hacienda luisita case.doc

8/19/2019 hacienda luisita case.doc

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[G.R. No. 127876. December 17, 1999]

ROXAS & CO., INC., petitioner , vs. THE HONORA!E CO"RT

O# A$$EA!S, DE$ART%ENT O# AGRARIAN RE#OR%,

SECRETAR O# AGRARIAN RE#OR%, DAR REGIONA!

DIRECTOR #OR REGION I', %"NICI$A! AGRARIAN

RE#OR% O##ICER O# NAS"G", ATANGAS ()*

DE$ART%ENT O# AGRARIAN RE#OR% AD+"DICATION

OARD, respondents.

D E C I S I O N

$"NO, J .

This case involves three (3) haciendas in Nasugbu, Batangas owned by

petitioner and the validity of the acquisition of these haciendas by the government

under Republic ct No! ""#$, the %omprehensive grarian Reform &aw of '!

*etitioner Ro-( & Co. / ( *ome0/c coror(0/o) ()* / 0e re3/0ere*

o4)er o5 0ree (c/e)*(, namely, H(c/e)*( $(/co, ()/(* ()* C((4(,

all located in the %)/c/(/0 o5 N(3b, (0()3(! +acienda *alico is ',-.hectares in area and is registered under Transfer %ertificate of Title (T%T) No!

#! This land is covered by Ta/ 0eclaration Nos! ."#, ."", .", .$, -3.

and 3#.! +acienda Banilad is ',# hectares in area, registered under T%T No!

-. and covered by Ta/ 0eclaration Nos! -3", -3$ and 3! +acienda

%aylaway is "$!.#$' hectares in area and is registered under T%T Nos! T1..""-,

T1..""3, T1.."". and T1..""#!

The events of this case occurred during the incumbency of then *resident

%ora2on %! quino! n 4ebruary '", *resident quino issued *roclamation No! 3

promulgating a *rovisional %onstitution! s head of the provisional government,the *resident e/ercised legislative power until a legislature is elected and convened

under a new %onstitution!5'6 n the e/ercise of this legislative power, the *resident

signed on 7uly --, '$, *roclamation No! '3' instituting a %omprehensive

grarian Reform *rogram and 8/ecutive 9rder No! -- providing the mechanisms

necessary to initially implement the program!

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9n 7uly -$, '$, the %ongress of the *hilippines formally convened and too:

over legislative power from the *resident!5-6 This %ongress passed Republic ct

No! ""#$, the %omprehensive grarian Reform &aw (%R&) of '! The ct

was signed by the *resident on 7une ', ' and too: effect on 7une '#, '!

Before the laws effectivity, on ;ay ", ', e0/0/o)er 5/e* 4/0 reo)*e)0DAR ( o)0(r o55er 0o e H(c/e)*( C((4( pursuant to the provisions

of 8!9! No! --! H(c/e)*( $(/co ()* ()/(* 4ere (0er (ce* )*er

comor (c://0/o) b reo)*e)0 DAR /) (ccor*()ce 4/0 0e CAR!!

H(c/e)*( $(/co

9n > ec0(re o5 H(c/e)*( $(/co be b?ec0 0o comor (c://0/o) (0 (

(e o5 $6,8>7,622.2>!56 The following day, 9ctober -, ', two (-) more

.>876 ec0(re ()* 7@.=8>>

ec0(re be (ce* )*er comor (c://0/o) (0 ( come)(0/o) o5

$8,1>9,7=9.>> ()* $2,188,[email protected], reec0/e!56

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9n 0ecember '-, ', respondent 0R through then 0epartment


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;r! 7aime *imentel

+acienda dministrator

+acienda Banilad

Nasugbu, Batangas5'$6

The %ARO /)5orme* $/me)0e 0(0 H(c/e)*( ()/(* 4( b?ec0 0ocomor (c://0/o) )*er 0e CAR!> that o* e0/0/o)er 4/ 0o ((/

o5 0e o0er ceme c ( 'o)0(r O55er 0o Se or 'o)0(r !()*

Tr()5er, reo)*e)0 DAR 4( 4//)3 0o ro/*e (/0()ce thereto!5'6

9n


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;a:ati, ;etro ;anila!5-#6

Respondent 0R offered petitioner compensation of *'#,',#!#- for $-!.'

hectares and *.,.-,."! for -3.!". hectares!5-"6

9n


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agricultural! s a result, petitioner informed respondent 0R that it was applying

for conversion of +acienda %aylaway from agricultural to other uses! 53.6

n a letter dated


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n a Resolution dated 9ctober '., '3, respondent 0RB held that the case

involved the pre?udicial question of whether the property was sub?ect to agrarian

reform, hence, this question should be submitted to the 9ffice of the


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R8 and ('') in quo warranto proceedings!5.-6

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*etitioner rightly sought immediate redress in the courts! There was a violation

of its rights and to require it to e/haust administrative remedies before the 0R

itself was not a plain, speedy and adequate remedy!

Respondent 0R issued %ertificates of &and 9wnership ward (%&9s) to

farmer beneficiaries over portions of petitioners land without ?ust compensation to petitioner! %ertificate of &and 9wnership ward (%&9) is evidence

of o4)er/ of land by a beneficiary under R!! ""#$, the %omprehensive

grarian Reform &aw of '!5.36 Before this may be awarded to a farmer

beneficiary, the land must first be acquired by the for

essentially, the determination of this compensation was marred by lac: of due

process! n fact, in the entire acquisition proceedings, respondent 0R disregarded

the basic requirements of administrative due process! Cnder these circumstances,

the issuance of the %&9s to farmer beneficiaries necessitated immediate ?udicial

action on the part of the petitioner!

II. Te '(/*/0 o5 0e Ac://0/o) $rocee*/)3 Oer 0e H(c/e)*(.

*etititioners allegation of lac: of due process goes into the validity of the

acquisition proceedings themselves! Before we rule on this matter, however, there

is need to lay down the procedure in the acquisition of private lands under the provisions of the law!

A. %o*e o5 Ac://0/o) o5 !()* )*er R. A. 66@7

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Republic ct No! ""#$, the %omprehensive grarian Reform &aw of '

(%R&), provides for two (-) modes of acquisition of private land@ compulsory

and voluntary! The procedure for the compulsory acquisition of private lands is set

forth in


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f) ny party who disagrees with the decision may bring the matter to the court of

proper ?urisdiction for final determination of ?ust compensation!

n the compulsory acquisition of private lands, the landholding, the landowners

and the farmer beneficiaries must first be identified! fter identification, the 0R

shall send a Notice of cquisition to the landowner, by personal delivery or

registered mail, and post it in a conspicuous place in the municipal building and

barangay hall of the place where the property is located! Jithin thirty days from

receipt of the Notice of cquisition, the landowner, his administrator or

representative shall inform the 0R of his acceptance or re?ection of the offer! f

the landowner accepts, he e/ecutes and delivers a deed of transfer in favor of the

government and surrenders the certificate of title! Jithin thirty days from the

e/ecution of the deed of transfer, the &and Ban: of the *hilippines (&B*) pays the

owner the purchase price! f the landowner re?ects the 0Rs offer or fails to ma:e

a reply, the 0R conducts summary administrative proceedings to determine ?ustcompensation for the land! The landowner, the &B* representative and other

interested parties may submit evidence on ?ust compensation within fifteen days

from notice! Jithin thirty days from submission, the 0R shall decide the case

and inform the owner of its decision and the amount of ?ust compensation! Cpon

receipt by the owner of the corresponding payment, or, in case of re?ection or lac:

of response from the latter, the 0R shall deposit the compensation in cash or in

&B* bonds with an accessible ban:! The 0R shall immediately ta:e possession

of the land and cause the issuance of a transfer certificate of title in the name of the

Republic of the *hilippines! The land shall then be redistributed to the farmer

beneficiaries! ny party may question the decision of the 0R in the regular

courts for final determination of ?ust compensation!

The 0R has made compulsory acquisition the priority mode of land

acquisition to hasten the implementation of the %omprehensive grarian Reform

*rogram (%R*)!5."6 Cnder


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'! Cpdate the masterlist of all agricultural lands covered under the %R* in his area of

responsibility! The masterlist shall include such information as required under the

attached %R* ;asterlist 4orm which shall include the name of the landowner,landholding area, T%TK9%T number, and ta/ declaration number!

-! *repare a %ompulsory cquisition %ase 4older (%%4) for each title (9%TKT%T) or

landholding covered under *hase and of the %R* e/cept those for which thelandowners have already filed applications to avail of other modes of land

acquisition! case folder shall contain the following duly accomplished forms@

a) %R* % 4orm ';R9 nvestigation Report

b) %R* % 4orm -11


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.! Cpon determination of the valuation, forward the case folder, together with the duly

accomplished valuation forms and his recommendations, to the %entral 9ffice! The

&B* representative and the ;R9 concerned shall be furnished a copy each of hisreport!

C. DAR Ce)0r( O55/ce, ec/5/c( 0ro3 0e re( o5 !()* Ac://0/o) ()*

D/0r/b0/o) ;!AD


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agreements of the parties! t the meeting, the landowner is as:ed to indicate his

retention area!

The ;R9 shall ma:e a report of the case to the *rovincial grarian Reform

9fficer (*R9) who shall complete the valuation of the land! 9cular inspection

and verification of the property by the *R9 shall be mandatory when thecomputed value of the estate e/ceeds *#,!! Cpon determination of the

valuation, the *R9 shall forward all papers together with his recommendation to

the %entral 9ffice of the 0R! The 0R %entral 9ffice, specifically, the Bureau

of &and cquisition and 0istribution (B&0), shall review, evaluate and

determine the final land valuation of the property! The B&0 shall prepare, on the

signature of the


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0R ! 9! No! ,


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b)


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of the land may also be conducted by a


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one wee: on the bulletin

board of the municipal and barangay

halls where the property is located!

&DC office concerned notifies 0R

about compliance with posting requirement

thru return indorsement on %R* 4orm

No! '$!

" 0R;9

and ?ointly prepares the 4ield nvestigation

Report (4R) and &and Cse ;ap! +owever,

the field investigation shall proceed even if the

&9, the representatives of the 08NR and

prospective RBs are not available provided,

they were given due notice of the time and date

of the investigation to be conducted!


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on issues affecting idle lands, the conflict shall be

resolved by a composite team of 0R, &B*, 08NR

and 0 which shall ?ointly conduct further investigation

thereon! The team shall submit its report of findings

which shall be binding to both 0R and &B*, pursuant

to 7oint ;emorandum %ircular of the 0R, &B*, 08NR

and 0 dated -$ 7anuary '-!

0R;9 '' 0R;9 4orwards A9%4K%%4 %R*

to 0R*9! 4orm No!

