Republic of the Philippines SUPREME COURT Manila EN BANC HACIENDA LUISITA, INCORPORATED, Petitioner, LUISITA INDUSTRIAL PARK CORPORATION

and RIZAL COMMERCIAL BANKING CORPORATION, Petitioners-in-Inter ention, ersus G"R" N#" $%$$&$ Present& CORONA, C.J., CARPIO, 'E(ASCO, )R%, (EONAR*O-*E CASTRO, BRION, PERA(TA,+ BERSAMIN, *E( CASTI((O, ABA*, 'I((ARAMA, )R%, PERE,, MEN*O,A, an$ SERENO, JJ%

PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO SUNIGA!"!# and hi SUPER!ISORY GROUP OF THE HACIENDA LUISITA, INC" and Pro-ul.ate$& WINDSOR ANDAYA, Respon$ents% )ul/ 0, 12!! 3-----------------------------------------------------------------------------------------3 DECISION
!+ "!# +

On official lea e% 4)ose )ulio ,uni.a5 in so-e parts of the recor$s%

!ELASCO, JR", J"' 4(an$ for the lan$less,5 a shibboleth the lan$e$ .entr/ $oubtless has recei e$ 6ith -uch -is.i in., if not resistance, e en if onl/ the nu-ber of a.rarian suits file$ ser es to be the nor-% Throu.h the /ears, this battle cr/ an$ root of $iscor$ continues to reflect the see-in.l/ ceaseless $iscourse on, an$ .reat $isparit/ in, the $istribution of lan$ a-on. the people, 4$ra-ati7in. the increasin.l/ ur.ent $e-an$ of the $ispossesse$ 3 3 3 for a plot of earth as their place in the sun%51"1# As a$-inistrations an$ political ali.n-ents chan.e, policies a$ ance$, an$ a.rarian refor- la6s enacte$, the latest bein. 6hat is consi$ere$ a co-prehensi e piece, the face of lan$ refor- aries an$ is -as8e$ in -/ria$s of 6a/s% The state$ .oal, ho6e er, re-ains the sa-e& clear the 6a/ for the true free$o- of the far-er%9"9# (an$ refor-, or the broa$er ter- 4a.rarian refor-,5 has been a .o ern-ent polic/ e en before the Co--on6ealth era% In fact, at the onset of the A-erican re.i-e, initial steps to6ar$ lan$ refor- 6ere alrea$/ ta8en to a$$ress social unrest%:":# Then, un$er the !;90 Constitution, specific pro isions on social <ustice an$ e3propriation of lan$e$ estates for $istribution to tenants as a solution to lan$ o6nership an$ tenanc/ issues 6ere incorporate$% In !;00, the (an$ Refor- Act =Republic Act No% "RA# !:22> 6as passe$, settin. in -otion the e3propriation of all tenante$ estates%0"0#
1"1# Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform , ?%R% No @A@:1, )ul/ !:, !;A;, !@0 SCRA 9:9, 901% 9"9# I$% at 9;1% :":# Bu<iro Ca/a-i, et al%, TODAR* AN A(TERNATI'E (AN* REEORM PARA*I?M& A PCI(IPPINE PERSPECTI'E 09 =!;;2>% 0"0# I$%

On Au.ust A, !;F9, the A.ricultural (an$ Refor- Co$e =RA 9A::> 6as enacte$,F"F# abolishin. share tenanc/ an$ con ertin. all instances of share tenanc/ into leasehol$ tenanc/%@"@# RA 9A:: create$ the (an$ Ban8 of the Philippines =(BP> to pro i$e support in all phases of a.rarian refor-% As its -a<or thrust, RA 9A:: ai-e$ to create a s/ste- of o6nerculti atorship in rice an$ corn, suppose$l/ to be acco-plishe$ b/ e3propriatin. lan$s in e3cess of @0 hectares for their e entual resale to tenants% The la6, ho6e er, ha$ this restrictin. feature& its operations 6ere confine$ -ainl/ to areas in Central (u7on, an$ its i-ple-entation at an/ le el of intensit/ li-ite$ to the pilot pro<ect in Nue a Eci<a%A"A# SubseGuentl/, Con.ress passe$ the Co$e of A.rarian Refor- =RA F9A;> $eclarin. the entire countr/ a lan$ refor- area, an$ pro i$in. for the auto-atic con ersion of tenanc/ to leasehol$ tenanc/ in all areas% Ero- @0 hectares, the retention li-it 6as cut $o6n to se en hectares%;";# Barel/ a -onth after $eclarin. -artial la6 in Septe-ber !;@1, then Presi$ent Eer$inan$ Marcos issue$ Presi$ential *ecree No% 1@ =P* 1@> for the 4e-ancipation of the tiller fro- the bon$a.e of the soil%5!2"!2# Base$ on this issuance, tenant-far-ers, $epen$in. on the si7e of the lan$hol$in. 6or8e$ on, can either purchase the lan$ the/ tille$ or shift fro- share to fi3e$-rent leasehol$ tenanc/%!!"!!# Dhile toute$ as 4re olutionar/,5 the scope of the a.rarian reforBureau of A.rarian Refor- Infor-ation an$ E$ucation =BARIE> H Co--unications *e elop-ent *i ision =C**>, A?RARIAN REEORM CISTORB !; =122F>% @"@# Salmorin v. Zaldivar, ?%R% No% !F;F;!, )ul/ 19, 122A, 00; SCRA 0F:, 0@1% A"A# Bu<iro Ca/a-i, et al%, supra note :, at 0@% ;";# I$% !2"!2# I$% !!"!!# I$% at F2I BARIE H C**, supra note F, at 1!%
F"F#

pro.ra- P* 1@ enunciate$ co ere$ onl/ tenante$, pri atel/-o6ne$ rice an$ corn lan$s%!1"!1# Then ca-e the re olutionar/ .o ern-ent of then Presi$ent Cora7on C% AGuino an$ the $raftin. an$ e entual ratification of the !;A@ Constitution% Its pro isions foresha$o6e$ the establish-ent of a le.al fra-e6or8 for the for-ulation of an e3pansi e approach to lan$ refor-, affectin. all a.ricultural lan$s an$ co erin. both tenant-far-ers an$ re.ular far-6or8ers%!9"!9# So it 6as that Procla-ation No% !9!, Series of !;A@, 6as issue$ institutin. a co-prehensi e a.rarian refor- pro.ra- =CARP> to co er all a.ricultural lan$s, re.ar$less of tenurial arran.e-ent an$ co--o$it/ pro$uce$, as pro i$e$ in the Constitution% On )ul/ 11, !;A@, E3ecuti e Or$er No% 11; =EO 11;> 6as issue$ pro i$in., as its title!:"!:# in$icates, the -echanis-s for CARP i-ple-entation% It create$ the Presi$ential A.rarian Refor- Council =PARC> as the hi.hest polic/--a8in. bo$/ that for-ulates all policies, rules, an$ re.ulations necessar/ for the i-ple-entation of CARP% On )une !0, !;AA, RA FF0@ or the Comprehensive Agrarian Reform Law of !"", also 8no6n as CAR( or the CARP (a6, too8 effect, usherin. in a ne6 process of lan$ classification, acGuisition, an$ $istribution% As to be e3pecte$, RA FF0@ -et stiff opposition, its ali$it/ or so-e of its pro isions challen.e$ at e er/ possible turn% Association of Small Landowners in the Philippines, Inc. v.
!1"!1# !9"!9#

BARIE H C**, supra note F, at 11% Bu<iro Ca/a-i, et al%, supra note :, at @!% !:"!:# Pro i$in. the Mechanis- for the I-ple-entation of the Co-prehensi e A.rarian Refor- Pro.ra-%

Secretary of Agrarian Reform

!0"!0#

state$ the obser ation that the assault 6as

ine itable, the CARP bein. an untrie$ an$ unteste$ pro<ect, 4an e3peri-ent "e en#, as all life is an e3peri-ent,5 the Court sai$, borro6in. fro- )ustice Col-es% Th( Ca ( In this Petition for Certiorari an$ Prohibition un$er Rule F0 6ith pra/er for preli-inar/ in<uncti e relief, petitioner Cacien$a (uisita, Inc% =C(I> assails an$ see8s to set asi$e PARC Resolution No% 1220-91-2!!F"!F# an$ Resolution No% 122F9:-2!!@"!@# issue$ on *ece-ber 11, 1220 an$ Ma/ 9, 122F, respecti el/, as 6ell as the i-ple-entin. Notice of Co era.e $ate$ )anuar/ 1, 122F =Notice of Co era.e>%!A"!A# Th( Fa)* At the core of the case is Cacien$a (uisita $e Tarlac =Cacien$a (uisita>, once a F,::9-hectare -i3e$ a.ricultural-in$ustrial-resi$ential e3panse stra$$lin. se eral -unicipalities of Tarlac an$ o6ne$ b/ Co-paJia ?eneral $e Tabacos $e Eilipinas =Tabacalera>% In !;0@, the Spanish o6ners of Tabacalera offere$ to sell Cacien$a (uisita as 6ell as their controllin. interest in the su.ar -ill 6ithin the hacien$a, the Central A7ucarera $e Tarlac =CAT>, as an in$i isible transaction% The Tarlac *e elop-ent Corporation =Ta$eco>, then o6ne$ an$Kor controlle$ b/ the )ose Co<uan.co, Sr% ?roup, 6as 6illin. to bu/% As a.ree$ upon, Ta$eco

!0"!0# !F"!F#

Supra note 1% Rollo, pp% !22-!2!% !@"!@# I$% at @A1-A22% !A"!A# I$% at !29-!2F%

un$ertoo8 to pa/ the purchase price for Cacien$a (uisita in pesos, 6hile that for the controllin. interest in CAT, in US $ollars%!;"!;# To facilitate the a$ erte$ sale-an$-purchase pac8a.e, the Philippine .o ern-ent, throu.h the then Central Ban8 of the Philippines, assiste$ the bu/er to obtain a $ollar loan fro- a US ban8%12"12# Also, the ?o ern-ent Ser ice Insurance S/ste- =?SIS> Boar$ of Trustees e3ten$e$ on No e-ber 1@, !;0@ a PhP 0%;!! -illion loan in fa or of Ta$eco to pa/ the peso price co-ponent of the sale% One of the con$itions containe$ in the appro in. ?SIS Resolution No% 9129, as later a-en$e$ b/ Resolution No% 90F, Series of !;0A, rea$s as follo6s&
That the lots co-prisin. the Cacien$a (uisita shall be sub$i i$e$ b/ the applicant-corporation an$ sol$ at cost to the tenants, shoul$ there be an/, an$ 6hene er con$itions shoul$ e3ist 6arrantin. such action un$er the pro isions of the (an$ Tenure ActI1!"1!#

As of March 9!, !;0A, Ta$eco ha$ full/ pai$ the purchase price for the acGuisition of Cacien$a (uisita an$ TabacaleraLs interest in CAT%11"11# The $etails of the e ents that happene$ ne3t in ol in. the hacien$a an$ the political color so-e of the parties e-bosse$ are of -ini-al si.nificance to this narration an$ nee$ no belaborin.% Suffice it to state that on Ma/ @, !;A2, the -artial la6 a$-inistration file$ a suit before the Manila Re.ional Trial Court =RTC> a.ainst Ta$eco, et al%, for the- to surren$er Cacien$a (uisita to the then Ministr/ of A.rarian Refor- =MAR, no6 the *epart-ent of A.rarian Refor"*AR#> so that the lan$ can be $istribute$ to far-ers at cost% Respon$in., Ta$eco
!;"!;# 12"12#

I$% at 9F::, Me-oran$u- of C(I% I$% at 9A2;, Me-oran$u- of Ear-6or8ers A.rarian Refor- Mo e-ent, Inc% =EARM>% 1!"1!# I$% at 9F:0-9F:F, Me-oran$u- of C(I% 11"11# I$% at 9F:0%

or its o6ners alle.e$ that Cacien$a (uisita $oes not ha e tenants, besi$es 6hich su.ar lan$sMMof 6hich the hacien$a consiste$MMare not co ere$ b/ e3istin. a.rarian refor- le.islations% As percei e$ then, the .o ern-ent co--ence$ the case a.ainst Ta$eco as a political -essa.e to the fa-il/ of the late Beni.no AGuino, )r%19"19# E entuall/, the Manila RTC ren$ere$ <u$.-ent or$erin. Ta$eco to surren$er Cacien$a (uisita to the MAR% Therefro-, Ta$eco appeale$ to the Court of Appeals =CA>% On March !@, !;AA, the Office of the Solicitor ?eneral =OS?> -o e$ to 6ith$ra6 the .o ern-entLs case a.ainst Ta$eco, et al% B/ Resolution of Ma/ !A, !;AA, the CA $is-isse$ the case the Marcos .o ern-ent initiall/ institute$ an$ 6on a.ainst Ta$eco, et al% The $is-issal action 6as, ho6e er, -a$e sub<ect to the obtention b/ Ta$eco of the PARCLs appro al of a stoc8 $istribution plan =S*P> that -ust initiall/ be i-ple-ente$ after such appro al shall ha e been secure$% 1:"1:# The appellate court 6rote&
The $efen$ants-appellants 3 3 3 file$ a -otion on April !9, !;AA <oinin. the 3 3 3 .o ern-ental a.encies concerne$ in -o in. for the $is-issal of the case sub<ect, ho6e er, to the follo6in. con$itions e-bo$ie$ in the letter $ate$ April A, !;AA =Anne3 1> of the Secretar/ of the "*AR# Guote$, as follo6s& !% Shoul$ TA*ECO fail to obtain appro al of the stoc8 $istribution plan for failure to co-pl/ 6ith all the reGuire-ents for corporate lan$o6ners set forth in the .ui$elines issue$ b/ the "PARC#& or 1% If such stoc8 $istribution plan is appro e$ b/ PARC, but TA*ECO fails to initiall/ i-ple-ent it% 3333
19"19# 1:"1:#

I$% at 9A!2, Me-oran$u- of EARM% I$% at 9A!!%

DCEREEORE, the present case on appeal is hereb/ $is-isse$ 6ithout pre<u$ice, an$ shoul$ be re i e$ if an/ of the con$itions as abo e set forth is not $ul/ co-plie$ 6ith b/ the TA*ECO%10"10#

Mar8e$l/, Section !2 of EO 11;1F"1F# allo6s corporate lan$o6ners, as an alternati e to the actual lan$ transfer sche-e of CARP, to .i e Gualifie$ beneficiaries the ri.ht to purchase shares of stoc8s of the corporation un$er a stoc8 o6nership arran.e-ent an$Kor lan$-to-share ratio% (i8e EO 11;, RA FF0@, un$er the latterLs Sec% 9!, also pro i$es t6o =1> alternati e -o$alities, i%e%, lan$ or stoc8 transfer, pursuant to either of 6hich the corporate lan$o6ner can co-pl/ 6ith CARP, but sub<ect to 6ell-$efine$ con$itions an$ ti-eline reGuire-ents% Sec% 9! of RA FF0@ pro i$es&
SEC% 9!% Corporate Landowners.Corporate lan$o6ners -a/ oluntaril/ transfer o6nership o er their a.ricultural lan$hol$in.s to the Republic of the Philippines pursuant to Section 12 hereof or to Gualifie$ beneficiaries 3 3 3% Upon certification b/ the *AR, corporations o6nin. a.ricultural lan$s +a, -i.( *h(i/ 01a2i3i(d 4(n(3i)ia/i( *h( /i-h* *# 51/)ha ( 1)h 5/#5#/*i#n #3 *h( )a5i*a2 *#)6 #3 *h( )#/5#/a*i#n *ha* *h( a-/i)12*1/a2 2and, a)*1a22, d(.#*(d *# a-/i)12*1/a2 a)*i.i*i( , 4(a/ in /(2a*i#n *# *h( )#+5an,7 *#*a2 a (* , un$er such ter-s an$ con$itions as -a/ be a.ree$ upon b/ the-% In no case shall the co-pensation recei e$ b/ the 6or8ers at the ti-e the shares of stoc8s are $istribute$ be re$uce$% 3 3 3 Corporations or associations 6hich oluntaril/ $i est a proportion of their capital stoc8, eGuit/ or participation in fa or of their 6or8ers or other Gualifie$ beneficiaries un$er this section shall be $ee-e$ to ha e co-plie$ 6ith the pro isions of this Act& Pro i$e$, That the follo6in. con$itions are co-plie$ 6ith& =a> In or$er to safe.uar$ the ri.ht of beneficiaries 6ho o6n shares of stoc8s to $i i$en$s an$ other financial benefits, the boo8s of the corporation or
I$% at 9F0!, Me-oran$u- of C(I% SECTION 10. Corporate Landowners. Corporate landowners may gi e t!eir wor"ers and ot!er #$ali%ied &ene%i'iaries t!e rig!t to p$r'!ase s$'! proportion o% t!e 'apital sto'" o% t!e 'orporation t!at t!e land assets &ear in relation to t!e 'orporation(s total assets) and grant additional 'ompensation w!i'! may &e $sed %or t!is p$rposes. T!e appro al &y t!e *+,C o% a plan %or s$'! sto'" distri&$tion) and its initial implementation) s!all &e deemed 'omplian'e wit! t!e land distri&$tion re#$irements o% t!e C+,*.
26[26]
10"10#

association shall be sub<ect to perio$ic au$it b/ certifie$ public accountants chosen b/ the beneficiariesI =b> Irrespecti e of the alue of their eGuit/ in the corporation or association, the beneficiaries shall be assure$ of at least one =!> representati e in the boar$ of $irectors, or in a -ana.e-ent or e3ecuti e co--ittee, if one e3ists, of the corporation or associationI =c> An/ shares acGuire$ b/ such 6or8ers an$ beneficiaries shall ha e the sa-e ri.hts an$ features as all other sharesI an$ =$> An/ transfer of shares of stoc8s b/ the ori.inal beneficiaries shall be oi$ a# initio unless sai$ transaction is in fa or of a Gualifie$ an$ re.istere$ beneficiar/ 6ithin the sa-e corporation% If 6ithin t6o =1> /ears fro- the appro al of this Act, the " oluntar/# lan$ or stoc8 transfer en isione$ abo e is not -a$e or reali7e$ or the plan for such stoc8 $istribution appro e$ b/ the PARC 6ithin the sa-e perio$, the a.ricultural lan$ of the corporate o6ners or corporation shall be sub<ect to the co-pulsor/ co era.e of this Act% =E-phasis a$$e$%>

'is-N- is the stoc8 $istribution aspect of the aforeGuote$ Sec% 9!, *AR issue$ A$-inistrati e Or$er No% !2, Series of !;AA =*AO !2>, 1@"1@# entitle$
2-[2-]

Section 1.

1a.. Qualified Corporate Landowner-Applicant+ll bona fide sto'" 'orporations owning agri'$lt$ral land $tili/ed %or agri'$lt$ral prod$'tion and e0isting as s$'! as o% 1$ne 12) 1344) t!e date o% e%%e'ti ity o% ,.+. No. 662-) may apply %or and a ail o% t!e ol$ntary sto'" distri&$tion plan [S5*] pro ided in Se'tion 61 t!ereo%. New 'orporations in'orporated a%ter t!e e%%e'ti ity o% ,.+. No. 662- may also apply) pro ided t!at t!ey are s$&sidiaries o% or spin7o%%s %rom t!eir mot!er 'orporation 0 0 0. 1&.. Qualified BeneficiariesT!e #$ali%ied &ene%i'iaries in t!e [S5*] are all t!ose identi%ied &ene%i'iaries o% land trans%er en$merated $nder Se'tion 22 o% ,+ 662-. T!e [S5*] s!all &e agreed $pon &y &ot! t!e 'orporate landowner7appli'ant and t!e #$ali%ied &ene%i'iaries and s$&8e't to appro al &y *+,C. 0 0 0 Section 2. Applicant and Time of FilingT!e 'orporate landowner7appli'ant s!all %ile t!e [S5*] in a %orm to &e pres'ri&ed &y 5+, and o&tain appro al wit!in two 92. years %rom t!e e%%e'ti ity o% ,+ 662- &$t prior to 5+,(s noti'e o% 'omp$lsory a'#$isition o% said property $nder t!e same law. Section 3. Proportion of DistributionT!e [S5*] o% 'orporate landowner7appli'ant m$st gi e t!e #$ali%ied &ene%i'iaries t!e rig!t to p$r'!ase at least s$'! proportion o% t!e 'apital sto'" o% t!e 'orporation t!at t!e agri'$lt$ral land) a't$ally de oted to agri'$lt$ral a'ti ities) &ears in relation to t!e 'orporation(s total assets $nder s$'! terms and 'onditions as may &e agreed $pon &y t!em.

$%idelines and Proced%res for Corporate Landowners &esiring to Avail 'hemselves of the Stoc( &istri#%tion Plan %nder Section ) of RA **+,%

Section 4. Stock Distribution PlanT!e [S5*] s$&mitted &y t!e 'orporate landowner7 appli'ant s!all pro ide %or t!e distri&$tion o% an e#$al n$m&er o% s!ares o% sto'" o% t!e same 'lass and al$e) wit! t!e same rig!ts and %eat$res as all ot!er s!ares) to ea'! o% t!e #$ali%ied &ene%i'iaries. T!is distri&$tion plan in all 'ases) s!all &e at least t!e minim$m ratio %or p$rposes o% 'omplian'e wit! Se'tion 61 o% ,+ 662-. On top o% t!e minim$m ratio pro ided $nder Se'tion 6 o% t!is Implementing :$ideline) 'orporate landowner7appli'ant may adopt additional sto'" distri&$tion s'!emes ta"ing into a''o$nt %a'tors s$'! as ran") seniority) salary) position and ot!er 'ir'$mstan'es w!i'! may &e deemed desira&le as a matter o% so$nd 'ompany poli'y. Section 5. Criteria for !aluation of Proposal T!e [S5*] s$&mitted &y t!e 'orporate landowner7appli'ant s!all meet t!e %ollowing minim$m 'riteria; a. t!at t!e 'ontin$ed operation o% t!e 'orporation wit! its agri'$lt$ral land inta't and $n%ragmented is ia&le wit! potential %or growt! and in'reased pro%ita&ility< &. t!at t!e plan %or sto'" distri&$tion to #$ali%ied &ene%i'iaries wo$ld res$lt in in'reased in'ome and greater &ene%its to t!em) t!an i% t!e lands were di ided and distri&$ted to t!em indi id$ally< '. t!at t!e sto'" distri&$tion plan is a''epta&le to a ma8ority) de%ined as 20= pl$s 1) o% all t!e #$ali%ied &ene%i'iaries< d. t!at t!e plan s!all in'l$de a pro ision t!at t!e &oo"s o% t!e 'orporation s!all &e s$&8e't to periodi' a$dit &y 'erti%ied p$&li' a''o$ntants '!osen &y t!e &ene%i'iaries< e. t!at irrespe'ti e o% t!e al$e o% t!e &ene%i'iaries e#$ity in t!e 'orporation) t!ey s!all &e ass$red o% at least one 91. representati e in t!e >oard o% 5ire'tors or in a management or e0e'$ti e 'ommittee) i% one e0ists 0 0 0< %. t!at a &ene%i'iary w!o a ails o% a sto'" option m$st %irst e0e'$te t!e ne'essary wai er %rom &eing a &ene%i'iary in anot!er sto'" distri&$tion plan 0 0 0< g. ot!er 'riteria t!at t!e 5+, may pres'ri&e 0 0 0. Section 6. "aluation and CompensationT!e al$ation o% 'orporate assets s$&mitted &y t!e 'orporate landowner7appli'ant in t!is proposal s!all &e s$&8e't to eri%i'ation and a$dit e0amination &y 5+,. T!e determination o% t!e al$e o% t!e agri'$lt$ral land s!all &e &ased on t!e land al$ation g$idelines prom$lgated &y 5+,. Section 7. #odes of Stock DistributionT!e [S5*] 0 0 0 may &e e%%e'ted t!ro$g! di estment o% t!e e0isting e#$ity !oldings &y sto'"!olders or ot!er modes o% sto'" distri&$tion a''epta&le

Ero- the start, the stoc8 $istribution sche-e appeare$ to be Ta$ecoLs preferre$ option, for, on Au.ust 19, !;AA,1A"1A# it or.ani7e$ a spin-off corporation, C(I, as ehicle to facilitate stoc8 acGuisition b/ the far-6or8ers% Eor this purpose, Ta$eco assi.ne$ an$ con e/e$ to C(I the a.ricultural lan$ portion =:,;!0%@0 hectares> an$ other far--relate$ properties of Cacien$a (uisita in e3chan.e for C(I shares of stoc8%1;"1;#

to &ot! parties and d$ly appro ed &y 5+,. Section 8. Limited Trans%era&ility o% >ene%i'iaries Sto'"s 0 0 0. Section 9. *ayment o% S!ares ? T!e payment o% t!e p$r'!ase pri'e o% t!e s!ares s!all &e $nder s$'! terms and 'onditions agreed $pon &y t!e 'orporate landowner7appli'ant and t!e &ene%i'iaries) pro ided t!at in no 'ase s!all t!e 'ompensation re'ei ed &y t!e wor"ers) at t!e time t!e s!ares o% sto'" are distri&$ted) &e red$'ed. Section 10. Disposition of Proposal+%ter t!e e al$ation o% t!e [S5*] s$&mitted &y t!e 'orporate landowner7appli'ant to t!e [5+,] Se'retary) !e s!all %orward t!e same wit! all t!e s$pporting do'$ments to t!e *residential +grarian ,e%orm Co$n'il 9*+,C.) t!ro$g! its E0e'$ti e Committee) wit! !is re'ommendation %or %inal a'tion. Section 11. $mplementation % #onitoring of PlanT!e appro ed [S5*] s!all &e implemented wit!in t!ree 96. mont!s %rom re'eipt &y t!e 'orporate landowner7appli'ant o% t!e appro al t!ereo% &y t!e *+,C and t!e trans%er o% t!e s!ares o% sto'"s in t!e names o% t!e #$ali%ied &ene%i'iaries s!all &e re'orded in t!e sto'" and trans%er &oo"s and s$&mitted to t!e Se'$rities and E0'!ange Commission 9SEC. wit!in si0ty 960. days %rom t!e said implementation o% t!e [S5*]. @pon 'ompletion) t!e 'orporate landowner7appli'ant s!all &e iss$ed a Certi%i'ate o% Complian'e. T!e [5+,] Se'retary 0 0 0 s!all stri'tly monitor t!e implementation to determine w!et!er or not t!ere !as &een 'omplian'e wit! t!e appro ed [S5*] as well as t!e re#$irements o% t!e C+,*. Aor t!is p$rpose) t!e 'orporate landowner7appli'ant s!all ma"e a aila&le its premises %or o'$lar inspe'tion) its personnel %or inter iew) and its re'ords %or e0amination at normal &$siness !o$rs. Section 12. Non7'omplian'e wit! any o% t!e re#$irements o% Se'tion 61 o% ,+ 66-2) as implemented &y t!is Implementing :$idelines s!all &e gro$nds %or t!e re o'ation o% t!e Certi%i'ate o% Complian'e iss$ed to t!e 'orporate landowner7appli'ant. Section 13. Not!ing !erein s!all &e 'onstr$ed as pre'l$ding t!e *+,C %rom ma"ing its own independent e al$ation and assessment o% t!e sto'" distri&$tion plan 0 0 0 and in pres'ri&ing ot!er re#$irements.
1A"1A# 1;"1;#

Rollo, p% 9AF% I$% at !:A%

Pe$ro Co<uan.co, )osephine C% Re/es, Teresita C% (opa, )ose Co<uan.co, )r%, an$ Pa7 C% Teopaco 6ere the incorporators of C(I%92"92# To acco--o$ate the assets transfer fro- Ta$eco to C(I, the latter, 6ith the Securities an$ E3chan.e Co--issionLs =SECLs> appro al, increase$ its capital stoc8 on Ma/ !2, !;A; fro- PhP !,022,222 $i i$e$ into !,022,222 shares 6ith a par alue of PhP !Kshare to PhP :22,222,222 $i i$e$ into :22,222,222 shares also 6ith par alue of PhP !Kshare, !02,222,222 of 6hich 6ere to be issue$ onl/ to Gualifie$ an$ re.istere$ beneficiaries of the CARP, an$ the re-ainin. 102,222,222 to an/ stoc8hol$er of the corporation%9!"9!# As appearin. in its propose$ S*P, the properties an$ assets of Ta$eco contribute$ to the capital stoc8 of C(I, as appraise$ an$ appro e$ b/ the SEC, ha e an a..re.ate alue of PhP 0;2,00:,112, or after $e$uctin. the total liabilities of the far- a-ountin. to PhP 190,:11,@0A, a net alue of PhP 900,09!,:F1% This translate$ to 900,09!,:F1 shares 6ith a par alue of PhP !Kshare%91"91# On Ma/ ;, !;A;, so-e ;9O of the then far-6or8er-beneficiaries =EDBs> co-ple-ent of Cacien$a (uisita si.nifie$ in a referen$u- their acceptance of the propose$ C(ILs Stoc8 *istribution Option Plan% On Ma/ !!, !;A;, the Stoc8 *istribution Option A.ree-ent =S*OA>, st/le$ as a Me-oran$u- of A.ree-ent =MOA>,99"99# 6as entere$ into b/ Ta$eco, C(I, an$ the 0,A:A Gualifie$ EDBs 9:"9:# an$ atteste$ to b/ then *AR Secretar/ Philip )uico% The S*OA e-bo$ie$ the basis
I$% at 9@F@% I$% at !9!A-!9!;% 91"91# I$% at 9@9F-9@:2% 99"99# I$% at !:@-!02% 9:"9:# I$% at 9@:F% The fi.ure is lifte$ fro- 4A Proposal for Stoc8 *istribution un$er CARP5I Me-oran$uof C(I, Anne3 4A%5
9!"9!# 92"92#

an$ -echanics of the S*P, 6hich 6oul$ e entuall/ be sub-itte$ to the PARC for appro al% In the S*OA, the parties a.ree$ to the follo6in.&
!% The percenta.e of the alue of the a.ricultural lan$ of Cacien$a (uisita =P!;F,F92,222%22> in relation to the total assets =P0;2,00:,112%22> transferre$ an$ con e/e$ to the SECON* PARTB "C(I# is 99%1;FO that, un$er the la6, is the proportion of the outstan$in. capital stoc8 of the SECON* PARTB, 6hich is P900,09!,:F1%22 or 900,09!,:F1 shares 6ith a par alue of P!%22 per share, that has to be $istribute$ to the TCIR* PARTB "EDBs# un$er the stoc8 $istribution plan, the sai$ 99%1;FO thereof bein. P!!A,9;!,;@F%A0 or $$8,9:$,:%;"8< ha/( % 1% The Gualifie$ beneficiaries of the stoc8 $istribution plan shall be the far-6or8ers 6ho appear in the annual pa/roll, inclusi e of the per-anent an$ seasonal e-plo/ees, 6ho are re.ularl/ or perio$icall/ e-plo/e$ b/ the SECON* PARTB% 9% At the en$ of each fiscal /ear, for a 5(/i#d #3 9& ,(a/ , the SECON* PARTB shall arran.e 6ith the EIRST PARTB "Ta$eco# the a)01i i*i#n and di */i41*i#n to the TCIR* PARTB on the basis of nu-ber of $a/s 6or8e$ an$ at no cost to the- of one-thirtieth =!K92> of !!A,9;!,;@F%A0 shares of the capital stoc8 of the SECON* PARTB that are presentl/ o6ne$ an$ hel$ b/ the EIRST PARTB, until such ti-e as the entire bloc8 of !!A,9;!,;@F%A0 shares shall ha e been co-pletel/ acGuire$ an$ $istribute$ to the TCIR* PARTB% :%The SECON* PARTB shall .uarantee to the Gualifie$ beneficiaries of the "S*P# that e er/ /ear the/ 6ill recei e on top of their re.ular co-pensation, an a-ount that appro3i-ates the eGui alent of three =9O> of the total .ross sales fro- the pro$uction of the a.ricultural lan$, 6hether it be in the for- of cash $i i$en$s or incenti e bonuses or both% 0% E en if onl/ a part or fraction of the shares ear-ar8e$ for $istribution 6ill ha e been acGuire$ fro- the EIRST PARTB an$ $istribute$ to the TCIR* PARTB, EIRST PARTB shall e3ecute at the be.innin. of each fiscal /ear an irre ocable pro3/, ali$ an$ effecti e for one =!> /ear, in fa or of the far-6or8ers appearin. as sharehol$ers of the SECON* PARTB at the start of sai$ /ear 6hich 6ill e-po6er the TCIR* PARTB or their representati e to ote in stoc8hol$ersL an$ boar$ of $irectorsL -eetin.s of the SECON* PARTB con ene$ $urin. the /ear the entire 99%1;FO of the outstan$in. capital stoc8 of the SECON* PARTB ear-ar8e$ for $istribution an$ thus be able to .ain such nu-ber of seats in the boar$ of $irectors of the SECON* PARTB that the 6hole 99%1;FO of the shares sub<ect to $istribution 6ill be entitle$ to% F% In a$$ition, the SECON* PARTB shall 6ithin a reasonable ti-e sub$i i$e an$ allocate for free an$ 6ithout char.e a-on. the Gualifie$ fa-il/-

beneficiaries resi$in. in the place 6here the a.ricultural lan$ is situate$, resi$ential or ho-elots of not -ore than 1:2 sG%-% each, 6ith each fa-il/beneficiar/ bein. assure$ of recei in. an$ o6nin. a ho-elot in the baran.a/ 6here it actuall/ resi$es on the $ate of the e3ecution of this A.ree-ent% @% This A.ree-ent is entere$ into b/ the parties in the spirit of the =C%A%R%P%> of the .o ern-ent an$ 6ith the super ision of the "*AR#, 6ith the en$ in ie6 of i-pro in. the lot of the Gualifie$ beneficiaries of the "S*P# an$ obtainin. for the- .reater benefits% =E-phasis a$$e$%>

As -a/ be .leane$ fro- the S*OA, inclu$e$ as part of the $istribution plan are& =a> pro$uction-sharin. eGui alent to three percent =9O> of .ross sales fro- the pro$uction of the a.ricultural lan$ pa/able to the EDBs in cash $i i$en$s or incenti e bonusI an$ =b> $istribution of free ho-elots of not -ore than 1:2 sGuare -eters each to fa-il/-beneficiaries% The pro$uction-sharin., as the S*P in$icate$, is pa/able 4i//( 5()*i.( #3 =h(*h(/ >HLI? +a6( +#n(, #/ n#* ,5 i-pl/in. that the benefits $o not parta8e the nature of $i i$en$s, as the ter- is or$inaril/ un$erstoo$ un$er corporation la6% Dhile a little bit har$ to follo6, .i en that, $urin. the perio$ -aterial, the assi.ne$ alue of the a.ricultural lan$ in the hacien$a 6as PhP !;F%F9 -illion, 6hile the total assets of C(I 6as PhP 0;2%00 -illion 6ith net assets of PhP 900%09 -illion, Ta$ecoKC(I 6oul$ a$-it that the ratio of the lan$-to-shares of stoc8 correspon$s to 99"9@ of the outstan$in. capital stoc8 of the C(I eGui alent to $$8,9:$,:%;"8< ha/( of stoc8 6ith a par alue of PhP !Kshare%

SubseGuentl/, C(I sub-itte$ to *AR its S*P, $esi.nate$ as 4Proposal for Stoc8 *istribution un$er C%A%R%P%,590"90# 6hich 6as substantiall/ base$ on the S*OA%

90"90#

I$% at 9@92-9@:A%

A PROPOSA( EOR STOCP *ISTRIBUTION UN*ER C%A%R%P% Tarla' 5e elopment Corporation) [Tade'o] engaged prin'ipally in agri'$lt$ral p$rs$its) proposes to 'omply wit! t!e Compre!ensi e +grarian ,e%orm *rogram 9C.+.,.*.. 0 0 0 wit! [regard] to its %arm 0 0 0 BCa'ienda L$isitaD &y a ailing o% Se'tion 61 o% [,+] 662- w!i'! allows a 'orporate landowner to '!oose &etween p!ysi'ally di iding its agri'$lt$ral land s$&8e't to agrarian re%orm among its %armwor"ers and adopting a plan o% distri&$tion to t!e same &ene%i'iaries o% t!e s!ares o% t!e 'apital sto'" o% t!e 'orporation owning t!e agri'$lt$ral land. In iew o% t!e %a't t!at t!e portions o% Ca'ienda L$isita de oted to agri'$lt$re) 'onsisting o% appro0imately E)312.-2 !e'tares) i% di ided and distri&$ted among more or less -)000 %armwor"ers as potential &ene%i'iaries) wo$ld not &e ade#$ate to gi e t!e said %arm!ands a de'ent means o% li eli!ood) [Tade'o] !as de'ided to resort to t!e distri&$tion o% s!ares to t!e #$ali%ied &ene%i'iaries as t!e &etter and more e#$ita&le mode o% 'omplian'e wit! t!e C.+.,.*. One o% t!e important &$sinesses o% [Tade'o] was to operate Ca'ienda L$isita w!i'! is a s$gar'ane %arm) t!e agri'$lt$ral parts o% w!i'! 0 0 0 !a e an aggregate area o% a&o$t E)312.-2 !e'tares. *rior to 1341) [Tade'o] operated t!e said %arm 0 0 0 man$ally. T!e only me'!ani/ed portion o% t!e operation t!en was t!e preparation o% t!e land. @nder t!is system o% '$lti ation) prod$'tion was so e0ig$o$s t!at t!e yield per !e'tare was e en &elow t!e &rea"7e en point. To s$r i e t!e 'rippling e'onomi' 'risis &egotten &y t!e depressed pri'e o% s$gar [Tade'o] &egan introd$'ing in Ca'ienda L$isita in 1341 new te'!nology in s$gar'ane %arming &y way o% me'!ani/ation. T!e si/e and 'ontig$o$s nat$re o% t!e land made t!e me'!ani/ed approa'! ideal. Its intention was not to '$t 'ost t!r$ la&or displa'ement &$t to ta"e ad antage o% t!e &etter prod$'ti ity le el a''r$ing to t!is type o% operation. In no time at all) 0 0 0 t!e yield per !e'tare almost do$&led and went $p to 40 tons. +nd w!at was &e%ore a marginal operation &e'ame a ia&le one.

