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Hacienda Luisita Vs PARC
Hacienda Luisita Vs PARC
The law is clear – farmers and regular farmworkers have a right to OWN
DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The basic law
allows two modes of land distribution—direct and indirect ownership. No language is
found in the 1987 Constitution that disqualifies or prohibits corporations or
cooperatives of farmers from being the legal entity through which collective
ownership can be exercised. The term “collectively” is said to allow indirect
ownership of land and not just outright agricultural land transfer. This is in
recognition of the fact that land reform may become successful even if it is done
through the medium of juridical entities composed of farmers.
Even in the definition of agrarian reform itself in RA 6657 allows stock
distribution— “the redistribution of lands… to farmers and regular farmworkers who
are landless… to lift the economic status of the beneficiaries and all other
arrangements alternative to physical redistribution of land, such as production or
profit sharing, labour management and the distribution of shares of stock which
allow beneficiaries to receive a just share of the fruits of the land they work.”
The SC believed that Sec. 31 of RA 6657 is NOT inconsistent with the State’s
commitment to farmers and farmworkers to advance their interests under the policy
of social justice. This is believed to be the modality of the legislature for collective
ownership by which the imperatives of social justice may be approximated, if not
achieved.
Also as contended by FARM that stock certificates do not equate to land
ownership, still, the Corporation Code is clear that the FWB becomes a stockholder
who acquires an equitable interest in the assets of the corporation, which includes the
agricultural lands. A share of stock typifies an aliquot part of the corporation’s
property, or right to share in its proceeds to the extent when distributed according to
law and equity and that its holder is not the owner of any part of the capital of the
corporation. However, the FWBs will ultimately own the agricultural lands owned by
the corporation when the latter is eventually dissolved and liquidated.
The policy of agrarian reform is that control over the agricultural land must
always be in the hands of the farmers. The Court also reasoned that there can be no
guarantee of a successful implementation of agrarian reform, whether there is actual
distribution or not. Accordingly, the principle of “land to the tiller and the old
pastoral model of ownership were non-human juridical persons were prohibited from
owning agricultural lands are no longer realistic under existing conditions.
FOURTH ISSUE:
On the determination of the propriety of such revocation or recall of HLI’s
SDP by PARC for violating the agrarian reform policy under Sec. 2 of RA 6657, as
said plan fail to enhance the dignity and improve the quality of lives of the FWBs
through greater productivity of agricultural lands, the SC disagreed.
The SC reasoned that Section 2 of RA 6657 states that improving the economic
status of FWBs is neither among the legal obligations of HLI under the SDP nor an
imperative imposition by RA 6657 and DAO 10, a violation of which would justify
discarding the stock distribution option. Nothing in that option agreement, law or
department order indicates otherwise.
Also SC said that it’s a matter of common business sense that no corporation
could guarantee a profitable run all the time. As such being the case, SDP cannot also
guarantee, as indeed the SDOA does not guarantee, a comfortable life for the FWBs.
The onerous condition of the FWBs’ economic status and hardships can hardly
be attributed to HLI and its SDP and provide a valid ground for the plan’s revocation.
On Titles to Homelots
The SC found that the SDOA violated two provisions of DAO 10.
In Par. 3 of the SDOA, the distribution of the shares of stock to the FWBs is
contigent on the number of days FWBs have worked during the year. This deviates
from Sec. 4, DAO 10, which decrees the distribution of equal number of shares to the
FWBs as the minimum ratio of shares of stock for purposes of compliance with
Section 21 of RA 6657.
Each of the 6,296 original FWBs is entitled to 18,804.32 HLI shares. The
original FWBs got less than the guaranteed 18,804.32 HLI shares per beneficiary,
because the acquisition and distribution of the HLI share per beneficiary needs to
work at least 37 days in a fiscal year before the latter becomes entitled to HLI shares.
If it falls below 37 days, the FWB gets no share at year end. The number of HLI
shares distributed varies depending on the number of days the FWBs were allowed to
work in one year. Worst is they even hired additional farmworkers which reached a
number of 10,502 which eventually diluted the 18,804.32 shares as a result of the use
of “man days” and hiring additional farmworkers (as ‘kahati’ in the share obviously).
Another sub-issue pointed is the reliance of HLI to Section 26 of RA 6657
which suggests that land awarded “shall be paid to by the beneficiaries to the LBP in
30 annual amortizations.” To simply put it, the beneficiaries are the ones obliged to
pay the LBP (which would really make it impossible for them to own it) and it is the
HLI who is obliged to distribute the shares of stocks among FWBs.