"

/ / /!M


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0R ! 9! No! ',


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+acienda *alico!5#$6 The invitation was received on the same day it was sent as

indicated by a signature and the date received at the bottom left corner of said

invitation!Jith regard to +acienda Banilad, respondent 0R claims that 7aime

*imentel, administrator also of +acienda Banilad, was notified and sent an

invitation to the conference! *imentel actually attended the conference on


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Sec. 13. Service upon private domestic corporation or partnership!f the defendant

is a corporation organi2ed under the laws of the *hilippines or a partnership duly

registered, service may be made on the president, manager, secretary, cashier,

agent, or any of its directors!


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him, there is no showing that *imentel himself was duly authori2ed to attend the

conference meeting with the ;R9, BR% and &B* representatives and farmer

beneficiaries for purposes of compulsory acquisition of petitioners

landholdings!8ven respondent 0Rs evidence does not indicate this authority! 9n

the contrary, petitioner claims that it had no :nowledge of the letter1invitation,

hence, could not have given *imentel the authority to bind it to whatever matters

were discussed or agreed upon by the parties at the preliminary conference or

public hearing! Notably, one year after *imentel was informed of the preliminary

conference, 0R !9! No! ,


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compulsorily! The right of retention and how this right is e/ercised, is guaranteed

in


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ll A9< filed before '# 7une ', the date of effectivity of the %R&, shall be

heard and processed in accordance with the procedure provided for in 8/ecutive

9rder No! --!

M/ / /!M


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landowner himself to e/ercise, at the very least, his right of retention guaranteed

under the %R&!

III. Te Co)er/o) o5 0e 0ree H(c/e)*(.

t is petitioners claim that the three haciendas are not sub?ect to agrarian reform

because they have been declared for tourism, not agricultural purposes! 5$6 n '$#,

then *resident ;arcos issued *roclamation No! '#- declaring the municipality of

Nasugbu, Batangas a tourist 2one! &ands in Nasugbu, including the sub?ect

haciendas, were allegedly reclassified as non1agricultural '3 years before the

effectivity of R! ! No! ""#$!5$6 n '3, the Regional 0irector for Region A of the

0epartment of griculture certified that the haciendas are not feasible and sound

for agricultural development!56 9n ;arch -, '-, pursuant to *roclamation No!

'#-, the


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field investigation and ocular inspection of the property! The findings of the

;R9 are sub?ect to review and evaluation by the *rovincial grarian Reform

9fficer (*R9)! The *R9 may conduct further field investigation and submit a

supplemental report together with his recommendation to the Regional grarian

Reform 9fficer (RR9) who shall review the same! 4or lands less than five

hectares, the RR9 shall approve or disapprove applications for conversion! 4or

lands e/ceeding five hectares, the RR9 shall evaluate the *R9 Report and

forward the records and his report to the Cndersecretary for &egal

ffairs!pplications over areas e/ceeding fifty hectares are approved or

disapproved by the


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use conversion have been consolidated in 0R ! 9! No! $,


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#/)(, 4e 0re 0(0 0e 5(/re o5 reo)*e)0 DAR 0o com 4/0 0e

re://0e o5 *e roce /) 0e (c://0/o) rocee*/)3 *oe )o0 3/e 0/

Cor0 0e o4er 0o )/5 0e C!OA (re(* /e* 0o 0e 5(rmer

be)e5/c/(r/e. To (me 0e o4er / 0o or0Bc/rc/0 0e (*m/)/0r(0/e

roce, 4/c ( e0 0o r) /0 re3(r core. Reo)*e)0 DAR m0 be

3/e) 0e c()ce 0o correc0 /0 roce*r( (e /) 0e (c://0/o)

rocee*/)3. I) H(c/e)*( $(/co (o)e, C!OA 4ere /e* 0o 177 5(rmer

be)e5/c/(r/e /) 199=.5-6 S/)ce 0e) )0/ 0e ree)0, 0ee 5(rmer (e bee)

c0/(0/)3 0e/r ()*.536 I0 3oe (3(/)0 0e b(/c rece0 o5 ?0/ce, 5(/r)e

()* e:/0 0o *er/e 0ee eoe, 0ro3 )o 5(0 o5 0e/r o4), o5 0e ()*

0e 0/. A)o4, 0e 5(rmer be)e5/c/(r/e o* 0e roer0 /) 0r0 5or 0e

r/305 o4)er o5 0e ()*.

IN 'IE HEREO#, the petition is granted in part and the acquisition

proceedings over the three haciendas are nullified for respondent 0Rs failure to

observe due process therein! n accordance with the guidelines set forth in this

decision and the applicable administrative procedure, the case is hereby remanded

to respondent 0R for proper acquisition proceedings and determination of

petitioners application for conversion!

SO ORDERED.

G.R. No. 171101 July 5, 2011

HACIENDA LUISITA, INCORPORATED, Petitioner,LUISITA INDUSTRIAL PARK CORPORATION an RI!AL CO""ERCIAL #ANKINGCORPORATION,Petitioners-in-Intervention,vs.

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PRESIDENTIAL AGRARIAN RE$OR" COUNCIL% SECRETAR& NASSER PANGANDA"ANO$ THE DEPART"ENT O$ AGRARIAN RE$OR"% AL&ANSA NG "GA "ANGGAGA'ANG#UKID NG HACIENDA LUISITA, RENE GALANG, NOEL "ALLARI, an JULIOSUNIGA1 an ()* SUPER+ISOR& GROUP O$ THE HACIENDA LUISITA, INC. an'INDSOR ANDA&A, Respondents.

D E C I S I O N

+ELASCO, JR., J.:

"Land for the landless," a shibboleth the landed entr! dobtless has re#eived $ith %#h%isivin, if not resistan#e, even if onl! the n%ber of ararian sits filed serves to be the nor%.&hroh the !ears, this battle #r! and root of dis#ord #ontines to refle#t the see%inl!#easeless dis#orse on, and reat disparit! in, the distribtion of land a%on the people,"dra%ati'in the in#reasinl! rent de%and of the dispossessed ( ( ( for a plot of earth astheir pla#e in the sn.") *s ad%inistrations and politi#al alin%ents #hane, poli#ies advan#ed,and ararian refor% la$s ena#ted, the latest bein $hat is #onsidered a #o%prehensive pie#e,the fa#e of land refor% varies and is %as+ed in %!riads of $a!s. &he stated oal, ho$ever,re%ains the sa%e #lear the $a! for the tre freedo% of the far%er.

Land refor%, or the broader ter% "ararian refor%," has been a overn%ent poli#! even beforethe Co%%on$ealth era. In fa#t, at the onset of the *%eri#an rei%e, initial steps to$ard landrefor% $ere alread! ta+en to address so#ial nrest. &hen, nder the 1/0 Constittion, spe#ifi#provisions on so#ial sti#e and e(propriation of landed estates for distribtion to tenants as asoltion to land o$nership and tenan#! isses $ere in#orporated.

In 1/00, the Land Refor% *#t 2Repbli# *#t No. 3R*4 1556 $as passed, settin in %otion thee(propriation of all tenanted estates.0

On *st 7, 1/8, the *ri#ltral Land Refor% Code 2R* 76 $as ena#ted,8

abolishinshare tenan#! and #onvertin all instan#es of share tenan#! into leasehold tenan#!.9 R* 7#reated the Land :an+ of the Philippines 2L:P6 to provide spport in all phases of ararianrefor%.

*s its %aor thrst, R* 7 ai%ed to #reate a s!ste% of o$ner-#ltivatorship in ri#e and #orn,spposedl! to be a##o%plished b! e(propriatin lands in e(#ess of 90 he#tares for theirevental resale to tenants. &he la$, ho$ever, had this restri#tin featre its operations $ere#onfined %ainl! to areas in Central L'on, and its i%ple%entation at an! level of intensit! li%itedto the pilot proe#t in Neva E#ia.7

Sbse;entl!, Conress passed the Code of *rarian Refor% 2R* 87/6 de#larin the entire

#ontr! a land refor% area, and providin for the ato%ati# #onversion of tenan#! to leaseholdtenan#! in all areas.


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&hen #a%e the revoltionar! overn%ent of then President Cora'on C. *;ino and the draftinand evental ratifi#ation of the 1/79 Constittion. Its provisions foreshado$ed the establish%entof a leal fra%e$or+ for the for%lation of an e(pansive approa#h to land refor%, affe#tin allari#ltral lands and #overin both tenant-far%ers and relar far%$or+ers.1

So it $as that Pro#la%ation No. 11, Series of 1/79, $as issed instittin a #o%prehensive

ararian refor% prora% 2C*RP6 to #over all ari#ltral lands, reardless of tenrialarrane%ent and #o%%odit! prod#ed, as provided in the Constittion.

On ?l! )), 1/79, E(e#tive Order No. ))/ 2EO ))/6 $as issed providin, as itstitle1 indi#ates, the %e#hanis%s for C*RP i%ple%entation. It #reated the Presidential *rarianRefor% Con#il 2P*RC6 as the hihest poli#!-%a+in bod! that for%lates all poli#ies, rles,and relations ne#essar! for the i%ple%entation of C*RP.

On ?ne 10, 1/77, R* 8809 or the Comprehensive Agrarian Reform Law of 1988 , also +no$nas C*RL or the C*RP La$, too+ effe#t, sherin in a ne$ pro#ess of land #lassifi#ation,a#;isition, and distribtion. *s to be e(pe#ted, R* 8809 %et stiff opposition, its validit! or so%eof its provisions #hallened at ever! possible trn. Association of Small Landowners in thePhilippines, Inc. v. Secretar of Agrarian Reform 10 stated the observation that the assalt $asinevitable, the C*RP bein an ntried and ntested proe#t, "an e(peri%ent 3even4, as all life isan e(peri%ent," the Cort said, borro$in fro% ?sti#e @ol%es.

T( Ca*

In this Petition for Certiorari and Prohibition nder Rle 80 $ith pra!er for preli%inar! inn#tiverelief, petitioner @a#ienda Lisita, In#. 2@LI6 assails and see+s to set aside P*RC ResoltionNo. )550-)-5118 and Resoltion No. )558--5119 issed on De#e%ber )), )550 and =a! ,)558, respe#tivel!, as $ell as the i%ple%entin Noti#e of Coverae dated ?anar! ), )5582Noti#e of Coverae6.17

T( $a-*

*t the #ore of the #ase is @a#ienda Lisita de &arla# 2@a#ienda Lisita6, on#e a 8,-he#tare%i(ed ari#ltral-indstrial-residential e(panse straddlin several %ni#ipalities of &arla# ando$ned b! Co%paAia Beneral de &aba#os de


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&hat the lots #o%prisin the @a#ienda Lisita shall be sbdivided b! the appli#ant-#orporationand sold at #ost to the tenants, shold there be an!, and $henever #onditions shold e(ist$arrantin s#h a#tion nder the provisions of the Land &enre *#t)1

*s of =ar#h 1, 1/07, &ade#o had fll! paid the pr#hase pri#e for the a#;isition of @a#iendaLisita and &aba#aleraFs interest in C*&.))