A+,FGO,HE,7>ENEAICI+,IES

Ca'ienda L$isita) as an agri'$lt$ral enterprise) employs at t!e moment 6)236 %armwor"ers) e0'l$ding t!ose w!ose names !a e &een dropped %rom t!e list %or not !a ing wor"ed in t!e %arm %or t!e past two years. Its la&or 'omplement 'onsists o% 66- permanent %armwor"ers) 2-2 seasonal) 6)40'as$als w!o are master list mem&ers and 1)4-- 'as$als w!o are non7master list mem&ers) alt!o$g! it

Notabl/, in a follo6-up referen$u- the *AR con$ucte$ on October !:, !;A;, 0,!!@ EDBs, out of 0,9!0 6ho participate$, opte$ to recei e shares in C(I% 9F
"9F#

One hun$re$ thirt/-t6o =!91> chose actual lan$ $istribution%9@"9@#

a't$ally needs only E)0E- o% t!em to r$n t!e %arm. Sin'e its a'#$isition o% Ca'ienda L$isita in 1324) [Tade'o] !as ne er resorted to retren'!ment in personnel e en d$ring e0tremely di%%i'$lt times 0 0 0) w!i'! saw t!e s$gar ind$stry on t!e &rin" o% 'ollapse. It !as promptly 'omplied wit! in'reases in t!e minim$m wage law. T!ere !as &een no 'olle'ti e &argaining negotiation t!at did not prod$'e an a'ross7t!e7&oard in'rease in wages %or la&or) so t!at a Ca'ienda L$isita wor"er re'ei ed 'ompensation m$'! !ig!er t!an t!e %loor wage pres'ri&ed %or t!e s$gar ind$stry. Aor Crop Iear 134-744) [Tade'o] paid a total o% *E4)0E0)000.00 in terms o% salaries and wages and %ringe &ene%its o% its employees and %armwor"ers in Ca'ienda L$isita. +mong t!e %ringe &ene%its presently en8oyed &y its personnel) $nder t!eir e0isting 'olle'ti e &argaining agreement [C>+] wit! management) are t!e %ollowing; 1.. 100= %ree !ospitali/ation and medi'al plan %or all employees and wor"ers) and t!eir spo$ses) '!ildren and parents< 2.. 6.. E.. and 2.. ,etirement plan t!at is %$lly %$nded and non7'ontri&$tory. Ser i'e and amelioration &on$ses< Interest7%ree loans on ed$'ation) ri'e and s$gar) and salary and spe'ial loans< >$s %are s$&sidy %or st$dents w!o are '!ildren o% employees and wor"ers in t!e %arm)

To &e entitled to t!e a&o e7mentioned &ene%its) a #$ali%ied wor"er !as only to wor" %or 6- days in one 'rop year.

S*IN7OAA CO,*O,+TION

To e0pedite 'omplian'e wit! t!e re#$irements o% t!e [C+,*] on sto'" distri&$tion and at t!e same time ass$re t!e %armwor"er7&ene%i'iaries o% t!e %arm o% re'ei ing greater &ene%its t!an i% t!e agri'$lt$ral land were to &e di ided among t!em instead) [Tade'o] 'on'ei ed o% separating t!e agri'$lt$ral portions o% Ca'ienda L$isita %rom t!e rest o% its &$siness and trans%erring and 'on eying t!e said agri'$lt$ral land and s$'! properties) assets) e#$ipment) rig!ts) interests and a''o$nts related to its operation) in'l$ding lia&ilities) o&ligations and en'$m&ran'es in'$rred t!ere&y) to anot!er 'orporation

After a re ie6 of the S*P, then *AR Secretar/ Miria- *efensor-Santia.o =Sec% *efensor-Santia.o> a$$resse$ a letter $ate$ No e-ber F, !;A; 9A"9A# to Pe$ro S% Co<uan.co =Co<uan.co>, then Ta$eco presi$ent, proposin. that the S*P be re ise$, alon. the follo6in. lines&

separate and distin't) and %or t!at p$rpose 'a$sed) t!r$ its 'ontrolling sto'"!olders) t!e registration and in'orporation o% [CLI] on +$g$st 26) 1344) as t!e entity to ser e as t!e spin7o%% e!i'le in w!ose %a or t!e said properties and assets were later on to &e trans%erred and 'on eyed. Capital Str$'t$re. ? To a''ommodate s$'! trans%er o% assets) [CLI]) wit! t!e appro al o% t!e [SEC]) in'reased its a$t!ori/ed 'apital sto'" on Fay 10) 1343) %rom *1)200)000.00) di ided into 1)200)000 s!ares wit! a par al$e o% *1.00 per s!are) to *E00)000)000.00) di ided into E00)000)000 s!ares also wit! a par al$e o% *1.00 per s!are) 120)000)000 o% w!i'! iss$a&le only to #$ali%ied and registered &ene%i'iaries o% t!e 9C.+.,.*.. and 220)000)000) to any sto'"!older or sto'"!olders o% t!e 'orporation. Jal$ation o% +ssets Trans%erred. ? >y irt$e o% a 5eed o% +ssignment and Con eyan'e e0e'$ted on Far'! 22) 1343) [Tade'o] s$&s'ri&ed to *622)161)E62.00 wort! o% s!ares in t!e in'rease in a$t!ori/ed 'apital sto'" o% t!e spin7o%% 'orporation) [CLI]) and in payment o% its s$&s'ription trans%erred and 'on eyed to t!e latter t!e agri'$lt$ral portions o% Ca'ienda L$isita 0 0 0 !a ing a total area o% E)312.-E66 !e'tares) w!i'! are 'o ered 0 0 0 toget!er wit! s$'! ot!er properties) assets) e#$ipment) rig!ts) interests and a''o$nts as are ne'essary in t!e operation o% t!e agri'$lt$ral land. S$'! properties and assets 'ontri&$ted &y [Tade'o] to t!e 'apital sto'" o% [CLI]) as appraised and appro ed &y t!e [SEC]) !a e an aggregate al$e o% *230)22E)220.00) &$t inasm$'! as t!e 'on eyan'e o% assets also in ol ed t!e trans%er o% lia&ilities to t!e spin7o%% 'orporation) t!e net al$e le%t) a%ter ded$'ting t!e total lia&ilities o% t!e %arm amo$nting to *262)E22)-24.33) is *622)161)E62.00 w!i'! is pre'isely t!e amo$nt o% [Tade'o(s] s$&s'ription to t!e in'rease in 'apital sto'" o% [CLI]. T!e total al$e o% t!e properties and assets trans%erred and 'on eyed &y [Tade'o] to [CLI] amo$nting to *230)22E)220.00 may &e &ro"en down as %ollows;

1..

+gri'$lt$ral land) 0 0 0 totaling E)312.-E66 !e'tares at t!eir %air mar"et al$e o% *E0)000.00 per !e'tare KKKKKKKKK *136)660)000.00

2..

Fa'!inery and E#$ipment) 0 0 0 'onsisting o% !ea y e#$ipment) [et'.] KKKKKKKK... E6)362)600.00

!% That o er the i-ple-entation perio$ of the "S*P#, "Ta$eco#KC(I shall ensure that there 6ill be no $ilution in the shares of stoc8s of in$i i$ual "EDBs#I 1% That a safe.uar$ shall be pro i$e$ b/ "Ta$eco#KC(I a.ainst the $ilution of the percenta.e sharehol$in.s of the "EDBs#, i%e%, that the 99O sharehol$in.s of the "EDBs# 6ill be -aintaine$ at an/ .i en ti-eI 9% That the -echanics for $istributin. the stoc8s be e3plicitl/ state$ in the "MOA# si.ne$ bet6een the "Ta$eco#, C(I an$ its "EDBs# prior to the i-ple-entation of the stoc8 planI
6.. C$rrent +ssets 0 0 0 KKKKKKKKKKK 162)664)336.00

E..

Land Impro ements) in t!e nat$re o% roads) '$l erts) &ridges) [et'.] KKKKKKK.. 61)446)600.00

2..

@nappraised +ssets) s$'! as railroad system and e#$ipment) 0 0 0 and 'onstr$'tion in progressKKKKKKKKKKKKKKK 4)402)310.00

6..

Long Term Note ,e'ei a&le KKKKKKK...

24)066)E1-.00

-..

,esidential Land) wit! a total area o% 120.326E !e'tares at t!eir appraisal al$e o% *20.00 per s#. m. KKKKK 60)E62)000.00

4..

Land) 'onsisting o% 14- lots $sed %or roads) railway) 'anals) lagoons) 0 0 0 !a ing an aggregate area o% 262.-E32 !e'tares KKKKKKKKKKK 24)162)000.00

T!e &rea" down o% t!e lia&ilities and o&ligations 'ontra'ted in operating t!e %arm land o% Ca'ienda L$isita [totaling *262)E22)-24.00] and t!at !a e to &e ded$'ted %rom t!e total al$e o% t!e properties and assets trans%erred to arri e at t!eir net al$e) is !erein&elow indi'ated; 0000

:% That the stoc8 $istribution plan pro i$e for clear an$ $efinite ter-s for $eter-inin. the actual nu-ber of seats to be allocate$ for the "EDBs# in the C(I Boar$I 0% That C(I pro i$e .ui$elines an$ a ti-etable for the $istribution of ho-elots to Gualifie$ "EDBs#I an$ F% That the 9O cash $i i$en$s -entione$ in the "S*P# be e3pressl/ pro i$e$ for "in# the MOA%
T!e a&o e al$ations o% &ot! assets and lia&ilities !a e &een gi en t!e imprimat$r o% t!e [SEC] &y reason o% its appro al o% t!e in'rease in t!e a$t!ori/ed 'apital sto'" o% [CLI]) t!e s$&s'ription to s$'! in'rease o% [Tade'o]) and t!e payment &y [Tade'o] o% its s$&s'ription t!r$ trans%er o% assets and lia&ilities. Conse#$ently) t!e net al$e o% t!e assets and properties trans%erred to [CLI] o% *622)161)E62.00) i% added to t!e s$&s'ription o% t!e in'orporators [CLI] to t!e original a$t!ori/ed 'apital sto'" o% t!e said 'orporation amo$nting to *E00)000.00) wo$ld gi e $s t!e total 'apital sto'" s$&s'ri&ed and o$tstanding o% [CLI] o% *622)261)E62.00 w!i'!) as will &e seen later on) plays an important role in determining w!at amo$nt o% s!ares o% t!e 'apital sto'" o% [CLI] may &e distri&$ted among its %armwor"er7&ene%i'iaries p$rs$ant to Se'tion 61 o% ,ep$&li' +'t No. 662-.

FECC+NICS OA STOCH 5IST,I>@TION *L+N

@nder Se'tion 61 o% [,+] 662-) a 'orporation owning agri'$lt$ral land may distri&$te among t!e #$ali%ied &ene%i'iaries s$'! proportion or per'entage o% its 'apital sto'" t!at t!e al$e o% t!e agri'$lt$ral land a't$ally de oted to agri'$lt$ral a'ti ities) &ears in relation to t!e 'orporation(s total assets. Con%orma&ly wit! t!is legal pro ision) [Tade'o] !ere&y s$&mits %or appro al a sto'" distri&$tion plan t!at en isions t!e %ollowing; 1.. T!e per'entage o% t!e al$e o% t!e agri'$lt$ral portions o% Ca'ienda L$isita 9*136)660)000.00. in relation to t!e total assets 9*230)22E)220.00. trans%erred and 'on eyed to t!e spin7 o%% 'orporation) 0 0 0 is 66.6=) or to &e e0a't) 66.236=) t!at in a''ordan'e wit! law) is t!e proportion o% t!e o$tstanding 'apital sto'" o% t!e 'orporation owning t!e agri'$lt$ral land) w!i'! is *622)261)E62.00 or 622)261)E62 s!ares wit! a par al$e o% *1.00 per s!are) t!at is proposed to &e distri&$ted to t!e #$ali%ied &ene%i'iaries o% t!e plan. 2.. T!e said 66.6= o% t!e o$tstanding 'apital sto'" o% [CLI] is *114)631)3-6.42 or 114)631)3-6.42 s!ares wit! a par al$e o% *1.00 per s!are. 6.. T!e #$ali%ied &ene%i'iaries o% t!e [S5*] s!all &e t!e %armwor"ers w!o appear in t!e ann$al payroll) in'l$si e o% t!e permanent and seasonal employees) w!o are reg$larly or periodi'ally employed &y [CLI] 0 0 0. E.. [CLI] s!all arrange wit! [Tade'o] at t!e end o% ea'! %is'al year) %or a period o% 60 years) t!e a'#$isition and distri&$tion to t!e %armwor"er7&ene%i'iaries) on t!e &asis o% n$m&er o% days wor"ed d$ring t!e year and at no 'ost to t!em) o% one7t!irtiet! 91L60. o% 114)631)3-6.42 s!ares o% t!e 'apital sto'" o% [CLI]) e#$i alent to *114)631)3-6.42) t!at are presently owned and !eld &y [Tade'o]) $ntil s$'!

In a letter-repl/ of No e-ber !:, !;A; to Sec% *efensor-Santia.o, Ta$ecoKC(I e3plaine$ that the propose$ re isions of the S*P are alrea$/ e-bo$ie$ in both the S*P an$ MOA% 9;"9;# Eollo6in. that e3chan.e, the PARC, un$er then Sec% *efensor-Santia.o, b/ R( #21*i#n N#" 8:A$BAB:2":2# $ate$ No e-ber 1!, !;A;, appro e$ the S*P of Ta$ecoKC(I%:!":!#
time as t!e entire &lo'" o% *114)631)3-6.42 s!ares s!all !a e &een 'ompletely a'#$ired and distri&$ted among t!e %armwor"er7&ene%i'iaries. 2.. [CLI] g$arantees to t!e #$ali%ied &ene%i'iaries o% t!e sto'" distri&$tion plan t!at e ery year t!ey will re'ei e) on top o% t!eir reg$lar 'ompensation) an amo$nt t!at appro0imates t!ree 96=. per'ent o% t!e total gross sales %rom t!e prod$'tion o% t!e agri'$lt$ral land) w!et!er it &e in t!e %orm o% 'as! di idends or in'enti e &on$ses or &ot!. 6.. E en i% only a part or %ra'tion o% t!e s!ares earmar"ed %or distri&$tion will !a e &een a'#$ired %rom [Tade'o] and distri&$ted among t!e %armwor"er7&ene%i'iaries) [Tade'o] s!all e0e'$te at t!e &eginning o% ea'! %is'al year an irre o'a&le pro0y) alid and e%%e'ti e %or one 91. year) in %a or o% t!e %armwor"ers appearing as s!are!olders o% [CLI] at t!e start o% t!e said year w!i'! will empower t!e said %armwor"ers or t!eir representati e to ote in sto'"!olders( meetings o% [CLI] 'on ened d$ring t!e year t!e entire 66.6= o% t!e o$tstanding 'apital sto'" o% [CLI] earmar"ed %or distri&$tion and t!$s &e a&le %rom t!e ery &eginning to gain s$'! n$m&er o% seats in t!e &oard o% dire'tors o% [CLI] t!at t!e w!ole 66.6= o% t!e s!ares s$&8e't to distri&$tion will &e entitled to. -.. In addition) [CLI] s!all wit!in a reasona&le time s$&di ide and allo'ate %or %ree and wit!o$t '!arge among t!e #$ali%ied %amily7&ene%i'iaries residing in t!e pla'e w!ere t!e agri'$lt$ral land is sit$ated) residential or !omelots o% not more t!an 2E0 s#. m. ea'!) wit! ea'! %amily7&ene%i'iary &eing ass$red o% re'ei ing and owning a !omelot in t!e &arrio or &arangay w!ere it a't$ally resides.

STOCH ,I:CTS +N5 ,EST,ICTIONS

+s pre io$sly e0plained) t!e amendment o% t!e arti'les o% in'orporation o% [CLI] in'reasing its 'apital sto'" pro ided %or t!e 'lassi%i'ation o% its s!ares o% sto'" into two types; Class B+D and Class B>D s!ares. S!ares o% sto'" representing t!e proportion o% t!e o$tstanding 'apital sto'" o% t!e said 'orporation to &e distri&$ted among its %armwor"er7&ene%i'iaries s!all 'onstit$te t!e Class B+D s!ares) w!ile t!e rest o% t!e 'apital sto'" s!all &e'ome Class B>D s!ares or s!ares sans any restri'tions and 'an &e iss$ed to any sto'"!older. Class B+D s!ares !a e t!e same rig!ts as t!e 0 0 0 Class B>D s!ares. >$t t!eir iss$an'e &eing limited to %armwor"er7&ene%i'iaries only) Class B+D s!ares are s$&8e't to t!e restri'tion t!at %or a period o% 10 years %rom and a%ter t!eir distri&$tion) no sale) trans%er or 'on eyan'e o% s$'! s!ares 0 0 0 s!all &e alid $nless it &e &y !ereditary s$''ession or in %a or o% #$ali%ied and registered &ene%i'iaries wit!in t!e same 'orporation. T!is limitation on t!e trans%era&ility appears 0 0 0 in t!e amended arti'les o%

At the ti-e of the S*P appro al, C(I ha$ a pool of far-6or8ers, nu-berin. F,1;F, -ore or less, co-pose$ of per-anent, seasonal an$ casual -aster listKpa/roll an$ non--aster list -e-bers% Ero- !;A; to 1220, C(I clai-e$ to ha e e3ten$e$ the follo6in. benefits to the EDBs&
in'orporation o% [CLI] and in d$e time will &e printed on t!e 'orresponding 'erti%i'ates o% sto'" o% t!at type o% s!ares. Limiting t!e e%%e'ti ity o% t!e restri'tion to 10 years %inds s$pport in Se'tion 2- o% t!e ,ep$&li' +'t No. 662- w!i'! ma"es land distri&$ted among &ene%i'iaries $nder t!e [C+,*] non7trans%era&le %or only 10 years) and sin'e sto'" distri&$tion is a law%$l alternati e to t!e %ragmentation o% land) t!e said legal pro ision s!o$ld e#$ally apply to a 'ase w!ere sto'" option is t!e '!oi'e.

+5J+NT+:ES OA STOCH *L+N OJE, L+N5 5IST,I>@TION

T!ere are p$issant reasons &e!ind [Tade'o(s] pre%eren'e %or sto'" distri&$tion to land apportionment) and t!ey are t!e %ollowing; 1.. T!e p!ysi'al %ragmentation and distri&$tion o% t!e agri'$lt$ral segments o% Ca'ienda L$isita) among potential %armwor"er7&ene%i'iaries w!o n$m&er appro0imately -)000 wo$ld res$lt in ea'! indi id$al %arm!and re'ei ing less t!an a !e'tare o% land t!at in no way 'o$ld prod$'e eno$g! to ena&le !im to lead a 'om%orta&le li%e< 2.. +s t!e re'ipient o% a par'el o% agri'$lt$ral land) t!e %armwor"er !as to ta"e 'are o% in8e'ting t!e ne'essary inp$ts needed &y t!e land and s!o$lder t!e 'ost o% prod$'tion) and 6.. T!e %armwor"er in'$rs t!e o&ligation o% paying to t!e go ernment %or !is s!are o% t!e agri'$lt$ral land) alt!o$g! t!e law allows !im 60 years wit!in w!i'! to do it. On t!e ot!er !and) t!e sto'" distri&$tion plan en isaged &y [Tade'o] 'ontemplates o%; +. >. C. 5. 5istri&$ting t!e s!ares o% sto'" o er a n$m&er o% years among t!e #$ali%ied &ene%i'iaries at no 'ost to t!em< +llowing t!e %armwor"er to 'ontin$e to wor" on t!e land as s$'! and re'ei e t!e wages and ot!er &ene%its pro ided %or &y !is [C>+] wit! t!e 'orporate landowner< Entitling !im to re'ei e di idends) w!et!er in 'as! or in sto'") on t!e s!ares already distri&$ted to !im and &ene%it %rom w!ate er appre'iation in al$e t!at t!e said s!ares may gain as t!e 'orporation &e'omes pro%ita&le< M$ali%ying !im to &e'ome t!e re'ipient o% w!ate er in'ome7a$gmenting and &ene%it7impro ing s'!emes t!at t!e spin7o%% 'orporation may esta&lis!) s$'! as t!e payment o% t!e g$aranteed t!ree 96=. per'ent o% gross sales e ery year and t!e %ree residential or !omelots to &e

=a> =b> =c> =$>

9 billion pesos =P9,222,222,222> 6orth of salaries, 6a.es an$ frin.e benefits 0; -illion shares of stoc8 $istribute$ for free to the EDBsI !02 -illion pesos =P!02,222,222> representin. 9O of the .ross pro$uceI 9@%0 -illion pesos =P9@,022,222> representin. 9O fro- the sale of 022 hectares of con erte$ a.ricultural lan$ of Cacien$a (uisitaI

allotted to %amily &ene%i'iaries o% t!e plan) and Heeping t!e agri'$lt$ral land inta't and $n%ragmented) to maintain t!e ia&ility o% t!e s$gar operation in ol ing t!e %arm as a single $nit and t!$s warrant to t!e a'"nowledged %armwor"er7&ene%i'iaries) !and7in7!and wit! t!eir a'#$isition o% t!e s!ares o% t!e 'apital sto'" o% t!e 'orporation owning t!e land) a 'ontin$ing and sta&le so$r'e o% in'ome. Indeed) t!e sto'" distri&$tion plan o% [Tade'o] 0 0 0 !as many strong points and ad!eren'e to t!e law is one o% t!em. E. Aor instan'e) in arranging %or t!e a'#$isition &y t!e %armwor"er7&ene%i'iaries o% s!ares o% t!e 'apital sto'" o% t!e 'orporation owning t!e land gratis) t!e 'orporate landowner $p!olds Se'tion 3 o% t!e :$idelines and *ro'ed$res prom$lgated to implement Se'tion 61 o% [,+] 662-) w!i'! pro!i&its t!e $se o% go ernment %$nds in paying %or t!e s!ares. Foreo er) t!e plan %or t!e %ree dispersal o% s!ares will not in any way diminis! t!e reg$lar 'ompensation &eing re'ei ed &y t!e %armwor"er7&ene%i'iaries at t!e time o% s!are distri&$tion) w!i'! is pros'ri&ed &y Se'tion 61 o% [,+] 662-.

IF*O,T+NCE TO ECONOFIC 5EJELO*FENT

Ca'ienda L$isita at present is t!e prin'ipal so$r'e o% s$gar'ane needed &y a s$gar mill owned and operated &y [C+T] in t!e area. It s$pplies 20= o% t!e s$gar'ane re#$irement o% t!e mill t!at !as 1)420 employees and wor"ers in its employ. +ny disr$ption in t!e present operation o% Ca'ienda L$isita w!i'! wo$ld a%%e't its present prod$'ti ity le el wo$ld t!ere%ore a$tomati'ally in%l$en'e t!e operational ia&ility o% t!e s$gar %a'tory 0 0 0 and w!i'!) in t$rn) wo$ld !a e reper'$ssions on t!e li eli!ood o% t!e present employees and wor"ers o% t!e mill as well as t!e li eli!ood o% t!e t!o$sands o% s$gar'ane planters and t!eir %amilies wit!in t!e Tarla' s$gar distri't &eing ser i'ed &y t!e s$gar mill. On t!e ot!er !and) t!e well7&eing o% t!e s$gar mill !as to &e t!e prime 'on'ern also o% t!e 'orporate owner o% Ca'ienda L$isita) simply &e'a$se it is t!e entity t!at mills and 'on erts t!e s$gar'ane prod$'e o% t!e latter to a %inis!ed prod$'t. Not only t!at. >y milling wit! [C+T] w!i'! !as t!e most e%%i'ient s$gar mill in t!e region) t!e 'orporate owner o% Ca'ienda L$isita in e%%e't g$arantees to itsel% ma0im$m re'o ery %rom its %arm(s s$gar'ane ? somet!ing t!at is essential to its %inan'ial 'apa&ility. In ot!er words) t!e relations!ip &etween %arm and mill is one o% a&sol$te re'ipro'ity and interdependen'e. One 'annot e0ist wit!o$t t!e ot!er. T!e importan'e o% t!e agri'$lt$ral land o% Ca'ienda L$isita staying $ndi ided 'annot &e gainsaid. Aor it to remain l$'rati e) it !as to &e operated as a $nit 0 0 0. +nd on its s$''ess%$l operation rests t!e

=e> =f> =.>

1:2-sGuare -eter ho-elots $istribute$ for freeI 1%: -illion pesos =P1,:22,222> representin. 9O fro- the sale of A2 hectares at A2 -illion pesos =PA2,222,222> for the SCTEQI Social ser ice benefits, such as but not li-ite$ to free hospitali7ationK-e$icalK-aternit/ ser ices, ol$ a.eK$eath benefits an$ no interest bearin. salar/Ke$ucational loans an$ rice su.ar accounts% :1":1#

T6o separate .roups subseGuentl/ conteste$ this clai- of C(I%

well7&eing o% so many &$sinesses and $nderta"ings in t!e pro in'e) or in a wider perspe'ti e) in t!e region) t!at are largely dependent $pon it %or e0isten'e.

CONAO,FITI OA A+,FGO,HE,7>ENEAICI+,IES

On Fay 11) 1343) a !istori' e ent too" pla'e in Ca'ienda L$isita w!en t!e representati es o% [Tade'o] and [CLI] and 2)4E4 %armwor"er7&ene%i'iaries in"ed t!eir a''ord) in t!e presen'e o% o%%i'ials o% t!e [5+,]) to a [FO+] t!at em&odies t!e sto'" distri&$tion plan s$&8e't o% t!is proposal. T!e said 2)4E4 %armwor"er7&ene%i'iaries w!o ga e t!eir 'on%ormity to t!e agreement represent 32.3= o% t!eir entire 'omplement w!i'! is m$'! more t!an t!e ma8ority 920= pl$s one. t!at t!e law re#$ires.