Exclusion from the coverage of land purchased by RCBC and LIPCO (III)
As regards to the 80.51 ha land transferred to the government for use as part of
SCTEX, this is excluded from the compulsory coverage considering that the transfer
was made via the government’s power of eminent domain.
As to the actual existence of a statute or executive act is, prior to such a
determination, an operative fact and may have consequences which cannot justly be
ignored; the past cannot always be erased by a new judicial declaration.
In this case, it is not the SDOA dated May 11, 1989 which was revoked, but
rather, it is the PARC’s approval of the HLI’s Proposal for Stock Distribution under
CARP which embodied the SDP that was nullified. It is the SDP that gave legal force
an effect to the stock distribution scheme under PARC Resolution No. 89-12-2 that
gave it its validity, and not the SDOA which merely gave its basis and mechanics.
On PARC’s Resolutions effectively nullifying the Hacienda Luisita’s
SDP (IV)
The Court upheld the revocation of the questioned PARC resolutions. The
Court also recognized the rights of the original 6,296 qualified FWBs to choose
whether they want to remain as HLI stockholders or not. The Court reasoned that it
cannot turn a blind eye to the fact that the FWBs were said to have received benefits
from the said agreement. Also on August 6, 2010, HLI and private respondents
submitted a Compromise Agreement, in which HLI gave the FWBs the option of
acquiring a piece of agricultural lands or remain as HLI stockholders, and which most
FWBs chose the latter.
With regards to the homelots already awarded, the FWBs are not obliged to
return it to HLI or pay for its value since it is part of the SDP’s benefit granted to
them. However, for those who did not receive the homelot as of the revocation of the
SDP on December 22, 2005 when PARC Resolution No. 2005-32-01 was issued, will
no longer be entitled to homelots. In case of distribution, the homelots would then
not be deducted.
In terms of the 3% proceeds of the 500-ha land and 80.51 ha SCTEX lot to
FWBs, DAR will move for the auditing of HLI’s books to determine if the proceeds
where utilized fof legitimate corporate purpose and the remaining balance from the
proceeds of the sale shall be distributed to the qualified beneficiaries.
In view of HLI’s payment of rent to FWBs for the use of the land from 1989,
the Court said that this cannot be done as the FWBs are also stockholders of HLI (a
seemingly elite title), and the benefits acquired by the corporation from its possession
and use of the land ultimately redounded to the FWBs benefit based on its business
operations in the form of salaries, and other fringe benefits under the CBA. To allow
payment of rent would tantamount to double compensation.
HLI will continue to exist, not functioning under the SDP, as the same was
revoked already, but pursuant to the Corporation Code as a private stock corporation.
HLI shall also be paid just compensation for the remaining agricultural lands
that will be transferred to DAR for land distribution to the FWBs. The date of
taking considered by the SC is November 21, 1989, when PARC approved the HLI’s
SDP per PARC Resolution No. 89-12-2. DAR shall coordinate with LBP for the
determination of just compensation, and NOT May 11, 1989, when the SDOA was
approved by PARC.
The petition is treated as pro hac vice (means for this case only) in view of the
peculiar facts and circumstances of the case.
THE INSTANT PETITION IS DENIED.
PARC Resolution No. 2005-32-01 dated December 22, 2005 (wherein PARC
affirmed the recommendation of DAR to recall/revoke the SDOP of
TADECO/HLI and the land be placed under compulsory coverage or mandated land
acquisition) and May 3, 2006 (wherein PARC denied MR by HLI) are AFFIRMED
with MODIFICATION that the original 6,296 qualified FWBs shall have the option
to remain as stockholders of HLI. Other FWBs who do not belong to the said
original qualified beneficiaries are NOT entitled to land distribution and shall remain
as HLI stockholders. HLI is directed to pay the FWBs the cconsiderations received
from the 500 Ha converted land sale and 80.51 ha SCTEX lot, wherein the 3% gross
sales from the production of agricultural land, including expenditures for legitimate
corporate purpose, such as taxes and title transfer payments, shall be deducted from
the total amount of PhP 1,330,511,500 (3 comas!). Any unspent or unused balance
will be distributed to the original FWBs.
HLI is entitled to just compensation for the agricultural land that will be
transferred to DAR to be reckoned from November 21, 1989 and LBP are ordered to
determine the compensation due to HLI.