&he details of the events that happened ne(t involvin the ha#ienda and the politi#al #olor so%eof the parties e%bossed are of %ini%al sinifi#an#e to this narration and need no belaborin.Sffi#e it to state that on =a! 9, 1/75, the %artial la$ ad%inistration filed a sit before the=anila Reional &rial Cort 2R&C6 aainst &ade#o, et al., for the% to srrender @a#ienda Lisitato the then =inistr! of *rarian Refor% 2=*R, no$ the Depart%ent of *rarian Refor% 3D*R46so that the land #an be distribted to far%ers at #ost. Respondin, &ade#o or its o$ners alleedthat @a#ienda Lisita does not have tenants, besides $hi#h sar landsGGof $hi#h the ha#ienda#onsistedGGare not #overed b! e(istin ararian refor% leislations. *s per#eived then, theovern%ent #o%%en#ed the #ase aainst &ade#o as a politi#al %essae to the fa%il! of the late:enino *;ino, ?r.)

Eventall!, the =anila R&C rendered d%ent orderin &ade#o to srrender @a#ienda Lisitato the =*R. &herefro%, &ade#o appealed to the Cort of *ppeals 2C*6.

On =ar#h 19, 1/77, the Offi#e of the Soli#itor Beneral 2OSB6 %oved to $ithdra$ theovern%entFs #ase aainst &ade#o, et al. :! Resoltion of =a! 17, 1/77, the C* dis%issed the#ase the =ar#os overn%ent initiall! institted and $on aainst &ade#o, et al. &he dis%issala#tion $as, ho$ever, %ade sbe#t to the obtention b! &ade#o of the P*RCFs approval of asto#+ distribtion plan 2SDP6 that %st initiall! be i%ple%ented after s#h approval shall havebeen se#red.) &he appellate #ort $rote

&he defendants-appellants ( ( ( filed a %otion on *pril 1, 1/77 oinin the ( ( ( overn%entalaen#ies #on#erned in %ovin for the dis%issal of the #ase sbe#t, ho$ever, to the follo$in#onditions e%bodied in the letter dated *pril 7, 1/77 2*nne( )6 of the Se#retar! of the 3D*R4;oted, as follo$s

1. Shold &*DECO fail to obtain approval of the sto#+ distribtion plan for failre to#o%pl! $ith all the re;ire%ents for #orporate lando$ners set forth in the idelinesissed b! the 3P*RC4 or

). If s#h sto#+ distribtion plan is approved b! P*RC, bt &*DECO fails to initiall!i%ple%ent it.

( ( ( (

>@ERE


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Li+e EO ))/, R* 8809, nder the latterFs Se#. 1, also provides t$o 2)6 alternative %odalities,i.e., land or sto#+ transfer, prsant to either of $hi#h the #orporate lando$ner #an #o%pl! $ithC*RP, bt sbe#t to $ell-defined #onditions and ti%eline re;ire%ents. Se#. 1 of R* 8809provides

SEC. 1. Corporate Landowners.! Corporate lando$ners %a! volntaril! transfer o$nership

over their ari#ltral landholdins to the Repbli# of the Philippines prsant to Se#tion )5hereof or to ;alified benefi#iaries ( ( (.

pon #ertifi#ation b! the D*R, #orporations o$nin ari#ltral lands /ay ) () 3ual)4)n4)-)a)* ( )( o 6u-(a* *u-( 6o6o)on o4 ( -a6)al *o- o4 ( -o6oa)on(a ( a)-ulual lan, a-ually o o a)-ulual a-)))*, a* )n la)on o( -o/6any8* oal a***, nder s#h ter%s and #onditions as %a! be areed pon b!the%. In no #ase shall the #o%pensation re#eived b! the $or+ers at the ti%e the shares ofsto#+s are distribted be red#ed. ( ( (

Corporations or asso#iations $hi#h volntaril! divest a proportion of their #apital sto#+, e;it! or parti#ipation in favor of their $or+ers or other ;alified benefi#iaries nder this se#tion shall bedee%ed to have #o%plied $ith the provisions of this *#t Provided, &hat the follo$in #onditionsare #o%plied $ith

2a6 In order to safeard the riht of benefi#iaries $ho o$n shares of sto#+s to dividendsand other finan#ial benefits, the boo+s of the #orporation or asso#iation shall be sbe#tto periodi# adit b! #ertified pbli# a##ontants #hosen b! the benefi#iaries

2b6 Irrespe#tive of the vale of their e;it! in the #orporation or asso#iation, thebenefi#iaries shall be assred of at least one 216 representative in the board of dire#tors,or in a %anae%ent or e(e#tive #o%%ittee, if one e(ists, of the #orporation orasso#iation

2#6 *n! shares a#;ired b! s#h $or+ers and benefi#iaries shall have the sa%e rihtsand featres as all other shares and

2d6 *n! transfer of shares of sto#+s b! the oriinal benefi#iaries shall be void ab initionless said transa#tion is in favor of a ;alified and reistered benefi#iar! $ithin thesa%e #orporation.

If $ithin t$o 2)6 !ears fro% the approval of this *#t, the 3volntar!4 land or sto#+ transferenvisioned above is not %ade or reali'ed or the plan for s#h sto#+ distribtion approved b! theP*RC $ithin the sa%e period, the ari#ltral land of the #orporate o$ners or #orporation shallbe sbe#t to the #o%plsor! #overae of this *#t. 2E%phasis added.6

His--vis the sto#+ distribtion aspe#t of the afore;oted Se#. 1, D*R issed *d%inistrativeOrder No. 15, Series of 1/77 2D*O 156,)9 entitled "#idelines and Proced#res for CorporateLandowners $esiring to Avail %hemselves of the Stoc& $istri'#tion Plan #nder Section (1 of RA))*+ .


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ari#ltral land portion 2,/10.90 he#tares6 and other far%-related properties of @a#iendaLisita in e(#hane for @LI shares of sto#+.)/

Pedro Coan#o, ?osephine C. Re!es, &eresita C. Lopa, ?ose Coan#o, ?r., and Pa' C.&eopa#o $ere the in#orporators of @LI.5

&o a##o%%odate the assets transfer fro% &ade#o to @LI, the latter, $ith the Se#rities andE(#hane Co%%issionFs 2SECFs6 approval, in#reased its #apital sto#+ on =a! 15, 1/7/ fro%PhP 1,055,555 divided into 1,055,555 shares $ith a par vale of PhP 1share to PhP55,555,555 divided into 55,555,555 shares also $ith par vale of PhP 1share, 105,555,555of $hi#h $ere to be issed onl! to ;alified and reistered benefi#iaries of the C*RP, and there%ainin )05,555,555 to an! sto#+holder of the #orporation.1

*s appearin in its proposed SDP, the properties and assets of &ade#o #ontribted to the #apitalsto#+ of @LI, as appraised and approved b! the SEC, have an areate vale of PhP0/5,00,))5, or after ded#tin the total liabilities of the far% a%ontin to PhP )0,)),907, anet vale of PhP 00,01,8). &his translated to 00,01,8) shares $ith a par vale of PhP1share.)

On =a! /, 1/7/, so%e /J of the then far%$or+er-benefi#iaries 2:s6 #o%ple%ent of@a#ienda Lisita sinified in a referend% their a##eptan#e of the proposed @LIFs Sto#+Distribtion Option Plan. On =a! 11, 1/7/, the Sto#+ Distribtion Option *ree%ent 2SDO*6,st!led as a =e%orand% of *ree%ent 2=O*6, $as entered into b! &ade#o, @LI, and the0,77 ;alified :s and attested to b! then D*R Se#retar! Philip ?i#o. &he SDO*e%bodied the basis and %e#hani#s of the SDP, $hi#h $old eventall! be sb%itted to theP*RC for approval. In the SDO*, the parties areed to the follo$in

1. &he per#entae of the vale of the ari#ltral land of @a#ienda Lisita2P1/8,85,555.556 in relation to the total assets 2P0/5,00,))5.556 transferred and#onve!ed to the SECOND P*R&K 3@LI4 is .)/8J that, nder the la$, is the proportionof the otstandin #apital sto#+ of the SECOND P*R&K, $hi#h is P00,01,8).55 or00,01,8) shares $ith a par vale of P1.55 per share, that has to be distribted to the&@IRD P*R&K 3:s4 nder the sto#+ distribtion plan, the said .)/8J thereof beinP117,/1,/98.70 or 119,:;1,;7


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the ari#ltral land, $hether it be in the for% of #ash dividends or in#entive bonses orboth.

0. Even if onl! a part or fra#tion of the shares ear%ar+ed for distribtion $ill have beena#;ired fro% the


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1. &hat over the i%ple%entation period of the 3SDP4, 3&ade#o4@LI shall ensre that there$ill be no diltion in the shares of sto#+s of individal 3:s4

). &hat a safeard shall be provided b! 3&ade#o4@LI aainst the diltion of theper#entae shareholdins of the 3:s4, i.e., that the J shareholdins of the 3:s4$ill be %aintained at an! iven ti%e

. &hat the %e#hani#s for distribtin the sto#+s be e(pli#itl! stated in the 3=O*4 sinedbet$een the 3&ade#o4, @LI and its 3:s4 prior to the i%ple%entation of the sto#+ plan

. &hat the sto#+ distribtion plan provide for #lear and definite ter%s for deter%inin thea#tal n%ber of seats to be allo#ated for the 3:s4 in the @LI :oard

0. &hat @LI provide idelines and a ti%etable for the distribtion of ho%elots to ;alified3:s4 and

8. &hat the J #ash dividends %entioned in the 3SDP4 be e(pressl! provided for 3in4 the

=O*.

In a letter-repl! of Nove%ber 1, 1/7/ to Se#. Defensor-Santiao, &ade#o@LI e(plained thatthe proposed revisions of the SDP are alread! e%bodied in both the SDP and =O*./


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On *st 10, 1//0, @LI applied for the #onversion of 055 he#tares of land of the ha#ienda fro%ari#ltral to indstrial se, prsant to Se#. 80 of R* 8809, providin

SEC. 80. Conversion of Lands.M*fter the lapse of five 206 !ears fro% its a$ard, $hen the land#eases to be e#ono%i#all! feasible and sond for ari#ltral prposes, or the lo#alit! hasbe#o%e rbani'ed and the land $ill have a reater e#ono%i# vale for residential, #o%%er#ial

or indstrial prposes, the D*R, pon appli#ation of the benefi#iar! or the lando$ner, $ith denoti#e to the affe#ted parties, and sbe#t to e(istin la$s, %a! athori'e the re#lassifi#ation, or#onversion of the land and its disposition Provided, &hat the benefi#iar! shall have fll! paid itsobliation.