CONCL@SION

Cere is a sto'" distri&$tion plan t!at 'alls %or t!e a'#$isition and distri&$tion e ery year) %or t!e ne0t 60 years) o% 6)3E6)633.26 s!ares) wort! *6)3E6)633.26) o% t!e 'apital sto'" o% t!e 'orporation owning t!e agri'$lt$ral land among its #$ali%ied %armwor"er7&ene%i'iaries at no 'ost to t!em. It also g$arantees to pay to t!em ea'! year t!e e#$i alent o% t!ree 96=. per'ent o% t!e gross sales o% t!e prod$'tion o% t!e land) w!i'! is a&o$t *-)620)000.00 yearly) irrespe'ti e o% w!et!er t!e said 'orporation ma"es money or not. It 'ontemplates o% allowing t!e %armwor"er7&ene%i'iaries %rom t!e ery start to o''$py s$'! n$m&er o% seats in t!e &oard o% dire'tors o% t!e 'orporate landowner as t!e w!ole n$m&er o% s!ares o% sto'" set aside %or distri&$tion may entitle t!em) so t!at t!ey 'o$ld !a e a say in %orging t!eir own destiny. +nd last &$t not least) it intends to !elp gi e t!e same %armwor"er7&ene%i'iaries) w!o are #$ali%ied) ade#$ate s!elter &y pro iding residential or !omelots not e0'eeding 2E0 s#.m. ea'! %or %ree w!i'! t!ey 'an 'all t!eir own. T!e a&o e sto'" distri&$tion plan is !ere&y s$&mitted on t!e &asis o% all t!ese &ene%its t!at t!e %armwor"er7&ene%i'iaries o% Ca'ienda L$isita will re'ei e $nder its pro isions in addition to t!eir reg$lar 'ompensation as %arm!ands in t!e agri'$lt$ral enterprise and t!e %ringe &ene%its granted to t!em &y t!eir [C>+] wit! management. 0 0 0

On Au.ust !0, !;;0, C(I applie$ for the con ersion of 022 hectares of lan$ of the hacien$a fro- a.ricultural to in$ustrial use, :9":9# pursuant to Sec% F0 of RA FF0@, pro i$in.&

SEC% F0% Conversion of Lands%After the lapse of fi e =0> /ears fro- its a6ar$, 6hen the lan$ ceases to be econo-icall/ feasible an$ soun$ for a.ricultural purposes, or the localit/ has beco-e urbani7e$ an$ the lan$ 6ill ha e a .reater econo-ic alue for resi$ential, co--ercial or in$ustrial purposes, the *AR, upon application of the beneficiar/ or the lan$o6ner, 6ith $ue notice to the affecte$ parties, an$ sub<ect to e3istin. la6s, -a/ authori7e the reclassification, or con ersion of the lan$ an$ its $isposition& Pro i$e$, That the beneficiar/ shall ha e full/ pai$ its obli.ation%

The application, accor$in. to C(I, ha$ the bac8in. of 0,222 or so EDBs, inclu$in. respon$ent Rene ?alan., an$ )ose )ulio Suni.a, as e i$ence$ b/ the Manifesto of Support the/ si.ne$ an$ 6hich 6as sub-itte$ to the *AR% ::"::# After the usual processin., the *AR, thru then Sec% Ernesto ?arilao, appro e$ the application on Au.ust !:, !;;F, per *AR Con ersion Or$er No% 292F2!2@:-@F:=;0>, Series of !;;F,:0":0# sub<ect to pa/-ent of three percent =9O> of the .ross sellin. price to the EDBs an$ to C(ILs continue$ co-pliance 6ith its un$erta8in.s un$er the S*P, a-on. other con$itions%

Un$er *AO !2, Sec% !b%>, par% 1, 4the acceptance of the "S*P# b/ the -a<orit/ of all the Gualifie$ beneficiaries shall be bin$in. upon all the sai$ Gualifie$ beneficiaries 6ithin the applicant corporation%5 9@"9@# Rollo, p% !:% 9A"9A# I$% at !92A-!92;% 9;"9;# I$% at !9!2-!9!9% :2":2# Entitle$ 4Resolution Appro in. the Stoc8 *istribution Plan of "Ta$eco#KC(I%5 :!":!# Rollo, p% !0!% :1":1# I$% at 9FF@-9FFA% :9":9# I$% at F:@-F02% ::"::# I$% at A2, Petition of C(II i$% at ;::, Consoli$ate$ Repl/ of C(II i$% at !91@-!91A% :0":0# I$% at F0!-FF:%

9F"9F#

On *ece-ber !9, !;;F, C(I, in e3chan.e for subscription of !1,222,222 shares of stoc8s of Centennar/ Col$in.s, Inc% =Centennar/>, ce$e$ 922 hectares of the con erte$ area to the latter%:F":F# ConseGuentl/, C(ILs Transfer Certificate of Title =TCT> No% 1A@;!2:@":@# 6as cancele$ an$ TCT No% 1;12;!:A":A# 6as issue$ in the na-e of Centennar/% C(I transferre$ the re-ainin. 122 hectares co ere$ b/ TCT No% 1A@;2; to (uisita Realt/ Corporation =(RC>:;":;# in t6o separate transactions in !;;@ an$ !;;A, both unifor-l/ in ol in. !22 hectares for PhP 102 -illion each%02"02# Centennar/, a corporation 6ith an authori7e$ capital stoc8 of PhP !1,!22,222 $i i$e$ into !1,!22,222 shares an$ 6holl/-o6ne$ b/ C(I, ha$ the follo6in. incorporators& Pe$ro Co<uan.co, )osephine C% Re/es, Teresita C% (opa, Ernesto ?% Teopaco, an$ Bernar$o R% (aho7% SubseGuentl/, Centennar/ sol$0!"0!# the entire 922 hectares to (uisita In$ustrial Par8 Corporation =(IPCO> for PhP @02 -illion% The latter acGuire$ it for the purpose of $e elopin. an in$ustrial co-ple3% 01"01# As a result, Centennar/Ls TCT No% 1;12;! 6as cancele$ to be replace$ b/ TCT No% 9!2;AF 09"09# in the na-e of (IPCO% Ero- the area co ere$ b/ TCT No% 9!2;AF 6as car e$ out t6o =1> parcels, for 6hich t6o =1> separate titles 6ere issue$ in the na-e of (IPCO, specificall/&
:F":F# :@":@#

I$% at !:A0-!:A@% I$% at !:A9-!:A:% :A":A# I$% at !:;1-!:;9% :;":;# I$% at !9F1% 02"02# I$% at 9FF;% 0!"0!# I$% at !:;;-!02;, ia a *ee$ of Sale $ate$ )ul/ 92, !;;A% 01"01# I$% at !9F1% 09"09# I$% at !0!:-!0!A%

=a> TCT No% 9F0A220:"0:# an$ =b> TCT No% 9F0A2!,00"00# co erin. !A2 an$ four hectares, respecti el/% TCT No% 9!2;AF 6as, accor$in.l/, partiall/ cancele$% (ater on, in a *ee$ of Absolute Assi.n-ent $ate$ No e-ber 10, 122:, (IPCO transferre$ the parcels co ere$ b/ its TCT Nos% 9F0A22 an$ 9F0A2! to the Ri7al Co--ercial Ban8in. Corporation =RCBC> b/ 6a/ of dacion en pago in pa/-ent of (IPCOLs PhP :9!,F;0,@91%!2 loan obli.ations% (IPCOLs titles 6ere cancele$ an$ ne6 ones, TCT Nos% 9;!20! an$ 9;!201, 6ere issue$ to RCBC% Apart fro- the 022 hectares allu$e$ to, another A2%0! hectares 6ere later $etache$ fro- the area co era.e of Cacien$a (uisita 6hich ha$ been acGuire$ b/ the .o ern-ent as part of the Subic-Clar8-Tarlac E3press6a/ =SCTEQ> co-ple3% In absolute ter-s, :,990%@0 hectares re-aine$ of the ori.inal :,;!0 hectares Ta$eco ce$e$ to C(I%0F"0F# Such, in short, 6as the state of thin.s 6hen t6o separate petitions, both un$ate$, reache$ the *AR in the latter part of 1229% In the first, $eno-inate$ as PetitionKProtest,0@"0@# respon$ents )ose )ulio Suni.a an$ Din$sor An$a/a, i$entif/in. the-sel es as hea$ of the Super isor/ ?roup of C(I =Super isor/ ?roup>, an$ F2 other super isors sou.ht to re o8e the S*OA, alle.in. that C(I ha$ faile$ to .i e the- their $i i$en$s an$ the one percent =!O> share in .ross sales, as 6ell as the thirt/-three percent =99O> share in the procee$s of the sale of the con erte$ 022 hectares of lan$% The/ further clai-e$ that their li es ha e not i-pro e$ contrar/ to the pro-ise an$ rationale for the a$option of the S*OA%
0:"0:# 00"00#

I$% at !0!;-!012% I$% at !01!-!011% 0F"0F# TSN, Au.ust !A, 12!2, pp% !09-!00% 0@"0@# Rollo, pp% !09-!0A, si.ne$ b/ F1 in$i i$uals%

The/ also cite$ iolations b/ C(I of the S*OALs ter-s% 0A"0A# The/ pra/e$ for a rene.otiation of the S*OA, or, in the alternati e, its re ocation% Re ocation an$ nullification of the S*OA an$ the $istribution of the lan$s in the hacien$a 6ere the call in the secon$ petition, st/le$ as Petisyon =Petition>%0;
"0;#

The Petisyon 6as ostensibl/ file$ on *ece-ber :, 1229 b/ Alyansa ng mga

-anggagawang .%(id ng /acienda L%isita =AMBA(A>, 6here the han$6ritten na-e of respon$ents Rene ?alan. as 4Pan.ulo AMBA(A5 an$ Noel Mallari as 4Sec-?en% AMBA(A5F2"F2# appeare$% As alle.e$, the petition 6as file$ on behalf of AMBA(ALs -e-bers purporte$l/ co-posin. about A2O of the 0,99; EDBs of Cacien$a (uisita% C(I 6oul$ e entuall/ ans6erF!"F!# the petitionKprotest of the Super isor/ ?roup% On the other han$, C(ILs ans6er F1"F1# to the AMBA(A petition 6as containe$ in its letter $ate$ )anuar/ 1!, 1220 also file$ 6ith *AR% Mean6hile, the *AR constitute$ a Special Tas8 Eorce to atten$ to issues relatin. to the S*P of C(I% A-on. other $uties, the Special Tas8 Eorce 6as -an$ate$ to re ie6 the ter-s an$ con$itions of the S*OA an$ PARC Resolution No% A;-!1-1 relati e to C(ILs S*PI e aluate C(ILs co-pliance reportsI e aluate the -erits of the petitions for the re ocation of the S*PI con$uct ocular inspections or fiel$ in esti.ationsI an$ reco--en$ appropriate re-e$ial -easures for appro al of the Secretar/%F9"F9#
I$% at 0:F% I$% at !@0-!A9% F2"F2# I$% at ::1, MallariLs Co--ent to Petition% Mallari 6oul$, per his account, brea8a6a/ fro- AMBA(A to for-, 6ith e3-AMBA(A -e-bers, Ear-ers A.rarian Refor- Mo e-ent, Inc% or EARM% F!"F!# I$% at !0;-!@:% F1"F1# I$% at !A:-!;1% F9"F9# I$% at F@;-FA2%
0;"0;# 0A"0A#

After in esti.ation an$ e aluation, the Special Tas8 Eorce sub-itte$ its 4Ter-inal Report& Cacien$a (uisita, Incorporate$ =C(I> Stoc8 *istribution Plan =S*P> Conflict5F:"F:# $ate$ Septe-ber 11, 1220 =Ter-inal Report>, fin$in. that C(I has not co-plie$ 6ith its obli.ations un$er RA FF0@ $espite the i-ple-entation of

Id. at 6467E02. T!e %ollowing are t!e pertinent %indings o% t!e Spe'ial Tas" Aor'e as stated in its Terminal ,eport;

6E[6E]

IV.

IDENTIFICATION OF THE P O!"E#S$ISS%ES$CONCE NS&

Fatri0 on t!e Comparati e Jiews o% t!e Aarmer :ro$ps is7N7 is t!ose o% CLI Fanagement) +long Git! t!e Corresponding A:5LOCI. ,es$lts was prepared and t!e 'omplian'e reports s$&mitted) t!e petitions o% t!e AG>s) parti'$larly t!e +F>+L+ and t!e S$per isory :ro$p) toget!er wit! t!e respe'ti e responses to said petitions &y CLI management and t!e A:5LOCI res$lts were $tili/ed to ma"e a 'omparati e s$mmary) e0empli%ied !ere$nder.

1. INDIVID%A" ISS%ES AISED !' THE S&P '"$S(') *'(&P OF HACIENDA "%ISITA INCO PO ATED "$S-+-"$S E(OINDE OF H"I AND O!SE VATION OF TF.

1.1. Iss$e;

Non7en8oyment o% t!e rig!ts and pri ileges t!at were s$pposed to &e gi en to t!e AG>s as stated in t!e [FO+] prompted t!e s$per isory gro$p to 'laim %or t!e Bone per'ent 91=.D s!are %rom t!e CLI representing t!eir s!are as s$per isors d$ring t!e transition period.

H"I )*n*+e)ent& S$'! 'laim is a total misappre!ension o% Section 32 of R.A. No. 6657) t!e last paragrap! o% w!i'! re#$ires t!e payment o% 1= o% t!e gross sale to managerial) s$per isory and te'!ni'al wor"ers at t!e time o% t!e e%%e'ti ity o% R.A. No. 6657. T!ere were no s$'! managerial employees and s$per isors engaged in temporarily managing and s$per ising t!e operation o% t!e land $ntil its %inal t$rno er to t!e %armwor"ers sin'e t!ere was no land to trans%er in t!e %irst pla'e. T,e T*-. Fo/ce 0o-ition& T!at Se'tion 62 o% ,.+. No. 662- may not dire'tly apply to t!e instant 'ase &$t t!e non7reali/ation o% t!e said 1= s!are o% e0pe'tation in t!e gross sale is a 'a$se o% disen'!antment. T!e 'laim %or t!e 1= s!are is not in'l$ded in t!e FO+. 0 0 0 1.2. Iss$e; Non1/ecei0t o2 t,e 103 4i5i4en4

the S*P%F0"F0# The Ter-inal Report an$ the Special Tas8 EorceLs reco--en$ations 6ere a$opte$ b/ then *AR Sec% Nasser Pan.an$a-an =Sec% Pan.an$a-an>%FF"FF# SubseGuentl/, Sec% Pan.an$a-an reco--en$e$ to the PARC E3ecuti e Co--ittee =E3co-> =a> the recallKre ocation of PARC Resolution No% A;-!1-1 $ate$ No e-ber 1!, !;A; appro in. C(ILs S*PI an$ =b> the acGuisition of

CLI 'ontends t!at t!e distri&$tion o% said di idend does not apply to 'orporate %arms li"e CLI w!i'! opted %or t!e S5 *lan. T*-. 2o/ce 2in4in+& stip$lation on t!e matter. 1.6. Iss$e; T!e AG>s do not re'ei e s$'! %inan'ial ret$rn despite t!e

On t,e t,/ee 0e/cent 6337 o8t o2 t,e t,i/t9 t,/ee 0e/cent 63337 /e0/e-entin+ t,e e:8it9 -,*/e- +i5en 2/o) t,e 0/ocee4- o2 t,e -*;e o2 t,e 500 ,ect*/e- 6con5e/te4 to non1*+/ic8;t8/*; 8-e7.

T!e H"I )*n*+e)ent arg$es t!at t!e 'orporation) &an"ing on t!e legal %i'tion o% separate 'orporate e0isten'e) is not o&liged to gi e 66= o% t!e +/o-- -e;;in+ 0/ice o% t!e land sin'e t!e legal owner is t!e 'orporation itsel% and not t!e sto'"!olders. +nd t!e 6= was gi en &y t!e CLI merely as a &on$s %or t!e AG>s. T,e T*-. Fo/ce 0o-ition& T!o$g!) allegedly) t!e s$per isory gro$p re'ei es t!e 6= gross prod$'tion s!are and t!at ot!ers alleged t!at t!ey re'ei ed 60 million pesos still ot!ers maintain t!at t!ey !a e not re'ei ed anyt!ing yet. Item No. E o% t!e FO+ is 'lear and m$st &e %ollowed. T!ere is a distin'tion &etween t!e tot*; +/o-- -*;e- %rom t!e 0/o48ction o2 t,e ;*n4 and t!e 0/ocee4- %rom t!e -*;e o2 t,e ;*n4. T!e %ormer re%ers to t!e %r$itsLyield o% t!e agri'$lt$ral land w!ile t!e latter is t!e land itsel%. T!e p!rase Bt!e &ene%i'iaries are entitled e ery year to an amo$nt appro0imately e#$i alent to 6= wo$ld only &e %easi&le i% t!e s$&8e't is t!e prod$'e sin'e t!ere is at least one !ar est per year) w!ile s$'! is not t!e 'ase in t!e sale o% t!e agri'$lt$ral land. T!is negates t!en t!e 'laim o% CLI t!at) all t!at t!e AG>s 'an &e entitled to) i% any) is only 6= o% t!e p$r'!ase pri'e o% t!e 'on erted land. >esides) t!e Con!ersion (rder dated 1E +$g$st 1336 pro ides t!at B the benefits, wages and the like, presently recei ed by the !"#s shall not in any way be red$ced or ad ersely affected. T,ree percent of t,e gross selling price of t,e sale of t,e con!erted land s,all be awarded to t,e beneficiaries of t,e SD(.% T!e 6= gross prod$'tion s!are t!en is di%%erent %rom t!e 6= pro'eeds o% t!e sale o% t!e 'on erted land and) wit! more reason) t!e 66= s!are &eing 'laimed &y t!e AG>s as part owners o% t!e Ca'ienda) s!o$ld !a e &een gi en t!e AG>s) as sto'"!olders) and to w!i'! t!ey 'o$ld !a e &een entitled i% only t!e land were a'#$ired and redistri&$ted to t!em $nder t!e C+,*.

Cacien$a (uisita throu.h the co-pulsor/ acGuisition sche-e% Eollo6in. re ie6, the PARC 'ali$ation Co--ittee fa orabl/ en$orse$ the *AR Secretar/Ls reco--en$ation afore-state$%F@"F@# On *ece-ber 11, 1220, the PARC issue$ the assaile$ Resolution No% 122091-2!, $isposin. as follo6s&
1.E. Iss$e; I;;e+*; con5e/-ion *n4 2in*nci*; inc*0*<i;it9 o2 H"I to 0/ocee4 =it, t,e 0/o0o-e4 4e5e;o0)ent> t,e/e<9 ;e*5in+ t,e */e*- 8n0/o48cti5e.

T!e H"I )*n*+e)ent 'ontends t!at t!e Petition 2o/ Con5e/-ion was d$ly appro ed &y t!e 5+, on 1E +$g$st 1336 and it !ad t!e 'on%ormity o% more t!an 2)000 AG>s w!o signed a mani%esto o% s$pport. In t!e Petitions andLd$ring t!e (C$%F*D [O'$lar Inspe'tionLAo'$sed :ro$p 5is'$ssion] t!e 200 !e'tares s$&8e't o% 'on ersion appear to still remain $nde eloped. + 'lear e0ample is t!e Central Te'!no *ar" w!i'! !as a lands'aped entran'e and 'on'rete roads &$t t!e only t!ings w!i'! 'an &e seen inside t!e premises are 'ogon grasslands. T!e AG>s %$rt!er maintained t!at t!ey were eit!er not gi en any monetary &ene%it %rom t!e 'on ersion o% t!e 200 !e'tares or t!at t!ey were only partially gi en. 2. CONCE NS #ANIFESTED IN THE PETITION FI"ED !' THE AL)A-SA -* #*A #A-**A*A.A-* B&/$D -* 0AC$ -DA L&$S$TA 1A#BALA2 "ED !' # . ENE ?A"AN?

2.1. Iss$e;

T,*t DA A4)ini-t/*ti5e O/4e/ No. 10> -e/ie- o2 1988> +8i4e;ine- in t,e co/0o/*te *5*i;)ent o2 SDO> -,o8;4 o<-e/5e Section 31 o2 .A. No. 6657 :8*;i2ie4 <ene2ici*/ie*n4 0/o5i4e t,*t t,e9 6F@!-7 <e *;;o=e4 to <89 t,e ;*n4 2/o) t,e co)0*n9.

T!e H"I )*n*+e)ent posits t!e proposition t!at Section 34 is ery 'lear and $nam&ig$o$s. It grants to t!e AG>s t!e rig!t to p$r'!ase s!ares o% sto'"s in t!e 'orporation t!at owns t!e agri'$lt$ral land itsel% and not t!e land. CLI is 'orre't in t!is $nless t!e S5* is disregarded.

2.2. Iss$e;

C*nce;;*tion o2 t,e SDO *n4 i))e4i*te co5e/*+e o2 t,e */e* */e /e:8e-te4 *- t,e *+/ee)ent- in t,e i)0;e)ent*tion o2 t,e SDO =e/e *;;e+e4;9 not 2o;;o=e4$co)0;ie4 =it,.

T!e CLI management warranted t!at s$&8e't S5 *lan is t!e most %easi&le s'!emeLalternati e is7 N7 is p!ysi'al distri&$tion o% t!e land!olding $nder 'omp$lsory a'#$isition.

NOD, TCEREEORE, on -otion $ul/ secon$e$, RESO('E*, as it is CEREBB RESO('E*, to appro e an$ confir- the reco--en$ation of the PARC E3ecuti e Co--ittee a$optin. in toto the report of the PARC E3Co'ali$ation Co--ittee affir-in. the reco--en$ation of the *AR to recallKre o8e the S*O plan of Tarlac *e elop-ent CorporationKCacien$a (uisita Incorporate$% RESO('E*, further, that the lan$s sub<ect of the recalle$Kre o8e$ T*CKC(I S*O plan be forth6ith place$ un$er the co-pulsor/ co era.e or -an$ate$ lan$ acGuisition sche-e of the "CARP#%

5$ring t!e F*D%(C$) it was represented t!at t!e terms) 'onditions and &ene%its pro ided %or in t!e FO+L'ommitment appear not to !a e &een s$&stantially %ollowed. He/e8n4e/> i- * )o/e 4et*i;e4 4i-c8--ion o2 t,e i--8e-& 2.2.1. On t,e i--8e o2 non co)0;i*nce =it, t,e #OA

AG>s are s$pposed to re'ei e *-007400 di idends ann$ally.

O *40071000 prod$'tion s!aring per year. T!e &acienda is operating 'ontin$o$sly w!i'! only pro es t!at t!e &acienda is earning.

CLI) !owe er) 'laims t!at it is not in'$rring pro%its) t!$s) t!ere are no di idends to &e distri&$ted. >$t t!e s!ares o% sto'"s and 6= prod$'tion s!are !a e &een gi en. F*D%(C$ 2in4in+ s!ows t!at t!e n$m&er o% s!ares o% sto'"s to &e re'ei ed &y t!e AG>s) depends on t!eir designation 9i.e.) permanent) 'as$al or seasonal. and on t!e n$m&er o% )*n 4*9-. eti/e4 and /et/enc,e4 =o/.e/- are not gi en s!ares o% sto'"s and 'ease as s!are !olders. @ndisp$tedly) t!e set$p $nder t!e FO+ is one7sided in %a or t!e CLI. T!e wor" s'!ed$le) $pon w!i'! t!e e0tent o% entitlement to &e granted s!ares o% sto'" is w!olly wit!in t!e prerogati e and dis'retion o% CLI management t!at a AG> 'an still &e denied t!ereo% &y t!e simple e0pedien'y o% not gi ing !im any wor"ing !o$rsLdays. +nd t!is is made possi&le &y t!e %a't t!at [t!ere] are more %armersL%armwor"ers in its employ t!an w!at is) a''ording to CLI) ne'essary to ma"e it operational. 2.2.2. On t,e i--8e o2 /e0/e-ent*tion

It was eri%ied t!at t!e >oard o% 5ire'tors ele'tion is ann$ally 'ond$'ted. Cowe er) ma8ority o% t!e AG>s are no longer interested and) in %a't) !a e &oy'otted t!e ele'tions &e'a$se o% t!e minority representation o% t!e AG>s 9E as against -.. T!ey 'laim t!at t!ey are always o$tn$m&ered and some 'laim t!at t!e representati es ele'ted are pro management. 0 0 0 [N]o %r$it%$l and !armonio$s 'orporate a'ti ities 'an &e e0pe'ted as any resistan'e will &e 'o$nter7prod$'ti e) t!at to 'ontin$e t!e operation $nder t!e S5* t!at is '!allenged !erein will only &e an empty e0er'ise. T!e %armers and %armwor"ers

APPRO'E*%FA"FA#

A cop/ of Resolution No% 1220-91-2! 6as ser e$ on C(I the follo6in. $a/, *ece-ber 19, 6ithout an/ cop/ of the $ocu-ents a$ erte$ to in the resolution

will not) $nder t!e 'ir'$mstan'es) &e a&le to reali/e t!e 'ontemplated re'eipt o% &ene%its $nder t!e *rogram. 2.2.3. On t,e i--8e o2 t,e 2401-:8*/e )ete/ ,o)e;ot

+s to t!e 2E0 s#$are meter !omelots) not all o% t!e AG>s were gi en !omelots. O% t!ose gi en) t!ey 'omplain t!at t!ey still do not !a e t!e 'orresponding titles. +nd) t!ose already gi en titles maintain t!at said do'$ments are $seless as s$'!) %or t!ey 'annot e en &e $sed as &an" 'ollaterals) despite e en t!e lapse o% t!e 27year pres'ripti e period) &e'a$se &an"s and ot!er %inan'ial instit$tions re%$se to !onor t!e same wit!o$t 'learan'e %rom t!e CLI management. 0 0 0 2.2.4. On t,e i--8e o2 co5e/*+e o2 t,e H*cien4*

T!e H"I 'ontends t!at di iding t!e E)312.-2 !e'tares among 6)236 &ene%i'iaries wo$ld res$lt to a %arm lot o% 0.-4 !e'tare per indi id$al AG>) w!i'! is not an e'onomi' si/e %arm. 5i%%eren'es in t!e p!ysi'al 'onditions o% t!e land!olding m$st &e 'onsidered s$'! as soil %ertility and a''essi&ility. T!e #$estion o% w!o wo$ld get t!e %ertile or a''essi&le part o% t!e land and w!o wo$ld re'ei e less wo$ld res$ltL'$lminate in a B&attle royaleD among t!e AG>s. 5+, !as esta&lis!ed g$idelines on t!e matter o% s$'! allo'ations and no pro&lem !as &een en'o$ntered in its implementation o% t!e C+,*. >y and large %or a w!ole s'ale '$lti ation and prod$'tion) %ormation o% 'ooperati es !as pro en to &e an e%%e'ti e me'!anism to address t!e pro&lem. T!e law e en en'o$rages t!e $se o% s$'! 'om&ination [ cf. Se'tion 23) 96rd par..) ,ep. +'t No. 662-].

2.2.5.

On t,e *+/ee)ent t,*t ot,e/ <ene2it- =i;; <e +i5en ot,e/ t,*n t,o-e 0/o5i4e4 2o/ in t,e #OA

It was stip$lated t!at t!e S5O wo$ld pro ide t!e AG>s ot!er &ene%its 0 0 0 a less t!an a !e'tare7%arm wo$ld not &e a&le to pro ide) li"e t!e 6= o% t!e gross prod$'tion sales) to &e s!ared wit! t!e AG>s) on top o% t!eir reg$lar 'ompensation. T!e AG>s do not re'ei e any ot!er &ene%its $nder t!e FO+ e0'ept t!e a%orementioned [9 i'; s!ares o% sto'"s 9partial.) 6= gross prod$'tion sale 9not all. and !omelots 9not all.].

attache$% A letter-reGuest $ate$ *ece-ber 1A, 1220F;"F;# for certifie$ copies of sai$ $ocu-ents 6as sent to, but 6as not acte$ upon b/, the PARC secretariat% Therefro-, C(I, on )anuar/ 1, 122F, sou.ht reconsi$eration% @2"@2# On the sa-e $a/, the *AR Tarlac pro incial office issue$ the Notice of Co era.e@!"@!# 6hich C(I recei e$ on )anuar/ :, 122F%
V. P E"I#INA ' CONSIDE ATIONS

1. T!e 'ommon iss$es raised &y t!e petitioners are %o'$sed on t!e re o'ation o% t!e e0isting S5O t!at was proposed &y CLI and appro ed &y t!e *+,C on gro$nd) among ot!ers t!at t!e pro isions o% Section 31 o% .A. No. 6657) $pon w!i'! t!e S5OLS5* was &ased is 'ontrary to t!e &asi' poli'y o% t!e agrarian re%orm program on Land Ac5uisition and 'edistribution) as may &e gleaned %rom t!e se'ond paragrap! o% Section 6 of '7A7 -o7 889:) w!i'! reads;

B(o this end, a )ore e*$itable distrib$tion and ownership of land, with d$e regard to the rights of landowners to +$st co)pensation and to the ecological needs of the nation, shall be $ndertaken to pro ide far)ers and far)workers with the opport$nity to enhance their dignity and to i)pro e the *$ality of their li es thro$gh greater prod$cti ity of agric$lt$ral lands.D ,$nderscoring s$pplied-.

En isioned in t!e %oregoing pro ision is t!e p!ysi'al land trans%er to prospe'ti e &ene%i'iaries as reiterated in Section 5 t!ereo%) as %ollows;

BSc,edule of $mplementation. (he distrib$tion of all lands co ered by this Act shall be i)ple)ented i))ediately and co)pleted within ten ,./- years fro) the effecti ity thereofD.

2. G!ile S5OLS5* is an alternati e arrangement to t!e p!ysi'al distri&$tion o% lands p$rs$ant to Section 31 o% .A. No. 6657) logi' and reason di'tate t!at s$'! agreement m$st materiali/e wit!in a spe'i%i' period d$ring t!e li%etime o% C+,*) stating 'learly t!erein w!en s$'! arrangement m$st end. T!e a%orementioned pro ision may &e 'onsidered as t!e pro ision o% t!e law on B s$spended co erageD) parallel to t!e pro isions o% Section .. on 0o))ercial !ar)ing w!ere 'o erage o% C+,* is de%erred %or ten 6107 9e*/- a%ter t!e e%%e'ti ity o% ,ep$&li' +'t No. 662-. Stated simply) owners o% 'ommer'ial %arms are gi en a '!an'e to re'o$p t!eir in estment %or ten 910. years &e%ore same is %inally s$&8e'ted to 'o erage $nder t!e C+,*.

Its -otion not6ithstan$in., C(I has file$ the instant recourse in li.ht of 6hat it consi$ers as the *ARLs hast/ placin. of Cacien$a (uisita un$er CARP e en before PARC coul$ rule or e en rea$ the -otion for reconsi$eration% @1"@1# As

VI.

FINDIN?S> ANA"'SIS AND

ECO##ENDATION&

1. *ro iding %or t!e #$intessen'e and spirit o% t!e agrarian re%orm program) ,ep$&li' +'t No. 662- e0pli'itly pro ides;

BSECTION 2. 5e'laration o% *rin'iples and *oli'ies. It is t!e poli'y o% t!e State to p$rs$e a Compre!ensi e +grarian ,e%orm *rogram 9C+,*.. T!e wel%are o% t!e landless %armers and %armwor"ers will re'ei e t!e !ig!est 'onsideration to promote so'ial 8$sti'e and to mo e t!e nation toward so$nd r$ral de elopment and ind$striali/ation) and t!e esta&lis!ment o% owner '$lti ators!ip o% e'onomi'7si/e %arms as t!e &asis o% *!ilippine agri'$lt$re.

To t!is end) a more e#$ita&le distri&$tion and owners!ip o% land) wit! d$e regard to t!e rig!ts o% landowners to 8$st 'ompensation and to t!e e'ologi'al needs o% t!e nation) s!all &e $nderta"en to pro ide %armers and %armwor"ers wit! t!e opport$nity to en!an'e t!eir dignity and impro e t!e #$ality o% t!eir li es t!ro$g! greater prod$'ti ity o% agri'$lt$ral landsD 9$nders'oring added..

Git!in t!e 'onte0t o% t!e %oregoing poli'yLo&8e'ti e) t!e %armerL%armwor"er &ene%i'iaries 9AG>s. in agri'$lt$ral land owned and operated &y 'orporations may &e granted option &y t!e latter) wit! t!e inter ention and prior 'erti%i'ation o% 5+,) B0 0 0 t!e rig!t to p$r'!ase s$'! proportion o% t!e 'apital sto'" o% t!e 'orporation t!at t!e agri'$lt$ral land) a't$ally de oted to agri'$lt$ral a'ti ities) &ears in relation to t!e 'ompany(s total asset 0 0 0D 9Se'tion 61) ,ep. +'t NO. 662-.. Toward t!is end) 5+, iss$ed +dministrati e Order No. 10) series o% 1344) 'opy o% w!i'! is atta'!ed as Anne; </= and made an integral part !ereo%) w!i'! re#$ires t!at t!e sto'" distri&$tion option 9S5O. s!all meet t!e %ollowing 'riteria) reading) inter alia;

Ba. t!at t!e 'ontin$ed operation o% t!e 'orporation wit! its agri'$lt$ral land inta't and $n%ragmented is ia&le) wit! potential %or growt! and in'reased pro%ita&ility<

C(I later rue$, it 4can not 8no6 fro- the abo e-Guote$ resolution the facts an$ the la6 upon 6hich it is base$%5@9"@9# PARC 6oul$ e entuall/ $en/ C(ILs -otion for reconsi$eration Resolution No% 122F-9:-2! $ate$ Ma/ 9, 122F% ia

B&. t!at t!e plan %or sto'" distri&$tion to #$ali%ied &ene%i'iaries wo$ld res$lt in in'reased in'ome and greater &ene%its to t!em) t!an i% t!e lands were di ided and distri&$ted to t!em indi id$ally<

0000

+nd to ens$re) e%%e'ti e and %air implementation o% t!e 'ontemplated Sto'" 5istri&$tion *lan 9S5*.) t!e said +O also pro ides;

BSECTION 12. Re ocation of 0ertificate of 0o)plianceNon7'omplian'e wit! any o% t!e re#$irements o% Se'tion 61 o% ,+ 662-) as implemented &y t!ese Implementing :$idelines s!all &e gro$nds %or t!e re o'ation o% t!e Certi%i'ate o% Complian'e iss$ed to t!e 'orporate landowner7appli'ant.

SECTION 16. Reser ation 0la$seNot!ing !erein s!all &e 'onstr$ed as pre'l$ding t!e *+,C %rom ma"ing its own independent e al$ation and assessment o% t!e sto'" distri&$tion plan o% t!e 'orporate landowner7appli'ant and %rom pres'ri&ing ot!er re#$irements.D

0erein> ,owe!er> t,ere is ?et no Certificate of Compliance issued7

T!e reason is simple. 5espite t!e lapse o% si0teen 916. years) %rom t!e time t!e S5* was appro ed in No em&er 1343) &y resol$tion o% t!e 0 0 0 9*+,C.) t!e o&8e'ti e and poli'y o% C+,*) i.e.) a'#$isition and distri&$tion 9!erein $nder t!e [S5*]) only s!ares o% sto'"s. is yet to &e %$lly 'ompleted< t!e AG>s) instead o% t!e promisedLen isioned &etter li%e $nder t!e C+,* 9t!erein) as 'orporate owner.) do still li e in want) in a&8e't po erty) !ig!lig!ted &y t!e res$lting loss o% li es in t!eir ainL%$tile attempt to &e %inan'ially restored at least to w!ere t!ey were &e%ore t!e C+,* 9S5*. was implemented. G!ile t!ey were t!en a&le to ma"e &ot! ends meet) wit! t!e S5*) t!eir li es &e'ame misera&le.

B/ Resolution of )une !:, 122F,@:"@:# the Court, actin. on C(ILs -otion, issue$ a te-porar/ restrainin. or$er,@0"@0# en<oinin. the i-ple-entation of Resolution No% 1220-91-2! an$ the notice of co era.e%

2. Aor t!e %oregoing 'onsiderations) as %$rt!er dramati/ed &y t!e %ollowing iolationsLnon'omplian'e wit! t!e g$idelines pres'ri&ed) w!i'! are legally pres$med as integrated in t!e agreementsLa''ordsLstip$lations arri ed at t!ere$nder li"e t!e CLI S5*) namely;

2.1. pro ides;

Non'omplian'e wit! Se'tion 11 o% +dministrati e Order No. 10) Series o% 1344) w!i'!

BT!e appro ed sto'" distri&$tion plan s!all &e implemented wit!in t!ree 96. mont!s %rom re'eipt &y t!e 'orporate landowner7appli'ant o% t!e appro al t!ereo% &y t!e *+,C and t!e trans%er o% t!e s!ares o% sto'"s in t!e names o% t!e #$ali%ied &ene%i'iaries s!all &e re'orded in t!e sto'" and trans%er &oo"s and s$&mitted to t!e Se'$rities and E0'!ange Commission 9SEC. wit!in si0ty 960. days %rom t!e said implementation plan.D

T!e [S5*]) !owe er) s$&mitted a 607year implementation period in terms o% t!e trans%er o% s!ares o% sto'"s to t!e %armwor"ers &ene%i'iaries 9AG>s.. T!e FO+ pro ides;

B+t t!e end o% ea'! %is'al year; %or a period o% 60 years) SECON5 *+,TI s!all arrange wit! t!e AI,ST *+,TI t!e a'#$isition and distri&$tion to t!e TCI,5 *+,TI on t!e &asis o% t!e n$m&er o% days wor"ed and at no 'ost to t!em o% one7t!irtiet! 91L60. o% KD

*lainly) pending t!e iss$an'e o% t!e 'orresponding s!ares o% sto'"s) t!e AG>s remain ordinary %armers andLor %armwor"er and t!e land remain $nder t!e %$ll owners!ip and 'ontrol o% t!e original owner) t!e CLILT+5ECO.

To date t!e iss$an'e and trans%er o% t!e s!ares o% sto'"s) toget!er wit! t!e re'ording o% t!e trans%er) are yet to &e 'omplied wit!.

On )ul/ !9, 122F, the OS?, for public respon$ents PARC an$ the *AR, file$ its Co--ent@F"@F# on the petition% On *ece-ber 1, 122F, Noel Mallari, i-plea$e$ b/ C(I as respon$ent in his capacit/ as 4Sec-?en% AMBA(A,5 file$ his Manifestation an$ Motion 6ith

2.2. Non'omplian'e wit! t!e representationsLwarranties made $nder Se'tion 2 9a. and 9&. o% said +dministrati e Order No. 10.

