, the the medium of juridical entities composed of principle of ―land to the tiller and the old farmers. pastoral model of ownership were non- Even in the definition of agrarian human juridical persons were prohibited reform itself in RA 6657 allows stock from owning agricultural lands are no longer distribution— ―the redistribution of lands… realistic under existing conditions. to farmers and regular farmworkers who are landless… to lift the economic status of the beneficiaries and all other arrangements alternative to physical redistribution of land, such as production or profit sharing, labour management and the distribution of shares of stock which allow beneficiaries to receive a just share of the fruits of the land they work.‖ FOURTH ISSUE: On the determination of the propriety On the 3% Production Share of such revocation or recall of HLI‘s SDP by PARC for violating the agrarian reform On the matter of whether HLI policy under Sec. 2 of RA 6657, as said plan complied with its undertaking to give 3% fail to enhance the dignity and improve the shares of the gross production sales of the quality of lives of the FWBs through greater land, the SC ruled that the Special Task productivity of agricultural lands, the SC Force was silent as to whether HLI has disagreed. failed to comply with the 3% production- The SC reasoned that Section 2 of sharing obligation or the 3% of the gross RA 6657 states that improving the economic selling price of the converted land and the status of FWBs is neither among the legal SCTEX lot, since some FWBs admits to obligations of HLI under the SDP nor an have received their share in the gross imperative imposition by RA 6657 and production of the sales and in the sale of DAO 10, a violation of which would justify SCTEX lot while the others claimed discarding the stock distribution option. otherwise. The Court found this as a slight Nothing in that option agreement, law or breach that would not justify rescission of department order indicates otherwise. the contract. Also SC said that it‘s a matter of common business sense that no corporation On Titles to Homelots could guarantee a profitable run all the time. As such being the case, SDP cannot also Under RA 6657, the distribution of guarantee, as indeed the SDOA does not homelots is required only for corporations or guarantee, a comfortable life for the FWBs. other business associations owning or The onerous condition of the FWBs‘ operating farms which opted for land economic status and hardships can hardly be distribution, and not for corporations which attributed to HLI and its SDP and provide a opted for stock distribution under Sec. 31 of valid ground for the plan‘s revocation. RA 6657. Concomitantly, said corporation are not obliged to provide it, EXCEPT by On the Conversion of Lands stipulation, as in this case. Under the SDP, HLI subdivided and In this issue of the conversion of 500 allocated for free to qualified family- Ha to non-agricultural uses as an beneficiaries 240 sq. m. homelots in the infringement of Sec. 5 (a) of DAO 10, which barrio or barangay where they actually reads: ―a. that the continued operation of the reside. The Court opined that 16 years have corporation with its agricultural land intact elapse from the time the SDP was approved and unfragmented is viable with potential by PARC, and yet FWBs alleged that not all for growth and increased profitability‖, the were afforded homelots. Hence, SC ruled SC said that the PARC is wrong. that HLI has not yet fully complied with its Said Sec. 5 (a) of DAO 10 does not exact undertaking to distribute homelots to FWBs from the corporate landowner-applicant the under the SDP. undertaking to keep the farm intact and unfragmented ad infinitum (forever). What On “Man Days” and the Mechanics of is required is viability of the corporate Stock Distribution operations with or without its corporate land remaining intact or unfragmented.‖ The SC found that the SDOA the HLI share per beneficiary needs to work violated two provisions of DAO 10. at least 37 days in a fiscal year before the In Par. 3 of the SDOA, the distribution of latter becomes entitled to HLI shares. If it the shares of stock to the FWBs is contigent falls below 37 days, the FWB gets no share on the number of days FWBs have worked at year end. The number of HLI shares during the year. This deviates from Sec. 4, distributed varies depending on the number DAO 10, which decrees the distribution of of days the FWBs were allowed to work in equal number of shares to the FWBs as the one year. Worst is they even hired additional minimum ratio of shares of stock for farmworkers which reached a number of purposes of compliance with Section 21 of 10,502 which eventually diluted the RA 6657. 18,804.32 shares as a result of the use of Accordingly, Section 4 of DAO 10 ―man days‖ and hiring additional gives two sets of shares of stocks which a farmworkers (as ‗kahati‘ in the share qualified beneficiary can acquire from the obviously). corporation under the SDP. The first one is Another sub-issue pointed is the the mandatory ratio of equal number of reliance of HLI to Section 26 of RA 6657 shares of stocks to be distributed to the which suggests that land awarded ―shall be FWBs which contemplates ―proportion of paid to by the beneficiaries to the LBP in 30 the capital stock of the corporation that annual amortizations.