&he appli#ation, a##ordin to @LI, had the ba#+in of 0,555 or so :s, in#ldin respondentRene Balan, and ?ose ?lio Snia, as eviden#ed b! the =anifesto of Spport the! sined and$hi#h $as sb%itted to the D*R. *fter the sal pro#essin, the D*R, thr then Se#. ErnestoBarilao, approved the appli#ation on *st 1, 1//8, per D*R Conversion Order No.5585159-98-2/06, Series of 1//8,0 sbe#t to pa!%ent of three per#ent 2J6 of the rosssellin pri#e to the :s and to @LIFs #ontined #o%plian#e $ith its nderta+ins nder theSDP, a%on other #onditions.

On De#e%ber 1, 1//8, @LI, in e(#hane for sbs#ription of 1),555,555 shares of sto#+s ofCentennar! @oldins, In#. 2Centennar!6, #eded 55 he#tares of the #onverted area to thelatter.8 Conse;entl!, @LIFs &ransfer Certifi#ate of &itle 2&C&6 No. )79/159 $as #an#eled and&C& No. )/)5/17 $as issed in the na%e of Centennar!. @LI transferred the re%ainin )55he#tares #overed b! &C& No. )79/5/ to Lisita Realt! Corporation 2LRC6/ in t$o separatetransa#tions in 1//9 and 1//7, both nifor%l! involvin 155 he#tares for PhP )05 %illion ea#h.05

Centennar!, a #orporation $ith an athori'ed #apital sto#+ of PhP 1),155,555 divided into1),155,555 shares and $holl!-o$ned b! @LI, had the follo$in in#orporators Pedro Coan#o,?osephine C. Re!es, &eresita C. Lopa, Ernesto B. &eopa#o, and :ernardo R. Laho'.

Sbse;entl!, Centennar! sold01 the entire 55 he#tares to Lisita Indstrial Par+ Corporation2LIPCO6 for PhP 905 %illion. &he latter a#;ired it for the prpose of developin an indstrial#o%ple(.0) *s a reslt, Centennar!Fs &C& No. )/)5/1 $as #an#eled to be repla#ed b! &C& No.15/780 in the na%e of LIPCO.


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S#h, in short, $as the state of thins $hen t$o separate petitions, both ndated, rea#hed theD*R in the latter part of )55. In the first, deno%inated as PetitionProtest,09 respondents ?ose?lio Snia and >indsor *nda!a, identif!in the%selves as head of the Spervisor! Brop of@LI 2Spervisor! Brop6, and 85 other spervisors soht to revo+e the SDO*, allein that@LI had failed to ive the% their dividends and the one per#ent 21J6 share in ross sales, as$ell as the thirt!-three per#ent 2J6 share in the pro#eeds of the sale of the #onverted 055

he#tares of land. &he! frther #lai%ed that their lives have not i%proved #ontrar! to the pro%iseand rationale for the adoption of the SDO*. &he! also #ited violations b! @LI of the SDO*Fster%s.07 &he! pra!ed for a reneotiation of the SDO*, or, in the alternative, its revo#ation.

Revo#ation and nllifi#ation of the SDO* and the distribtion of the lands in the ha#ienda $erethe #all in the se#ond petition, st!led as Petison 2Petition6.0/ &he Petis!on $as ostensibl! filedon De#e%ber , )55 b! *l!ansa n %a =anaa$an :+id n @a#ienda Lisita2*=:*L*6, $here the hand$ritten na%e of respondents Rene Balan as "Panlo *=:*L*"and Noel =allari as "Se#-Ben. *=:*L*"85 appeared. *s alleed, the petition $as filed on behalf of *=:*L*Fs %e%bers prportedl! #o%posin abot 75J of the 0,/ :s of @a#iendaLisita.

@LI $old eventall! ans$er 81 the petitionprotest of the Spervisor! Brop. On the other hand,@LIFs ans$er 8)to the *=:*L* petition $as #ontained in its letter dated ?anar! )1, )550 alsofiled $ith D*R.

=ean$hile, the D*R #onstitted a Spe#ial &as+


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RESOLHED, frther, that the lands sbe#t of the re#alledrevo+ed &DC@LI SDO plan beforth$ith pla#ed nder the #o%plsor! #overae or %andated land a#;isition s#he%e of the3C*RP4.

*PPROHED.87

* #op! of Resoltion No. )550-)-51 $as served on @LI the follo$in da!, De#e%ber ),$ithot an! #op! of the do#%ents adverted to in the resoltion atta#hed. * letter-re;est datedDe#e%ber )7, )5508/ for #ertified #opies of said do#%ents $as sent to, bt $as not a#ted ponb!, the P*RC se#retariat.

&herefro%, @LI, on ?anar! ), )558, soht re#onsideration.95 On the sa%e da!, the D*R &arla#provin#ial offi#e issed the Noti#e of Coverae91 $hi#h @LI re#eived on ?anar! , )558.

Its %otion not$ithstandin, @LI has filed the instant re#orse in liht of $hat it #onsiders as theD*RFs hast! pla#in of @a#ienda Lisita nder C*RP even before P*RC #old rle or evenread the %otion for re#onsideration.9) *s @LI later red, it "#an not +no$ fro% the above-;otedresoltion the fa#ts and the la$ pon $hi#h it is based."9

P*RC $old eventall! den! @LIFs %otion for re#onsideration via Resoltion No. )558--51dated =a! , )558.

:! Resoltion of ?ne 1, )558,9 the Cort, a#tin on @LIFs %otion, issed a te%porar!restrainin order ,90enoinin the i%ple%entation of Resoltion No. )550-)-51 and the noti#e of#overae.

On ?l! 1, )558, the OSB, for pbli# respondents P*RC and the D*R, filed its Co%%ent98 onthe petition.

On De#e%ber ), )558, Noel =allari, i%pleaded b! @LI as respondent in his #apa#it! as "Se#-Ben. *=:*L*," filed his =anifestation and =otion $ith Co%%ent *tta#hed dated De#e%ber ,)558 2=anifestation and =otion6.99 In it, =allari stated that he has bro+en a$a! fro% *=:*L*$ith other *=:*L* e(-%e%bers and for%ed


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%otions for leave to intervene $ere ranted and the #orrespondin petitions-in-interventionad%itted.

On *st 17, )515, the Cort heard the %ain and intervenin petitioners on oral ar%ents.On the other hand, the Cort, on *st ), )515, heard pbli# respondents as $ell as therespe#tive #onsels of the *=:*L*-=allari-Spervisor! Brop, the *=:*L*-Balan fa#tion,

and the or+ers nion, representedb! Eldifonso Pinol, filed $ith the Cort a oint sb%ission and %otion for approval of aCo%pro%ise *ree%ent 2Enlish and &aalo versions6dated *st 8, )515.

On *st 1, )515, the Cort, in a bid to resolve the dispte throh an a%i#able settle%ent,issed a Resoltion7 #reatin a =ediation Panel #o%posed of then *sso#iate ?sti#e =a. *li#ia

*stria-=artine', as #hairperson, and for%er C* ?sti#es @e#tor @ofileAa and &eresita D!-Lia##o @E&@ER OR NO& P:LIC RESPONDEN&S P*RC *ND SECRE&*RKP*NB*ND*=*N @*HE ?RISDIC&ION, PO>ER *NDOR *&@ORI&K &O NLLIER *NDOR *&@ORI&K *& &@IS &I=E, I.E., *I&@O& DE PROCESS O< L*> *ND&@E I=P*IR=EN& O< CON&R*C&*L RIB@&S *ND O:LIB*&IONS =OREOHER,

*RE &@ERE LEB*L BRONDS NDER &@E CIHIL CODE, vi , *R&ICLE 11/1 ( ( (, *R&ICLES 175, 171 *ND 17) ( ( ( *R&ICLE 1/5 ( ( ( *ND *R&ICLE 15/ ( ( (&@*& C*N :E INHOED &O NLLI@E&@ER &@E PE&I&IONS &O NLLI@E&@ER &@E PE&I&IONERS&@EREIN *RE &@E RE*L P*R&IES-IN-IN&ERES& &O


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'HETHER THE RIGHTS, O#LIGATIONS AND RE"EDIES O$ THE PARTIES TO THESDOA ARE NO' GO+ERNED #& THE CORPORATION CODE >#ATAS PA"#ANSA#LG. @EN I& DID NO& ECLDE &@ES:?EC& PROPER&K


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>e first pro#eed to the e(a%ination of the preli%inar! isses before delvin on the %ore serios#hallenes bearin on the validit! of P*RCFs assailed issan#e and the ronds for it.

Su6)*oy Gou6, A"#ALA an () *6-) la* a al 6a)*=)n=)n*

@LI $old den! real part!-in-interest stats to the prported leaders of the Spervisor! Bropand *=:*L*, i.e., ?lio Snia, >indsor *nda!a, and Rene Balan, $ho filed the revo#ator!petitions before the D*R. *s @LI $old have it, Balan, the self-st!led head of *=:*L*, ained@LI e%plo!%ent in ?ne 1//5 and, ths, #old not have been a part! to the SDO* e(e#ted a!ear earlier .70 *s reards the Spervisor! Brop, @LI allees that spervisors are not relarfar%$or+ers, bt the #o%pan! nonetheless #onsidered the% :s nder the SDO* as a %ere#on#ession to enable the% to eno! the sa%e benefits iven ;alified relar far%$or+ers.@o$ever, if the SDO* $old be #an#eled and land distribtion effe#ted, so @LI #lai%s, #itin


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( ( ( (

R*6on*)l 4a/ la* *(all allo o 6*n (/*l*, () 4llo4a/* o () oan)a)on* )n any 6o-)n* 4o ( DAR Provided, ho$ever, that$hen there are t$o or %ore representatives for an! individal or rop, the representativesshold #hoose onl! one a%on the%selves to represent s#h part! or rop before an! D*R

pro#eedins. 2E%phasis spplied.6

Clearl!, the respe#tive leaders of the Spervisor! Brop and *=:*L* are #onte(tall! realparties-in-interest allo$ed b! la$ to file a petition before the D*R or P*RC.

&his is not ne#essaril! to sa!, ho$ever, that Balan represents *=:*L*, for as re#ords sho$and as @LI aptl! noted,/) his " petison" filed $ith D*R did not #arr! the sal athori'ation ofthe individals in $hose behalf it $as spposed to have been institted. &o date, s#hathori'ation do#%ent, $hi#h $old loi#all! in#lde a list of the na%es of the athori'in:s, has !et to be sb%itted to be part of the re#ords.

PARC8* Au(o)y o Ro a So- D)*)u)on Plan

On the postlate that the sbe#t risdi#tion is #onferred b! la$, @LI %aintains that P*RC is$ithot athorit! to revo+e an SDP, for neither R* 8809 nor EO ))/ e(pressl! vests P*RC $iths#h athorit!. >hile, as @LI ared, EO ))/ e%po$ers P*RC to approve the plan for sto#+distribtion in appropriate #ases, the e%po$er%ent onl! in#ldes the po$er to disapprove, btnot to re#all its previos approval of the SDP after it has been i%ple%ented b! the parties./ &o@LI, it is the #ort $hi#h has risdi#tion and athorit! to order the revo#ation or res#ission of theP*RC-approved SDP.