+s 'laimed &y CLI itsel%) t!e 'orporate a'ti ity !as already stopped t!at t!e 'ontemplated pro%ita&ility) in'reased in'ome and greater &ene%its en$merated in t!e S5* !a e remained mere ill$sions.

2.6. T!e agri'$lt$ral land in ol ed was not maintained B$n%ragmentedD. +t least) 200 !e'tares !ereo% !a e &een 'ar ed o$t a%ter its land $se !as &een 'on erted to non7agri'$lt$ral $ses.

T!e /ec*;; o% said S5*LS5O o% CLI is re'ommended. Fore so) sin'e;

1. It i- cont/*/9 to P8<;ic Po;ic9

Se'tion 2 o% [,+] 662- pro ides t!at t!e wel%are o% landless %armwor"ers will re'ei e t!e !ig!est 'onsideration to promote so'ial 8$sti'e. +s s$'!) t!e State $nderta"e a more e#$ita&le distri&$tion and owners!ip o% land t!at s!all pro ide %armwor"ers wit! t!e opport$nity to en!an'e t!eir dignity and impro e t!e #$ality o% t!eir li es t!ro$g! greater prod$'ti ity o% agri'$lt$ral lands.

In t!e 'ase o% Ca'ienda L$isita) t!e %armwor"ers alleged t!at t!e #$ality o% t!eir li es !as not impro ed. In %a't it e en deteriorated espe'ially wit! t!e CLI Fanagement de'laration t!at t!e 'ompany !as not gained pro%its) in t!e last 12 years) t!at t!ere 'o$ld &e no de'laration and distri&$tion o% di idends.

2. T!e matter o% iss$an'eLdistri&$tion s!ares o% sto'"s in lie$ o% a't$al distri&$tion o% t!e agri'$lt$ral land in ol ed) was made totally dependent on t!e dis'retionL'apri'e o% CLI. @nder t!e set$p) t!e agreement is grossly onero$s to t!e AG>s as t!eir man days o% wor" 'annot depart %rom w!ate er management o% CLI $nilaterally dire'ts.

Co--ent Attache$ $ate$ *ece-ber :, 122F =Manifestation an$ Motion>% @@"@@# In it, Mallari state$ that he has bro8en a6a/ fro- AMBA(A 6ith other AMBA(A e3-e-bers an$ for-e$ Ear-6or8ers A.rarian Refor- Mo e-ent, Inc% =EARM>%@A"@A# Shoul$ this shift in alliance $en/ hi- stan$in., Mallari also pra/e$ that EARM be allo6e$ to inter ene%

T!ey 'an &e denied t!e opport$nity to &e granted a s!are o% sto'" &y 8$st not allowing t!em to wor" altoget!er $nder t!e g$ise o% rotation. Feanw!ile) wit!in t!e 607year period o% &ondage) t!ey may already rea'! retirement or) worse) get retren'!ed %or any reason) t!en) t!ey %ore er lose w!ate er &ene%it !e 'o$ld !a e re'ei ed as reg$lar agrarian &ene%i'iary $nder t!e C+,* i% only t!e S5* o% CLI were not a$t!ori/ed and appro ed.

In'identally) t!e AG>s did not !a e parti'ipation in t!e al$ation o% t!e agri'$lt$ral land %or t!e p$rpose o% determining its proportionate e#$ity in relation to t!e total assets o% t!e 'orporation. +pparently) t!e s$garlands were $nder al$ed.

6. T!e AG>s were misled into &elie ing &y t!e CLI) t!ro$g! its 'are%$lly worded *roposal t!at B0 0 0 t!e sto'" distri&$tion plan en isaged &y [Tade'o]) in e%%e't) ass$red o%;

B+. 5istri&$ting t!e s!ares o% sto'" o er a n$m&ers o% years among t!e #$ali%ied &ene%i'iaries at no 'ost to t!em<

>. +llowing t!e %armwor"er to 'ontin$e to wor" on t!e land as s$'! and re'ei e t!e wages and ot!er &ene%its pro ided %or &y !is 'olle'ti e &argaining agreement wit! t!e 'orporate landowner<

C. Entitling !im to re'ei e di idends) w!et!er in 'as! or in sto'") on t!e s!ares already distri&$ted to !im and &ene%it %rom w!ate er appre'iation in al$e t!at t!e said s!ares may gain as t!e 'orporation &e'omes pro%ita&le<

5. M$ali%ying !im to &e'ome t!e re'ipient o% w!ate er in'ome7a$gmenting and &ene%it7impro ing s'!emes t!at t!e spin7o%% 'orporation may esta&lis!) s$'! as t!e payment o% t!e g$aranteed t!ree 96=. per'ent o% gross sales e ery year and t!e %ree residential or !omelots to &e allotted to %amily &ene%i'iaries o% t!e plan< and

As e ents 6oul$ later $e elop, Mallari ha$ a partin. of 6a/s 6ith other EARM -e-bers, particularl/ 6oul$-be inter enors Renato (alic, et al% As thin.s stan$, Mallari returne$ to the AMBA(A fol$, creatin. the AMBA(A-Noel Mallari faction an$ lea in. Renato (alic, et al% as the re-ainin. -e-bers of EARM 6ho sou.ht to inter ene%

E. Heeping t!e agri'$lt$ral land inta't and $n%ragmented) to maintain t!e ia&ility o% t!e s$gar operation in ol ing t!e %arm as a single $nit and t!$s warrant to t!e a'"nowledged %armwor"er7&ene%i'iaries) !and7in7[!and] wit! t!eir a'#$isition o% t!e s!ares o% t!e 'apital sto'" o% t!e 'orporation owing t!e land) a 'ontin$ing and sta&le so$r'e o% in'ome.D 9Anne; <A=, s$pra..

+t t!e e0pense o% &eing repetiti e) t!e &e s$gar7'oated ass$ran'es were) more t!an eno$g! to made t!em %all %or t!e S5O as t!ey made t!em %eel ri'! as Bsto'" !olderD o% a ri'! and %amo$s 'orporation despite t!e dirt in t!eir !ands and t!e tatters) t!ey $se< gi en t!e %eeling o% se'$rity o% ten$re in t!eir wor" w!en t!ere is none< e0pe'tation to re'ei e di idends w!en t!e 'orporation !as already s$spended operations allegedly d$e to loses< and a sta&le s$gar prod$'tion &y maintaining t!e agri'$lt$ral lands w!en a s$&stantial portion t!ereo% o%) almost 1L4 o% t!e total area) !as already &een 'on erted to non7agri'$lt$ral $ses.
F0"F0# FF"FF#

I$% at F;:-F;;% I$% at 99;-9:1% F@"F@# I$% at !22% FA"FA# I$% at !2!% F;"F;# I$% at !:F% @2"@2# I$% at !2@-!:2% @!"@!# I$% at !29-!2F% @1"@1# I$% at !;% @9"@9# I$% at 01 @:"@:# I$% at 100-10F% @0"@0# I$% at 10@-10;% @F"@F# I$% at 99:-9F@% @@"@@# I$% at :9F-:0;% @A"@A# Att/s% E$.ar Bernal an$ Elorisa Al-o$iel si.ne$ the -otionK-anifestation as counsel of Mallari an$Kor EARM%

On )anuar/ !2, 122@, the Super isor/ ?roup@;"@;# an$ the AMBA(A-Rene ?alan. faction sub-itte$ their Co--entKOpposition $ate$ *ece-ber !@, 122F%A2
"A2#

On October 92, 122@, RCBC file$ a Motion for (ea e to Inter ene an$ to Eile an$ A$-it Attache$ Petition-In-Inter ention $ate$ October !A, 122@%A!"A!# (IPCO later follo6e$ 6ith a si-ilar -otion% A1"A1# In both -otions, RCBC an$ (IPCO conten$e$ that the assaile$ resolution effecti el/ nullifie$ the TCTs un$er their respecti e na-es as the properties co ere$ in the TCTs 6ere eritabl/ inclu$e$ in the )anuar/ 1, 122F notice of co era.e% In the -ain, the/ clai-e$ that the re ocation of the S*P cannot le.all/ affect their ri.hts as innocent purchasers for alue% Both -otions for lea e to inter ene 6ere .rante$ an$ the correspon$in. petitions-in-inter ention a$-itte$% On Au.ust !A, 12!2, the Court hear$ the -ain an$ inter enin. petitioners on oral ar.u-ents% On the other han$, the Court, on Au.ust 1:, 12!2, hear$ public respon$ents as 6ell as the respecti e counsels of the AMBA(A-MallariSuper isor/ ?roup, the AMBA(A-?alan. faction, an$ the EARM an$ its 1@ -e-bersA9"A9# ar.ue their case% Prior to the oral ar.u-ents, ho6e er, C(II AMBA(A, represente$ b/ MallariI the Super isor/ ?roup, represente$ b/ Suni.a an$ An$a/aI an$ the Unite$ (uisita Dor8ers Union, represente$ b/ El$ifonso Pin.ol, file$ 6ith the
@;"@;# The Super isor/ ?roup later tea-e$ up 6ith the AMBA(A-Mallari faction% Eor bre it/, the/ are referre$ to herein as the 4AMBA(A-Mallari-Super isor/ ?roup%5 A2"A2# Rollo, pp% 092-F:!% A!"A!# I$% at !902-!90;% A1"A1# I$% at !090-!0::% A9"A9# TSN, Au.ust 1:, 12!2, p% 11;%

Court a <oint sub-ission an$ -otion for appro al of a Co-pro-ise A.ree-ent =En.lish an$ Ta.alo. ersions> $ate$ Au.ust F, 12!2% On Au.ust 9!, 12!2, the Court, in a bi$ to resol e the $ispute throu.h an a-icable settle-ent, issue$ a ResolutionA:"A:# creatin. a Me$iation Panel co-pose$ of then Associate )ustice Ma% Alicia Austria-Martine7, as chairperson, an$ for-er CA )ustices Cector CofileJa an$ Teresita */-(iacco Elores, as -e-bers% Meetin.s on fi e =0> separate $ates, i%e%, Septe-ber A, ;, !:, 12, an$ 1@, 12!2, 6ere con$ucte$% *espite perse erin. an$ painsta8in. efforts on the part of the panel, -e$iation ha$ to be $iscontinue$ 6hen no acceptable a.ree-ent coul$ be reache$% Th( I 1( C(I raises the follo6in. issues for our consi$eration&
I% DCETCER OR NOT PUB(IC RESPON*ENTS PARC AN* SECRETARB PAN?AN*AMAN CA'E )URIS*ICTION, PODER AN*KOR AUTCORITB TO NU((IEB, RECA((, RE'OPE OR RESCIN* TCE S*OA% II% "IE SO#, 3 3 3 CAN TCEB STI(( EQERCISE SUCC )URIS*ICTION, PODER AN*KOR AUTCORITB AT TCIS TIME, I.0., AETER SIQTEEN =!F> BEARS EROM TCE EQECUTION OE TCE S*OA AN* ITS IMP(EMENTATION DITCOUT 'IO(ATIN? SECTIONS ! AN* !2 OE ARTIC(E III =BI(( OE RI?CTS> OE TCE CONSTITUTION A?AINST *EPRI'ATION OE PROPERTB DITCOUT *UE PROCESS OE (AD AN* TCE IMPAIRMENT OE CONTRACTUA( RI?CTS AN* OB(I?ATIONSR MOREO'ER, ARE TCERE (E?A( ?ROUN*S UN*ER TCE CI'I( CO*E, vi1, ARTIC(E !!;! 3 3 3, ARTIC(ES !9A2, !9A! AN* !9A1 3 3 3 ARTIC(E !9;2 3 3 3 AN* ARTIC(E !:2; 3 3 3 TCAT CAN BE IN'OPE* TO NU((IEB, RECA((, RE'OPE, OR RESCIN* TCE S*OAR
A:"A:#

Rollo, pp% 92F2-92F1%

III% DCETCER TCE PETITIONS TO NU((IEB, RECA((, RE'OPE OR RESCIN* TCE S*OA CA'E ANB (E?A( BASIS OR ?ROUN*S AN* DCETCER TCE PETITIONERS TCEREIN ARE TCE REA( PARTIES-ININTEREST TO EI(E SAI* PETITIONS%

I'% DCETCER TCE RI?CTS, OB(I?ATIONS AN* REME*IES OE TCE PARTIES TO TCE S*OA ARE NOD ?O'ERNE* BB TCE CORPORATION CO*E =BATAS PAMBANSA B(?% FA> AN* NOT BB TCE 3 3 3 "CAR(# 3 3 3%

On the other han$, RCBC sub-its the follo6in. issues&

I% RESPON*ENT PARC COMMITTE* ?RA'E ABUSE OE *ISCRETION AMOUNTIN? TO (ACP OR EQCESS OE )URIS*ICTION DCEN IT *I* NOT EQC(U*E TCE SUB)ECT PROPERTB EROM TCE CO'ERA?E OE TCE CARP *ESPITE TCE EACT TCAT PETITIONER-INTER'ENOR RCBC CAS ACSUIRE* 'ESTE* RI?CTS AN* IN*EEEASIB(E TIT(E O'ER TCE SUB)ECT PROPERTB AS AN INNOCENT PURCCASER EOR 'A(UE% A% TCE ASSAI(E* RESO(UTION NO% 1220-91-2! AN* TCE NOTICE OE CO'ERA?E *ATE* 21 )ANUARB 122F CA'E TCE EEEECT OE NU((IEBIN? TCT NOS% 9;!20! AN* 9;!201 IN TCE NAME OE PETITIONER-INTER'ENOR RCBC% B% AS AN INNOCENT PURCCASER EOR 'A(UE, PETITIONERINTER'ENOR RCBC CANNOT BE PRE)U*ICE* BB A SUBSESUENT RE'OCATION OR RESCISSION OE TCE S*OA% II% TCE ASSAI(E* RESO(UTION NO% 1220-91-2! AN* TCE NOTICE OE CO'ERA?E *ATE* 21 )ANUARB 122F DERE ISSUE* DITCOUT AEEOR*IN? PETITIONER-INTER'ENOR RCBC ITS RI?CT TO *UE PROCESS AS AN INNOCENT PURCCASER EOR 'A(UE%

(IPCO, li8e RCBC, asserts ha in. acGuire$ este$ an$ in$efeasible ri.hts o er certain portions of the con erte$ propert/, an$, hence, 6oul$ ascribe on PARC the co--ission of .ra e abuse of $iscretion 6hen it inclu$e$ those portions in the notice of co era.e% An$ apart fro- raisin. issues i$entical 6ith those of C(I, such as but not li-ite$ to the absence of ali$ .roun$s to 6arrant the rescission an$Kor re ocation of the S*P, (IPCO 6oul$ alle.e that the assaile$ resolution an$ the notice of co era.e 6ere issue$ 6ithout affor$in. it the ri.ht to $ue process as an innocent purchaser for alue% The .o ern-ent, (IPCO also ar.ues, is estoppe$ fro- reco erin. properties 6hich ha e since passe$ to innocent parties% Si-pl/ for-ulate$, the principal $eter-inati e issues ten$ere$ in the -ain petition an$ to 6hich all other relate$ Guestions -ust /iel$ boil $o6n to the follo6in.& =!> -atters of stan$in.I =1> the constitutionalit/ of Sec% 9! of RA FF0@I =9> the <uris$iction of PARC to recall or re o8e C(ILs S*PI =:> the ali$it/ or propriet/ of such recall or re ocator/ actionI an$ =0> corollar/ to =:>, the ali$it/ of the ter-s an$ con$itions of the S*P, as e-bo$ie$ in the S*OA% O1/ R12inI" De first procee$ to the e3a-ination of the preli-inar/ issues before $el in. on the -ore serious challen.es bearin. on the ali$it/ of PARCLs assaile$ issuance an$ the .roun$s for it%

S15(/.i #/, G/#15, AMBALA and *h(i/ /( 5()*i.( 2(ad(/ a/( /(a2 5a/*i( AinAin*(/( * C(I 6oul$ $en/ real part/-in-interest status to the purporte$ lea$ers of the Super isor/ ?roup an$ AMBA(A, i%e%, )ulio Suni.a, Din$sor An$a/a, an$ Rene ?alan., 6ho file$ the re ocator/ petitions before the *AR% As C(I 6oul$ ha e it, ?alan., the self-st/le$ hea$ of AMBA(A, .aine$ C(I e-plo/-ent in )une !;;2 an$, thus, coul$ not ha e been a part/ to the S*OA e3ecute$ a /ear earlier% A0"A0# As re.ar$s the Super isor/ ?roup, C(I alle.es that super isors are not re.ular far-6or8ers, but the co-pan/ nonetheless consi$ere$ the- EDBs un$er the S*OA as a -ere concession to enable the- to en<o/ the sa-e benefits .i en Gualifie$ re.ular far-6or8ers% Co6e er, if the S*OA 6oul$ be cancele$ an$ lan$ $istribution effecte$, so C(I clai-s, citin. 2ortich v. Corona,AF"AF# the super isors 6oul$ be e3clu$e$ fro- recei in. lan$s as far-6or8ers other than the re.ular far-6or8ers 6ho are -erel/ entitle$ to the 4fruits of the lan$%5A@"A@# The S*OA no less i$entifies 4the S*P Gualifie$ beneficiaries5 as 4*h( 3a/+=#/6(/ =h# a55(a/ in *h( ann1a2 5a,/#22, in)21 i.( #3 *h( 5(/+an(n* and (a #na2 (+52#,(( , =h# a/( /(-12a/2, #/ 5(/i#di)a22, (+52#,(d 4, >HLI?%5AA"AA# ?alan., per C(ILs o6n a$-ission, is e-plo/e$ b/ C(I, an$ is, thus, a Gualifie$ beneficiar/ of the S*PI he co-es 6ithin the $efinition of a real part/-ininterest un$er Sec% 1, Rule 9 of the Rules of Court, -eanin., one 6ho stan$s to be benefite$ or in<ure$ b/ the <u$.-ent in the suit or is the part/ entitle$ to the a ails of the suit%

A0"A0# AF"AF#

I$% at A!% ?%R% No% !9!:0@, Au.ust !;, !;;;, 9!1 SCRA @0!% A@"A@# Rollo, p% A1% AA"AA# I$% at !:;%

The sa-e hol$s true 6ith respect to the Super isor/ ?roup 6hose -e-bers 6ere a$-itte$l/ e-plo/e$ b/ C(I an$ 6hose na-es an$ si.natures e en appeare$ in the anne3 of the S*OA% Bein. Gualifie$ beneficiaries of the S*P, Suni.a an$ the other F! super isors are certainl/ parties 6ho 6oul$ benefit or be pre<u$ice$ b/ the <u$.-ent recallin. the S*P or replacin. it 6ith so-e other -o$alit/ to co-pl/ 6ith RA FF0@% E en assu-in. that -e-bers of the Super isor/ ?roup are not re.ular far-6or8ers, but are in the cate.or/ of 4other far-6or8ers5 -entione$ in Sec% :, Article QIII of the Constitution,A;"A;# thus onl/ entitle$ to a share of the fruits of the lan$, as in$ee$ 2ortich teaches, this $oes not $etract fro- the fact that the/ are still i$entifie$ as bein. a-on. the 4S*P Gualifie$ beneficiaries%5 As such, the/ are, thus, entitle$ to brin. an action upon the S*P% ;2";2# At an/ rate, the follo6in. a$-ission -a$e b/ Att/% ?ener Asuncion, counsel of C(I, $urin. the oral ar.u-ents shoul$ put to rest an/ lin.erin. $oubt as to the status of protesters ?alan., Suni.a, an$ An$a/a&
)ustice Bersa-in& 3 3 3 I hear$ /ou a 6hile a.o that /ou 6ere conce$in. the Gualifie$ far-er beneficiaries of Cacien$a (uisita 6ere real parties in interestR Att/% Asuncion& Bes, Bour Conor please, real part/ in interest 6hich that Guestion refers to the co-plaints of protest initiate$ before the *AR an$ the real part/ in interest there be consi$ere$ as possesse$ b/ the far-er beneficiaries 6ho initiate$ the protest%;!";!#

Sec% :% The State shall, b/ la6, un$erta8e an a.rarian refor- pro.ra- foun$e$ on the ri.ht of far-ers an$ re.ular far- 6or8ers, 6ho are lan$less, to o6n $irectl/ or collecti el/ the lan$s the/ till or, in the case of other far- 6or8ers, to recei e a <ust share of the fruits thereof% To this en$, the State shall encoura.e an$ un$erta8e the <ust $istribution of all a.ricultural lan$s, sub<ect to such priorities an$ reasonable retention li-its as the Con.ress -a/ prescribe, ta8in. into account ecolo.ical, $e elop-ental, or eGuit/ consi$erations, an$ sub<ect to the pa/-ent of <ust co-pensation% In $eter-inin. retention li-its the State shall respect the ri.ht of s-all lan$o6ners% The State shall further pro i$e incenti es for oluntar/ lan$-sharin.% ;2";2# Cons%mido v. Ros, ?%R% No% !FFA@0, )ul/ 9!, 122@, 01A SCRA F;F, @21% ;!";!# TSN, Au.ust !A, 12!2, p% !:!%

A;"A;#

Eurther, un$er Sec% 02, para.raph : of RA FF0@, far-er-lea$ers are e3pressl/ allo6e$ to represent the-sel es, their fello6 far-ers or their or.ani7ations in an/ procee$in.s before the *AR% Specificall/&
SEC% 02% Suasi-)u$icial Po6ers of the *AR%3 3 3 3333 R( 5#n i42( 3a/+(/ 2(ad(/ ha22 4( a22#=(d *# /(5/( (n* *h(+ (2.( , *h(i/ 3(22#= 3a/+(/ #/ *h(i/ #/-aniCa*i#n in an, 5/#)((din- 4(3#/( *h( DAR& Pro i$e$, ho6e er, that 6hen there are t6o or -ore representati es for an/ in$i i$ual or .roup, the representati es shoul$ choose onl/ one a-on. the-sel es to represent such part/ or .roup before an/ *AR procee$in.s% =E-phasis supplie$%>

Clearl/, the respecti e lea$ers of the Super isor/ ?roup an$ AMBA(A are conte3tuall/ real parties-in-interest allo6e$ b/ la6 to file a petition before the *AR or PARC% This is not necessaril/ to sa/, ho6e er, that ?alan. represents AMBA(A, for as recor$s sho6 an$ as C(I aptl/ note$, ;1";1# his 4petisyon5 file$ 6ith *AR $i$ not carr/ the usual authori7ation of the in$i i$uals in 6hose behalf it 6as suppose$ to ha e been institute$% To $ate, such authori7ation $ocu-ent, 6hich 6oul$ lo.icall/ inclu$e a list of the na-es of the authori7in. EDBs, has /et to be sub-itte$ to be part of the recor$s%

PARC7 A1*h#/i*, *# R(.#6( a S*#)6 Di */i41*i#n P2an

;1";1#

Rollo, p% A@!%

On the postulate that the sub<ect <uris$iction is conferre$ b/ la6, C(I -aintains that PARC is 6ithout authorit/ to re o8e an S*P, for neither RA FF0@ nor EO 11; e3pressl/ ests PARC 6ith such authorit/% Dhile, as C(I ar.ue$, EO 11; e-po6ers PARC to appro e the plan for stoc8 $istribution in appropriate cases, the e-po6er-ent onl/ inclu$es the po6er to $isappro e, but not to recall its pre ious appro al of the S*P after it has been i-ple-ente$ b/ the parties% ;9";9# To C(I, it is the court 6hich has <uris$iction an$ authorit/ to or$er the re ocation or rescission of the PARC-appro e$ S*P% De $isa.ree% Un$er Sec% 9! of RA FF0@, as i-ple-ente$ b/ *AO !2, the authorit/ to appro e the plan for stoc8 $istribution of the corporate lan$o6ner belon.s to PARC% Co6e er, contrar/ to petitioner C(ILs posture, PARC also has the po6er to re o8e the S*P 6hich it pre iousl/ appro e$% It -a/ be, as ur.e$, that RA FF0@ or other e3ecuti e issuances on a.rarian refor- $o not e3plicitl/ est the PARC 6ith the po6er to re o8eKrecall an appro e$ S*P% Such po6er or authorit/, ho6e er, is $ee-e$ possesse$ b/ PARC un$er the 5/in)i52( #3 n()( a/, i+52i)a*i#n, a 4a i) 5# *12a*( *ha* =ha* i i+52i(d in a *a*1*( i a +1)h a 5a/* #3 i* a *ha* =hi)h i (D5/( (d%;:";:# De ha e e3plaine$ that 4e er/ statute is un$erstoo$, b/ i-plication, to contain all such pro isions as -a/ be necessar/ to effectuate its ob<ect an$ purpose, or to -a8e effecti e ri.hts, po6ers, pri ile.es or <uris$iction 6hich it .rants, inclu$in. all such collateral an$ subsi$iar/ conseGuences as -a/ be fairl/
I$% at 9A% Atien1a v. 3illarosa, ?%R% No% !F!2A!, Ma/ !2, 1220, :0A SCRA 9A0, :29I citin. Ch%a v. Civil Service Commission, ?%R% No% AA;@;, Eebruar/ @, !;;1, 12F SCRA F0%
;:";:# ;9";9#

an$ lo.icall/ inferre$ fro- its ter-s%5;0";0# Eurther, 4e er/ statutor/ .rant of po6er, ri.ht or pri ile.e is $ee-e$ to inclu$e all inci$ental po6er, ri.ht or pri ile.e%;F";F# $ordon v. 3eridiano II is instructi e&
Th( 5#=(/ *# a55/#.( a 2i)(n ( in)21d( 4, i+52i)a*i#n, (.(n i3 n#* (D5/( 2, -/an*(d, *h( 5#=(/ *# /(.#6( i*" B/ e3tension, the po6er to re o8e is li-ite$ b/ the authorit/ to .rant the license, fro- 6hich it is $eri e$ in the first place% Thus, if the E*A .rants a license upon its fin$in. that the applicant $ru. store has co-plie$ 6ith the reGuire-ents of the .eneral la6s an$ the i-ple-entin. a$-inistrati e rules an$ re.ulations, it is onl/ for their iolation that the E*A -a/ re o8e the sai$ license% B/ the sa-e to8en, ha in. .rante$ the per-it upon his ascertain-ent that the con$itions thereof as applie$ 3 3 3 ha e been co-plie$ 6ith, it is onl/ for the iolation of such con$itions that the -a/or -a/ re o8e the sai$ per-it%;@";@# =E-phasis supplie$%>

Eollo6in. the $octrine of necessar/ i-plication, it -a/ be state$ that the confer-ent of e3press po6er to appro e a plan for stoc8 $istribution of the a.ricultural lan$ of corporate o6ners necessaril/ inclu$es the po6er to re o8e or recall the appro al of the plan% As public respon$ents aptl/ obser e, to $en/ PARC such re ocator/ po6er 6oul$ re$uce it into a toothless a.enc/ of CARP, because the er/ sa-e a.enc/ tas8e$ to ensure co-pliance b/ the corporate lan$o6ner 6ith the appro e$ S*P 6oul$ be 6ithout authorit/ to i-pose sanctions for non-co-pliance 6ith it% ;A";A# Dith the ie6 De ta8e of the case, onl/ PARC can effect such re ocation% The *AR Secretar/, b/ his o6n authorit/ as such, cannot plausibl/ $o so, as the acceptance an$Kor appro al of the S*P sou.ht to be ta8en bac8 or un$one is the act
;0";0# ;F";F#

I$% I$% ;@";@# No% (-00192, No e-ber A, !;AA, !F@ SCRA 0!, 0;-F2% ;A";A# Public respon$entsL Me-oran$u-, p% 1:

of PARC 6hose official co-position inclu$es, no less, the Presi$ent as chair, the *AR Secretar/ as ice-chair, an$ at least ele en =!!> other $epart-ent hea$s%;;";;# On another but relate$ issue, the C(I foists on the Court the ar.u-ent that sub<ectin. its lan$hol$in.s to co-pulsor/ $istribution after its appro e$ S*P has been i-ple-ente$ 6oul$ i-pair the contractual obli.ations create$ un$er the S*OA% The broa$ s6eep of C(ILs ar.u-ent i.nores certain establishe$ le.al precepts an$ -ust, therefore, be re<ecte$% A la6 authori7in. interference, 6hen appropriate, in the contractual relations bet6een or a-on. parties is $ee-e$ rea$ into the contract an$ its i-ple-entation cannot successfull/ be resiste$ b/ force of the non-i-pair-ent .uarantee% There is, in that instance, no i-pin.e-ent of the i-pair-ent clause, the non-i-pair-ent protection bein. applicable onl/ to la6s that $ero.ate 5/i#/ acts or contracts b/ enlar.in., abri$.in. or in an/ -anner chan.in. the intention of the parties% I-pair-ent, in fine, obtains if a 14 (01(n* la6 chan.es the ter-s of a contract bet6een the parties, i-poses ne6 con$itions, $ispenses 6ith those a.ree$ upon or 6ith$ra6s e3istin. re-e$ies for the enforce-ent of the ri.hts of the parties% !22"!22# Necessaril/, the constitutional proscription 6oul$ not appl/ to la6s alrea$/ in effect at the ti-e of contract e3ecution, as in the case of RA FF0@, in relation to *AO !2, is-N- is C(ILs S*OA% As hel$ in Serrano v. $allant -aritime Services, Inc.&

;;";;#

!22"!22#

EO 11;, Sec% !A% .A4A' Party5list v. C6-0L0C, ?%R% No% !@@02A, Au.ust @, 122;, 0;0 SCRA :@@, :;A%

The prohibition "a.ainst i-pair-ent of the obli.ation of contracts# is ali.ne$ 6ith the .eneral principle that la6s ne6l/ enacte$ ha e onl/ a prospective operation, an$ cannot affect acts or contracts alrea$/ perfecte$I ho6e er, as to la6s alrea$/ in e3istence, their pro isions are rea$ into contracts an$ $ee-e$ a part thereof% Th1 , *h( n#nAi+5ai/+(n* )2a1 ( 1nd(/ S()*i#n $&, A/*i)2( II >#3 *h( C#n *i*1*i#n? i 2i+i*(d in a552i)a*i#n *# 2a= a4#1* *# 4( (na)*(d *ha* =#12d in an, =a, d(/#-a*( 3/#+ (Di *in- a)* #/ )#n*/a)* 4, (n2a/-in-, a4/id-in- #/ in an, +ann(/ )han-in- *h( in*(n*i#n #3 *h( 5a/*i( *h(/(*#%!2!"!2!# =E-phasis supplie$%>

Nee$less to stress, the assaile$ Resolution No% 1220-91-2! is not the 8in$ of issuance 6ithin the a-bit of Sec% !2, Art% III of the Constitution pro i$in. that 47n8o law impairing the o#ligation of contracts shall #e passed%5 Parentheticall/, C(I ta.s the S*OA as an or$inar/ ci il la6 contract an$, as such, a breach of its ter-s an$ con$itions is not a PARC a$-inistrati e -atter, but one that .i es rise to a cause of action co.ni7able b/ re.ular courts% !21"!21# This contention has little to co--en$ itself% The S*OA is a 5()ia2 )#n*/a)* i+41(d =i*h 5142i) in*(/( *, entere$ into an$ crafte$ pursuant to the pro isions of RA FF0@% It e-bo$ies the S*P, 6hich reGuires for its ali$it/, or at least its enforceabilit/, PARCLs appro al% An$ the fact that the certificate of co-pliance!29"!29#MMto be issue$ b/ a.rarian authorities upon co-pletion of the $istribution of stoc8sMMis re ocable b/ the sa-e issuin. authorit/ supports the i$ea

?%R% No% !F@F!:, March 1:, 122;, 0A1 SCRA 10:, 1@0-1@F% Rollo, p% :2I TSN Au.ust !A, 12!2, p% @:% 106[106] DAO 10> Section 11. $mplementation % #onitoring of PlanT!e appro ed [S5*] s!all &e implemented wit!in t!ree 96. mont!s 0 0 0.
!21"!21#