‖ To simply put it, the the agricultural land, actually devoted to beneficiaries are the ones obliged to pay the agricultural activities, bears in relation to LBP (which would really make it impossible the company’s total asset.‖ for them to own it) and it is the HLI who is The second partakes a gratuitous obliged to distribute the shares of stocks extra grant or an augmentation share/s that among FWBs. the corporate landowner may give under an additional stock distribution scheme, taking Exclusion from the coverage of land into account the rank, seniority, salary, purchased by RCBC and LIPCO (III) position, and like factors which the management, in the exercise of its sound On resolving the issue of whether the discretion, may deem desirable. converted farm land (allegedly) innocently However, the Court found that by purchased for value by RCBC and LIPCO providing that number of shares of the should be excluded from the PARC original 1989 FWBs to depend on the Resolution 2005-32-01, as implemented by number of ―man days‖, HLI violated the rule the DAR-issued Notice of Coverage dated on stock distribution and effectively January 2, 2006, which called for a deprived the FWBs of equal shares of stock mandatory CARP acquisition of the lands in the corporation notwithstanding the fact subject of the SDP, the SC opined that that these FWBs have given up their right to although Section 44 of PD 1529 gives the the land that could have been distributed to principle that one need not look at the four them instead of suffering such dilution corners of the title and may rely on what regarding their due share entitlement. appears on it, the rule admits to some Each of the 6,296 original FWBs is exceptions, as when the party had entitled to 18,804.32 HLI shares. The knowledge of the facts and circumstances original FWBs got less than the guaranteed that would impel a reasonably cautious man 18,804.32 HLI shares per beneficiary, to make inquiry, or when the purchaser has because the acquisition and distribution of knowledge of the defect of lack of title, or sufficient facts to make inquiry into the for Stock Distribution under CARP which status of the title of the property in litigation. embodied the SDP that was nullified. It is Obviously, a higher level of care and the SDP that gave legal force an effect to the diligence is expected from banks, their stock distribution scheme under PARC business being impressed with public Resolution No. 89-12-2 that gave it its interest. validity, and not the SDOA which merely But the Court ruled that facts prove that gave its basis and mechanics. RCBC and LIPCO cannot be claimed to have acted in bad faith to have acquired the On PARC’s Resolutions effectively lots that were previously covered by SDP. nullifying the Hacienda Luisita’s SDP The Court said that RCBC and LIPCO (IV) honestly believed that the subject lots were validly converted to commercial or The Court upheld the revocation of the industrial purposes and for which said lots questioned PARC resolutions. The Court were taken out of the CARP coverage of also recognized the rights of the original PARC Resolution No. 89-12-2 and hence, 6,296 qualified FWBs to choose whether can be legally and validly acquired by them, they want to remain as HLI stockholders or and since Section 65 of RA 6657 allows not. The Court reasoned that it cannot turn a conversion and disposition of agricultural blind eye to the fact that the FWBs were lands previously covered by CARP. Also said to have received benefits from the said DAR notified all affected parties, especially agreement. Also on August 6, 2010, HLI the FWBs but the order became final and and private respondents submitted a executory after failure to interpose an Compromise Agreement, in which HLI gave appeal. Since RCBC and LIPCO believed in the FWBs the option of acquiring a piece of good faith that the previous registered agricultural lands or remain as HLI owners could legally sell and convey the lot stockholders, and which most FWBs chose though these were previously subject of the latter. CARP coverage. Ergo, RCBC and LIPCO With regards to the homelots already acted in good faith in acquiring the subject awarded, the FWBs are not obliged to return lots. This fact cannot be disregarded by it to HLI or pay for its value since it is part DAR, PARC, or even the SC. of the SDP‘s benefit granted to them. As regards to the 80.51 ha land transferred However, for those who did not receive the to the government for use as part of SCTEX, homelot as of the revocation of the SDP on this is excluded from the compulsory December 22, 2005 when PARC Resolution coverage considering that the transfer was No. 2005-32-01 was issued, will no longer made via the government‘s power of be entitled to