>e disaree.

nder Se#. 1 of R* 8809, as i%ple%ented b! D*O 15, the athorit! to approve the plan forsto#+ distribtion of the #orporate lando$ner belons to P*RC. @o$ever, #ontrar! to petitioner@LIFs postre, P*RC also has the po$er to revo+e the SDP $hi#h it previosl! approved. It %a!be, as red, that R* 8809 or other e(e#tive issan#es on ararian refor% do not e(pli#itl!vest the P*RC $ith the po$er to revo+ere#all an approved SDP. S#h po$er or athorit!,ho$ever, is dee%ed possessed b! P*RC nder the prin#iple of ne#essar! i%pli#ation, a basi#postlate that $hat is i%plied in a statte is as %#h a part of it as that $hi#h is e(pressed./

>e have e(plained that "ever! statte is nderstood, b! i%pli#ation, to #ontain all s#hprovisions as %a! be ne#essar! to effe#tate its obe#t and prpose, or to %a+e effe#tive rihts,po$ers, privilees or risdi#tion $hi#h it rants, in#ldin all s#h #ollateral and sbsidiar!#onse;en#es as %a! be fairl! and loi#all! inferred fro% its ter%s."/0


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revo+e the said li#ense. :! the sa%e to+en, havin ranted the per%it pon his as#ertain%entthat the #onditions thereof as applied ( ( ( have been #o%plied $ith, it is onl! for the violation of s#h #onditions that the %a!or %a! revo+e the said per%it./9 2E%phasis spplied.6

ith the vie$ >e ta+e of the #ase, onl! P*RC #an effe#t s#hrevo#ation. &he D*R Se#retar!, b! his o$n athorit! as s#h, #annot plasibl! do so, as thea##eptan#e andor approval of the SDP soht to be ta+en ba#+ or ndone is the a#t of P*RC$hose offi#ial #o%position in#ldes, no less, the President as #hair, the D*R Se#retar! as vi#e-#hair, and at least eleven 2116 other depart%ent heads.//

On another bt related isse, the @LI foists on the Cort the ar%ent that sbe#tin itslandholdins to #o%plsor! distribtion after its approved SDP has been i%ple%ented $oldi%pair the #ontra#tal obliations #reated nder the SDO*.

&he broad s$eep of @LIFs ar%ent inores #ertain established leal pre#epts and %st,therefore, be ree#ted.

* la$ athori'in interferen#e, $hen appropriate, in the #ontra#tal relations bet$een or a%onparties is dee%ed read into the #ontra#t and its i%ple%entation #annot s##essfll! be resistedb! for#e of the non-i%pair%ent arantee. &here is, in that instan#e, no i%pine%ent of thei%pair%ent #lase, the non-i%pair%ent prote#tion bein appli#able onl! to la$s that deroateprior a#ts or #ontra#ts b! enlarin, abridin or in an! %anner #hanin the intention of theparties. I%pair%ent, in fine, obtains if a sbse;ent la$ #hanes the ter%s of a #ontra#tbet$een the parties, i%poses ne$ #onditions, dispenses $ith those areed pon or $ithdra$se(istin re%edies for the enfor#e%ent of the rihts of the parties.155 Ne#essaril!, the#onstittional pros#ription $old not appl! to la$s alread! in effe#t at the ti%e of #ontra#te(e#tion, as in the #ase of R* 8809, in relation to D*O 15, vis--vis @LIFs SDO*. *s held inSerrano v. Ballant =ariti%e Servi#es, In#.

&he prohibition 3aainst i%pair%ent of the obliation of #ontra#ts4 is alined $ith the eneralprin#iple that la$s ne$l! ena#ted have onl! a prospe#tive operation, and #annot affe#t a#ts or#ontra#ts alread! perfe#ted ho$ever, as to la$s alread! in e(isten#e, their provisions are readinto #ontra#ts and dee%ed a part thereof. &hs, the non-i%pair%ent #lase nder Se#tion 15,

*rti#le II 3of the Constittion4 is li%ited in appli#ation to la$s abot to be ena#ted that $old in

an! $a! deroate fro% e(istin a#ts or #ontra#ts b! enlarin, abridin or in an! %anner#hanin the intention of the parties thereto.151 2E%phasis spplied.6

Needless to stress, the assailed Resoltion No. )550-)-51 is not the +ind of issan#e $ithinthe a%bit of Se#. 15, *rt. III of the Constittion providin that "3n4o la$ i%pairin the obliation of #ontra#ts shall be passed."

Parentheti#all!, @LI tas the SDO* as an ordinar! #ivil la$ #ontra#t and, as s#h, a brea#h of itster%s and #onditions is not a P*RC ad%inistrative %atter, bt one that ives rise to a #ase of

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a#tion #oni'able b! relar #orts.15) &his #ontention has little to #o%%end itself. &he SDO* isa spe#ial #ontra#t i%bed $ith pbli# interest, entered into and #rafted prsant to theprovisions of R* 8809. It e%bodies the SDP, $hi#h re;ires for its validit!, or at least itsenfor#eabilit!, P*RCFs approval. *nd the fa#t that the #ertifi#ate of #o%plian#e15 GGto be issedb! ararian athorities pon #o%pletion of the distribtion of sto#+sGGis revo#able b! the sa%eissin athorit! spports the idea that ever!thin abot the i%ple%entation of the SDP is, at

the first instan#e, sbe#t to ad%inistrative addi#ation.

@LI also parla!s the notion that the parties to the SDO* shold no$ loo+ to the CorporationCode, instead of to R* 8809, in deter%inin their rihts, obliations and re%edies. &he Code, itadds, shold be the appli#able la$ on the disposition of the ari#ltral land of @LI.

Contrar! to the vie$ of @LI, the rihts, obliations and re%edies of the parties to the SDO*e%bod!in the SDP are pri%aril! overned b! R* 8809. It shold abndantl! be %ade #learthat @LI $as pre#isel! #reated in order to #o%pl! $ith R* 8809, $hi#h the OSB aptl! des#ribedas the "%other la$" of the SDO* and the SDP.15 It is, ths, parado(i#al for @LI to shield itselffro% the #overae of C*RP b! invo+in e(#lsive appli#abilit! of the Corporation Code nderthe ise of bein a #orporate entit!.

>ithot in an! $a! %ini%i'in the relevan#e of the Corporation Code sin#e the :s of @LIare also sto#+holders, its appli#abilit! is li%ited as the rihts of the parties arisin fro% the SDPshold not be %ade to spplant or #ir#%vent the ararian refor% prora%.

>ithot dobt, the Corporation Code is the eneral la$ providin for the for%ation, orani'ationand relation of private #orporations. On the other hand, R* 8809 is the spe#ial la$ onararian refor%. *s bet$een a eneral and spe#ial la$, the latter shall prevailQeneraliaspe#ialibs non deroant.150 :esides, the present i%passe bet$een @LI and the privaterespondents is not an intra-#orporate dispte $hi#h ne#essitates the appli#ation of theCorporation Code. >hat private respondents ;estioned before the D*R is the properi%ple%entation of the SDP and @LIFs #o%plian#e $ith R* 8809. Evidentl!, R* 8809 shold bethe appli#able la$ to the instant #ase.

@LI frther #ontends that the in#lsion of the ari#ltral land of @a#ienda Lisita nder the#overae of C*RP and the evental distribtion of the land to the :s $old a%ont to adisposition of all or pra#ti#all! all of the #orporate assets of @LI. @LI $old add that this#ontinen#!, if ever it #o%es to pass, re;ires the appli#abilit! of the Corporation Codeprovisions on #orporate dissoltion.

>e are not persaded.

Indeed, the provisions of the Corporation Code on #orporate dissoltion $old appl! insofar as

the $indin p of @LIFs affairs or li;idation of the assets is #on#erned. @o$ever, the %erein#lsion of the ari#ltral land of @a#ienda Lisita nder the #overae of C*RP and the landFsevental distribtion to the :s $ill not, $ithot %ore, ato%ati#all! trier the dissoltion of@LI. *s stated in the SDO* itself, the per#entae of the vale of the ari#ltral land of@a#ienda Lisita in relation to the total assets transferred and #onve!ed b! &ade#o to @LI#o%prises onl! .)/8J, follo$in this e;ation vale of the ari#ltral lands divided b! total#orporate assets. :! no stret#h of i%aination $old said per#entae a%ont to a disposition ofall or pra#ti#all! all of @LIFs #orporate assets shold #o%plsor! land a#;isition and distribtionense.

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It is tre that the Cort, in so%e #ases, has pro#eeded to resolve #onstittional isses other$isealread! %oot and a#ade%i#11 provided the follo$in re;isites are present

( ( ( first, there is a rave violation of the Constittion se#ond, the e(#eptional #hara#ter of thesitation and the para%ont pbli# interest is involved third, $hen the #onstittional isseraised re;ires for%lation of #ontrollin prin#iples to ide the ben#h, the bar, and the pbli#

forth, the #ase is #apable of repetition !et evadin revie$.

&hese re;isites do not obtain in the #ase at bar.

N dire#tl! or COLLEC&IHELK &@EL*NDS &@EK &ILL or, in the #ase of other far%$or+ers, to re#eive a st share of the fritsthereof. &o this end, the State shall en#orae and nderta+e the st distribtion of allari#ltral lands, sbe#t to s#h priorities and reasonable retention li%its as the Conress %a!pres#ribe, ta+in into a##ont e#oloi#al, develop%ental, or e;it! #onsiderations, and sbe#tto the pa!%ent of st #o%pensation. In deter%inin retention li%its, the State shall respe#t theriht of s%all lando$ners. &he State shall frther provide in#entives for volntar! land-sharin.2E%phasis spplied.6

&he $ordin of the provision is ne;ivo#alGGthe far%ers and relar far%$or+ers have a riht&O O>N DIREC&LK OR COLLEC&IHELK &@E L*NDS &@EK &ILL. &he basi# la$ allo$s t$o2)6 %odes of land distribtionQdire#t and indire#t o$nership. Dire#t transfer to individalfar%ers is the %ost #o%%onl! sed %ethod b! D*R and $idel! a##epted. Indire#t transferthroh #olle#tive o$nership of the ari#ltral land is the alternative to dire#t o$nership ofari#ltral land b! individal far%ers. &he afore;oted Se#. EPRESSLK athori'es#olle#tive o$nership b! far%ers. No lanae #an be fond in the 1/79 Constittion thatdis;alifies or prohibits #orporations or #ooperatives of far%ers fro% bein the leal entit!throh $hi#h #olle#tive o$nership #an be e(er#ised. &he $ord "#olle#tive" is defined as"indi#atin a n%ber of persons or thins #onsidered as #onstittin one rop orareate,"110 $hile "#olle#tivel!" is defined as "in a #olle#tive sense or %anner in a %ass orbod!."118 :! sin the $ord "#olle#tivel!," the Constittion allo$s for indire#t o$nership of landand not st otriht ari#ltral land transfer. &his is in re#onition of the fa#t that land refor%%a! be#o%e s##essfl even if it is done throh the %edi% of ridi#al entities #o%posed offar%ers.