!2!"!2!#

@pon 'ompletion [o% t!e sto'" distri&$tion]) t!e 'orporate landowner7appli'ant s!all &e iss$ed a Certi%i'ate o% Complian'e. 0 0 0 Section 12. Non7'omplian'e wit! any o% t!e re#$irements o% Se'tion 61 o% ,+ 66-2) as implemented &y t!is Implementing :$idelines s!all &e gro$nds %or t!e re o'ation o% t!e Certi%i'ate o% Complian'e iss$ed to t!e 'orporate landowner7appli'ant. 0 0 0

that e er/thin. about the i-ple-entation of the S*P is, at the first instance, sub<ect to a$-inistrati e a$<u$ication% C(I also parla/s the notion that the parties to the S*OA shoul$ no6 loo8 to the Corporation Co$e, instea$ of to RA FF0@, in $eter-inin. their ri.hts, obli.ations an$ re-e$ies% The Co$e, it a$$s, shoul$ be the applicable la6 on the $isposition of the a.ricultural lan$ of C(I% Contrar/ to the ie6 of C(I, the ri.hts, obli.ations an$ re-e$ies of the parties to the S*OA e-bo$/in. the S*P are pri-aril/ .o erne$ b/ RA FF0@% It shoul$ abun$antl/ be -a$e clear that C(I 6as precisel/ create$ in or$er to co-pl/ 6ith RA FF0@, 6hich the OS? aptl/ $escribe$ as the 4-other la65 of the S*OA an$ the S*P%!2:"!2:# It is, thus, para$o3ical for C(I to shiel$ itself fro- the co era.e of CARP b/ in o8in. e3clusi e applicabilit/ of the Corporation Co$e un$er the .uise of bein. a corporate entit/% Dithout in an/ 6a/ -ini-i7in. the rele ance of the Corporation Co$e since the EDBs of C(I are also stoc8hol$ers, its applicabilit/ is li-ite$ as the ri.hts of the parties arisin. fro- the S*P shoul$ not be -a$e to supplant or circu- ent the a.rarian refor- pro.ra-% Dithout $oubt, the Corporation Co$e is the .eneral la6 pro i$in. for the for-ation, or.ani7ation an$ re.ulation of pri ate corporations% On the other han$, RA FF0@ is the special la6 on a.rarian refor-% As bet6een a .eneral an$ special la6, the latter shall pre ailTgeneralia speciali#%s non derogant%!20"!20# Besi$es, the
TSN, Au.ust 1:, 12!2, p% !9% 9or%ga v. Arcenas, ?%R% Nos% !FA991 an$ !F;209, )une !;, 122;, 0;2 SCRA :;, FAI citin. In Re: Petition for Assistance in the Li;%idation of the R%ral .an( of .o(od <.eng%et=, Inc., P&IC v. .%rea% of Internal Reven%e, ?%R% No% !0A1F!, *ece-ber !A, 122F, 0!! SCRA !19, !:!%
!20"!20# !2:"!2:#

present i-passe bet6een C(I an$ the pri ate respon$ents is not an intra-corporate $ispute 6hich necessitates the application of the Corporation Co$e% Dhat pri ate respon$ents Guestione$ before the *AR is the proper i-ple-entation of the S*P an$ C(ILs co-pliance 6ith RA FF0@% E i$entl/, RA FF0@ shoul$ be the applicable la6 to the instant case% C(I further conten$s that the inclusion of the a.ricultural lan$ of Cacien$a (uisita un$er the co era.e of CARP an$ the e entual $istribution of the lan$ to the EDBs 6oul$ a-ount to a $isposition of all or practicall/ all of the corporate assets of C(I% C(I 6oul$ a$$ that this contin.enc/, if e er it co-es to pass, reGuires the applicabilit/ of the Corporation Co$e pro isions on corporate $issolution% De are not persua$e$% In$ee$, the pro isions of the Corporation Co$e on corporate $issolution 6oul$ appl/ insofar as the 6in$in. up of C(ILs affairs or liGui$ation of the assets is concerne$% Co6e er, the -ere inclusion of the a.ricultural lan$ of Cacien$a (uisita un$er the co era.e of CARP an$ the lan$Ls e entual $istribution to the EDBs 6ill not, 6ithout -ore, auto-aticall/ tri..er the $issolution of C(I% As state$ in the S*OA itself, the percenta.e of the alue of the a.ricultural lan$ of Cacien$a (uisita in relation to the total assets transferre$ an$ con e/e$ b/ Ta$eco to C(I co-prises onl/ 99%1;FO, follo6in. this eGuation& alue of the a.ricultural lan$s $i i$e$ b/ total corporate assets% B/ no stretch of i-a.ination 6oul$ sai$ percenta.e a-ount to a $isposition of all or practicall/ all of C(ILs corporate assets shoul$ co-pulsor/ lan$ acGuisition an$ $istribution ensue%

This brin.s us to the ali$it/ of the re ocation of the appro al of the S*P si3teen =!F> /ears after its e3ecution pursuant to Sec% 9! of RA FF0@ for the reasons set forth in the Ter-inal Report of the Special Tas8 Eorce, as en$orse$ b/ PARC E3co-% But first, the -atter of the constitutionalit/ of sai$ section% C#n *i*1*i#na2 I 1( EARM as8s for the in ali$ation of Sec% 9! of RA FF0@, insofar as it affor$s the corporation, as a -o$e of CARP co-pliance, to resort to stoc8 $istribution, an arran.e-ent 6hich, to EARM, i-pairs the fun$a-ental ri.ht of far-ers an$ far-6or8ers un$er Sec% :, Art% QIII of the Constitution%!2F"!2F# To a -ore specific, but $irect point, EARM ar.ues that Sec% 9! of RA FF0@ per-its stoc8 transfer in lieu of outri.ht a.ricultural lan$ transferI in fine, there is stoc8 certificate o6nership of the far-ers or far-6or8ers instea$ of the- o6nin. the lan$, as en isa.e$ in the Constitution% Eor EARM, this -o$alit/ of $istribution is an ano-al/ to be annulle$ for bein. inconsistent 6ith the basic concept of a.rarian refor- in.raine$ in Sec% :, Art% QIII of the Constitution%!2@"!2@# Reactin., C(I insists that a.rarian refor- is not onl/ about transfer of lan$ o6nership to far-ers an$ other Gualifie$ beneficiaries% It $ra6s attention in this re.ar$ to Sec% 9=a> of RA FF0@ on the concept an$ scope of the ter- 4 a-/a/ian /(3#/+%5 The constitutionalit/ of a la6, C(I a$$e$, cannot, as here, be attac8e$ collaterall/%

!2F"!2F# !2@"!2@#

TSN, Au.ust 1:, 12!2, p% 120% I$%

The instant challen.e on the constitutionalit/ of Sec% 9! of RA FF0@ an$ necessaril/ its counterpart pro ision in EO 11; -ust fail as e3plaine$ belo6% Dhen the Court is calle$ upon to e3ercise its po6er of <u$icial re ie6 o er, an$ pass upon the constitutionalit/ of, acts of the e3ecuti e or le.islati e $epart-ents, it $oes so onl/ 6hen the follo6in. essential reGuire-ents are first -et, to 6it& =!>
=1> =9> there is an actual case or contro ers/I that the constitutional Guestion is raise$ at the earliest possible opportunit/ b/ a proper part/ or one 6ith loc%s standiI an$ the issue of constitutionalit/ -ust be the er/ lis mota of the case%!2A"!2A#

Not all the fore.oin. reGuire-ents are satisfie$ in the case at bar% Dhile there is in$ee$ an actual case or contro ers/, inter enor EARM, co-pose$ of a s-all -inorit/ of 1@ far-ers, has /et to e3plain its failure to challen.e the constitutionalit/ of Sec% 9l of RA FF0@, since as earl/ as No e-ber 1!, l;A; 6hen PARC appro e$ the S*P of Cacien$a (uisita or at least 6ithin a reasonable ti-e thereafter an$ 6h/ its -e-bers recei e$ benefits fro- the S*P 6ithout so -uch of a protest% It 6as onl/ on *ece-ber :, 1229 or !: /ears after appro al of the S*P ia PARC Resolution No% A;-!1-1 $ate$ No e-ber 1!, !;A; that sai$ plan an$ appro in. resolution 6ere sou.ht to be re o8e$, but not, to stress, b/ EARM or an/ of its -e-bers, but b/ petitioner AMBA(A% Eurther-ore, the AMBA(A petition $i$ NOT Guestion the constitutionalit/ of Sec% 9! of RA FF0@, but concentrate$ on the purporte$ fla6s an$ .aps in the subseGuent
$arcia v. 0>ec%tive Secretary, ?%R% No% !0@0A:, April 1, 122;, 0A9 SCRA !!;, !1;I citin. 2ranciso, Jr. v. /o%se of Representatives , ?%R% No% !F21F!, No e-ber !2, 1229, :!0 SCRA ::%
!2A"!2A#

i-ple-entation of the S*P% E en the public respon$ents, as represente$ b/ the Solicitor ?eneral, $i$ not Guestion the constitutionalit/ of the pro ision% On the other han$, EARM, 6hose 1@ -e-bers for-erl/ belon.e$ to AMBA(A, raise$ the constitutionalit/ of Sec% 9! onl/ on Ma/ 9, 122@ 6hen it file$ its Supple-ental Co--ent 6ith the Court% Thus, it too8 EARM so-e ei.hteen =!A> /ears froNo e-ber 1!, !;A; before it challen.e$ the constitutionalit/ of Sec% 9! of RA FF0@ 6hich is Guite too late in the $a/% The EARM -e-bers slept on their ri.hts an$ e en accepte$ benefits fro- the S*P 6ith nar/ a co-plaint on the alle.e$ unconstitutionalit/ of Sec% 9! upon 6hich the benefits 6ere $eri e$% The Court cannot no6 be .oa$e$ into resol in. a constitutional issue that EARM faile$ to assail after the lapse of a lon. perio$ of ti-e an$ the occurrence of nu-erous e ents an$ acti ities 6hich resulte$ fro- the application of an alle.e$ unconstitutional le.al pro ision% It has been e-phasi7e$ in a nu-ber of cases that the Guestion of constitutionalit/ 6ill not be passe$ upon b/ the Court unless it is properl/ raise$ an$ presente$ in an appropriate case at the first opportunit/% !2;"!2;# EARM is, therefore, re-iss in belate$l/ Guestionin. the constitutionalit/ of Sec% 9! of RA FF0@% The secon$ reGuire-ent that the constitutional Guestion shoul$ be raise$ at the earliest possible opportunit/ is clearl/ 6antin.% The last but the -ost i-portant reGuisite that the constitutional issue -ust be the er/ lis mota of the case $oes not li8e6ise obtain% The lis mota aspect is not present, the constitutional issue ten$ere$ not bein. critical to the resolution of the
A#S10#N #roadcasting 0orporation . 2hilippine 3$lti13edia Syste), 4nc. ) :.,. Nos. 1-2-637-0) 1an$ary 13) 2003) 2-6 SC,+ 262) 243 'iting 2hilippine 5eterans #ank . 0o$rt of Appeals ) :.,. No. 162261) 1$ne 60) 2002) E62 SC,+ 666< Ape6 3ining 0o., 4nc. . So$theast 3indanao 7old 3ining 0orp.) :.,. Nos. 122616) 122624) 162613720 and 1224-07-1.
103[103]

case% The un/iel$in. rule has been to a oi$, 6hene er plausible, an issue assailin. the constitutionalit/ of a statute or .o ern-ental act% !!2"!!2# If so-e other .roun$s e3ist b/ 6hich <u$.-ent can be -a$e 6ithout touchin. the constitutionalit/ of a la6, such recourse is fa ore$%!!!"!!!# $arcia v. 0>ec%tive Secretary e3plains 6h/&
Lis -ota T the fourth reGuire-ent to satisf/ before this Court 6ill un$erta8e <u$icial re ie6 T -eans that the Court 6ill not pass upon a Guestion of unconstitutionalit/, althou.h properl/ presente$, if the case can #e disposed of on some other gro%nd, s%ch as the application of the stat%te or the general law % The petitioner -ust be able to sho6 that the case cannot be le.all/ resol e$ unless the constitutional Guestion raise$ is $eter-ine$% This reGuire-ent is base$ on the rule that e er/ la6 has in its fa or the presu-ption of constitutionalit/I to <ustif/ its nullification, there -ust be a clear an$ uneGui ocal breach of the Constitution, an$ not one that is $oubtful, speculati e, or ar.u-entati e% !!1"!!1# =Italics in the ori.inal%>

The lis mota in this case, procee$in. fro- the basic positions ori.inall/ ta8en b/ AMBA(A =to 6hich the EARM -e-bers pre iousl/ belon.e$> an$ the Super isor/ ?roup, is the alle.e$ non-co-pliance b/ C(I 6ith the con$itions of the S*P to support a plea for its re ocation% An$ before the Court, the lis mota is 6hether or not PARC acte$ in .ra e abuse of $iscretion 6hen it or$ere$ the recall of the S*P for such non-co-pliance an$ the fact that the S*P, as couche$ an$ i-ple-ente$, offen$s certain constitutional an$ statutor/ pro isions% To be sure, an/ of these 8e/ issues -a/ be resol e$ 6ithout plun.in. into the constitutionalit/ of Sec% 9! of RA FF0@% Moreo er, loo8in. $eepl/ into the un$erl/in. petitions of AMBA(A, et al%, it is not the sai$ section per se that is in ali$, but rather it is the alle.e$ application of the sai$ pro ision in the S*P that is fla6e$%

!!2"!!2# !!!"!!!#

2ranciso, Jr. v. /o%se of Representatives, supra note !2A% Alvare1 v. PIC6P Reso%rces, Inc., ?%R% Nos% !F11:9, etc%, No e-ber 1;, 122F, 02A SCRA :;A, 001% !!1"!!1# Supra note !2A, at !9A-!9;%

It -a/ be 6ell to note at this <uncture that Sec% 0 of RA ;@22, !!9"!!9# a-en$in. Sec% @ of RA FF0@, has all but superse$e$ Sec% 9! of RA FF0@ is-N- is the stoc8 $istribution co-ponent of sai$ Sec% 9!% In its pertinent part, Sec% 0 of RA ;@22 pro i$es& 4>T?ha* a3*(/ J1n( 9&, B&&:, *h( +#d( #3 a)01i i*i#n ha22 4( 2i+i*(d *# .#21n*a/, #33(/ *# (22 and )#+512 #/, a)01i i*i#n %5 Thus, for all intents an$ purposes, the stoc8 $istribution sche-e un$er Sec% 9! of RA FF0@ is no lon.er an a ailable option un$er e3istin. la6% The Guestion of 6hether or not it is unconstitutional shoul$ be a -oot issue% It is true that the Court, in so-e cases, has procee$e$ to resol e constitutional issues other6ise alrea$/ -oot an$ aca$e-ic !!:"!!:# pro i$e$ the follo6in. reGuisites are present&
3 3 3 first, there is a .ra e iolation of the ConstitutionI second, the e3ceptional character of the situation an$ the para-ount public interest is in ol e$I third, 6hen the constitutional issue raise$ reGuires for-ulation of controllin. principles to .ui$e the bench, the bar, an$ the publicI fo%rth, the case is capable of repetition /et e a$in. re ie6%

These reGuisites $o not obtain in the case at bar% Eor one, there appears to be no breach of the fun$a-ental la6% Sec% :, Article QIII of the Constitution rea$s&
The State shall, b/ la6, un$erta8e an a.rarian refor- pro.ra- foun$e$ on the ri.ht of the far-ers an$ re.ular far-6or8ers, 6ho are lan$less, to ODN $irectl/ or CO((ECTI'E(B TCE (AN*S TCEB TI(( or, in the case of other far-6or8ers, to recei e a <ust share of the fruits thereof% To this en$, the State
An Act Stren.thenin. the CARP, E3ten$in. the AcGuisition an$ *istribution of all A.ricultural (an$s, Institutin. Necessar/ Refor-s, A-en$in. for the Purpose Certain Pro isions of RA FF0@, as A-en$e$ an$ Appropriatin. Eun$s therefor% !!:"!!:# ?%i1on v. Comelec, 0:0 SCRA F90I -attel, Inc. v. 2rancisco, 0F2 SCRA 02F%
!!9"!!9#

shall encoura.e an$ un$erta8e the <ust $istribution of all a.ricultural lan$s, sub<ect to such priorities an$ reasonable retention li-its as the Con.ress -a/ prescribe, ta8in. into account ecolo.ical, $e elop-ental, or eGuit/ consi$erations, an$ sub<ect to the pa/-ent of <ust co-pensation% In $eter-inin. retention li-its, the State shall respect the ri.ht of s-all lan$o6ners% The State shall further pro i$e incenti es for oluntar/ lan$-sharin.% =E-phasis supplie$%>

The 6or$in. of the pro ision is uneGui ocalMMthe far-ers an$ re.ular far-6or8ers ha e a ri.ht TO ODN *IRECT(B OR CO((ECTI'E(B TCE (AN*S TCEB TI((% The basic la6 allo6s t6o =1> -o$es of lan$ $istributionT $irect an$ in$irect o6nership% *irect transfer to in$i i$ual far-ers is the -ost co--onl/ use$ -etho$ b/ *AR an$ 6i$el/ accepte$% In$irect transfer throu.h collecti e o6nership of the a.ricultural lan$ is the alternati e to $irect o6nership of a.ricultural lan$ b/ in$i i$ual far-ers% The aforeGuote$ Sec% : EQPRESS(B authori7es collecti e o6nership b/ far-ers% No lan.ua.e can be foun$ in the !;A@ Constitution that $isGualifies or prohibits corporations or cooperati es of far-ers fro- bein. the le.al entit/ throu.h 6hich collecti e o6nership can be e3ercise$% The 6or$ 4collecti e5 is $efine$ as 4in$icatin. a nu-ber of persons or thin.s consi$ere$ as constitutin. one .roup or a..re.ate,5 !!0"!!0# 6hile 4collecti el/5 is $efine$ as 4in a collecti e sense or -annerI in a -ass or bo$/%5 !!F"!!F# B/ usin. the 6or$ 4collecti el/,5 the Constitution allo6s for in$irect o6nership of lan$ an$ not <ust outri.ht a.ricultural lan$ transfer% This is in reco.nition of the fact that lan$ refor- -a/ beco-e successful e en if it is $one throu.h the -e$iu- of <uri$ical entities co-pose$ of far-ers% Collecti e o6nership is per-itte$ in t6o =1> pro isions of RA FF0@% Its Sec% 1; allo6s 6or8ersL cooperati es or associations to collecti el/ o6n the lan$, 6hile the secon$ para.raph of Sec% 9! allo6s corporations or associations to o6n
!!0"!!0# !!F"!!F#

DEBSTERLS TCIR* NED INTERNATIONA( *ICTIONARB UNABRI*?E* :::-::0 =!;;9>% I$% at ::0%

a.ricultural lan$ 6ith the far-ers beco-in. stoc8hol$ers or -e-bers% pro isions rea$&
SEC% 1;% 2arms owned or operated #y corporations or other #%siness associations%TIn the case of far-s o6ne$ or operate$ b/ corporations or other business associations, the follo6in. rules shall be obser e$ b/ the PARC% In .eneral, lan$s shall be $istribute$ $irectl/ to the in$i i$ual 6or8erbeneficiaries% In case it is not econo-icall/ feasible an$ soun$ to $i i$e the lan$, then i* ha22 4( #=n(d )#22()*i.(2, 4, *h( =#/6(/ 4(n(3i)ia/i( =h# ha22 3#/+ a =#/6(/ 7 )##5(/a*i.( #/ a #)ia*i#n 6hich 6ill $eal 6ith the corporation or business association% 3 3 3 =E-phasis supplie$%> SEC% 9!% Corporate Landowners%T 3 3 3 3333 Upon certification b/ the *AR, )#/5#/a*i#n o6nin. a.ricultural lan$s -a/ .i e their Gualifie$ beneficiaries the ri.ht to purchase such proportion of the capital stoc8 of the )#/5#/a*i#n that the a.ricultural lan$, actuall/ $e ote$ to a.ricultural acti ities, bears in relation to the co-pan/Ls total assets, un$er such ter-s an$ con$itions as -a/ be a.ree$ upon b/ the-% In no case shall the co-pensation recei e$ b/ the 6or8ers at the ti-e the shares of stoc8s are $istribute$ be re$uce$% The sa-e principle shall be applie$ to a #)ia*i#n , 6ith respect to their eGuit/ or participation% 3 3 3 =E-phasis supplie$%>

Sai$

Clearl/, 6or8ersL cooperati es or associations un$er Sec% 1; of RA FF0@ an$ corporations or associations un$er the succee$in. Sec% 9!, as $ifferentiate$ froin$i i$ual far-ers, are authori7e$ a.ricultural lan$% ehicles for the collecti e o6nership of Cooperati es can be re.istere$ 6ith the Cooperati e

*e elop-ent Authorit/ an$ acGuire le.al personalit/ of their o6n, 6hile corporations are <uri$ical persons un$er the Corporation Co$e% Thus, Sec% 9! is constitutional as it si-pl/ i-ple-ents Sec% : of Art% QIII of the Constitution that

lan$ can be o6ne$ CO((ECTI'E(B b/ far-ers% E en the fra-ers of the l;A@ Constitution are in unison 6ith respect to the t6o =1> -o$es of o6nership of a.ricultural lan$s tille$ b/ far-ersMM*IRECT an$ CO((ECTI'E, thus&
MR% NO((E*O% An$ 6hen 6e tal8 of the phrase 4to o6n di/()*2,,5 6e -ean the principle of di/()* #=n(/ hi5 4, *h( *i22(/R MR% MONSO*% Bes% MR% NO((E*O% An$ 6hen 6e tal8 of 4 )#22()*i.(2,,5 6e -ean co--unal o6nership, ste6ar$ship or State o6nershipR MS% NIE'A% In this section, 6e concei e of cooperati esI *ha* i 3a/+(/ 7 )##5(/a*i.( #=nin- *h( 2and, not the State% MR% NO((E*O% An$ 6hen 6e tal8 of 4)#22()*i.(2,,5 referrin. to far-ersL cooperati es, $o the far-ers o6n specific areas of lan$ 6here the/ onl/ unite in their effortsR MS% NIE'A% That is one 6a/% MR% NO((E*O% Because I un$erstan$ that there are t6o basic s/ste-s in ol e$& the 4-osha e5 t/pe of a.riculture an$ the 48ibbut7%5 So are both conte-plate$ in the reportR MR% TA*EO% An- da2a=a 6a in- 5a+a+a/aan n- 5a-5a5a*15ad n- *1na, na /(5#/+a a 215a a, an- 5a-+a+a,Aa/i n- 215a na haha*iin a indi.id1a2 na 5a-+a+a,Aa/i E di/()*2, E a* an- *ina*a=a- na a+aA a+an- -a-a=in n+-a +a-41416id" Tula$ sa Ne.ros, an. .usto n. -.a -a.bubu8i$ a/ .a6in nila iton. 4cooperati e or collecti e far-%5 An. ibi. sabihin a/ a+aA a+a nilan. sasa8ahin% 3333 MR% TIN?SON% 3 3 3 Dhen 6e spea8 here of 4to o6n $irectl/ or collecti el/ the lan$s the/ till,5 is this lan$ for the tillers rather than lan$ for the lan$lessR

Before, 6e use$ to hear 4lan$ for the lan$less,5 but no6 the slo.an is 4lan$ for the tillers%5 Is that ri.htR MR% TA*EO% An. prinsip/on. u-iiral $ito a/ i/on. lan$ for the tillers% Ani4i- a4ihin n- Fdi/()*2,G a, *12ad a i+52(+(n*a ,#n a /i)( and )#/n 2and 61n- aan inaa/i na n- +-a +a- a a6a an- 215an- 4in141n-6a2 ni2a" Ani4i- a4ihin na+an n- F)#22()*i.(2,G a, a+aA a+an- 5a--a=a a i an215ain # i an- 416id, 8atula$ n. sit6as/on sa Ne.ros%!!@"!!@# =E-phasis supplie$%>

As Co--issioner Ta$eo e3plaine$, the far-ers 6ill 6or8 on the a.ricultural lan$ 4sa-a-sa-a5 or collecti el/% Thus, the -ain reGuisite for collecti e o6nership of lan$ is collecti e or .roup 6or8 b/ far-ers of the a.ricultural lan$% Irrespecti e of 6hether the lan$o6ner is a cooperati e, association or corporation co-pose$ of far-ers, as lon. as concerte$ .roup 6or8 b/ the far-ers on the lan$ is present, then it falls 6ithin the a-bit of collecti e o6nership sche-e% (i8e6ise, Sec% :, Art% QIII of the Constitution -a8es -ention of a co--it-ent on the part of the State to pursue, 4, 2a=, an a.rarian refor- pro.rafoun$e$ on the polic/ of lan$ for the lan$less, but sub<ect to such priorities as Con.ress -a/ prescribe, ta8in. into account such abstract ariable as 4eGuit/ consi$erations%5 The te3tual reference to a la6 an$ Con.ress necessaril/ i-plies that the abo e constitutional pro ision is n#* (23A(D()1*#/, an$ that le.islation is nee$e$ to i-ple-ent the ur.entl/ nee$e$ pro.ra- of a.rarian refor-% An$ RA FF0@ has been enacte$ precisel/ pursuant to an$ as a -echanis- to carr/ out the constitutional $irecti es% This piece of le.islation, in fact, restates !!A"!!A# the a.rarian refor- polic/ establishe$ in the afore-entione$ pro ision of the Constitution of
Recor$s of the Constitutional Co--ission, 'ol% II, p% F@A% Sec% 1, 9r$ para.raph , of RA FF0@ states& The a.rarian refor- pro.ra- is foun$e$ on the ri.ht of far-ers an$ re.ular far-ers 6ho are lan$less, to o6n lan$ $irectl/ or collecti el/ the lan$s the/ till or, in the case of other far-6or8ers to recei e a share of the fruits thereof% To this en$, the State shall encoura.e an$ un$erta8e the <ust $istribution of all a.ricultural lan$s, sub<ect to priorities an$ retention li-its set forth in this Act 3 3 3%
!!A"!!A# !!@"!!@#

pro-otin. the 6elfare of lan$less far-ers an$ far-6or8ers% RA FF0@ thus $efines 4a.rarian refor-5 as 4the re$istribution of lan$s U to far-ers an$ re.ular far-6or8ers 6ho are lan$less U to lift the econo-ic status of the beneficiaries an$ a22 #*h(/ a//an-(+(n* a2*(/na*i.( *# *h( 5h, i)a2 /(di */i41*i#n #3 2and , such as pro$uction or profit sharin., labor a$-inistration an$ the di */i41*i#n #3 ha/( #3 *#)6 6hich 6ill allo6 beneficiaries to recei e a <ust share of the fruits of the lan$s the/ 6or8%5 Dith the ie6 De ta8e of this case, the stoc8 $istribution option $e ise$ un$er Sec% 9! of RA FF0@ he6s 6ith the a.rarian refor- polic/, as instru-ent of social <ustice un$er Sec% : of Article QIII of the Constitution% Albeit lan$ o6nership for the lan$less appears to be the $o-inant the-e of that polic/, De e-phasi7e that Sec% :, Article QIII of the Constitution, as couche$, $oes not constrict Con.ress to passin. an a.rarian refor- la6 plante$ on $irect lan$ transfer to an$ o6nership b/ far-ers an$ no other, or else the enact-ent suffers fro- the ice of unconstitutionalit/% If the intention 6ere other6ise, the fra-ers of the Constitution 6oul$ ha e 6or$e$ sai$ section in a -anner -an$ator/ in character% Eor this Court, Sec% 9! of RA FF0@, 6ith its $irect an$ in$irect transfer features, is not inconsistent 6ith the StateLs co--it-ent to far-ers an$ far-6or8ers to a$ ance their interests un$er the polic/ of social <ustice% The le.islature, thru Sec% 9! of RA FF0@, has chosen a -o$alit/ for collecti e o6nership b/ 6hich the i-perati es of social <ustice -a/, in its esti-ation, be appro3i-ate$, if not achie e$% The Court shoul$ be boun$ b/ such polic/ choice%

EARM conten$s that the far-ers in the stoc8 $istribution sche-e un$er Sec% 9! $o not o6n the a.ricultural lan$ but are -erel/ .i en stoc8 certificates% Thus, the far-ers lose control o er the lan$ to the boar$ of $irectors an$ e3ecuti e officials of the corporation 6ho actuall/ -ana.e the lan$% The/ conclu$e that such arran.e-ent runs counter to the -an$ate of the Constitution that an/ a.rarian refor- -ust preser e the control o er the lan$ in the han$s of the tiller% This contention has no -erit% Dhile it is true that the far-er is issue$ stoc8 certificates an$ $oes not $irectl/ o6n the lan$, still, the Corporation Co$e is clear that the EDB beco-es a stoc8hol$er 6ho acGuires an eGuitable interest in the assets of the corporation, 6hich inclu$e the a.ricultural lan$s% It 6as e3plaine$ that the 4eGuitable interest of the sharehol$er in the propert/ of the corporation is represente$ b/ the terstoc8, an$ the e3tent of his interest is $escribe$ b/ the ter- shares% The e3pression shares of stoc8 6hen Gualifie$ b/ 6or$s in$icatin. nu-ber an$ o6nership e3presses the e3tent of the o6nerLs interest in the corporate propert/%5 !!;"!!;# A share of stoc8 t/pifies an aliGuot part of the corporationLs propert/, or the ri.ht to share in its procee$s to that e3tent 6hen $istribute$ accor$in. to la6 an$ eGuit/ an$ that its hol$er is not the o6ner of an/ part of the capital of the corporation% !12
"!12#

Co6e er, the EDBs 6ill ulti-atel/ o6n the a.ricultural lan$s o6ne$ b/ the

corporation 6hen the corporation is e entuall/ $issol e$ an$ liGui$ate$%

!!;"!!;# !12"!12#

!! Eletcher, C/c% Corps% =!;@! Re % 'ol%> Sec% 02A9% -o#ilia Prod%cts, Inc. v. @me1awa, ?%R% Nos% !:;90@ an$ !:;:29, March :, 1220%

Anent the alle.e$ loss of control of the far-ers o er the a.ricultural lan$ operate$ an$ -ana.e$ b/ the corporation, a rea$in. of the secon$ para.raph of Sec% 9! sho6s other6ise% Sai$ pro ision pro i$es that Gualifie$ beneficiaries ha e 4the ri.ht to purchase such proportion of the capital stoc8 of the corporation that the a.ricultural lan$, actuall/ $e ote$ to a.ricultural acti ities, bears in relation to the co-pan/Ls total assets%5 The 6or$in. of the for-ula in the co-putation of the nu-ber of shares that can be bou.ht b/ the far-ers $oes not -ean loss of control on the part of the far-ers% It -ust be re-e-bere$ that the $eter-ination of the percenta.e of the capital stoc8 that can be bou.ht b/ the far-ers $epen$s on the alue of the a.ricultural lan$ an$ the alue of the total assets of the corporation% There is, thus, nothin. unconstitutional in the for-ula prescribe$ b/ RA FF0@% The polic/ on a.rarian refor- is that control o er the a.ricultural lan$ -ust al6a/s be in the han$s of the far-ers% Then it falls on the shoul$ers of *AR an$ PARC to see to it the far-ers shoul$ al6a/s o6n -a<orit/ of the co--on shares entitle$ to elect the -e-bers of the boar$ of $irectors to ensure that the far-ers 6ill ha e a clear -a<orit/ in the boar$% Before the S*P is appro e$, strict scrutin/ of the propose$ S*P -ust al6a/s be un$erta8en b/ the *AR an$ PARC, such that the alue of the a.ricultural lan$ contribute$ to the corporation -ust al6a/s be -ore than 02O of the total assets of the corporation to ensure that the -a<orit/ of the -e-bers of the boar$ of $irectors are co-pose$ of the far-ers% The PARC co-pose$ of the Presi$ent of the Philippines an$ cabinet secretaries -ust see to it that control o er the boar$ of $irectors rests 6ith the far-ers b/ re<ectin. the

inclusion of non-a.ricultural assets 6hich 6ill /iel$ the -a<orit/ in the boar$ of $irectors to non-far-ers% An/ $e iation, ho6e er, b/ PARC or *AR fro- the correct application of the for-ula prescribe$ b/ the secon$ para.raph of Sec% 9! of RA FF@0 $oes not -a8e sai$ pro ision constitutionall/ infir-% Rather, it is the application of sai$ pro ision that can be challen.e$% Er.o, Sec% 9! of RA FF0@ $oes not trench on the constitutional polic/ of ensurin. control b/ the far-ers% A ie6 has been a$ ance$ that there can be no a.rarian refor- unless there is lan$ $istribution an$ that actual lan$ $istribution is the essential characteristic of a constitutional a.rarian refor- pro.ra-% On the contrar/, there ha e been so -an/ instances 6here, $espite actual lan$ $istribution, the i-ple-entation of a.rarian refor- 6as still unsuccessful% As a -atter of fact, this Court -a/ ta8e <u$icial notice of cases 6here EDBs sol$ the a6ar$e$ lan$ e en to non-Gualifie$ persons an$ in iolation of the prohibition perio$ pro i$e$ un$er the la6% This onl/ pro es to sho6 that the -ere fact that there is lan$ $istribution $oes not .uarantee a successful i-ple-entation of a.rarian refor-% As it 6ere, the principle of 4lan$ to the tiller5 an$ the ol$ pastoral -o$el of lan$ o6nership 6here non-hu-an <uri$ical persons, such as corporations, 6ere prohibite$ fro- o6nin. a.ricultural lan$s are no lon.er realistic un$er e3istin. con$itions% Practicall/, an in$i i$ual far-er 6ill often face .reater $isa$ anta.es an$ $ifficulties than those 6ho e3ercise o6nership in a collecti e -anner throu.h a cooperati e or corporation% The for-er is too often left to his o6n $e ices 6hen face$ 6ith failin. crops an$ ba$ 6eather, or co-pelle$ to obtain usurious loans in or$er to purchase costl/ fertili7ers or far-in. eGuip-ent% The e3periences learne$ fro- faile$ lan$ refor- acti ities in arious parts of the countr/ are lac8 of financin., lac8 of far- eGuip-ent, lac8 of fertili7ers, lac8 of .uarantee$ bu/ers of

pro$uce, lac8 of far--to--ar8et roa$s, a-on. others% Thus, at the en$ of the $a/, there is still no successful i-ple-entation of a.rarian refor- to spea8 of in such a case% Althou.h success is not .uarantee$, a cooperati e or a corporation stan$s in a better position to secure fun$in. an$ co-petentl/ -aintain the a.ri-business than the in$i i$ual far-er% Dhile $irect sin.ular o6nership o er far-lan$ $oes offer a$ anta.es, such as the abilit/ to -a8e Guic8 $ecisions unha-pere$ b/ interference fro- others, /et at best, these a$ anta.es onl/ but offset the $isa$ anta.es that are often associate$ 6ith such o6nership arran.e-ent% Thus, .o ern-ent -ust be fle3ible an$ creati e in its -o$e of i-ple-entation to better its chances of success% One such option is collecti e o6nership throu.h <uri$ical persons co-pose$ of far-ers% Asi$e fro- the fact that there appears to be no iolation of the Constitution, the reGuire-ent that the instant case be capable of repetition /et e a$in. re ie6 is also 6antin.% It 6oul$ be speculati e for this Court to assu-e that the le.islature 6ill enact another la6 pro i$in. for a si-ilar stoc8 option% As a -atter of soun$ practice, the Court 6ill not interfere inor$inatel/ 6ith the e3ercise b/ Con.ress of its official functions, the hea / presu-ption bein. that a la6 is the pro$uct of earnest stu$ies b/ Con.ress to ensure that no constitutional prescription or concept is infrin.e$%!1!"!1!# Corollaril/, courts 6ill not pass upon Guestions of 6is$o-, e3pe$ienc/ an$ <ustice of le.islation or its pro isions% To6ar$s this en$, all reasonable $oubts shoul$ be resol e$ in fa or of the