DAR’s compliance report is ordered to be submitted six months from finality
of judgment. TRO is lifted.
DISSENTING OPINION
Corona, C.J.:
One of the nice points given by the late CJ Corona (ousted in the PNoy
Administration) states, to wit:
“Agrarian reform is an essential element of social justice under the 1987
Constitution. It mandates that farmers and farmworkers have the right to own the
land they till, individually and collectively, through cooperative or similar
organizations. It aims to liberate farmers and farmworkers from bondage to the soil,
to ensure that they do not remain slaves of the land but stewards thereof.”
He also opined that “unless there is land distribution, there can be no agrarian
reform. Any program that gives farmers or farmworkers anything less than ownership
of land fails to conform to the mandate of the Constitution. In other words, a
program that gives qualified beneficiaries stock certificates instead of land is not
agrarian reform.”
He believed that “actual land distribution is the essential characteristic of
a constitutional agrarian reform program.” Accordingly, the “polar star” in land
reform is that ‘the farmer has a right to the land he tills”.
In the APRIL 24, 2012 RESOLUTION involving the same Hacienda Luisita
Case
On November 22, 2011, the Court recalled and set aside the option to remain
as stockholders of HLI, while maintaining that all benefits received shall be respected
with no obligation to refund or return them.
On December 9, 2011, a Motion for Reconsideration/Clarification by private
respondents Mallari, Suniga, Supervisory Group of HLI, and Andaya (Mallari, et al.
On December 16, 2011, a Motion to Clarify and Reconsider Resolution of
November 22, 2011 was filed by HLI.
The Court stressed that “just compensation has been defined as the full and
fair equivalent of the property taken from its owner by the expropriator. The measure
is not the takers gain, but the owner’s loss. Hence, in determining just compensation,
the price or value of the property at the time it was taken from the owner and
appropriated by the government shall be the basis. If the government takes possession
of the land before the institution of expropriation proceedings, the value should be
fixed as of the time of the taking of said possession, not of the filing of the
complaint.”
The SC, citing Land Bank of the Philippines v. Livioc, said that taking is when the
landowner was deprived of the use and benefit of his property, such as when the title
is transferred to the Republic. It also noted that taking also occurs when
agricultural lands are voluntarily offered by a landowner and approved by PARC for
CARP coverage through the stock distribution scheme, as in the case of HLI earlier
decided. Thus, HLI submitting its SDP for approval is an acknowledgment on its part
that the agricultural lands of Hacienda Luisita are covered by CARP. However, the
PARC approval should be considered as the effective date of taking because it was
only during that time that the government officially confirmed the CARP coverage of
these lands.
Accordingly, Stock distribution and compulsory acquisition are two modalities
sharing the same end goal of having a more equitable distribution of land ownership,
without ignoring such right to just compensation. Also, since it is only upon the
approval of the SDP that the agricultural lands actually came under CARP coverage,
such approval operates and takes the place of a notice of coverage ordinarily issued
under compulsory acquisition.
What the SC found notable, however, is that the divestment by Tadeco of the
agricultural lands of Hacienda Luisita and the giving of the shares of stock for free is
nothing but an enticement or incentive for the FWBs to agree with the stock
distribution option scheme and not further push for land distribution. And the
stubborn fact is that the “man days” scheme of HLI impelled the FWBs to work in
the hacienda in exchange for such shares of stock.
The Court ruled that taking only when the landowner is deprived of the use
and benefit of his property is not incompatible with the earlier conclusion that taking
took place on November 21, 1989, and since even from the start, TADECO seemed
to already favour Stock Distribution Scheme when complying with the CARP when it
organized the HLI as its spin-off corporation which facilitated stock acquisition of
FWBs. Tadeco assigned and conveyed 4,915.75 has to HLI the agricultural lands of
Hacienda Luisita. These agricultural lands constituted as the capital contribution of
the FWBs in HLI. This, in effect, deprived TADECO itself of the ownership over
these lands when it transferred the same to HLI.
The SC maintained that, as it has in fact already ruled on its reckoning date,
that is, November 21, 1989, the date of issuance of PARC Resolution No. 89-12-2,
based on the above-mentioned disquisitions.
On side note, the SC added that “even though the compensation due to HLI
will still be preliminarily determined by DAR and LBP, subject to review by the RTC
acting as a SAC, the fact that the reckoning point of taking is already fixed at a certain
date should already hasten the proceedings and not further cause undue hardship on
the parties, especially the qualified FWBs.”