homelots. In case of eminent domain. distribution, the homelots would then not be As to the actual existence of a statute or deducted. executive act is, prior to such a In terms of the 3% proceeds of the 500-ha determination, an operative fact and may land and 80.51 ha SCTEX lot to FWBs, have consequences which cannot justly be DAR will move for the auditing of HLI‘s ignored; the past cannot always be erased by books to determine if the proceeds where a new judicial declaration. utilized fof legitimate corporate purpose and In this case, it is not the SDOA dated May the remaining balance from the proceeds of 11, 1989 which was revoked, but rather, it is the sale shall be distributed to the qualified the PARC‘s approval of the HLI‘s Proposal beneficiaries. In view of HLI‘s payment of rent to FWBs FWBs the cconsiderations received from the for the use of the land from 1989, the Court 500 Ha converted land sale and 80.51 ha said that this cannot be done as the FWBs SCTEX lot, wherein the 3% gross sales from are also stockholders of HLI (a seemingly the production of agricultural land, including elite title), and the benefits acquired by the expenditures for legitimate corporate corporation from its possession and use of purpose, such as taxes and title transfer the land ultimately redounded to the FWBs payments, shall be deducted from the total benefit based on its business operations in amount of PhP 1,330,511,500 (3 comas!). the form of salaries, and other fringe Any unspent or unused balance will be benefits under the CBA. To allow payment distributed to the original FWBs. of rent would tantamount to double HLI is entitled to just compensation for the compensation. agricultural land that will be transferred to HLI will continue to exist, not functioning DAR to be reckoned from November 21, under the SDP, as the same was revoked 1989 and LBP are ordered to determine the already, but pursuant to the Corporation compensation due to HLI. Code as a private stock corporation. DAR‘s compliance report is ordered to be HLI shall also be paid just compensation for submitted six months from finality of the remaining agricultural lands that will be judgment. TRO is lifted. transferred to DAR for land distribution to the FWBs. The date of taking considered DISSENTING OPINION by the SC is November 21, 1989, when Corona, C.J.: PARC approved the HLI‘s SDP per PARC Resolution No. 89-12-2. DAR shall coordinate with LBP for the determination One of the nice points given by the of just compensation, and NOT May 11, late CJ Corona (ousted in the PNoy 1989, when the SDOA was approved by Administration) states, to wit: PARC. The petition is treated as pro hac vice ―Agrarian reform is an essential element of (means for this case only) in view of the social justice under the 1987 Constitution. It peculiar facts and circumstances of the case. mandates that farmers and farmworkers have THE INSTANT PETITION IS DENIED. the right to own the land they till, PARC Resolution No. 2005-32-01 dated individually and collectively, through December 22, 2005 (wherein PARC cooperative or similar organizations. It aims affirmed the recommendation of DAR to to liberate farmers and farmworkers from recall/revoke the SDOP of TADECO/HLI bondage to the soil, to ensure that they do and the land be placed under compulsory not remain slaves of the land but stewards coverage or mandated land acquisition) and thereof.‖ May 3, 2006 (wherein PARC denied MR by HLI) are AFFIRMED with He also opined that ―unless there is land MODIFICATION that the original 6,296 distribution, there can be no agrarian reform. qualified FWBs shall have the option to Any program that gives farmers or remain as stockholders of HLI. Other FWBs farmworkers anything less than ownership who do not belong to the said original of land fails to conform to the mandate of qualified beneficiaries are NOT entitled to the Constitution. In other words, a program land distribution and shall remain as HLI that gives qualified beneficiaries stock stockholders. HLI is directed to pay the certificates instead of land is not agrarian November 21, 1989 is a reform.‖ deprivation of landowner‘s property WITHOUT due process He believed that ―actual land distribution of law; and HLI is entitled to be is the essential characteristic of a paid interest on the just constitutional agrarian reform program.