!1!"!1!#

Cawaling v. C6-0L0C, ?%R% No% !:F9!;, October 1F, 122!, 9FA SCRA :09%

constitutionalit/ of a la6 an$ the ali$it/ of the acts an$ processes ta8en pursuant thereof%!11"!11# ConseGuentl/, before a statute or its pro isions $ul/ challen.e$ are oi$e$, an uneGui ocal breach of, or a clear conflict 6ith the Constitution, not -erel/ a $oubtful or ar.u-entati e one, -ust be $e-onstrate$ in such a -anner as to lea e no $oubt in the -in$ of the Court% In other 6or$s, the .roun$s for nullit/ -ust be be/on$ reasonable $oubt%!19"!19# EARM has not presente$ co-pellin. ar.u-ents to o erco-e the presu-ption of constitutionalit/ of Sec% 9! of RA FF0@%

The 6is$o- of Con.ress in allo6in. an S*P throu.h a corporation as an alternati e -o$e of i-ple-entin. a.rarian refor- is not for <u$icial $eter-ination% Establishe$ <urispru$ence tells us that it is not 6ithin the pro ince of the Court to inGuire into the 6is$o- of the la6, for, in$ee$, De are boun$ b/ 6or$s of the statute%!1:"!1:# II" The sta.e is no6 set for the $eter-ination of the propriet/ un$er the pre-ises of the re ocation or recall of C(ILs S*P% Or to be -ore precise, the inGuir/ shoul$ be& 6hether or not PARC .ra el/ abuse$ its $iscretion in re o8in. or recallin. the sub<ect S*P an$ placin. the hacien$a un$er CARPLs co-pulsor/ acGuisition an$ $istribution sche-e%
.asco v. PA$C6R, ?%R% No% !9A1;A, No e-ber 1;, 1222, 9:F SCRA :A0 Angara v. 0lectoral Commission, F9 Phil% !9; =!;9F>I Cawaling v. C6-0L0C, supra, citin. Alvare1 v. $%ingona, 101 SCRA F;0 =!;;F>% !1:"!1:# 4ational 2ood A%thority v. -asda Sec%rity Agency, Inc., ?%R% No% !F9::A, March A, 1220%
!19"!19# !11"!11#

The fin$in.s, anal/sis an$ reco--en$ation of the *ARLs Special Tas8 Eorce containe$ an$ su--ari7e$ in its Ter-inal Report pro i$e$ the bases for the assaile$ PARC re ocator/Krecallin. Resolution% The fin$in.s -a/ be .roupe$ into t6o& =!> the S*P is contrar/ to either the polic/ on a.rarian refor-, Sec% 9! of RA FF0@, or *AO !2I an$ =1> the alle.e$ iolation b/ C(I of the con$itionsKter-s of the S*P% In -ore particular ter-s, the follo6in. are essentiall/ the reasons un$erpinnin. PARCLs re ocator/ or recall action& =!> *espite the lapse of !F /ears fro- the appro al of C(ILs S*P, the li es of the EDBs ha e har$l/ i-pro e$ an$ the pro-ise$ increase$ inco-e has not -ateriali7e$I =1> C(I has faile$ to 8eep Cacien$a (uisita intact an$ unfra.-ente$I =9> The issuance of C(I shares of stoc8 on the basis of nu-ber of hours 6or8e$MMor the so-calle$ 4-an $a/s5MMis .rossl/ onerous to the EDBs, as C(I, in the .uise of rotation, can unilaterall/ $en/ 6or8 to an/one% In elaboration of this .roun$, PARCLs Resolution No% 122F-9:-2!, $en/in. C(ILs -otion for reconsi$eration of Resolution No% 1220-91-2!, state$ that the -an $a/s criterion 6or8e$ to $ilute the entitle-ent of the ori.inal share beneficiariesI!10"!10#
Rollo, p% @;:% The PARC resolution also states& C(ILs i-ple-entation of the $istribution of the -an$ator/ -ini-u- ratio of lan$-to-shares of stoc8 to the ARBs "A.rarian Refor- Beneficiaries# 6as base$ on -an $a/s, 6ithin its polic/ of no-6or8 no-shares of stoc8, an$ not to eGual nu-ber of shares $epen$in. upon their ri.htful share, as reGuire$ in the rules, an$ therefore practicall/ $i este$ the ARBs, as to their GualificationKentitle-ent, as ARBs at C(ILs 6hi-s, to their $isa$ anta.e an$ pre<u$ice in the for- of $i-inution in the -ini-u- ration of shares% Ca in. increase$ 3 3 3 the nu-ber of 6or8ers =contractual>, the (01i*, ha/( #3 (a)h 5(/+an(n* (+52#,((, a #3 $:8:, na*1/a22, had *# 4(, a in 3a)*, /(d1)(d" Eurther 3 3 3, C(I too8 it upon itself, or usurpe$, the $ut/ or -an$ate of *AR to Gualif/ the recipient ARBs an$ i-pose$ its o6n criteria an$ $iscretion in the allocation of the -an$ator/ -ini-u- ratio of lan$-to share b/ basin. the $istribution on the nu-ber of $a/s 6or8e$% Still 6orse, C(I -a$e allocation to recipients 6ho are not in the ARBs ori.inal -asterlist as a$-itte$l/, i* di */i41*(d *# a4#1* $$,:<< *#)6h#2d(/ #3 /()#/d <:,9;B,;$$ ha/( /(5/( (n*in- *h( ()#nd ha23 #3 *h( *#*a2 n1+4(/ #3 ha/( (a/+a/6(d 3#/ di */i41*i#n =h(n in 3a)* *h(/( =(/( #n2, ;,B:; 3a/+ =#/6(/ or less, at the ti-e 6hen the lan$ 6as place$ un$er CARP un$er the S*PKS*O sche-e% =E-phasis a$$e$%>
!10"!10#

=:> The $istributionKtransfer of shares 6as not in accor$ance 6ith the ti-elines fi3e$ b/ la6I =0> C(I has faile$ to co-pl/ 6ith its obli.ations to .rant 9O of the .ross sales e er/ /ear as pro$uction-sharin. benefit on top of the 6or8ersL salar/I an$ =F> Se eral ho-elot a6ar$ees ha e /et to recei e their in$i i$ual titles% Petitioner C(I clai-s ha in. co-plie$ 6ith, at least substantiall/, all its obli.ations un$er the S*P, as appro e$ b/ PARC itself, an$ ta.s the reasons .i en for the re ocation of the S*P as unfoun$e$% Public respon$ents, on the other han$, a er that the assaile$ resolution rests on soli$ .roun$s set forth in the Ter-inal Report, a position share$ b/ AMBA(A, 6hich, in so-e plea$in.s, is represente$ b/ the sa-e counsel as that appearin. for the Super isor/ ?roup%

EARM, for its part, posits the ie6 that le.al bases obtain for the re ocation of the S*P, because it $oes not confor- to Sec% 9! of RA FF0@ an$ *AO !2% An$ trainin. its si.ht on the resultin. $ilution of the eGuit/ of the EDBs appearin. in C(ILs -asterlist, EARM 6oul$ state that the S*P, as couche$ an$ i-ple-ente$, spa6ne$ $isparit/ 6hen there shoul$ be noneI parit/ 6hen there shoul$ ha e been $ifferentiation%!1F"!1F#
!1F"!1F#

Me-oran$u- of Renato (alic, et al%, p% !:%

The petition is not i-presse$ 6ith -erit% In the Ter-inal Report a$opte$ b/ PARC, it is state$ that the S*P iolates the a.rarian refor- polic/ un$er Sec% 1 of RA FF0@, as the sai$ plan faile$ to enhance the $i.nit/ an$ i-pro e the Gualit/ of li es of the EDBs throu.h .reater pro$ucti it/ of a.ricultural lan$s% De $isa.ree% Sec% 1 of RA FF0@ states&
SECTION 1% &eclaration of Principles and Policies%It is the polic/ of the State to pursue a Co-prehensi e A.rarian Refor- Pro.ra- =CARP>% The 6elfare of the lan$less far-ers an$ far- 6or8ers 6ill recei e the hi.hest consi$eration to pro-ote social <ustice an$ to -o e the nation to6ar$s soun$ rural $e elop-ent an$ in$ustriali7ation, an$ the establish-ent of o6ner culti atorship of econo-ic-si7e$ far-s as the basis of Philippine a.riculture% To this en$, a -ore eGuitable $istribution an$ o6nership of lan$, 6ith $ue re.ar$ to the ri.hts of lan$o6ners to <ust co-pensation an$ to the ecolo.ical nee$s of the nation, shall be un$erta8en to pro i$e far-ers an$ far- 6or8ers =i*h *h( #55#/*1ni*, *# (nhan)( *h(i/ di-ni*, and i+5/#.( *h( 01a2i*, #3 *h(i/ 2i.( *h/#1-h -/(a*(/ 5/#d1)*i.i*, #3 a-/i)12*1/a2 2and " The a.rarian refor- pro.ra- is foun$e$ on the ri.ht of far-ers an$ re.ular far- 6or8ers, 6ho are lan$less, to o6n $irectl/ or collecti el/ the lan$s the/ till or, in the case of other far- 6or8ers, to recei e a share of the fruits thereof% To this en$, the State shall encoura.e the <ust $istribution of all a.ricultural lan$s, sub<ect to the priorities an$ retention li-its set forth in this Act, ha in. ta8en into account ecolo.ical, $e elop-ental, an$ eGuit/ consi$erations, an$ sub<ect to the pa/-ent of <ust co-pensation% The State shall respect the ri.ht of s-all lan$o6ners an$ shall pro i$e incenti es for oluntar/ lan$-sharin.% =E-phasis supplie$%>

Para.raph 1 of the abo e-Guote$ pro ision specificall/ -entions that 4a -ore eGuitable $istribution an$ o6nership of lan$ 3 3 3 shall be un$erta8en to pro i$e far-ers an$ far- 6or8ers 6ith the #55#/*1ni*, to enhance their $i.nit/ an$ i-pro e the Gualit/ of their li es throu.h .reater pro$ucti it/ of a.ricultural

lan$s%5 Of note is the ter- 4opportunit/5 6hich is $efine$ as a fa orable chance or openin. offere$ b/ circu-stances% !1@"!1@# Consi$erin. this, b/ no stretch of i-a.ination can sai$ pro ision be construe$ as a .uarantee in i-pro in. the li es of the EDBs% At best, it -erel/ pro i$es for a possibilit/ or fa orable chance of upliftin. the econo-ic status of the EDBs, 6hich -a/ or -a/ not be attaine$% Pertinentl/, i-pro in. the econo-ic status of the EDBs is neither a-on. the le.al obli.ations of C(I un$er the S*P nor an i-perati e i-position b/ RA FF0@ an$ *AO !2, a iolation of 6hich 6oul$ <ustif/ $iscar$in. the stoc8 $istribution option% Nothin. in that option a.ree-ent, la6 or $epart-ent or$er in$icates other6ise% Si.nificantl/, C(I $ra6s particular attention to its ha in. pai$ its EDBs, $urin. the re.i-e of the S*P =!;A;-1220>, so-e PhP 9 billion b/ 6a/ of salariesK6a.es an$ hi.her benefits e3clusi e of free hospital an$ -e$ical benefits to their i--e$iate fa-il/% An$ attache$ as Anne3 4?5 to C(ILs Me-oran$u- is the certifie$ true report of the finance -ana.er of )ose Co<uan.co H Sons Or.ani7ations-Tarlac Operations, captione$ as 4/ACI04&A L@ISI'A, I4C. Salaries, .enefits and Credit Privileges <in 'ho%sand Pesos= Since the Stoc( 6ption was Approved #y PARCACARP,5 $etailin. 6hat C(I .a e their 6or8ers fro- !;A; to 1220% The su- total, as a$$e$ up b/ the Court, /iel$s the follo6in. nu-bers& Total *irect Cash Out =SalariesKDa.es H Cash Benefits> V PhP 1,;1@,A:AI Total Non-*irect Cash Out =CospitalKMe$ical Benefits> V PhP 929,2:2% The cash out fi.ures, as state$ in the report, inclu$e the cost of ho-elotsI the PhP !02 -illion or so representin. 9O of the .ross pro$uce of the hacien$aI an$ the PhP 9@%0 -illion representin. 9O fro- the procee$s of the sale of the 022-hectare
!1@"!1@#

(ITT(E OQEOR* *ICTIONARB ::1 =@th e$%>%

con erte$ lan$s% Dhile not inclu$e$ in the report, C(I -anifests ha in. .i en the EDBs 9O of the PhP A2 -illion pai$ for the A2 hectares of lan$ tra erse$ b/ the SCTEQ%!1A"!1A# On top of these, it is 6orth re-e-berin. that the shares of stoc8s 6ere .i en b/ C(I to the EDBs for free% 'eril/, the EDBs ha e benefite$ frothe S*P% To a$$ress ur.in.s that the EDBs be allo6e$ to $isen.a.e fro- the S*P as C(I has not an/6a/ earne$ profits throu.h the /ears, it cannot be o er-e-phasi7e$ that, as a -atter of co--on business sense, no corporation coul$ .uarantee a profitable run all the ti-e% As has been su..este$, one of the 8e/ features of an S*P of a corporate lan$o6ner is the li8elihoo$ of the corporate earnin., or, 6orse still, losin. -one/%!1;"!1;# The Court is full/ a6are that one of the criteria un$er *AO !2 for the PARC to consi$er the a$ isabilit/ of appro in. a stoc8 $istribution plan is the li8elihoo$ that the plan 4=#12d /( 12* in in)/(a (d in)#+( and -/(a*(/ 4(n(3i* *# >01a2i3i(d 4(n(3i)ia/i( ? *han i3 *h( 2and =(/( di.id(d and di */i41*(d *# *h(+ indi.id1a22,%5!92"!92# But as aptl/ note$ $urin. the oral ar.u-ents, *AO !2 ou.ht to ha e not, as it cannot, actuall/ e3act assurance of success on so-ethin. that is sub<ect to the 6ill of -an, the forces of nature or the inherent ris8/ nature of business%!9!"!9!# )ust li8e in actual lan$ $istribution, an S*P cannot .uarantee, as in$ee$ the S*OA $oes not .uarantee, a co-fortable life for the EDBs% The Court can ta8e <u$icial notice of the fact that there 6ere -an/ instances 6herein after a
Rollo, p% 9F@F% The S?' H Co%Ls In$epen$ent Au$itors Report on C(I for /ears en$e$ 122;, 122A an$ 122@ contains the follo6in. entries& 4"T#he Co-pan/ has suffere$ recurrin. losses fro- operations an$ has substantial ne.ati e 6or8in. capital $eficienc/% The Co-pan/ has continue$ to ha e no operations an$ e3perience$ financial $ifficulties as a result of a stri8e sta.e$ b/ the labor union on No e-ber F, 122:%5 Rollo, p% 9@@;, Anne3 4I5 of C(ILs Me-oran$u-% !92"!92# Sec% 0=1>% !9!"!9!# TSN, Au.ust 1:, 12!2, p% !10%
!1;"!1;# !1A"!1A#

ehicle not

far-6or8er beneficiar/ has been a6ar$e$ 6ith an a.ricultural lan$, he <ust subseGuentl/ sells it an$ is e entuall/ left 6ith nothin. in the en$% In all then, the onerous con$ition of the EDBsL econo-ic status, their life of har$ship, if that reall/ be the case, can har$l/ be attribute$ to C(I an$ its S*P an$ pro i$e a ali$ .roun$ for the planLs re ocation% Neither $oes C(ILs S*P, 6hence the *AR-atteste$ S*OAKMOA is base$, infrin.e Sec% 9! of RA FF0@, albeit public respon$ents erroneousl/ sub-it other6ise% The pro isions of the first para.raph of the a$ erte$ Sec% 9! are 6ithout rele ance to the issue on the propriet/ of the assaile$ or$er re o8in. C(ILs S*P, for the para.raph $eals 6ith the transfer of a.ricultural lan$s to the .o ern-ent, as a -o$e of CARP co-pliance, thus&
SEC% 9!% Corporate Landowners.Corporate lan$o6ners -a/ oluntaril/ transfer o6nership o er their a.ricultural lan$hol$in.s to the Republic of the Philippines pursuant to Section 12 hereof or to Gualifie$ beneficiaries un$er such ter-s an$ con$itions, consistent 6ith this Act, as the/ -a/ a.ree, sub<ect to confir-ation b/ the *AR%

The secon$ an$ thir$ para.raphs, 6ith their sub-para.raphs, of Sec% 9! pro i$e as follo6s&
Upon certification b/ the *AR, corporations o6nin. a.ricultural lan$s +a, -i.( *h(i/ 01a2i3i(d 4(n(3i)ia/i( *h( /i-h* *# 51/)ha ( 1)h 5/#5#/*i#n #3 *h( )a5i*a2 *#)6 #3 *h( )#/5#/a*i#n *ha* *h( a-/i)12*1/a2 2and, a)*1a22, d(.#*(d *# a-/i)12*1/a2 a)*i.i*i( , 4(a/ in /(2a*i#n *# *h( )#+5an,7 *#*a2 a (* , un$er such ter-s an$ con$itions as -a/ be a.ree$ upon b/ the-% In no

case shall the co-pensation recei e$ b/ the 6or8ers at the ti-e the shares of stoc8s are $istribute$ be re$uce$% 3 3 3 Corporations or associations 6hich oluntaril/ $i est a proportion of their capital stoc8, eGuit/ or participation in fa or of their 6or8ers or other Gualifie$ beneficiaries un$er this section shall be $ee-e$ to ha e co-plie$ 6ith the pro isions of this Act& Pro i$e$, That the follo6in. con$itions are co-plie$ 6ith& =a> In or$er to safe.uar$ the ri.ht of beneficiaries 6ho o6n shares of stoc8s to $i i$en$s an$ other financial benefits, the boo8s of the corporation or association shall be sub<ect to perio$ic au$it b/ certifie$ public accountants chosen b/ the beneficiariesI =b> Irrespecti e of the alue of their eGuit/ in the corporation or association, the beneficiaries shall be assure$ of at least one =!> representati e in the boar$ of $irectors, or in a -ana.e-ent or e3ecuti e co--ittee, if one e3ists, of the corporation or associationI =c> An/ shares acGuire$ b/ such 6or8ers an$ beneficiaries shall ha e the sa-e ri.hts an$ features as all other sharesI an$ =$> An/ transfer of shares of stoc8s b/ the ori.inal beneficiaries shall be oi$ a# initio unless sai$ transaction is in fa or of a Gualifie$ an$ re.istere$ beneficiar/ 6ithin the sa-e corporation%

The -an$ator/ -ini-u- ratio of lan$-to-shares of stoc8 suppose$ to be $istribute$ or allocate$ to Gualifie$ beneficiaries, a$ ertin. to 6hat Sec% 9! of RA FF0@ refers to as that 45/#5#/*i#n #3 *h( )a5i*a2 *#)6 #3 *h( )#/5#/a*i#n *ha* *h( a-/i)12*1/a2 2and, a)*1a22, d(.#*(d *# a-/i)12*1/a2 a)*i.i*i( , 4(a/ in /(2a*i#n *# *h( )#+5an,7 *#*a2 a (* 5 ha$ been obser e$% Para.raph one =!> of the S*OA, 6hich 6as base$ on the S*P, confor-s to Sec% 9! of RA FF0@% The stipulation rea$s&
!% The percenta.e of the alue of the a.ricultural lan$ of Cacien$a (uisita =P!;F,F92,222%22> in relation to the total assets =P0;2,00:,112%22> transferre$ an$ con e/e$ to the SECON* PARTB is 99%1;FO that, un$er the la6, is the proportion of the outstan$in. capital stoc8 of the SECON* PARTB, 6hich is P900,09!,:F1%22 or 900,09!,:F1 shares 6ith a par alue of P!%22 per

share, that has to be $istribute$ to the TCIR* PARTB un$er the stoc8 $istribution plan, the sai$ 99%1;FO thereof bein. P!!A,9;!,;@F%A0 or !!A,9;!,;@F%A0 shares%

The appraise$ alue of the a.ricultural lan$ is PhP !;F,F92,222 an$ of C(ILs other assets is PhP 9;9,;1:,112% The total alue of C(ILs assets is, therefore, PhP 0;2,00:,112%!91"!91# The percenta.e of the alue of the a.ricultural lan$s =PhP !;F,F92,222> in relation to the total assets =PhP 0;2,00:,112> is 99%1;FO, 6hich represents the stoc8hol$in.s of the F,1;F ori.inal Gualifie$ far-6or8er-beneficiaries =EDBs> in C(I% The total nu-ber of shares to be $istribute$ to sai$ Gualifie$ EDBs is !!A,9;!,;@F%A0 C(I shares% This 6as arri e$ at b/ .ettin. 99%1;FO of the 900,09!,:F1 shares 6hich is the outstan$in. capital stoc8 of C(I 6ith a alue of PhP 900,09!,:F1% Thus, if 6e $i i$e the !!A,9;!,;@F%A0 C(I shares b/ F,1;F EDBs, then each EDB is entitle$ to !A,A2:%91 C(I shares% These shares un$er the S*P are to be .i en to EDBs for free% The Court fin$s that the $eter-ination of the shares to be $istribute$ to the F,1;F EDBs strictl/ a$heres to the for-ula prescribe$ b/ Sec% 9!=b> of RA FF0@% Anent the reGuire-ent un$er Sec% 9!=b> of the thir$ para.raph, that the EDBs shall be assure$ of at least one =!> representati e in the boar$ of $irectors or in a -ana.e-ent or e3ecuti e co--ittee irrespecti e of the alue of the eGuit/ of the EDBs in C(I, the Court fin$s that the S*OA containe$ pro isions -a8in. certain the EDBsL representation in C(ILs .o ernin. boar$, thus&
0% E en if onl/ a part or fraction of the shares ear-ar8e$ for $istribution 6ill ha e been acGuire$ fro- the EIRST PARTB an$ $istribute$ to the TCIR* PARTB, EIRST PARTB shall e3ecute at the be.innin. of each fiscal /ear an
!91"!91#

MOA, :th Dhereas clause%

irre ocable pro3/, ali$ an$ effecti e for one =!> /ear, in fa or of the far-6or8ers appearin. as sharehol$ers of the SECON* PARTB at the start of sai$ /ear 6hich 6ill e-po6er the TCIR* PARTB or their representati e to ote in stoc8hol$ersL an$ boar$ of $irectorsL -eetin.s of the SECON* PARTB con ene$ $urin. the /ear the entire 99%1;FO of the outstan$in. capital stoc8 of the SECON* PARTB ear-ar8e$ for $istribution an$ thus be able to .ain such nu-ber of seats in the boar$ of $irectors of the SECON* PARTB that the 6hole 99%1;FO of the shares sub<ect to $istribution 6ill be entitle$ to%

Also, no alle.ations ha e been -a$e a.ainst C(I restrictin. the inspection of its boo8s b/ accountants chosen b/ the EDBsI hence, the assu-ption -a/ be -a$e that there has been no iolation of the statutor/ prescription un$er subpara.raph =a> on the au$itin. of C(ILs accounts% Public respon$ents, ho6e er, sub-it that the $istribution of the -an$ator/ -ini-u- ratio of lan$-to-shares of stoc8, referrin. to the !!A,9;!,;@F%A0 shares 6ith par alue of PhP ! each, shoul$ ha e been -a$e in full 6ithin t6o =1> /ears fro- the appro al of RA FF0@, in line 6ith the last para.raph of Sec% 9! of sai$ la6%!99"!99# Public respon$entsL sub-ission is palpabl/ erroneous% De ha e closel/ e3a-ine$ the last para.raph allu$e$ to, 6ith particular focus on the t6o-/ear perio$ -entione$, an$ nothin. in it re-otel/ supports the public respon$entsL posture% In its pertinent part, sai$ Sec% 9! pro i$es&
SEC% 9!% Corporate (an$o6ners 3 3 3 If 6ithin *=# HBI ,(a/ fro- the appro al of this Act, the " oluntar/# lan$ or stoc8 transfer en isione$ abo e is not -a$e or reali7e$ #/ *h( 52an 3#/ 1)h *#)6 di */i41*i#n a55/#.(d 4, *h( PARC =i*hin *h( a+( 5(/i#d, *h( a-/i)12*1/a2 2and #3 *h( )#/5#/a*( #=n(/ #/ )#/5#/a*i#n ha22 4( 14J()* *# *h( )#+512 #/, )#.(/a-( #3 *hi A)*" =Dor$ in brac8et an$ e-phasis a$$e$%>
!99"!99#

Me-oran$u- of public respon$ents, p% :!%

Properl/ ie6e$, the 6or$s 4*=# HBI ,(a/ 5 clearl/ refer to the perio$ 6ithin 6hich the corporate lan$o6ner, to a oi$ lan$ transfer as a -o$e of CARP co era.e un$er RA FF0@, is to a ail of the stoc8 $istribution option or to ha e the S*P appro e$% The C(I secure$ appro al of its S*P in No e-ber !;A;, 6ell 6ithin the t6o-/ear perio$ rec8one$ fro- )une !;AA 6hen RA FF0@ too8 effect% Ca in. hur$le$ the alle.e$ breach of the a.rarian refor- polic/ un$er Sec% 1 of RA FF0@ as 6ell as the statutor/ issues, De shall no6 $el e into 6hat PARC an$ respon$ents $ee- to be other instances of iolation of *AO !2 an$ the S*P%

On *h( C#n.(/ i#n #3 Land Contrar/ to the al-ost parallel stance of the respon$ents, 8eepin. Cacien$a (uisita unfra.-ente$ is also not a-on. the i-perati e i-positions b/ the S*P, RA FF0@, an$ *AO !2% The Ter-inal Report states that the propose$ $istribution plan sub-itte$ in !;A; to the PARC effecti el/ assure$ the inten$e$ stoc8 beneficiaries that the ph/sical inte.rit/ of the far- shall re-ain in iolate% Accor$in.l/, the Ter-inal

Report an$ the PARC-assaile$ resolution 6oul$ ta8e C(I to tas8 for securin. appro al of the con ersion to non-a.ricultural uses of 022 hectares of the hacien$a% In not too -an/ 6or$s, the Report an$ the resolution ie6 the con ersion as an infrin.e-ent of Sec% 0=a> of *AO !2 6hich rea$s& 4a% that the continue$ operation of the corporation 6ith its a.ricultural lan$ intact an$ unfra.-ente$ is iable 6ith potential for .ro6th an$ increase$ profitabilit/%5 The PARC is 6ron.% In the first place, Sec% 0=a>MM<ust li8e the succee$in. Sec% 0=b> of *AO !2 on increase$ inco-e an$ .reater benefits to Gualifie$ beneficiariesMMis but one of the state$ criteria to .ui$e PARC in $eci$in. on 6hether or not to accept an S*P% Sai$ Sec% 0=a> $oes not e3act fro- the corporate lan$o6ner-applicant the un$erta8in. to 8eep the far- intact an$ unfra.-ente$ ad infinit%m. An$ there is lo.ic to C(ILs state$ obser ation that the 8e/ phrase in the pro ision of Sec% 0=a> is 4 iabilit/ of corporate operations5& 4"6#hat is thus reGuire$ is not the a.ricultural lan$ re-ainin. intact 3 3 3 but the e en if the corporate iabilit/ of the corporate operations 6ith its lan$ $oes not re-ain intact or a.ricultural lan$ bein. intact an$ unfra.-ente$% Corporate operation -a/ be iable a.ricultural "un#fra.-ente$%5!9:"!9:# It is, of course, anti-cli-actic to -ention that *AR ie6e$ the con ersion as not iolati e of an/ issuance, let alone un$er-inin. the iabilit/ of Cacien$a (uisitaLs operation, as the *AR Secretar/ appro e$ the lan$ con ersion applie$ for an$ its $isposition ia his Con ersion Or$er $ate$ Au.ust !:, !;;F pursuant to Sec% F0 of RA FF0@ 6hich rea$s&
!9:"!9:#

C(I Consoli$ate$ Repl/ an$ Opposition, p% F0%

Sec% F0% Conversion of Lands%After the lapse of fi e /ears fro- its a6ar$ 6hen the lan$ ceases to be econo-icall/ feasible an$ soun$ for a.ricultural purposes, or the localit/ has beco-e urbani7e$ an$ the lan$ 6ill ha e a .reater econo-ic alue for resi$ential, co--ercial or in$ustrial purposes, the *AR upon application of the beneficiar/ or lan$o6ner 6ith $ue notice to the affecte$ parties, an$ sub<ect to e3istin. la6s, -a/ authori7e the 3 3 3 con ersion of the lan$ an$ its $ispositions% 3 3 3

On *h( 9@ P/#d1)*i#n Sha/( On the -atter of the alle.e$ failure of C(I to co-pl/ 6ith sharin. the 9O of the .ross pro$uction sales of the hacien$a an$ pa/ $i i$en$s fro- profit, the entries in its financial boo8s ten$ to in$icate co-pliance b/ C(I of the profitsharin. eGui alent to 9O of the .ross sales fro- the pro$uction of the a.ricultural lan$ on top of =a> the salaries an$ 6a.es $ue EDBs as e-plo/ees of the co-pan/ an$ =b> the 9O of the .ross sellin. price of the con erte$ lan$ an$ that portion use$ for the SCTEQ% A plausible e i$ence of co-pliance or non-co-pliance, as the case -a/ be, coul$ be the boo8s of account of C(I% E i$entl/, the cr/ of so-e .roups of not ha in. recei e$ their share fro- the .ross pro$uction sales has not a$eGuatel/ been ali$ate$ on the .roun$ b/ the Special Tas8 Eorce% In$ee$, factual fin$in.s of a$-inistrati e a.encies are conclusi e 6hen supporte$ b/ substantial e i$ence an$ are accor$e$ $ue respect an$ 6ei.ht, especiall/ 6hen the/ are affir-e$ b/ the CA% !90"!90# Co6e er, such rule is not absolute% One such e3ception is 6hen the fin$in.s of an a$-inistrati e a.enc/ are conclusions 6ithout citation of specific e i$ence on 6hich the/ are base$, !9F"!9F# such as in this particular instance% As culle$ fro- its Ter-inal Report, it 6oul$

!90"!90# !9F"!9F#

/erida v. 2BC Pawnshop and Jewelry Store, ?%R% No% !@1F2!, April !F, 122;, 0A0 SCRA 9;0, :2!% .ascos, Jr. v. 'aganahan, ?%R% No% !A2FFF, Eebruar/ !A, 122;, 0@; SCRA F09, F@:-F@0%

appear that the Special Tas8 Eorce re<ecte$ C(ILs clai- of co-pliance on the basis of this ratiocination&
The Tas8 Eorce position' Thou.h, alle.e$l/, the Super isor/ ?roup recei es the 9O .ross pro$uction share an$ that others alle.e$ that the/ recei e$ 92 -illion pesos still others -aintain that the/ ha e not recei e$ an/thin. /et% Ite- No% : of the MOA is clear an$ -ust be follo6e$% There is a $istinction bet6een the *#*a2 -/# a2( fro- the 5/#d1)*i#n #3 *h( 2and an$ the 5/#)((d fro- the a2( #3 *h( 2and% The for-er refers to the fruitsK/iel$ of the a.ricultural lan$ 6hile the latter is the lan$ itself% The phrase 4the beneficiaries are entitle$ e er/ /ear to an a-ount appro3i-atel/ eGui alent to 9O 6oul$ onl/ be feasible if the sub<ect is the pro$uce since there is at least one har est per /ear, 6hile such is not the case in the sale of the a.ricultural lan$% This ne.ates then the clai- of C(I that, all that the EDBs can be entitle$ to, if an/, is onl/ 9O of the purchase price of the con erte$ lan$% Besi$es, the Conversion Order $ate$ !: Au.ust !;;F pro i$es that 4 the #enefits, wages and the li(e, presently received #y the 2C.s shall not in any way #e red%ced or adversely affected. Three percent of the gross selling price of the sale of the converted land shall be awarded to the beneficiaries of the SDO .D The 9O .ross pro$uction share then is $ifferent fro- the 9O procee$s of the sale of the con erte$ lan$ an$, 6ith -ore reason, the 99O share bein. clai-e$ b/ the EDBs as part o6ners of the Cacien$a, shoul$ ha e been .i en the EDBs, as stoc8hol$ers, an$ to 6hich the/ coul$ ha e been entitle$ if onl/ the lan$ 6ere acGuire$ an$ re$istribute$ to the- un$er the CARP% 3333 The EDBs $o not recei e an/ other benefits un$er the MOA e3cept the afore-entione$ "=vi1& shares of stoc8s =partial>, 9O .ross pro$uction sale =not all> an$ ho-elots =not all>#%

)u$.in. fro- the abo e state-ents, the Special Tas8 Eorce is at best silent on 6hether C(I has faile$ to co-pl/ 6ith the 9O pro$uction-sharin. obli.ation or the 9O of the .ross sellin. price of the con erte$ lan$ an$ the SCTEQ lot% In fact, it a$-its that the EDBs, thou.h not all, ha e recei e$ their share of the .ross pro$uction sales an$ in the sale of the lot to SCTEQ% At -ost, then, C(I ha$ co-plie$ substantiall/ 6ith this S*P un$erta8in. an$ the con ersion or$er% To be

sure, this sli.ht breach 6oul$ not <ustif/ the settin. to nau.ht b/ PARC of the appro al action of the earlier PARC% E en in contract la6, rescission, pre$icate$ on iolation of reciprocit/, 6ill not be per-itte$ for a sli.ht or casual breach of contractI rescission -a/ be ha$ onl/ for such breaches that are substantial an$ fun$a-ental as to $efeat the ob<ect of the parties in -a8in. the a.ree-ent%!9@"!9@# *espite the fore.oin. fin$in.s, the re ocation of the appro al of the S*P is not 6ithout basis as sho6n belo6% On Ti*2( *# H#+(2#* Un$er RA FF0@, the $istribution of ho-elots is reGuire$ onl/ for corporations or business associations o6nin. or operatin. far-s 6hich opte$ for lan$ $istribution% Sec% 92 of RA FF0@ states&
SEC% 92% /omelots and 2armlots for -em#ers of Cooperatives%The in$i i$ual -e-bers of the cooperati es or corporations -entione$ in the prece$in. section shall be pro i$e$ 6ith ho-elots an$ s-all far-lots for their fa-il/ use, to be ta8en fro- the lan$ o6ne$ b/ the cooperati e or corporation%