Colle#tive o$nership is per%itted in t$o 2)6 provisions of R* 8809. Its Se#. )/ allo$s $or+ersF#ooperatives or asso#iations to #olle#tivel! o$n the land, $hile the se#ond pararaph of Se#. 1

allo$s #orporations or asso#iations to o$n ari#ltral land $ith the far%ers be#o%insto#+holders or %e%bers. Said provisions read

SEC. )/.


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In #ase it is not e#ono%i#all! feasible and sond to divide the land, then it shall be o$ned#olle#tivel! b! the $or+er benefi#iaries $ho shall for% a $or+ersF #ooperative or asso#iation$hi#h $ill deal $ith the #orporation or bsiness asso#iation. ( ( ( 2E%phasis spplied.6

SEC. 1. Corporate Lando$ners.Q ( ( (

( ( ( (

pon #ertifi#ation b! the D*R, #orporations o$nin ari#ltral lands %a! ive their ;alifiedbenefi#iaries the riht to pr#hase s#h proportion of the #apital sto#+ of the #orporation that theari#ltral land, a#tall! devoted to ari#ltral a#tivities, bears in relation to the #o%pan!Fstotal assets, nder s#h ter%s and #onditions as %a! be areed pon b! the%. In no #ase shallthe #o%pensation re#eived b! the $or+ers at the ti%e the shares of sto#+s are distribted bered#ed. &he sa%e prin#iple shall be applied to asso#iations, $ith respe#t to their e;it! orparti#ipation. ( ( ( 2E%phasis spplied.6

Clearl!, $or+ersF #ooperatives or asso#iations nder Se#. )/ of R* 8809 and #orporations orasso#iations nder the s##eedin Se#. 1, as differentiated fro% individal far%ers, areathori'ed vehi#les for the #olle#tive o$nership of ari#ltral land. Cooperatives #an bereistered $ith the Cooperative Develop%ent *thorit! and a#;ire leal personalit! of theiro$n, $hile #orporations are ridi#al persons nder the Corporation Code. &hs, Se#. 1 is#onstittional as it si%pl! i%ple%ents Se#. of *rt. III of the Constittion that land #an beo$ned COLLEC&IHELK b! far%ers. Even the fra%ers of the l/79 Constittion are in nison $ithrespe#t to the t$o 2)6 %odes of o$nership of ari#ltral lands tilled b! far%ersGGDIREC& andCOLLEC&IHE, ths

=R. NOLLEDO. *nd $hen $e tal+ of the phrase "to o$n dire#tl!," $e %ean the prin#iple ofdire#t o$nership b! the tiller

=R. =ONSOD. Kes.

=R. NOLLEDO. *nd $hen $e tal+ of "#olle#tivel!," $e %ean #o%%nal o$nership, ste$ardshipor State o$nership

=S. NIEH*. In this se#tion, $e #on#eive of #ooperatives that is far%ersF #ooperatives o$ninthe land, not the State.

=R. NOLLEDO. *nd $hen $e tal+ of "#olle#tivel!," referrin to far%ersF #ooperatives, do thefar%ers o$n spe#ifi# areas of land $here the! onl! nite in their efforts

=S. NIEH*. &hat is one $a!.

=R. NOLLEDO. :e#ase I nderstand that there are t$o basi# s!ste%s involved the"%oshave" t!pe of ari#ltre and the "+ibbt'." So are both #onte%plated in the report

=R. &*DEO. *n dala$a +asin pa%a%araan n papapatpad n tna! na repor%a sa lpaa! an pa%a%a!-ari n lpa na hahatiin sa individal na pa%a%a!-ari G dire#tl! G at antinata$a na sa%a-sa%an aa$in n %a %abb+id. &lad sa Neros, an sto n %a


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%abb+id a! a$in nila iton "#ooperative or #olle#tive far%." *n ibi sabihin a! sa%a-sa%anilan sasa+ahin.

( ( ( (

=R. &INBSON. ( ( ( >hen $e spea+ here of "to o$n dire#tl! or #olle#tivel! the lands the! till,"is this land for the tillers rather than land for the landless :efore, $e sed to hear "land for thelandless," bt no$ the sloan is "land for the tillers." Is that riht

=R. &*DEO. *n prinsip!on %iiral dito a! i!on land for the tillers. *n ibi sabihin n"dire#tl!" a! tlad sa i%ple%entas!on sa ri#e and #orn lands +n saan inaari na n %a%asasa+a an lpan binbn+al nila. *n ibi sabihin na%an n "#olle#tivel!" a! sa%a-sa%an paa$a sa isan lpain o isan b+id, +atlad n sit$as!on sa Neros.119 2E%phasisspplied.6

*s Co%%issioner &adeo e(plained, the far%ers $ill $or+ on the ari#ltral land "sa%a-sa%a"or #olle#tivel!. &hs, the %ain re;isite for #olle#tive o$nership of land is #olle#tive or rop$or+ b! far%ers of the ari#ltral land. Irrespe#tive of $hether the lando$ner is a #ooperative,asso#iation or #orporation #o%posed of far%ers, as lon as #on#erted rop $or+ b! thefar%ers on the land is present, then it falls $ithin the a%bit of #olle#tive o$nership s#he%e.

Li+e$ise, Se#. , *rt. III of the Constittion %a+es %ention of a #o%%it%ent on the part of theState to prse,y la, an ararian refor% prora% fonded on the poli#! of land for thelandless, bt sbe#t to s#h priorities as Conress %a! pres#ribe, ta+in into a##ont s#habstra#t variable as "e;it! #onsiderations." &he te(tal referen#e to a la$ and Conressne#essaril! i%plies that the above #onstittional provision is no *l4=@-uoyand thatleislation is needed to i%ple%ent the rentl! needed prora% of ararian refor%. *nd R*8809 has been ena#ted pre#isel! prsant to and as a %e#hanis% to #arr! ot the #onstittionaldire#tives. &his pie#e of leislation, in fa#t, restates117 the ararian refor% poli#! established inthe afore%entioned provision of the Constittion of pro%otin the $elfare of landless far%ersand far%$or+ers. R* 8809 ths defines "ararian refor%" as "the redistribtion of lands tofar%ers and relar far%$or+ers $ho are landless to lift the e#ono%i# stats of thebenefi#iaries and all o( aan/n* alna) o ( 6(y*)-al )*)u)on o4 lan*,s#h as prod#tion or profit sharin, labor ad%inistration and the )*)u)on o4 *(a* o4*o- $hi#h $ill allo$ benefi#iaries to re#eive a st share of the frits of the lands the! $or+."

>ith the vie$ >e ta+e of this #ase, the sto#+ distribtion option devised nder Se#. 1 of R*8809 he$s $ith the ararian refor% poli#!, as instr%ent of so#ial sti#e nder Se#. of *rti#leIII of the Constittion. *lbeit land o$nership for the landless appears to be the do%inant the%eof that poli#!, >e e%phasi'e that Se#. , *rti#le III of the Constittion, as #o#hed, does not#onstri#t Conress to passin an ararian refor% la$ planted on dire#t land transfer to and

o$nership b! far%ers and no other, or else the ena#t%ent sffers fro% the vi#e ofn#onstittionalit!. If the intention $ere other$ise, the fra%ers of the Constittion $old have$orded said se#tion in a %anner %andator! in #hara#ter.


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hile it is tre that the far%er is issed sto#+ #ertifi#ates and does not dire#tl! o$n the land,still, the Corporation Code is #lear that the : be#o%es a sto#+holder $ho a#;ires ane;itable interest in the assets of the #orporation, $hi#h in#lde the ari#ltral lands. It $ase(plained that the "e;itable interest of the shareholder in the propert! of the #orporation isrepresented b! the ter% sto#+, and the e(tent of his interest is des#ribed b! the ter% shares.&he e(pression shares of sto#+ $hen ;alified b! $ords indi#atin n%ber and o$nershipe(presses the e(tent of the o$nerFs interest in the #orporate propert!."11/ * share of sto#+t!pifies an ali;ot part of the #orporationFs propert!, or the riht to share in its pro#eeds to thate(tent $hen distribted a##ordin to la$ and e;it! and that its holder is not the o$ner of an!part of the #apital of the #orporation.1)5 @o$ever, the :s $ill lti%atel! o$n the ari#ltral

lands o$ned b! the #orporation $hen the #orporation is eventall! dissolved and li;idated.

*nent the alleed loss of #ontrol of the far%ers over the ari#ltral land operated and %anaedb! the #orporation, a readin of the se#ond pararaph of Se#. 1 sho$s other$ise. Saidprovision provides that ;alified benefi#iaries have "the riht to pr#hase s#h proportion of the#apital sto#+ of the #orporation that the ari#ltral land, a#tall! devoted to ari#ltrala#tivities, bears in relation to the #o%pan!Fs total assets." &he $ordin of the for%la in the#o%ptation of the n%ber of shares that #an be boht b! the far%ers does not %ean loss of#ontrol on the part of the far%ers. It %st be re%e%bered that the deter%ination of theper#entae of the #apital sto#+ that #an be boht b! the far%ers depends on the vale of theari#ltral land and the vale of the total assets of the #orporation.

&here is, ths, nothin n#onstittional in the for%la pres#ribed b! R* 8809. &he poli#! onararian refor% is that #ontrol over the ari#ltral land %st al$a!s be in the hands of thefar%ers. &hen it falls on the sholders of D*R and P*RC to see to it the far%ers shold al$a!so$n %aorit! of the #o%%on shares entitled to ele#t the %e%bers of the board of dire#tors toensre that the far%ers $ill have a #lear %aorit! in the board. :efore the SDP is approved,stri#t s#rtin! of the proposed SDP %st al$a!s be nderta+en b! the D*R and P*RC, s#hthat the vale of the ari#ltral land #ontribted to the #orporation %st al$a!s be %ore than05J of the total assets of the #orporation to ensre that the %aorit! of the %e%bers of theboard of dire#tors are #o%posed of the far%ers. &he P*RC #o%posed of the President of thePhilippines and #abinet se#retaries %st see to it that #ontrol over the board of dire#tors rests$ith the far%ers b! ree#tin the in#lsion of non-ari#ltral assets $hi#h $ill !ield the %aorit!in the board of dire#tors to non-far%ers. *n! deviation, ho$ever, b! P*RC or D*R fro% the#orre#t appli#ation of the for%la pres#ribed b! the se#ond pararaph of Se#. 1 of R* 8890does not %a+e said provision #onstittionall! infir%. Rather, it is the appli#ation of said provisionthat #an be #hallened. Ero, Se#. 1 of R* 8809 does not tren#h on the #onstittional poli#! ofensrin #ontrol b! the far%ers.