‖ compensation. Accordingly, the ―polar star‖ in land reform B. WON SC erred in reversing the is that ‗the farmer has a right to the land decision of giving the FWBs he tills‖. option to remain as stockholders In the APRIL 24, 2012 RESOLUTION or not since (1) it has been involving the same Hacienda Luisita Case decided; (2) that neither the Constitution nor the CARL On November 22, 2011, the Court requires that FWBs should have recalled and set aside the option to remain as control over the agricultural stockholders of HLI, while maintaining that lands; and (3) that the option is all benefits received shall be respected with not shown to be detrimental to no obligation to refund or return them. FWBs, but rather found beneficial by the SC. On December 9, 2011, a Motion for C. The proprietary of distributing Reconsideration/Clarification by private the proceeds from the sale of the respondents Mallari, Suniga, Supervisory 500ha and 80.51 SCTEX lot Group of HLI, and Andaya (Mallari, et al. cannot be retained by HLI but On December 16, 2011, a Motion to Clarify returned to the FWBs and that and Reconsider Resolution of November 22, HLI is using the Corporation 2011 was filed by HLI. Code to avoid liability to the HLI and Mallari, et al., invokes the FWBs because: (1) the proceeds following grounds: belongs to the corporation and not to either the HLI/TADECO A. WON SC erred in determining or FWBs; and (2) to allow return just compensation by considering or proceeds to FWBs. the date of taking as November D. Just Compensation for the 21, 1989 when PARC approved Homelots given to FWBs as it the SDP (already revoked) since does not form part of the the Notice of Coverage of 4,915.75 hectares covered by the January 2, 2006 may be SDP, and hence, the value of considered as time FWBs owned these homelots should, with the and possess the agricultural lands revocation of the SDP, be paid to of Hacienda Luisita because it Tadeco as the landowner. was the only time when the latter was placed under Compulsory ON JUST COMPENSATION: Acquisition in view of failure to The Court stressed that ―just compensation perform their obligations under has been defined as the full and fair the SDP, or SDOA, when the equivalent of the property taken from its owner is ACTUALLY deprived owner by the expropriator. The measure is or dispossessed of his property, not the takers gain, but the owner‘s loss. and considering taking from Hence, in determining just compensation, the price or value of the property at the time scheme and not further push for land it was taken from the owner and distribution. And the stubborn fact is that the appropriated by the government shall be the ―man days‖ scheme of HLI impelled the basis. If the government takes possession of FWBs to work in the hacienda in exchange the land before the institution of for such shares of stock. expropriation proceedings, the value should be fixed as of the time of the taking of said The Court ruled that taking only when the possession, not of the filing of the landowner is deprived of the use and benefit complaint.‖ of his property is not incompatible with the The SC, citing Land Bank of the Philippines earlier conclusion that taking took place on v. Livioc, said that taking is when the November 21, 1989, and since even from landowner was deprived of the use and the start, TADECO seemed to already benefit of his property, such as when the favour Stock Distribution Scheme when title is transferred to the Republic. It also complying with the CARP when it noted that taking also occurs when organized the HLI as its spin-off corporation agricultural lands are voluntarily offered by which facilitated stock acquisition of a landowner and approved by PARC for FWBs. Tadeco assigned and conveyed CARP coverage through the stock 4,915.75 has to HLI the agricultural lands of distribution scheme, as in the case of HLI Hacienda Luisita. These agricultural lands earlier decided. Thus, HLI submitting its constituted as the capital contribution of the SDP for approval is an acknowledgment on FWBs in HLI. This, in effect, deprived its part that the agricultural lands of TADECO itself of the ownership over these Hacienda Luisita are covered by CARP. lands when it transferred the same to HLI. However, the PARC approval should be considered as the effective date of taking When the agricultural lands of Hacienda because it was only during that time that the Luisita were transferred by Tadeco to HLI in government officially confirmed the CARP order to comply with CARP through the coverage of these lands. stock distribution option scheme under Accordingly, Stock distribution and PARC Resolution No. 89-12-2 dated compulsory acquisition are two modalities November 21, 1989, Tadeco was sharing the same end goal of having a more consequently dispossessed of the ownership equitable distribution of land ownership, of the same. without ignoring such right to just compensation. Also, since it is only upon the Furthermore, adherence to the suggestion of approval of the SDP that the agricultural HLI that the Notice of Coverage issued on lands actually came under CARP coverage, January 2, 2006 should be considered as such approval operates and takes the place date of taking would in effect penalize the of a notice of coverage ordinarily issued qualified FWBs twice for acceding to the under compulsory acquisition. Stock Distribution Scheme, (1) depriving them of the agricultural lands they should What the SC found notable, however, is that have gotten earlier, if it were not for this the divestment by Tadeco of the agricultural SDP and (2) making them pay higher lands of Hacienda Luisita and the giving of amortization for the agricultural lands that the shares of stock for free is nothing but an should have been given to them