The 4prece$in. section5 referre$ to in the abo e-Guote$ pro ision is as follo6s&
SEC% 1;% 2arms 6wned or 6perated #y Corporations or 6ther .%siness Associations.In the case of far-s o6ne$ or operate$ b/ corporations or other business associations, the follo6in. rules shall be obser e$ b/ the PARC% In .eneral, lan$s shall be $istribute$ $irectl/ to the in$i i$ual 6or8erbeneficiaries%
Cann% v. $alang, ?%R% No% !9;019, Ma/ 1F, 1220, :0; SCRA A2, ;9-;:I Ang v. Co%rt of Appeals , ?%R% No%A220A, Eebruar/ !9, !;A;, !@2 SCRA 1AF%
!9@"!9@#

In case it is not econo-icall/ feasible an$ soun$ to $i i$e the lan$, then it shall be o6ne$ collecti el/ b/ the 6or8er-beneficiaries 6ho shall for- a 6or8ersL cooperati e or association 6hich 6ill $eal 6ith the corporation or business association% Until a ne6 a.ree-ent is entere$ into b/ an$ bet6een the 6or8ersL cooperati e or association an$ the corporation or business association, an/ a.ree-ent e3istin. at the ti-e this Act ta8es effect bet6een the for-er an$ the pre ious lan$o6ner shall be respecte$ b/ both the 6or8ersL cooperati e or association an$ the corporation or business association%

Noticeabl/, the fore.oin. pro isions $o not -a8e reference to corporations 6hich opte$ for stoc8 $istribution un$er Sec% 9! of RA FF0@% Conco-itantl/, sai$ corporations are not obli.e$ to pro i$e for it e3cept b/ stipulation, as in this case% Un$er the S*P, C(I un$ertoo8 to 4sub$i i$e an$ allocate for free an$ 6ithout char.e a-on. the Gualifie$ fa-il/-beneficiaries 3 3 3 resi$ential or ho-elots of not -ore than 1:2 sG% -% each, 6ith each fa-il/ beneficiar/ bein. assure$ of recei in. an$ o6nin. a ho-elot in the barrio or baran.a/ 6here it actuall/ resi$es,5 46ithin a reasonable ti-e%5 More than si3teen =!F> /ears ha e elapse$ fro- the ti-e the S*P 6as appro e$ b/ PARC, an$ /et, it is still the contention of the EDBs that not all 6as .i en the 1:2-sGuare -eter ho-elots an$, of those 6ho 6ere alrea$/ .i en, so-e still $o not ha e the correspon$in. titles% *urin. the oral ar.u-ents, C(I 6as affor$e$ the chance to refute the fore.oin. alle.ation b/ sub-ittin. proof that the EDBs 6ere alrea$/ .i en the sai$ ho-elots&
)ustice 'elasco& 3 3 3 There is also an alle.ation that the far-er beneficiaries, the Gualifie$ fa-il/ beneficiaries 6ere not .i en the 1:2 sGuare -eters each% So, can

/ou also "pro e# that the Gualifie$ fa-il/ beneficiaries 6ere alrea$/ pro i$e$ the 1:2 sGuare -eter ho-elots% Att/% Asuncion& De 6ill, /our Conor please%!9A"!9A#

Other than the financial report, ho6e er, no other substantial proof sho6in. that all the Gualifie$ beneficiaries ha e recei e$ ho-elots 6as sub-itte$ b/ C(I% Cence, this Court is constraine$ to rule that C(I has not /et full/ co-plie$ 6ith its un$erta8in. to $istribute ho-elots to the EDBs un$er the S*P%

On FMan Da, G and *h( M()hani) #3 S*#)6 Di */i41*i#n In our re ie6 an$ anal/sis of par% 9 of the S*OA on the -echanics an$ ti-elines of stoc8 $istribution, De fin$ that it .i#2a*( t6o =1> pro isions of *AO !2% Par% 9 of the S*OA states&
9% At the en$ of each fiscal /ear, for a perio$ of 92 /ears, the SECON* PARTB "C(I# shall arran.e 6ith the EIRST PARTB "T*C# the acGuisition an$ $istribution to the TCIR* PARTB "EDBs# on the basis of nu-ber of $a/s 6or8e$ an$ at no cost to the- of one-thirtieth =!K92> of !!A,9;!,;@F%A0 shares of the capital stoc8 of the SECON* PARTB that are presentl/ o6ne$ an$ hel$ b/ the EIRST PARTB, until such ti-e as the entire bloc8 of !!A,9;!,;@F%A0 shares shall ha e been co-pletel/ acGuire$ an$ $istribute$ to the TCIR* PARTB%

Base$ on the abo e-Guote$ pro ision, the $istribution of the shares of stoc8 to the EDBs, albeit not entailin. a cash out fro- the-, is contin.ent on the nu-ber of 4-an $a/s,5 that is, the nu-ber of $a/s that the EDBs ha e 6or8e$ $urin. the
!9A"!9A#

TSN, Au.ust !A, 12!2, p% 0A%

/ear% This for-ula $e iates fro- Sec% ! of *AO !2, 6hich $ecrees the $istribution of eGual nu-ber of shares to the EDBs as the -ini-u- ratio of shares of stoc8 for purposes of co-pliance 6ith Sec% 9! of RA FF0@% As state$ in Sec% : of *AO !2&
Section :% Stoc( &istri#%tion Plan.The "S*P# sub-itte$ b/ the corporate lan$o6ner-applicant shall pro i$e for *h( di */i41*i#n #3 an (01a2 n1+4(/ #3 ha/( #3 *h( a+( )2a and .a21(, =i*h *h( a+( /i-h* and 3(a*1/( a a22 #*h(/ ha/( , *# (a)h #3 *h( 01a2i3i(d 4(n(3i)ia/i( % This $istribution plan in all cases, shall be at least the +ini+1+ /a*i# for purposes of co-pliance 6ith Section 9! of R%A% No% FF0@% On *#5 #3 *h( +ini+1+ /a*i# pro i$e$ un$er Section 9 of this I-ple-entin. ?ui$eline, the corporate lan$o6ner-applicant -a/ a$opt addi*i#na2 *#)6 di */i41*i#n )h(+( *a6in- in*# a))#1n* 3a)*#/ 1)h a /an6, (ni#/i*,, a2a/,, 5# i*i#n and #*h(/ )i/)1+ *an)( =hi)h +a, 4( d((+(d d( i/a42( a a +a**(/ #3 #1nd )#+5an, 5#2i),% =E-phasis supplie$%>

The abo e pro iso .i es t6o =1> sets or cate.ories of shares of stoc8 6hich a Gualifie$ beneficiar/ can acGuire fro- the corporation un$er the S*P% The first pertains, as earlier e3plaine$, to the -an$ator/ -ini-u- ratio of shares of stoc8 to be $istribute$ to the EDBs in co-pliance 6ith Sec% 9! of RA FF0@% This -ini-uratio conte-plates of that 45/#5#/*i#n #3 *h( )a5i*a2 *#)6 #3 *h( )#/5#/a*i#n *ha* *h( a-/i)12*1/a2 2and, a)*1a22, d(.#*(d *# a-/i)12*1/a2 a)*i.i*i( , 4(a/ in /(2a*i#n *# *h( )#+5an,7 *#*a2 a (* %5!9;"!9;# It is this set of shares of stoc8 6hich, in line 6ith Sec% : of *AO !2, is suppose$ to be allocate$ 4for the $istribution of an eGual nu-ber of shares of stoc8 of the sa-e class an$ alue, 6ith the sa-e ri.hts an$ features as all other shares, to each of the Gualifie$ beneficiaries%5
!9;"!9;#

RA FF0@, Sec% 9!%

On the other han$, the secon$ set or cate.or/ of shares parta8es of a .ratuitous e3tra .rant, -eanin. that this set or cate.or/ constitutes an au.-entation shareKs that the corporate lan$o6ner -a/ .i e un$er an a$$itional stoc8 $istribution sche-e, ta8in. into account such ariables as ran8, seniorit/, salar/, position an$ li8e factors 6hich the -ana.e-ent, in the e3ercise of its soun$ $iscretion, -a/ $ee- $esirable%!:2"!:2# Before an/thin. else, it shoul$ be stresse$ that, at the ti-e PARC appro e$ C(ILs S*P, C(I reco.ni7e$ ;,B:; in$i i$uals as Gualifie$ EDBs% An$ un$er the 92-/ear stoc8 $istribution pro.ra- en isa.e$ un$er the plan, EDBs 6ho ca-e in after !;A;, ne6 EDBs in fine, -a/ be acco--o$ate$, as the/ appear to ha e in fact been acco--o$ate$ as e i$ence$ b/ their receipt of C(I shares% No6 then, b/ pro i$in. that the nu-ber of shares of the ori.inal !;A; EDBs shall $epen$ on the nu-ber of 4-an $a/s,5 C(I iolate$ the afore-Guote$ rule on stoc8 $istribution an$ effecti el/ $epri e$ the EDBs of eGual shares of stoc8 in the corporation, for, in net effect, these F,1;F Gualifie$ EDBs, 6ho theoreticall/ ha$ .i en up their ri.hts to the lan$ that coul$ ha e been $istribute$ to the-, suffere$ a $ilution of their $ue share entitle-ent% As has been obser e$ $urin. the oral ar.u-ents, C(I has chosen to use the shares ear-ar8e$ for far-6or8ers as re6ar$ s/ste- chips to 6ater $o6n the shares of the ori.inal F,1;F EDBs%!:!"!:!# Particularl/&
)ustice Aba$& If the S*OA $i$ not ta8e place, the other thin. that 6oul$ ha e happene$ is that there 6oul$ be CARPR Att/% *ela Merce$& Bes, Bour Conor%
!:2"!:2# !:!"!:!#

*AO !2, s% !;AA, Sec% !% TSN, Au.ust !A, 12!2, p% !2F%

)ustice Aba$& ThatLs the onl/ point I 6ant to 8no6 3 3 3% No6, but the/ chose to enter S*OA instea$ of placin. the lan$ un$er CARP% An$ for that reason those 6ho 6oul$ ha e .otten their shares of the lan$ actuall/ .a e up their ri.hts to this lan$ in place of the shares of the stoc8, is that correctR Att/% *ela Merce$& It 6oul$ be that 6a/, Bour Conor% )ustice Aba$& Ri.ht no6, also the .o ern-ent, in a 6a/, .a e up its ri.ht to o6n the lan$ because that 6a/ the .o ern-ent ta8es o6n "sic# the lan$ an$ $istribute it to the far-ers an$ pa/ for the lan$, is that correctR Att/% *ela Merce$& Bes, Bour Conor% )ustice Aba$& An$ then /ou .a e thirt/-three percent =99O> of the shares of C(I to the far-ers at that ti-e that nu-bere$ 3 3 3 those 6ho si.ne$ fi e thousan$ four hun$re$ ninet/ ei.ht =0,:;A> beneficiaries, is that correctR Att/% *ela Merce$& Bes, Bour Conor% )ustice Aba$& But later on, after assi.nin. the- their shares, so-e 6or8ers ca-e in fro- !;A;, !;;2, !;;!, !;;1 an$ the rest of the /ears that /ou .a e a$$itional shares 6ho 6ere not in the ori.inal list of o6nersR Att/% *ela Merce$& Bes, Bour Conor% )ustice Aba$& *i$ those ne6 6or8ers .i e up an/ ri.ht that 6oul$ ha e belon. to the- in !;A; 6hen the lan$ 6as suppose$ to ha e been place$ un$er CARPR Att/% *ela Merce$& If /ou are tal8in. or referrin.U =interrupte$> )ustice Aba$& NoneW Bou tell -e% None% The/ .a e up no ri.hts to lan$R Att/% *ela Merce$& The/ $i$ not $o the sa-e thin. as 6e $i$ in !;A;, Bour Conor% )ustice Aba$& No, if the/ 6ere not 6or8ers in !;A; 6hat lan$ $i$ the/ .i e upR None, if the/ beco-e 6or8ers later on% Att/% *ela Merce$& None, Bour Conor, I 6as referrin., Bour Conor, to the ori.inalU =interrupte$> )ustice Aba$& So 6h/ is it that the ri.hts of those 6ho .a e up their lan$s 6oul$ be $ilute$, because the co-pan/ has chosen to use the shares as re6ar$ s/ste- for ne6 6or8ers 6ho co-e inR It is not that the ne6 6or8ers, in effect,

beco-e <ust 6or8ers of the corporation 6hose stoc8hol$ers 6ere alrea$/ fi3e$% The TA*ECO 6ho has shares there about si3t/ si3 percent =FFO> an$ the fi e thousan$ four hun$re$ ninet/ ei.ht =0,:;A> far-ers at the ti-e of the S*OAR E3plain to -e% Dh/, 6h/ 6ill /ou 3 3 3 6hat ri.ht or 6here $i$ /ou .et that ri.ht to use this shares, to 6ater $o6n the shares of those 6ho shoul$ ha e been benefite$, an$ to use it as a re6ar$ s/ste- $eci$e$ b/ the co-pan/R !:1"!:1#

Ero- the abo e $iscourse, it is clear as $a/ that the ori.inal F,1;F EDBs, 6ho 6ere Gualifie$ beneficiaries at the ti-e of the appro al of the S*P, suffere$ fro- 6aterin. $o6n of shares% As $eter-ine$ earlier, each ori.inal EDB is entitle$ to !A,A2:%91 C(I shares% The ori.inal EDBs .ot less than the .uarantee$ !A,A2:%91 C(I shares per beneficiar/, because the acGuisition an$ $istribution of the C(I shares 6ere base$ on 4-an $a/s5 or 4nu-ber of $a/s 6or8e$5 b/ the EDB in a /earLs ti-e% As e3plaine$ b/ C(I, a beneficiar/ nee$s to 6or8 for at least 9@ $a/s in a fiscal /ear before he or she beco-es entitle$ to C(I shares% If it falls belo6 9@ $a/s, the EDB, unfortunatel/, $oes not .et an/ share at /ear en$% The nu-ber of C(I shares $istribute$ aries $epen$in. on the nu-ber of $a/s the EDBs 6ere allo6e$ to 6or8 in one /ear% Dorse, C(I hire$ far-6or8ers in a$$ition to the ori.inal F,1;F EDBs, such that, as in$icate$ in the Co-pliance $ate$ Au.ust 1, 12!2 sub-itte$ b/ C(I to the Court, the total nu-ber of far-6or8ers of C(I as of sai$ $ate stoo$ at !2,021% All these far-6or8ers, 6hich inclu$e the ori.inal F,1;F EDBs, 6ere .i en shares out of the !!A,;9!,;@F%A0 C(I shares representin. the 99%1;FO of the total outstan$in. capital stoc8 of C(I% Clearl/, the -ini-u- in$i i$ual allocation of each ori.inal EDB of !A,A2:%91 shares 6as $ilute$ as a result of the use of 4-an $a/s5 an$ the hirin. of a$$itional far-6or8ers%

!:1"!:1#

I$% at !29-!2F%

?oin. into another but relate$ -atter, par% 9 of the S*OA e3pressl/ pro i$in. for a 92-/ear ti-efra-e for C(I-to-EDBs stoc8 transfer is an arran.e-ent contrar/ to 6hat Sec% !! of *AO !2 prescribes% Sai$ Sec% !! pro i$es for the i-ple-entation of the appro e$ stoc8 $istribution plan 6ithin three =9> -onths fro- receipt b/ the corporate lan$o6ner of the appro al of the plan b/ PARC% In fact, base$ on the sai$ pro ision, the transfer of the shares of stoc8 in the na-es of the Gualifie$ EDBs shoul$ be recor$e$ in the stoc8 an$ transfer boo8s an$ -ust be sub-itte$ to the SEC 6ithin si3t/ =F2> $a/s froi-ple-entation% As state$&
Section !!% ImplementationA-onitoring of Plan.The appro e$ stoc8 $istribution plan shall be i+52(+(n*(d =i*hin *h/(( H9I +#n*h 3/#+ /()(i5* 4, *h( )#/5#/a*( 2and#=n(/Aa552i)an* #3 *h( a55/#.a2 *h(/(#3 4, *h( PARC , an$ the transfer of the shares of stoc8s in the na-es of the Gualifie$ beneficiaries shall be recor$e$ in stoc8 an$ transfer boo8s an$ 14+i**(d *# *h( S()1/i*i( and ED)han-( C#++i i#n HSECI =i*hin iD*, H;&I da, 3/#+ *h( aid i+52(+(n*a*i#n #3 *h( *#)6 di */i41*i#n 52an" =E-phasis supplie$%>

It is e i$ent fro- the fore.oin. pro ision that the i-ple-entation, that is, the $istribution of the shares of stoc8 to the EDBs, -ust be -a$e 6ithin three =9> -onths fro- receipt b/ C(I of the appro al of the stoc8 $istribution plan b/ PARC% Dhile neither of the clashin. parties has -a$e a co-pellin. case of the thrust of this pro ision, the Court is of the ie6 an$ so hol$s that the intent is to co-pel the corporate lan$o6ner to co-plete, not -erel/ initiate, the transfer process of shares 6ithin that three--onth ti-efra-e% Reinforcin. this conclusion is the F2-$a/ stoc8 transfer recor$in. =6ith the SEC> reGuire-ent rec8one$ fro- the i-ple-entation of the S*P% To the Court, there is a purpose, 6hich is at once $iscernible as it is practical, for the three--onth threshol$% Re-o e this ti-eline an$ the corporate

lan$o6ner can

eritabl/ e a$e co-pliance 6ith a.rarian refor- b/ si-pl/

$eferrin. to absur$ li-its the i-ple-entation of the stoc8 $istribution sche-e% The ar.u-ent is ur.e$ that the thirt/ =92>-/ear $istribution pro.rais

<ustifie$ b/ the fact that, un$er Sec% 1F of RA FF0@, pa/-ent b/ beneficiaries of lan$ $istribution un$er CARP shall be -a$e in thirt/ =92> annual a-orti7ations% To C(I, sai$ section pro i$es a <ustif/in. $i-ension to its 92-/ear stoc8 $istribution pro.ra-% C(ILs reliance on Sec% 1F of RA FF0@, Guote$ in part belo6, is ob iousl/ -isplace$ as the sai$ pro ision clearl/ $eals 6ith lan$ $istribution%
SEC% 1F% Payment #y .eneficiaries%(an$s a6ar$e$ pursuant to this Act shall be pai$ for b/ the beneficiaries to the (BP in thirt/ =92> annual a-orti7ations 3 3 3%

Then, too, the ones obli.e$ to pa/ the (BP un$er the sai$ pro ision are the beneficiaries% On the other han$, in the instant case, asi$e fro- the fact that 6hat is in ol e$ is stoc8 $istribution, it is the corporate lan$o6ner 6ho has the obli.ation to $istribute the shares of stoc8 a-on. the EDBs% E i$entl/, the lan$ transfer beneficiaries are .i en thirt/ =92> /ears 6ithin 6hich to pa/ the cost of the lan$ thus a6ar$e$ the- to -a8e it less cu-berso-e for the- to pa/ the .o ern-ent% To be sure, the reason un$erpinnin. the 92-/ear acco--o$ation $oes not appl/ to corporate lan$o6ners in $istributin. shares of stoc8 to the Gualifie$ beneficiaries, as the shares -a/ be issue$ in a -uch shorter perio$ of ti-e%

Ta8in. into account the abo e $iscussion, the re ocation of the S*P b/ PARC shoul$ be uphel$ for iolatin. *AO !2% It bears stressin. that un$er Sec% :; of RA FF0@, the PARC an$ the *AR ha e the po6er to issue rules an$ re.ulations, substanti e or proce$ural% Bein. a pro$uct of such rule--a8in. po6er, *AO !2 has the force an$ effect of la6 an$ -ust be $ul/ co-plie$ 6ith%!:9"!:9# The PARC is, therefore, correct in re o8in. the S*P% ConseGuentl/, the PARC Resolution No% A;-!1-1 $ate$ No e-ber 1!, l;A; appro in. the C(ILs S*P is nullifie$ an$ oi$e$% III" De no6 resol e the petitions-in-inter ention 6hich, at botto-, unifor-l/ pra/ for the e3clusion fro- the co era.e of the assaile$ PARC resolution those portions of the con erte$ lan$ 6ithin Cacien$a (uisita 6hich RCBC an$ (IPCO acGuire$ b/ purchase% Both conten$ that the/ are innocent purchasers for alue of portions of the con erte$ far- lan$% Thus, their plea for the e3clusion of that portion fro- PARC Resolution 1220-91-2!, as i-ple-ente$ b/ a *AR-issue$ Notice of Co era.e $ate$ )anuar/ 1, 122F, 6hich calle$ for -an$ator/ CARP acGuisition co era.e of lan$s sub<ect of the S*P% To restate the antece$ents, after the con ersion of the 022 hectares of lan$ in Cacien$a (uisita, C(I transferre$ the 922 hectares to Centennar/, 6hile ce$in. the re-ainin. 122-hectare portion to (RC% SubseGuentl/, (IPCO purchase$ the entire
!:9"!:9#

See A#a(ada $%ro Party List v. P%risima, ?%R% No% !FF@!0, Au.ust !:, 122A, 0F1 SCRA 10!, 1AA-

1A;%

three hun$re$ =922> hectares of lan$ fro- Centennar/ for the purpose of $e elopin. the lan$ into an in$ustrial co-ple3% !::"!::# Accor$in.l/, the TCT in Centennar/Ls na-e 6as cancele$ an$ a ne6 one issue$ in (IPCOLs na-e% Thereafter, sai$ lan$ 6as sub$i i$e$ into t6o =1> -ore parcels of lan$% (ater on, (IPCO transferre$ about !A: hectares to RCBC b/ 6a/ of dacion en pago, b/ irtue of 6hich TCTs in the na-e of RCBC 6ere subseGuentl/ issue$% Un$er Sec% :: of P* !01; or the Property Registration &ecree, 4e er/ re.istere$ o6ner recei in. a certificate of title in pursuance of a $ecree of re.istration an$ e er/ subseGuent purchaser of re.istere$ lan$ ta8in. a certificate of title for alue an$ in good faith shall hol$ the sa-e free fro- all encu-brances e3cept those note$ on the certificate an$ enu-erate$ therein%5!:0"!:0# It is settle$ $octrine that one 6ho $eals 6ith propert/ re.istere$ un$er the Torrens s/ste- nee$ not .o be/on$ the four corners of, but can rel/ on 6hat appears on, the title% Ce is char.e$ 6ith notice onl/ of such bur$ens an$ clai-s as are annotate$ on the title% This principle a$-its of certain e3ceptions, such as 6hen the part/ has actual 8no6le$.e of facts an$ circu-stances that 6oul$ i-pel a reasonabl/ cautious -an to -a8e such inGuir/, or 6hen the purchaser has 8no6le$.e of a $efect or the lac8 of title in his en$or or of sufficient facts to in$uce a reasonabl/ pru$ent -an to inGuire into the status of the title of the propert/ in liti.ation%!:F"!:F# A hi.her le el of care an$ $ili.ence is of course e3pecte$ fro- ban8s, their business bein. i-presse$ 6ith public interest%!:@"!:@# -illena v. Co%rt of Appeals $escribes a purchaser in .oo$ faith in this 6ise&
!::"!::# !:0"!:0#

Rollo, p% !9F1% L% v. -anipon, ?%R% No% !:@2@1, Ma/ @, 1221, 9A! SCRA @AA, @;F% !:F"!:F# Sandoval v. Co%rt of Appeals, ?%R% No% !2FF0@, Au.ust !, !;;F, 1F2 SCRA 1A9, 1;0% !:@"!:@# Cavite &evelopment .an( v. Lim, ?%R% No% !9!F@;, Eebruar/ !, 1222, 91: SCRA 9:F, 90;%%

3 3 3 A 51/)ha (/ in -##d 3ai*h i #n( =h# 41, 5/#5(/*, #3 an#*h(/, =i*h#1* n#*i)( *ha* #+( #*h(/ 5(/ #n ha a /i-h* *#, #/ in*(/( * in, 1)h 5/#5(/*, a* *h( *i+( #3 1)h 51/)ha (, #/ 4(3#/( h( ha n#*i)( #3 *h( )2ai+ #/ in*(/( * #3 #+( #*h(/ 5(/ #n in *h( 5/#5(/*," ?oo$ faith, or the lac8 of it, is in the final anal/sis a Guestion of intentionI but in ascertainin. the intention b/ 6hich one is actuate$ on a .i en occasion, 6e are necessaril/ controlle$ b/ the e i$ence as to the con$uct an$ out6ar$ acts b/ 6hich alone the in6ar$ -oti e -a/, 6ith safet/, be $eter-ine$% Trul/, .oo$ faith is not a isible, tan.ible fact that can be seen or touche$, but rather a state or con$ition of -in$ 6hich can onl/ be <u$.e$ b/ actual or fancie$ to8ens or si.ns% Other6ise state$, .oo$ faith 3 3 3 refers to the state of -in$ 6hich is -anifeste$ b/ the acts of the in$i i$ual concerne$%!:A"!:A# =E-phasis supplie$%>

In fine, there are t6o =1> reGuire-ents before one -a/ be consi$ere$ a purchaser in .oo$ faith, na-el/& =!> that the purchaser bu/s the propert/ of another 6ithout notice that so-e other person has a ri.ht to or interest in such propert/I an$ =1> that the purchaser pa/s a full an$ fair price for the propert/ at the ti-e of such purchase or before he or she has notice of the clai- of another% It can ri.htfull/ be sai$ that both (IPCO an$ RCBC areMMbase$ on the abo e reGuire-ents an$ 6ith respect to the a$ erte$ transactions of the con erte$ lan$ in GuestionMMpurchasers in .oo$ faith for alue entitle$ to the benefits arisin. fro- such status% 2irst, at the ti-e (IPCO purchase$ the entire three hun$re$ =922> hectares of in$ustrial lan$, there 6as no notice of an/ suppose$ $efect in the title of its transferor, Centennar/, or that an/ other person has a ri.ht to or interest in such propert/% In fact, at the ti-e (IPCO acGuire$ sai$ parcels of lan$, onl/ the follo6in. annotations appeare$ on the TCT in the na-e of Centennar/& the Secretar/Ls Certificate in fa or of Teresita (opa, the Secretar/Ls Certificate in

!:A"!:A#

?%R% No% !1@@;@, )anuar/ 9!, 1222, 91: SCRA !1F, !9F-!9@%

fa or of Shintaro Murai, an$ the con ersion of the propert/ fro- a.ricultural to in$ustrial an$ resi$ential use%!:;"!:;# The sa-e is true 6ith respect to RCBC% At the ti-e it acGuire$ portions of Cacien$a (uisita, onl/ the follo6in. .eneral annotations appeare$ on the TCTs of (IPCO& the *ee$ of Restrictions, li-itin. its use solel/ as an in$ustrial estateI the Secretar/Ls Certificate in fa or of Po<i Po-ai an$ P/osu8e CoriI an$ the Real Estate Mort.a.e in fa or of RCBC to .uarantee the pa/-ent of PhP 922 -illion% It cannot be clai-e$ that RCBC an$ (IPCO acte$ in ba$ faith in acGuirin. the lots that 6ere pre iousl/ co ere$ b/ the S*P% ?oo$ faith 4consists in the possessorLs belief that the person fro- 6ho- he recei e$ it 6as the o6ner of the sa-e an$ coul$ con e/ his title% ?oo$ faith reGuires a 6ell-foun$e$ belief that the person fro- 6ho- title 6as recei e$ 6as hi-self the o6ner of the lan$, 6ith the ri.ht to con e/ it% There is .oo$ faith 6here there is an honest intention to abstain fro- ta8in. an/ unconscientious a$ anta.e fro- another%5!02"!02# It is the opposite of frau$% To be sure, inter enor RCBC an$ (IPCO 8ne6 that the lots the/ bou.ht 6ere sub<ecte$ to CARP co era.e b/ -eans of a stoc8 $istribution plan, as the *AR con ersion or$er 6as annotate$ at the bac8 of the titles of the lots the/ acGuire$% Co6e er, the/ are of the honest belief that the sub<ect lots 6ere ali$l/ con erte$ to co--ercial or in$ustrial purposes an$ for 6hich sai$ lots 6ere ta8en out of the CARP co era.e sub<ect of PARC Resolution No% A;-!1-1 an$, hence, can be le.all/ an$ ali$l/ acGuire$ b/ the-% After all, Sec% F0 of RA FF0@
!:;"!:;#

150"!02#

Rollo, p% !0FA% &%ran v. Intermediate Appellate Co%rt, No% (-F:!0;, Septe-ber !2, !;A0, !9A SCRA :A;, :;:%

e3plicitl/ allo6s con ersion an$ $isposition of a.ricultural lan$s pre iousl/ co ere$ b/ CARP lan$ acGuisition 4after the lapse of fi e =0> /ears fro- its a6ar$ 6hen the lan$ ceases to be econo-icall/ feasible an$ soun$ for a.ricultural purposes or the localit/ has beco-e urbani7e$ an$ the lan$ 6ill ha e a .reater econo-ic alue for resi$ential, co--ercial or in$ustrial purposes%5 Moreo er, *AR notifie$ all the affecte$ parties, -ore particularl/ the EDBs, an$ .a e thethe opportunit/ to co--ent or oppose the propose$ con ersion% *AR, after .oin. throu.h the necessar/ processes, .rante$ the con ersion of 022 hectares of Cacien$a (uisita pursuant to its pri-ar/ <uris$iction un$er Sec% 02 of RA FF0@ to $eter-ine an$ a$<u$icate a.rarian refor- -atters an$ its ori.inal e3clusi e <uris$iction o er all -atters in ol in. the i-ple-entation of a.rarian refor-% The *AR con ersion or$er beca-e final an$ e3ecutor/ after none of the EDBs interpose$ an appeal to the CA% In this factual settin., RCBC an$ (IPCO purchase$ the lots in Guestion on their honest an$ 6ell-foun$e$ belief that the pre ious re.istere$ o6ners coul$ le.all/ sell an$ con e/ the lots thou.h these 6ere pre iousl/ sub<ect of CARP co era.e% Er.o, RCBC an$ (IPCO acte$ in .oo$ faith in acGuirin. the sub<ect lots%

An$ second, both (IPCO an$ RCBC purchase$ portions of Cacien$a (uisita for alue% Un$eniabl/, (IPCO acGuire$ 922 hectares of lan$ fro- Centennar/ for the a-ount of PhP @02 -illion pursuant to a *ee$ of Sale $ate$ )ul/ 92, !;;A% !0!
"!0!#

On the other han$, in a *ee$ of Absolute Assi.n-ent $ate$ No e-ber 10,

122:, (IPCO con e/e$ portions of Cacien$a (uisita in fa or of RCBC b/ 6a/ of dacion en pago to pa/ for a loan of PhP :9!,F;0,@91%!2%
!0!"!0!#

Rollo, pp% !:;;-!02;%

As #ona fide purchasers for alue, both (IPCO an$ RCBC ha e acGuire$ ri.hts 6hich cannot <ust be $isre.ar$e$ b/ *AR, PARC or e en b/ this Court% As hel$ in Spo%ses Ch%a v. Soriano&
Dith the propert/ in Guestion ha in. alrea$/ passe$ to the han$s of purchasers in .oo$ faith, it is no6 of no -o-ent that so-e irre.ularit/ atten$e$ the issuance of the SPA, consistent 6ith our pronounce-ent in /eirs of Spo%ses .enito $avino and J%ana 0%ste v. Co%rt of Appeals, to 6it& 3 3 3 the .eneral rule that the $irect result of a pre ious oi$ contract cannot be ali$, is inapplicable in this case as it 6ill $irectl/ contra ene the Torrens s/ste- of re.istration% Wh(/( inn#)(n* *hi/d 5(/ #n , /(2,in- #n *h( )#//()*n( #3 *h( )(/*i3i)a*( #3 *i*2( *h1 i 1(d, a)01i/( /i-h* #.(/ *h( 5/#5(/*,, *h( )#1/* )ann#* di /(-a/d 1)h /i-h* and #/d(/ *h( )an)(22a*i#n #3 *h( )(/*i3i)a*(" The effect of such outri.ht cancellation 6ill be to i-pair public confi$ence in the certificate of title% The sanctit/ of the Torrens s/ste- -ust be preser e$I other6ise, e er/one $ealin. 6ith the propert/ re.istere$ un$er the s/ste6ill ha e to inGuire in e er/ instance as to 6hether the title ha$ been re.ularl/ or irre.ularl/ issue$, contrar/ to the e i$ent purpose of the la6% B(in- 51/)ha (/ in -##d 3ai*h, *h( Ch1a a2/(ad, a)01i/(d .a2id *i*2( *# *h( 5/#5(/*," A 51/)ha (/ in -##d 3ai*h h#2d an ind(3(a i42( *i*2( *# *h( 5/#5(/*, and h( i (n*i*2(d *# *h( 5/#*()*i#n #3 *h( 2a=" !01"!01# 3 3 3 =E-phasis supplie$%>

To be sure, the practicalities of the situation ha e to a point influence$ Our $isposition on the fate of RCBC an$ (IPCO% After all, the Court, to borro6 froAssociation of Small Landowners in the Philippines, Inc. ,!09"!09# is not a 4cloistere$ institution re-o e$5 fro- the realities on the .roun$% To note, the appro al an$ issuances of both the national an$ local .o ern-ents sho6in. that certain portions of Cacien$a (uisita ha e effecti el/ cease$, le.all/ an$ ph/sicall/, to be a.ricultural an$, therefore, no lon.er CARPable are a -atter of fact 6hich cannot