* vie$ has been advan#ed that there #an be no ararian refor% nless there is land distribtionand that a#tal land distribtion is the essential #hara#teristi# of a #onstittional ararian refor%prora%. On the #ontrar!, there have been so %an! instan#es $here, despite a#tal land

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II.

&he stae is no$ set for the deter%ination of the propriet! nder the pre%ises of the revo#ationor re#all of @LIFs SDP. Or to be %ore pre#ise, the in;ir! shold be $hether or not P*RCravel! absed its dis#retion in revo+in or re#allin the sbe#t SDP and pla#in the ha#iendander C*RPFs #o%plsor! a#;isition and distribtion s#he%e.

&he findins, anal!sis and re#o%%endation of the D*RFs Spe#ial &as+


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In the &er%inal Report adopted b! P*RC, it is stated that the SDP violates the ararian refor%poli#! nder Se#. ) of R* 8809, as the said plan failed to enhan#e the dinit! and i%prove the;alit! of lives of the :s throh reater prod#tivit! of ari#ltral lands. >e disaree.

Se#. ) of R* 8809 states

SEC&ION ). $eclaration of Principles and Policies.MIt is the poli#! of the State to prse aCo%prehensive *rarian Refor% Prora% 2C*RP6. &he $elfare of the landless far%ers andfar% $or+ers $ill re#eive the hihest #onsideration to pro%ote so#ial sti#e and to %ove thenation to$ards sond rral develop%ent and indstriali'ation, and the establish%ent of o$ner#ltivatorship of e#ono%i#-si'ed far%s as the basis of Philippine ari#ltre.

&o this end, a %ore e;itable distribtion and o$nership of land, $ith de reard to the rihts oflando$ners to st #o%pensation and to the e#oloi#al needs of the nation, shall be nderta+ento provide far%ers and far% $or+ers $ith the opportnit! to enhan#e their dinit! and i%provethe ;alit! of their lives throh reater prod#tivit! of ari#ltral lands.

&he ararian refor% prora% is fonded on the riht of far%ers and relar far% $or+ers, $hoare landless, to o$n dire#tl! or #olle#tivel! the lands the! till or, in the #ase of other far%$or+ers, to re#eive a share of the frits thereof. &o this end, the State shall en#orae the stdistribtion of all ari#ltral lands, sbe#t to the priorities and retention li%its set forth in this

*#t, havin ta+en into a##ont e#oloi#al, develop%ental, and e;it! #onsiderations, andsbe#t to the pa!%ent of st #o%pensation. &he State shall respe#t the riht of s%alllando$ners and shall provide in#entives for volntar! land-sharin. 2E%phasis spplied.6

Pararaph ) of the above-;oted provision spe#ifi#all! %entions that "a %ore e;itabledistribtion and o$nership of land ( ( ( shall be nderta+en to provide far%ers and far%$or+ers $ith the opportnit! to enhan#e their dinit! and i%prove the ;alit! of their livesthroh reater prod#tivit! of ari#ltral lands." Of note is the ter% "opportnit!" $hi#h isdefined as a favorable #han#e or openin offered b! #ir#%stan#es.1)9 Considerin this, b! nostret#h of i%aination #an said provision be #onstred as a arantee in i%provin the lives ofthe :s. *t best, it %erel! provides for a possibilit! or favorable #han#e of pliftin thee#ono%i# stats of the :s, $hi#h %a! or %a! not be attained.

Pertinentl!, i%provin the e#ono%i# stats of the :s is neither a%on the leal obliations of @LI nder the SDP nor an i%perative i%position b! R* 8809 and D*O 15, a violation of $hi#h$old stif! dis#ardin the sto#+ distribtion option. Nothin in that option aree%ent, la$ ordepart%ent order indi#ates other$ise.

Sinifi#antl!, @LI dra$s parti#lar attention to its havin paid its :s, drin the rei%e of theSDP 21/7/-)5506, so%e PhP billion b! $a! of salaries$aes and hiher benefits e(#lsive of

free hospital and %edi#al benefits to their i%%ediate fa%il!. *nd atta#hed as *nne( "B" to @LIFs=e%orand% is the #ertified tre report of the finan#e %anaer of ?ose Coan#o SonsOrani'ations-&arla# Operations, #aptioned as "@*CIEND* LISI&*, INC. Salaries, :enefitsand Credit Privilees 2in &hosand Pesos6 Sin#e the Sto#+ Option $as *pproved b!P*RCC*RP," detailin $hat @LI ave their $or+ers fro% 1/7/ to )550. &he s% total, asadded p b! the Cort, !ields the follo$in n%bers &otal Dire#t Cash Ot 2Salaries>aes Cash :enefits6 T PhP ),/)9,77 &otal Non-Dire#t Cash Ot 2@ospital=edi#al :enefits6 T PhP5,55. &he #ash ot fires, as stated in the report, in#lde the #ost of ho%elots the PhP 105%illion or so representin J of the ross prod#e of the ha#ienda and the PhP 9.0 %illion

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representin J fro% the pro#eeds of the sale of the 055-he#tare #onverted lands. >hile notin#lded in the report, @LI %anifests havin iven the :s J of the PhP 75 %illion paid forthe 75 he#tares of land traversed b! the SC&E.1)7 On top of these, it is $orth re%e%berin thatthe shares of sto#+s $ere iven b! @LI to the :s for free. Heril!, the :s have benefitedfro% the SDP.

&o address rins that the :s be allo$ed to disenae fro% the SDP as @LI has notan!$a! earned profits throh the !ears, it #annot be over-e%phasi'ed that, as a %atter of#o%%on bsiness sense, no #orporation #old arantee a profitable rn all the ti%e. *s hasbeen sested, one of the +e! featres of an SDP of a #orporate lando$ner is the li+elihood ofthe #orporate vehi#le not earnin, or, $orse still, losin %one!.1)/

&he Cort is fll! a$are that one of the #riteria nder D*O 15 for the P*RC to #onsider theadvisabilit! of approvin a sto#+ distribtion plan is the li+elihood that the plan "$old reslt inin#reased in#o%e and reater benefits to 3;alified benefi#iaries4 than if the lands $ere dividedand distribted to the% individall!."15 :t as aptl! noted drin the oral ar%ents, D*O 15oht to have not, as it #annot, a#tall! e(a#t assran#e of s##ess on so%ethin that issbe#t to the $ill of %an, the for#es of natre or the inherent ris+! natre of bsiness.11 ?st

li+e in a#tal land distribtion, an SDP #annot arantee, as indeed the SDO* does notarantee, a #o%fortable life for the :s. &he Cort #an ta+e di#ial noti#e of the fa#t thatthere $ere %an! instan#es $herein after a far%$or+er benefi#iar! has been a$arded $ith anari#ltral land, he st sbse;entl! sells it and is eventall! left $ith nothin in the end.

In all then, the oneros #ondition of the :sF e#ono%i# stats, their life of hardship, if thatreall! be the #ase, #an hardl! be attribted to @LI and its SDP and provide a valid rond for theplanFs revo#ation.

Neither does @LIFs SDP, $hen#e the D*R-attested SDO*=O* is based, infrine Se#. 1 of R*8809, albeit pbli# respondents erroneosl! sb%it other$ise.

&he provisions of the first pararaph of the adverted Se#. 1 are $ithot relevan#e to the isseon the propriet! of the assailed order revo+in @LIFs SDP, for the pararaph deals $ith thetransfer of ari#ltral lands to the overn%ent, as a %ode of C*RP #o%plian#e, ths

SEC. 1. Corporate Landowners.! Corporate lando$ners %a! volntaril! transfer o$nershipover their ari#ltral landholdins to the Repbli# of the Philippines prsant to Se#tion )5hereof or to ;alified benefi#iaries nder s#h ter%s and #onditions, #onsistent $ith this *#t, asthe! %a! aree, sbe#t to #onfir%ation b! the D*R.

&he se#ond and third pararaphs, $ith their sb-pararaphs, of Se#. 1 provide as follo$s

pon #ertifi#ation b! the D*R, #orporations o$nin ari#ltral lands /ay ) () 3ual)4)n4)-)a)* ( )( o 6u-(a* *u-( 6o6o)on o4 ( -a6)al *o- o4 ( -o6oa)on(a ( a)-ulual lan, a-ually o o a)-ulual a-)))*, a* )n la)on o( -o/6any8* oal a***, nder s#h ter%s and #onditions as %a! be areed pon b!the%. In no #ase shall the #o%pensation re#eived b! the $or+ers at the ti%e the shares ofsto#+s are distribted be red#ed. ( ( (

Corporations or asso#iations $hi#h volntaril! divest a proportion of their #apital sto#+, e;it! or parti#ipation in favor of their $or+ers or other ;alified benefi#iaries nder this se#tion shall be

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dee%ed to have #o%plied $ith the provisions of this *#t Provided, &hat the follo$in #onditionsare #o%plied $ith

2a6 In order to safeard the riht of benefi#iaries $ho o$n shares of sto#+s to dividendsand other finan#ial benefits, the boo+s of the #orporation or asso#iation shall be sbe#tto periodi# adit b! #ertified pbli# a##ontants #hosen b! the benefi#iaries

2b6 Irrespe#tive of the vale of their e;it! in the #orporation or asso#iation, thebenefi#iaries shall be assred of at least one 216 representative in the board of dire#tors,or in a %anae%ent or e(e#tive #o%%ittee, if one e(ists, of the #orporation orasso#iation

2#6 *n! shares a#;ired b! s#h $or+ers and benefi#iaries shall have the sa%e rihtsand featres as all other shares and

2d6 *n! transfer of shares of sto#+s b! the oriinal benefi#iaries shall be void ab initionless said transa#tion is in favor of a ;alified and reistered benefi#iar! $ithin thesa%e #orporation.

&he %andator! %ini%% ratio of land-to-shares of sto#+ spposed to be distribted or allo#atedto ;alified benefi#iaries, advertin to $hat Se#. 1 of R* 8809 refers to as that "proportion ofthe #apital sto#+ of the #orporation that the ari#ltral land, a#tall! devoted to ari#ltrala#tivities, bears in relation to the #o%pan!Fs total assets" had been observed.

Pararaph one 216 of the SDO*, $hi#h $as based on the SDP, #onfor%s to Se#. 1 of R* 8809.&he stiplation reads

1. &he per#entae of the vale of the ari#ltral land of @a#ienda Lisita 2P1/8,85,555.556 inrelation to the total assets 2P0/5,00,))5.556 transferred and #onve!ed to the SECOND P*R&K

is .)/8J that, nder the la$, is the proportion of the otstandin #apital sto#+ of the SECONDP*R&K, $hi#h is P00,01,8).55 or 00,01,8) shares $ith a par vale of P1.55 per share,that has to be distribted to the &@IRD P*R&K nder the sto#+ distribtion plan, the said.)/8J thereof bein P117,/1,/98.70 or 117,/1,/98.70 shares.