decades enticement or incentive for the FWBs to ago. agree with the stock distribution option The SC maintained that, as it has in fact equity considerations, and subject to the already ruled on its reckoning date, that is, payment of just compensation. In November 21, 1989, the date of issuance of determining retention limits, the State shall PARC Resolution No. 89-12-2, based on the respect the right of small landowners. The above-mentioned disquisitions. State shall further provide incentives for voluntary land-sharing. (Emphasis On side note, the SC added that ―even supplied.) though the compensation due to HLI will still be preliminarily determined by DAR Sec. 2 of RA 6657 also states: and LBP, subject to review by the RTC acting as a SAC, the fact that the reckoning SECTION 2. Declaration of Principles and point of taking is already fixed at a certain Policies. - It is the policy of the State to date should already hasten the proceedings pursue a Comprehensive Agrarian Reform and not further cause undue hardship on the Program (CARP). The welfare of the parties, especially the qualified FWBs.‖ landless farmers and farm workers will receive the highest consideration to promote Option will not ensure control over social justice and to move the nation agricultural lands towards sound rural development and The Court agreed that the option given to the industrialization, and the establishment of qualified FWBs whether to remain as owner cultivatorship of economic-sized stockholders of HLI or opt for land farms as the basis of Philippine agriculture. distribution is neither iniquitous nor prejudicial to the FWBs. However, the Court The agrarian reform program is founded is noted the policy on agrarian reform that on the right of farmers and regular farm control over the agricultural land must workers, who are landless, to own directly always be in the hands of the farmers. or collectively the lands they till or, in the Contrary to the stance of HLI, both the case of other farm workers, to receive a Constitution and RA 6657 intended the share of the fruits thereof. farmers, individually or collectively, to have control over the agricultural lands of HLI; As discussed by the SC, there is collective otherwise, all these rhetoric about agrarian ownership as long as there is a concerted reform will be rendered for naught. group work by the farmers on the land, Sec. 4, Art. XIII of the 1987 Constitution regardless of whether the landowner is a provides: cooperative, association or corporation Section 4. The State shall, by law, undertake composed of farmers. However, the an agrarian reform program founded on the definition of collective ownership should be right of farmers and regular farmworkers read in light of the clear policy of the law on who are landless, to own directly or agrarian reform, which is to emancipate the collectively the lands they till or, in the tiller from the bondage of the soil and case of other farmworkers, to receive a just empower the common people. share of the fruits thereof. To this end, the ―HLI‘s insistent view that control need not State shall encourage and undertake the just be in the hands of the farmers translates distribution of all agricultural lands, subject to allowing it to run roughshod against to such priorities and reasonable retention the very reason for the enactment of limits as the Congress may prescribe, taking agrarian reform laws and leave the into account ecological, developmental, or farmers in their shackles with sheer lip service to look forward to.‖ (quotable Decision was modified by the November 21, phrase) 2011 Resolution which ordered the government, through the DAR, to pay just FWBs Entitled to Proceeds of Sale compensation for the 240 sq. m. homelots The proceeds realized from the sale should distributed to FWBs. This RESOLUTION is accrue for the benefit of the FWBs, minus now declared FINAL and EXECUTORY. deductions of 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, as prescribed in our November 22, 2011 Resolution.
HOMELOTS
The SC agreed to DISAGREE.
As reiterated in the earlier decision, the distribution of homelots is required under RA 6657 only for corporations or business associations owning or operating farms which opted for land distribution. Corporations are not obliged to provide for homelots. Nonetheless, HLI undertook to subdivide and allocate for free and without charge among the qualified family- beneficiaries 240 sq. m. of homelots to some, if not all of the qualified beneficiaries. The Supreme Court, by a unanimous vote, resolved to maintain its ruling that the FWBs shall retain ownership of the homelots given to them with no obligation to pay for the value of said lots. Also, since the SDP was already revoked with finality in th earlier discussion of the decision, the Court directs the government through the DAR to pay HLI the just compensation for said homelots in consonance with Sec. 4, Article XIII of the 1987 Constitution that the taking of land for use in the agrarian reform program is subject to the payment of just compensation.