!01"!01# !09"!09#

?%R% No% !022FF, April !9, 122@, 01! SCRA FA, A1-A9% Supra note 1%

<ust be i.nore$ b/ the Court an$ the *AR% A-on. the appro in.Ken$orsin. issuances&!0:"!0:# =a> Resolution No% 9;1 $ate$ !! *ece-ber !;;F of the San..unian. Ba/an of Tarlac fa orabl/ en$orsin. the 922-hectare in$ustrial estate pro<ect of (IPCOI =b> BOI Certificate of Re.istration No% ;F-212 $ate$ 12 *ece-ber !;;F issue$ in accor$ance 6ith the O-nibus In est-ents Co$e of !;A@I =c> PE,A Certificate of Boar$ Resolution No% ;@-121 $ate$ 1@ )une !;;@, appro in. (IPCOLs application for a -i3e$ eco7one an$ proclai-in. the three hun$re$ =922> hectares of the in$ustrial lan$ as a Special Econo-ic ,oneI =$> Resolution No% 19: $ate$ 2A Au.ust !;;@ of the San..unian. Ba/an of Tarlac, appro in. the Einal *e elop-ent Per-it for the (uisita In$ustrial Par8 II Pro<ectI =e> *e elop-ent Per-it $ate$ !9 Au.ust !;;@ for the propose$ (uisita In$ustrial Par8 II Pro<ect issue$ b/ the Office of the San..unian. Ba/an of TarlacI!00"!00# =f> *ENR En iron-ental Co-pliance Certificate $ate$ 2! October !;;@ issue$ for the propose$ pro<ect of buil$in. an in$ustrial co-ple3 on three hun$re$ =922> hectares of in$ustrial lan$I!0F"!0F# =.> Certificate of Re.istration No% 22@;: $ate$ 1F *ece-ber !;;@ issue$ b/ the C(URB on the pro<ect of (uisita In$ustrial Par8 II 6ith an area of three -illion =9,222,222> sGuare -etersI!0@"!0@# =h> (icense to Sell No% 22@F $ate$ 1F *ece-ber !;;@ issue$ b/ the C(URB authori7in. the sale of lots in the (uisita In$ustrial Par8 III
!0:"!0:# !00"!00#

Me-oran$u- of RCBC, p% 01% I$% !0F"!0F# I$% at 01-09% !0@"!0@# I$ at 09%

=i> Procla-ation No% !12@ $ate$ 11 April !;;A entitle$ 4*eclarin. Certain Parcels of Pri ate (an$ in Baran.a/ San Mi.uel, Municipalit/ of Tarlac, Pro ince of Tarlac, as a Special Econo-ic ,one pursuant to Republic Act No% @;!F,5 $esi.natin. the (uisita In$ustrial Par8 II consistin. of three hun$re$ hectares =922 has%> of in$ustrial lan$ as a Special Econo-ic ,oneI an$ =<> Certificate of Re.istration No% E,-;A-20 $ate$ 2@ Ma/ !;;A issue$ b/ the PE,A, statin. that pursuant to Presi$ential Procla-ation No% !12@ $ate$ 11 April !;;A an$ Republic Act No% @;!F, (IPCO has been re.istere$ as an Eco7one *e eloperKOperator of (uisita In$ustrial Par8 II locate$ in San Mi.uel, Tarlac, Tarlac% Dhile a -ere reclassification of a co ere$ a.ricultural lan$ or its inclusion in an econo-ic 7one $oes not auto-aticall/ allo6 the corporate or in$i i$ual lan$o6ner to chan.e its use,!0A"!0A# the reclassification process is a prima facie in$iciu- that the lan$ has cease$ to be econo-icall/ feasible an$ soun$ for a.ricultural uses% An$ if onl/ to stress, *AR Con ersion Or$er No% 292F2!2@:@F:-=;0> issue$ in !;;F b/ then *AR Secretar/ ?arilao ha$ effecti el/ con erte$ 022 hectares of hacien$a lan$ fro- a.ricultural to in$ustrialKco--ercial use an$ authori7e$ their $isposition% In rel/in. upon the abo e--entione$ appro als, procla-ation an$ con ersion or$er, both RCBC an$ (IPCO cannot be consi$ere$ at fault for belie in. that certain portions of Cacien$a (uisita are in$ustrialKco--ercial lan$s an$ are, thus, outsi$e the a-bit of CARP% The PARC, an$ conseGuentl/ *AR, .ra el/ abuse$ its $iscretion 6hen it place$ (IPCOLs an$ RCBCLs propert/ 6hich

!0A"!0A#

Ro>as B Company, Inc. v. &A-.A542SC, ?%R% Nos% !:;0:A, etc%, *ece-ber :, 122;, F2@ SCRA

99, 0F%

once for-e$ part of Cacien$a (uisita un$er the CARP co-pulsor/ acGuisition sche-e ia the assaile$ Notice of Co era.e% As re.ar$s the A2%0!-hectare lan$ transferre$ to the .o ern-ent for use as part of the SCTEQ, this shoul$ also be e3clu$e$ fro- the co-pulsor/ a.rarian refor- co era.e consi$erin. that the transfer 6as consistent 6ith the .o ern-entLs e3ercise of the po6er of e-inent $o-ain!0;"!0;# an$ none of the parties actuall/ Guestione$ the transfer% Dhile De affir- the re ocation of the S*P on Cacien$a (uisita sub<ect of PARC Resolution Nos% 1220-91-2! an$ 122F-9:-2!, the Court cannot close its e/es to certain 4operati e facts5 that ha$ occurre$ in the interi-% Pertinentl/, the 4operati e fact5 $octrine reali7es that, in $eclarin. a 2a= or (D()1*i.( a)*i#n null an$ oi$, or, b/ e3tension, no lon.er 6ithout force an$ effect, un$ue harshness an$ resultin. unfairness -ust be a oi$e$% This is as it shoul$ realisticall/ be, since ri.hts -i.ht ha e accrue$ in fa or of natural or <uri$ical persons an$ obli.ations <ustl/ incurre$ in the -eanti-e% !F2"!F2# The actual e3istence of a statute or e3ecuti e act is, prior to such a $eter-ination, an operati e fact an$ -a/ ha e conseGuences 6hich cannot <ustl/ be i.nore$I the past cannot al6a/s be erase$ b/ a ne6 <u$icial $eclaration%!F!"!F!# The oft-cite$ &e Ag#ayani v% Philippine 4ational .an(!F1"!F1# $iscusse$ the effect to be .i en to a le.islati e or e3ecuti e act subseGuentl/ $eclare$ in ali$&
RA, A;@:, Sec% F% See Xhttp&KK666%con.ress%.o %phKco--itteesKco--ne6sKco--ne6sY$et%phpRne6si$V!19!Z =last isite$ )une 19, 12!!>% !F2"!F2# -anila -otor Co., Inc. v. 2lores, ;; Phil% @9A, @9; =!;0F>% !F!"!F!# 2ernande1 v. P. C%erva B Co. , No% (-1!!!:, No e-ber 1A, !;F@, 1! SCRA !2;0, !!2:I citin. Chicot Co%nty &rainage &ist. 3. .a>ter States .an( =!;:2> 92A US 9@!% !F1"!F1# No% (-19!1@, April 1;, !;@!, 9A SCRA :1;, :9:-:90%
!0;"!0;#

3 3 3 It $oes not a$-it of $oubt that prior to the $eclaration of nullit/ such challen.e$ le.islati e or e3ecuti e act -ust ha e been in force an$ ha$ to be co-plie$ 6ith% This is so as until after the <u$iciar/, in an appropriate case, $eclares its in ali$it/, it is entitle$ to obe$ience an$ respect% Parties -a/ ha e acte$ un$er it an$ -a/ ha e chan.e$ their positions% Dhat coul$ be -ore fittin. than that in a subseGuent liti.ation re.ar$ be ha$ to 6hat has been $one 6hile such le.islati e or e3ecuti e act 6as in operation an$ presu-e$ to be ali$ in all respects% It is no6 accepte$ as a $octrine that prior to its bein. nullifie$, its e3istence as a fact -ust be rec8one$ 6ith% This is -erel/ to reflect a6areness that precisel/ because the <u$iciar/ is the .o ern-ent or.an 6hich has the final sa/ on 6hether or not a le.islati e or e3ecuti e -easure is ali$, a perio$ of ti-e -a/ ha e elapse$ before it can e3ercise the po6er of <u$icial re ie6 that -a/ lea$ to a $eclaration of nullit/% It 6oul$ be to $epri e the la6 of its Gualit/ of fairness an$ <ustice then, if there be no reco.nition of 6hat ha$ transpire$ prior to such a$<u$ication% In the lan.ua.e of an A-erican Supre-e Court $ecision& 4The actual e3istence of a statute, prior to such a $eter-ination of "unconstitutionalit/#, is an operati e fact an$ -a/ ha e conseGuences 6hich cannot <ustl/ be i.nore$% The past cannot al6a/s be erase$ b/ a ne6 <u$icial $eclaration% The effect of the subseGuent rulin. as to in ali$it/ -a/ ha e to be consi$ere$ in arious aspects,MM 6ith respect to particular relations, in$i i$ual an$ corporate, an$ particular con$uct, pri ate an$ official%5 3 3 3

?i en the abo e perspecti e an$ consi$erin. that -ore than t6o $eca$es ha$ passe$ since the PARCLs appro al of the C(ILs S*P, in con<unction 6ith nu-erous acti ities perfor-e$ in .oo$ faith b/ C(I, an$ the reliance b/ the EDBs on the le.alit/ an$ ali$it/ of the PARC-appro e$ S*P, perforce, certain ri.hts of the parties, -ore particularl/ the EDBs, ha e to be respecte$ pursuant to the application in a .eneral 6a/ of the operati e fact $octrine% A ie6, ho6e er, has been a$ ance$ that the operati e fact $octrine is of -ini-al or alto.ether 6ithout rele ance to the instant case as it applies onl/ in consi$erin. the effects of a $eclaration of unconstitutionalit/ of a statute, an$ not of a $eclaration of nullit/ of a contract% This is incorrect, for this ie6 faile$ to consi$er is that it is NOT the S*OA $ate$ Ma/ !!, !;A; 6hich 6as re o8e$ in the

instant case% Rather, it is PARCLs appro al of the C(ILs Proposal for Stoc8 *istribution un$er CARP 6hich e-bo$ie$ the S*P that 6as nullifie$% A recall of the antece$ent e ents 6oul$ sho6 that on Ma/ !!, !;A;, Ta$eco, C(I, an$ the Gualifie$ EDBs e3ecute$ the S*OA% This a.ree-ent pro i$e$ the basis an$ -echanics of the S*P that 6as subseGuentl/ propose$ an$ sub-itte$ to *AR for appro al% It 6as onl/ after its re ie6 that the PARC, throu.h then Sec% *efensor-Santia.o, issue$ the assaile$ Resolution No% A;-!1-1 appro in. the S*P% Consi$erabl/, it is not the S*OA 6hich .a e le.al force an$ effect to the stoc8 $istribution sche-e but instea$, it is the appro al of the S*P un$er the PARC Resolution No% A;-!1-1 that .a e it its ali$it/% The abo e conclusion is bolstere$ b/ the fact that in Sec% Pan.an$a-anLs reco--en$ation to the PARC E3co-, 6hat he propose$ is the recallKre ocation of PARC Resolution No% A;-!1-1 appro in. C(ILs S*P, an$ not the re ocation of the S*OA% Sec% Pan.an$a-anLs reco--en$ation 6as fa orabl/ en$orse$ b/ the PARC 'ali$ation Co--ittee to the PARC E3co-, an$ these reco--en$ations 6ere referre$ to in the assaile$ Resolution No% 1220-91-2!% Clearl/, it is not the S*OA 6hich 6as -a$e the basis for the i-ple-entation of the stoc8 $istribution sche-e% That the operati e fact $octrine sGuarel/ applies to e3ecuti e actsMMin this case, the appro al b/ PARC of the C(I proposal for stoc8 $istributionMMis 6ellsettle$ in our <urispru$ence% In Chave1 v. 4ational /o%sing A%thority,!F9"!F9# De hel$&

!F9"!F9#

?%R% No% !F:01@, Au.ust !0, 122@, 092 SCRA 190%

Petitioner postulates that the 4operati e fact5 $octrine is inapplicable to the present case because it is an eGuitable $octrine 6hich coul$ not be use$ to countenance an ineGuitable result that is contrar/ to its proper office% On the other han$, the petitioner Solicitor ?eneral ar.ues that the e3istence of the arious a.ree-ents i-ple-entin. the SM*RP is an operati e fact that can no lon.er be $isturbe$ or si-pl/ i.nore$, citin. Rieta v. People of the Philippines% The ar.u-ent of the Solicitor ?eneral is -eritorious% The 4operati e fact5 $octrine is e-bo$ie$ in &e Ag#ayani v. Co%rt of Appeals, 6herein it is state$ that a le.islati e or (D()1*i.( a)*, prior to its bein. $eclare$ as unconstitutional b/ the courts, is ali$ an$ -ust be co-plie$ 6ith, thus& 333 333 333

This $octrine 6as reiterate$ in the -ore recent case of City of -a(ati v. Civil Service Commission, 6herein 6e rule$ that& Moreo er, 6e certainl/ cannot nullif/ the Cit/ ?o ern-ent[s or$er of suspension, as 6e ha e no reason to $o so, -uch less retroacti el/ appl/ such nullification to $epri e pri ate respon$ent of a co-pellin. an$ ali$ reason for not filin. the lea e application% F#/ a =( ha.( h(2d, a .#id a)* *h#1-h in 2a= a +(/( )/a5 #3 5a5(/ n#n(*h(2( )#n3(/ 2(-i*i+a), 15#n 5a * a)* #/ #+i i#n d#n( in /(2ian)( *h(/(#3" ConseGuentl/, the e3istence of a statute or (D()1*i.( #/d(/ prior to its bein. a$<u$.e$ oi$ is an operati e fact to 6hich le.al conseGuences are attache$% It 6oul$ in$ee$ be .hastl/ unfair to pre ent pri ate respon$ent fro- rel/in. upon the or$er of suspension in lieu of a for-al lea e application% =Citations o-itte$I E-phasis supplie$%>

The applicabilit/ of the operati e fact $octrine to e3ecuti e acts 6as further e3plicate$ b/ this Court in Rieta v. People,!F:"!F:# thus&
Petitioner conten$s that his arrest b/ irtue of Arrest Search an$ Sei7ure Or$er =ASSO> No% :@0: 6as in ali$, as the la6 upon 6hich it 6as pre$icate$ T ?eneral Or$er No% F2, issue$ b/ then Presi$ent Eer$inan$ E% Marcos T 6as subseGuentl/ $eclare$ b/ the Court, in 'aEada v. '%vera, 99 to ha e no force an$
!F:"!F:#

?%R% No% !:@A!@, Au.ust !1, 122:, :9F SCRA 1@9%

effect% Thus, he asserts, an/ e i$ence obtaine$ pursuant thereto is ina$-issible in e i$ence% De $o not a.ree% In 'aEada, the Court a$$resse$ the possible effects of its $eclaration of the in ali$it/ of arious presi$ential issuances% *iscussin. therein ho6 such a $eclaration -i.ht affect acts $one on a presu-ption of their ali$it/, the Court sai$& 4% % %% In si-ilar situations in the past this Court ha$ ta8en the pra.-atic an$ realistic course set forth in Chicot Co%nty &rainage &istrict vs. .a>ter .an( to 6it& \The courts belo6 ha e procee$e$ on the theor/ that the Act of Con.ress, ha in. been foun$ to be unconstitutional, 6as not a la6I that it 6as inoperati e, conferrin. no ri.hts an$ i-posin. no $uties, an$ hence affor$in. no basis for the challen.e$ $ecree% % % % It is Guite clear, ho6e er, that such broa$ state-ents as to the effect of a $eter-ination of unconstitutionalit/ -ust be ta8en 6ith Gualifications% The actual e3istence of a statute, prior to "the $eter-ination of its in ali$it/#, is an operati e fact an$ -a/ ha e conseGuences 6hich cannot <ustl/ be i.nore$% The past cannot al6a/s be erase$ b/ a ne6 <u$icial $eclaration% The effect of the subseGuent rulin. as to in ali$it/ -a/ ha e to be consi$ere$ in arious aspects T 6ith respect to particular con$uct, pri ate an$ official% Suestions of ri.hts clai-e$ to ha e beco-e este$, of status, of prior $eter-inations $ee-e$ to ha e finalit/ an$ acte$ upon accor$in.l/, of public polic/ in the li.ht of the nature both of the statute an$ of its pre ious application, $e-an$ e3a-ination% These Guestions are a-on. the -ost $ifficult of those 6hich ha e en.a.e$ the attention of courts, state an$ fe$eral, an$ it is -anifest fro- nu-erous $ecisions that an all-inclusi e state-ent of a principle of absolute retroacti e in ali$it/ cannot be <ustifie$%L 333 333 333

4Si-ilarl/, the i-ple-entationKenforce-ent of presi$ential $ecrees prior to their publication in the Official ?a7ette is \an operati e fact 6hich -a/ ha e conseGuences 6hich cannot be <ustl/ i.nore$% The past cannot al6a/s be erase$ b/ a ne6 <u$icial

$eclaration % % % that an all-inclusi e state-ent of a principle of absolute retroacti e in ali$it/ cannot be <ustifie$%L5 The Chicot $octrine cite$ in 'aEada a$ ocates that, prior to the nullification of a statute, there is an i-perati e necessit/ of ta8in. into account its actual e3istence as an operati e fact ne.atin. the acceptance of 4a principle of absolute retroacti e in ali$it/%5 Dhate er 6as $one 6hile the le.islati e or the (D()1*i.( a)* 6as in operation shoul$ be $ul/ reco.ni7e$ an$ presu-e$ to be ali$ in all respects% Th( ASSO *ha* =a i 1(d in $:%: 1nd(/ G(n(/a2 O/d(/ N#" ;& K 2#n- 4(3#/( #1/ D()i i#n in Taada and *h( a//( * #3 5(*i*i#n(/ K i an #5(/a*i.( 3a)* *ha* )an n# 2#n-(/ 4( di *1/4(d #/ i+52, i-n#/(d" =Citations o-itte$I E-phasis supplie$%>

To reiterate, althou.h the assaile$ Resolution No% 1220-91-2! states that it re o8es or recalls the S*P, 6hat it actuall/ re o8e$ or recalle$ 6as the PARCLs appro al of the S*P e-bo$ie$ in Resolution No% A;-!1-1% ConseGuentl/, 6hat 6as actuall/ $eclare$ null an$ oi$ 6as an e3ecuti e act, PARC Resolution No% A;-!11,!F0"!F0# an$ not a contract =S*OA>% It is, therefore, 6ron. to sa/ that it 6as the S*OA 6hich 6as annulle$ in the instant case% E i$entl/, the operati e fact $octrine is applicable%

I!" Dhile the assaile$ PARC resolutions effecti el/ nullif/in. the Cacien$a (uisita S*P are uphel$, the re ocation -ust, b/ application of the operati e fact principle, .i e 6a/ to the ri.ht of the ori.inal F,1;F Gualifie$ EDBs to choose 6hether the/ 6ant to re-ain as C(I stoc8hol$ers or not% The Court cannot turn a blin$ e/e to the fact that in !;A;, ;9O of the EDBs a.ree$ to the S*OA =or the
See Province of 4orth Cota#ato v. $RP Peace Panel on Ancestral &omain , ?%R% Nos% !A90;!, !A9@01, !A9A;9, !A9;0! an$ !A9;F1, October !:, 122A, 0FA SCRA :21%
!F0"!F0#

MOA>, 6hich beca-e the basis of the S*P appro e$ b/ PARC per its Resolution No% A;-!1-1 $ate$ No e-ber 1!, !;A;% Ero- !;A; to 1220, the EDBs 6ere sai$ to ha e recei e$ fro- C(I salaries an$ cash benefits, hospital an$ -e$ical benefits, 1:2-sGuare -eter ho-elots, 9O of the .ross pro$uce fro- a.ricultural lan$s, an$ 9O of the procee$s of the sale of the 022-hectare con erte$ lan$ an$ the A2%0!hectare lot sol$ to SCTEQ% C(I shares totalin. !!A,9;!,;@F%A0 6ere $istribute$ as of April 11, 1220%!FF"!FF# On Au.ust F, 12l2, C(I an$ pri ate respon$ents sub-itte$ a Co-pro-ise A.ree-ent, in 6hich C(I .a e the EDBs the option of acGuirin. a piece of a.ricultural lan$ or re-ain as C(I stoc8hol$ers, an$ as a -atter of fact, -ost EDBs in$icate$ their choice of re-ainin. as stoc8hol$ers% These facts an$ circu-stances ten$ to in$icate that so-e, if not all, of the EDBs -a/ actuall/ $esire to continue as C(I sharehol$ers% A -atter best left to their o6n $iscretion% Dith respect to the other EDBs 6ho 6ere not liste$ as Gualifie$ beneficiaries as of No e-ber 1!, !;A; 6hen the S*P 6as appro e$, the/ are not accor$e$ the ri.ht to acGuire lan$ but shall, ho6e er, continue as C(I stoc8hol$ers% All the benefits an$ ho-elots !F@"!F@# recei e$ b/ the !2,021 EDBs =F,1;F ori.inal EDBs an$ :,12F non-Gualifie$ EDBs> liste$ as C(I stoc8hol$ers as of Au.ust 1, 12!2 shall be respecte$ 6ith no obli.ation to refun$ or return thesince the benefits =e3cept the ho-elots> 6ere recei e$ b/ the EDBs as far-han$s in the a.ricultural enterprise of C(I an$ other frin.e benefits 6ere .rante$ to thepursuant to the e3istin. collecti e bar.ainin. a.ree-ent 6ith Ta$eco% If the nu-ber of C(I shares in the na-es of the ori.inal EDBs 6ho opt to re-ain as C(I stoc8hol$ers falls belo6 the .uarantee$ allocation of !A,A2:%91 C(I shares per
Rollo, p% !;9% Id. at 6-64. T!ese !omelots do not %orm part o% t!e E)312.-2 !e'tares o% agri'$lt$ral land in Ca'ienda L$isita. T!ese are part o% t!e residential land wit! a total area o% 120.326E !e'tares) as indi'ated in t!e S5*.
16-[16-]
!FF"!FF#

EDB, the C(I shall assi.n a$$itional shares to sai$ EDBs to co-plete sai$ -ini-u- nu-ber of shares at no cost to sai$ EDBs% Dith re.ar$ to the ho-elots alrea$/ a6ar$e$ or ear-ar8e$, the EDBs are not obli.e$ to return the sa-e to C(I or pa/ for its alue since this is a benefit .rante$ un$er the S*P% The ho-elots $o not for- part of the :,;!0%@0 hectares co ere$ b/ the S*P but 6ere ta8en fro- the !12%;19: hectare resi$ential lot o6ne$ b/ Ta$eco% Those 6ho $i$ not recei e the ho-elots as of the re ocation of the S*P on *ece-ber 11, 1220 6hen PARC Resolution No% 1220-91-2! 6as issue$, 6ill no lon.er be entitle$ to ho-elots% Thus, in the $eter-ination of the ulti-ate a.ricultural lan$ that 6ill be sub<ecte$ to lan$ $istribution, the a..re.ate area of the ho-elots 6ill no lon.er be $e$ucte$% There is a clai- that, since the sale an$ transfer of the 022 hectares of lan$ sub<ect of the Au.ust !:, !;;F Con ersion Or$er an$ the A2%0!-hectare SCTEQ lot ca-e after co-pulsor/ co era.e has ta8en place, the EDBs shoul$ ha e their correspon$in. share of the lan$Ls alue% There is -erit in the clai-% Since the S*P appro e$ b/ PARC Resolution No% A;-!1-1 has been nullifie$, then all the lan$s sub<ect of the S*P 6ill auto-aticall/ be sub<ect of co-pulsor/ co era.e un$er Sec% 9! of RA FF0@% Since the Court e3clu$e$ the 022-hectare lot sub<ect of the Au.ust !:, !;;F Con ersion Or$er an$ the A2%0!-hectare SCTEQ lot acGuire$ b/ the .o ern-ent fro- the area co ere$ b/ S*P, then C(I an$ its subsi$iar/, Centennar/, shall be liable to the EDBs for the price recei e$ for sai$ lots% C(I shall be liable for the alue recei e$ for the sale of the 122-hectare lan$ to (RC in the a-ount of PhP 022,222,222 an$ the eGui alent alue of the !1,222,222 shares of its subsi$iar/, Centennar/, for the 922-hectare lot sol$ to (IPCO for the

consi$eration of PhP @02,222,222%

(i8e6ise, C(I shall be liable for PhP

A2,0!!,022 as consi$eration for the sale of the A2%0!-hectare SCTEQ lot% De, ho6e er, note that C(I has alle.e$l/ pai$ 9O of the procee$s of the sale of the 022-hectare lan$ an$ A2%0!-hectare SCTEQ lot to the EDBs% De also ta8e into account the pa/-ent of ta3es an$ e3penses relatin. to the transfer of the lan$ an$ C(ILs state-ent that -ost, if not all, of the procee$s 6ere use$ for le.iti-ate corporate purposes% In or$er to $eter-ine once an$ for all 6hether or not all the procee$s 6ere properl/ utili7e$ b/ C(I an$ its subsi$iar/, Centennar/, *AR 6ill en.a.e the ser ices of a reputable accountin. fir- to be appro e$ b/ the parties to au$it the boo8s of C(I to $eter-ine if the procee$s of the sale of the 022-hectare lan$ an$ the A2%0!-hectare SCTEQ lot 6ere actuall/ use$ for le.iti-ate corporate purposes, titlin. e3penses an$ in co-pliance 6ith the Au.ust !:, !;;F Con ersion Or$er% The cost of the au$it 6ill be shoul$ere$ b/ C(I% If after such au$it, it is $eter-ine$ that there re-ains a balance fro- the procee$s of the sale, then the balance shall be $istribute$ to the Gualifie$ EDBs% A ie6 has been a$ ance$ that C(I -ust pa/ the EDBs /earl/ rent for use of the lan$ fro- !;A;% De $isa.ree% It shoul$ not be for.otten that the EDBs are also stoc8hol$ers of C(I, an$ the benefits acGuire$ b/ the corporation fro- its possession an$ use of the lan$ ulti-atel/ re$oun$e$ to the EDBsL benefit base$ on its business operations in the for- of salaries, an$ other frin.e benefits un$er the CBA% To still reGuire C(I to pa/ rent to the EDBs 6ill result in $ouble co-pensation% Eor sure, C(I 6ill still e3ist as a corporation e en after the re ocation of the S*P althou.h it 6ill no lon.er be operatin. un$er the S*P, but pursuant to the

Corporation Co$e as a pri ate stoc8 corporation% The non-a.ricultural assets a-ountin. to PhP 9;9,;1:,112 shall re-ain 6ith C(I, 6hile the a.ricultural lan$s alue$ at PhP !;F,F92,222 6ith an ori.inal area of :,;!0%@0 hectares shall be turne$ o er to *AR for $istribution to the EDBs% To be $e$ucte$ fro- sai$ area are the 022-hectare lot sub<ect of the Au.ust !:, !;;F Con ersion Or$er, the A2%0!-hectare SCTEQ lot, an$ the total area of F,AAF%0 sGuare -eters of in$i i$ual lots that shoul$ ha e been $istribute$ to EDBs b/ *AR ha$ the/ not opte$ to sta/ in C(I% C(I shall be pai$ <ust co-pensation for the re-ainin. a.ricultural lan$ that 6ill be transferre$ to *AR for lan$ $istribution to the EDBs% De fin$ that the $ate of the 4ta8in.5 is No e-ber 1!, !;A;, 6hen PARC appro e$ C(ILs S*P per PARC Resolution No% A;-!1-1% *AR shall coor$inate 6ith (BP for the $eter-ination of <ust co-pensation% De cannot use Ma/ !!, !;A; 6hen the S*OA 6as e3ecute$, since it 6as the S*P, not the S*OA, that 6as appro e$ b/ PARC% The instant petition is treate$ pro hac vice in ie6 of the peculiar facts an$ circu-stances of the case% WHEREFORE, the instant petition is DENIED% PARC Resolution No% 1220-91-2! $ate$ *ece-ber 11, 1220 an$ Resolution No% 122F-9:-2! $ate$ Ma/ 9, 122F, placin. the lan$s sub<ect of C(ILs S*P un$er co-pulsor/ co era.e on -an$ate$ lan$ acGuisition sche-e of the CARP, are hereb/ AFFIRMED 6ith the MODIFICATION that the ori.inal F,1;F Gualifie$ EDBs shall ha e the option to re-ain as stoc8hol$ers of C(I% *AR shall i--e$iatel/ sche$ule -eetin.s 6ith the sai$ F,1;F EDBs an$ e3plain to the- the effects, conseGuences an$ le.al or

practical i-plications of their choice, after 6hich the EDBs 6ill be as8e$ to -anifest, in secret otin., their choices in the ballot, si.nin. their si.natures or placin. their thu-b-ar8s, as the case -a/ be, o er their printe$ na-es% Of the F,1;F EDBs, he or she 6ho 6ishes to continue as an C(I stoc8hol$er is entitle$ to !A,A2:%91 C(I shares, an$, in case the C(I shares alrea$/ .i en to hi- or her is less than !A,A2:%91 shares, the C(I is or$ere$ to issue or $istribute a$$itional shares to co-plete sai$ prescribe$ nu-ber of shares at no cost to the EDB 6ithin thirt/ =92> $a/s fro- finalit/ of this *ecision% Other EDBs 6ho $o not belon. to the ori.inal F,1;F Gualifie$ beneficiaries are not entitle$ to lan$ $istribution an$ shall re-ain as C(I sharehol$ers% All salaries, benefits, 9O pro$uction share an$ 9O share in the procee$s of the sale of the 022-hectare con erte$ lan$ an$ the A2%0!-hectare SCTEQ lot an$ ho-elots alrea$/ recei e$ b/ the !2,021 EDBs, co-pose$ of F,1;F ori.inal EDBs an$ :,12F non-Gualifie$ EDBs, shall be respecte$ 6ith no obli.ation to refun$ or return the-% Dithin thirt/ =92> $a/s after $eter-inin. 6ho fro- a-on. the ori.inal EDBs 6ill sta/ as stoc8hol$ers, *AR shall se.re.ate fro- the C(I a.ricultural lan$ 6ith an area of :,;!0%@0 hectares sub<ect of PARCLs S*P-appro in. Resolution No% A;-!1-1 the follo6in.& =a> the 022-hectare lot sub<ect of the Au.ust !:, l;;F Con ersion Or$erI =b> the A2%0!-hectare lot sol$ to, or acGuire$ b/, the .o ern-ent as part of the SCTEQ co-ple3I an$ =c> the a..re.ate area of F,AAF%0 sGuare -eters of in$i i$ual lots that each EDB is entitle$ to un$er the CARP ha$ he or she not opte$ to sta/ in C(I as a stoc8hol$er% After the se.re.ation process, as in$icate$, is $one, the re-ainin. area shall be turne$ o er to *AR for i--e$iate lan$ $istribution to the ori.inal Gualifie$ EDBs 6ho opte$ not to re-ain as C(I stoc8hol$ers%

The afore-entione$ area co-pose$ of F,AAF%0-sGuare -eter lots allotte$ to the EDBs 6ho sta/e$ 6ith the corporation shall for- part of the C(I assets% C(I is $irecte$ to pa/ the F,1;F EDBs the consi$eration of PhP 022,222,222 recei e$ b/ it fro- (uisita Realt/, Inc% for the sale to the latter of 122 hectares out of the 022 hectares co ere$ b/ the Au.ust !:, !;;F Con ersion Or$er, the consi$eration of PhP @02,222,222 recei e$ b/ its o6ne$ subsi$iar/, Centennar/ Col$in.s, Inc% for the sale of the re-ainin. 922 hectares of the afore-entione$ 022-hectare lot to (uisita In$ustrial Par8 Corporation, an$ the price of PhP A2,0!!,022 pai$ b/ the .o ern-ent throu.h the Bases Con ersion *e elop-ent Authorit/ for the sale of the A2%0!-hectare lot use$ for the construction of the SCTEQ roa$ net6or8% Ero- the total a-ount of PhP !,992,0!!,022 =PhP 022,222,222 ] PhP @02,222,222 ] PhP A2,0!!,022 V PhP !,992,0!!,022> shall be $e$ucte$ the 9O of the total .ross sales fro- the pro$uction of the a.ricultural lan$ an$ the 9O of the procee$s of sai$ transfers that 6ere pai$ to the EDBs, the ta3es an$ e3penses relatin. to the transfer of titles to the transferees, an$ the e3pen$itures incurre$ b/ C(I an$ Centennar/ Col$in.s, Inc% for le.iti-ate corporate purposes% Eor this purpose, *AR is or$ere$ to en.a.e the ser ices of a reputable accountin. fir- appro e$ b/ the parties to au$it the boo8s of C(I an$ Centennar/ Col$in.s, Inc% to $eter-ine if the PhP !,992,0!!,022 procee$s of the sale of the three =9> afore-entione$ lots 6ere use$ or spent for le.iti-ate corporate purposes% An/ unspent or unuse$ balance as $eter-ine$ b/ the au$it shall be $istribute$ to the F,1;F ori.inal EDBs% C(I is entitle$ to <ust co-pensation for the a.ricultural lan$ that 6ill be transferre$ to *AR to be rec8one$ fro- No e-ber 1!, !;A; per PARC Resolution

No% A;-!1-1% *AR an$ (BP are or$ere$ to $eter-ine the co-pensation $ue to C(I% *AR shall sub-it a co-pliance report after si3 =F> -onths fro- finalit/ of this <u$.-ent% It shall also sub-it, after sub-ission of the co-pliance report, Guarterl/ reports on the e3ecution of this <u$.-ent to be sub-itte$ 6ithin the first !0 $a/s at the en$ of each Guarter, until full/ i-ple-ente$% The te-porar/ restrainin. or$er is lifte$% SO ORDERED"

PRESBITERO J" !ELASCO, JR" Associate )ustice

DE CONCUR&

RENATO C" CORONA Chief )ustice

ANTONIO T" CARPIO CASTRO Associate )ustice )ustice

TERESITA J" LEONARDOADE Associate

ARTURO D" BRION Associate )ustice

=On official lea e> DIOSDADO M" PERALTA Associate )ustice

LUCAS P" BERSAMIN Associate )ustice

MARIANO C" DEL CASTILLO Associate )ustice

ROBERTO A" ABAD Associate )ustice

MARTIN S" !ILLARAMA, JR" Associate )ustice

JOSE PORTUGAL PEREZ Associate )ustice

JOSE CATRAL MENDOZA Associate )ustice

MARIA LOURDES P" A" SERENO Associate )ustice

CERTIFICATION Pursuant to Section !9, Article 'III of the Constitution, it is hereb/ certifie$ that the conclusions in the abo e *ecision ha$ been reache$ in consultation before the case 6as assi.ne$ to the 6riter of the opinion of the Court%

RENATO C" CORONA Chief )ustice