&he appraised vale of the ari#ltral land is PhP 1/8,85,555 and of @LIFs other assets isPhP /,/),))5. &he total vale of @LIFs assets is, therefore, PhP 0/5,00,))5.1) &heper#entae of the vale of the ari#ltral lands 2PhP 1/8,85,5556 in relation to the total assets2PhP 0/5,00,))56 is .)/8J, $hi#h represents the sto#+holdins of the 8,)/8 oriinal;alified far%$or+er-benefi#iaries 2:s6 in @LI. &he total n%ber of shares to be distribted tosaid ;alified :s is 117,/1,/98.70 @LI shares. &his $as arrived at b! ettin .)/8J ofthe 00,01,8) shares $hi#h is the otstandin #apital sto#+ of @LI $ith a vale of PhP

00,01,8). &hs, if $e divide the 117,/1,/98.70 @LI shares b! 8,)/8 :s, then ea#h :is entitled to 17,75.) @LI shares. &hese shares nder the SDP are to be iven to :s forfree.

&he Cort finds that the deter%ination of the shares to be distribted to the 8,)/8 :s stri#tl!adheres to the for%la pres#ribed b! Se#. 12b6 of R* 8809.

*nent the re;ire%ent nder Se#. 12b6 of the third pararaph, that the :s shall be assredof at least one 216 representative in the board of dire#tors or in a %anae%ent or e(e#tive



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#o%%ittee irrespe#tive of the vale of the e;it! of the :s in @LI, the Cort finds that theSDO* #ontained provisions %a+in #ertain the :sF representation in @LIFs overnin board,ths

0. Even if onl! a part or fra#tion of the shares ear%ar+ed for distribtion $ill have been a#;iredfro% the


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&he &er%inal Report states that the proposed distribtion plan sb%itted in 1/7/ to the P*RCeffe#tivel! assred the intended sto#+ benefi#iaries that the ph!si#al interit! of the far% shallre%ain inviolate. *##ordinl!, the &er%inal Report and the P*RC-assailed resoltion $old ta+e@LI to tas+ for se#rin approval of the #onversion to non-ari#ltral ses of 055 he#tares ofthe ha#ienda. In not too %an! $ords, the Report and the resoltion vie$ the #onversion as aninfrine%ent of Se#. 02a6 of D*O 15 $hi#h reads "a. that the #ontined operation of the

#orporation $ith its ari#ltral land inta#t and nfra%ented is viable $ith potential for ro$thand in#reased profitabilit!."

&he P*RC is $ron.

In the first pla#e, Se#. 02a6GGst li+e the s##eedin Se#. 02b6 of D*O 15 on in#reased in#o%eand reater benefits to ;alified benefi#iariesGGis bt one of the stated #riteria to ide P*RC inde#idin on $hether or not to a##ept an SDP. Said Se#. 02a6 does not e(a#t fro% the #orporatelando$ner-appli#ant the nderta+in to +eep the far% inta#t and nfra%ented ad infinit%. *ndthere is loi# to @LIFs stated observation that the +e! phrase in the provision of Se#. 02a6 is"viabilit! of #orporate operations" "3$4hat is ths re;ired is not the ari#ltral land re%ainininta#t ( ( ( bt the viabilit! of the #orporate operations $ith its ari#ltral land bein inta#t and

nfra%ented. Corporate operation %a! be viable even if the #orporate ari#ltral land doesnot re%ain inta#t or 3n4fra%ented."1

It is, of #orse, anti-#li%a#ti# to %ention that D*R vie$ed the #onversion as not violative of an!issan#e, let alone nder%inin the viabilit! of @a#ienda LisitaFs operation, as the D*RSe#retar! approved the land #onversion applied for and its disposition via his Conversion Orderdated *st 1, 1//8 prsant to Se#. 80 of R* 8809 $hi#h reads

Se#. 80. Conversion of Lands.M*fter the lapse of five !ears fro% its a$ard $hen the land#eases to be e#ono%i#all! feasible and sond for ari#ltral prposes, or the lo#alit! hasbe#o%e rbani'ed and the land $ill have a reater e#ono%i# vale for residential, #o%%er#ialor indstrial prposes, the D*R pon appli#ation of the benefi#iar! or lando$ner $ith de noti#eto the affe#ted parties, and sbe#t to e(istin la$s, %a! athori'e the ( ( ( #onversion of theland and its dispositions. ( ( (

On the J Prod#tion Share

On the %atter of the alleed failre of @LI to #o%pl! $ith sharin the J of the ross prod#tionsales of the ha#ienda and pa! dividends fro% profit, the entries in its finan#ial boo+s tend toindi#ate #o%plian#e b! @LI of the profit-sharin e;ivalent to J of the ross sales fro% theprod#tion of the ari#ltral land on top of 2a6 the salaries and $aes de :s as e%plo!eesof the #o%pan! and 2b6 the J of the ross sellin pri#e of the #onverted land and that portionsed for the SC&E. * plasible eviden#e of #o%plian#e or non-#o%plian#e, as the #ase %a!

be, #old be the boo+s of a##ont of @LI. Evidentl!, the #r! of so%e rops of not havinre#eived their share fro% the ross prod#tion sales has not ade;atel! been validated on therond b! the Spe#ial &as+


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$old appear that the Spe#ial &as+


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ho%elots and s%all far%lots for their fa%il! se, to be ta+en fro% the land o$ned b! the#ooperative or #orporation.

&he "pre#edin se#tion" referred to in the above-;oted provision is as follo$s

SEC. )/. -arms wned or perated ' Corporations or ther /#siness Associations.! In the#ase of far%s o$ned or operated b! #orporations or other bsiness asso#iations, the follo$inrles shall be observed b! the P*RC.

In eneral, lands shall be distribted dire#tl! to the individal $or+er-benefi#iaries.

In #ase it is not e#ono%i#all! feasible and sond to divide the land, then it shall be o$ned#olle#tivel! b! the $or+er-benefi#iaries $ho shall for% a $or+ersF #ooperative or asso#iation$hi#h $ill deal $ith the #orporation or bsiness asso#iation. ntil a ne$ aree%ent is enteredinto b! and bet$een the $or+ersF #ooperative or asso#iation and the #orporation or bsinessasso#iation, an! aree%ent e(istin at the ti%e this *#t ta+es effe#t bet$een the for%er and theprevios lando$ner shall be respe#ted b! both the $or+ersF #ooperative or asso#iation and the#orporation or bsiness asso#iation.

Noti#eabl!, the foreoin provisions do not %a+e referen#e to #orporations $hi#h opted forsto#+ distribtion nder Se#. 1 of R* 8809. Con#o%itantl!, said #orporations are not oblied toprovide for it e(#ept b! stiplation, as in this #ase.

nder the SDP, @LI ndertoo+ to "sbdivide and allo#ate for free and $ithot #hare a%on the;alified fa%il!-benefi#iaries ( ( ( residential or ho%elots of not %ore than )5 s;. %. ea#h, $ithea#h fa%il! benefi#iar! bein assred of re#eivin and o$nin a ho%elot in the barrio orbarana! $here it a#tall! resides," "$ithin a reasonable ti%e."

=ore than si(teen 2186 !ears have elapsed fro% the ti%e the SDP $as approved b! P*RC, and

!et, it is still the #ontention of the :s that not all $as iven the )5-s;are %eter ho%elotsand, of those $ho $ere alread! iven, so%e still do not have the #orrespondin titles.

Drin the oral ar%ents, @LI $as afforded the #han#e to refte the foreoin alleation b!sb%ittin proof that the :s $ere alread! iven the said ho%elots

?sti#e Helas#o ( ( ( &here is also an alleation that the far%er benefi#iaries, the ;alifiedfa%il! benefi#iaries $ere not iven the )5 s;are %eters ea#h. So, #an !o also 3prove4 thatthe ;alified fa%il! benefi#iaries $ere alread! provided the )5 s;are %eter ho%elots.

*tt!. *sn#ion >e $ill, !or @onor please.17

Other than the finan#ial report, ho$ever, no other sbstantial proof sho$in that all the ;alifiedbenefi#iaries have re#eived ho%elots $as sb%itted b! @LI. @en#e, this Cort is #onstrained torle that @LI has not !et fll! #o%plied $ith its nderta+in to distribte ho%elots to the :snder the SDP.

On "=an Da!s" and the =e#hani#s of Sto#+ Distribtion



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In or revie$ and anal!sis of par. of the SDO* on the %e#hani#s and ti%elines of sto#+distribtion, >e find that it )ola* t$o 2)6 provisions of D*O 15. Par. of the SDO* states

. *t the end of ea#h fis#al !ear, for a period of 5 !ears, the SECOND P*R&K 3@LI4 shallarrane $ith the


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No$ then, b! providin that the n%ber of shares of the oriinal 1/7/ :s shall depend onthe n%ber of "%an da!s," @LI violated the afore-;oted rle on sto#+ distribtion andeffe#tivel! deprived the :s of e;al shares of sto#+ in the #orporation, for, in net effe#t, these8,)/8 ;alified :s, $ho theoreti#all! had iven p their rihts to the land that #old havebeen distribted to the%, sffered a diltion of their de share entitle%ent. *s has beenobserved drin the oral ar%ents, @LI has #hosen to se the shares ear%ar+ed for

far%$or+ers as re$ard s!ste% #hips to $ater do$n the shares of the oriinal 8,)/8:s.11 Parti#larl!

?sti#e *bad If the SDO* did not ta+e pla#e, the other thin that $old have happened is thatthere $old be C*RP

*tt!. Dela =er#ed Kes, Kor @onor.

?sti#e *bad &hatFs the onl! point I $ant to +no$ ( ( (. No$, bt the! #hose to enter SDO*instead of pla#in the land nder C*RP. *nd for that reason those $ho $old have otten theirshares of the land a#tall! ave p their rihts to this land in pla#e of the shares of the sto#+, isthat #orre#t

*tt!. Dela =er#ed It $old be that $a!, Kor @onor.

?sti#e *bad Riht no$, also the overn%ent, in a $a!, ave p its riht to o$n the landbe#ase that $a! the overn%ent ta+es o$n 3si#4 the land and distribte it to the far%ers andpa! for the land, is that #orre#t


?sti#e *bad *nd then !o ave thirt!-three per#ent 2J6 of the shares of @LI to the far%ersat that ti%e that n%bered ( ( ( those $ho sined five thosand for hndred ninet! eiht

20,/76 benefi#iaries, is that #orre#t


?sti#e *bad :t later on, after assinin the% their shares, so%e $or+ers #a%e in fro% 1/7/,1//5, 1//1, 1//) and the rest of the !ears that !o ave additional shares $ho $ere not in theoriinal list of o$ners


?sti#e *bad Did those ne$ $or+ers ive p an! riht that $old have belon to the% in 1/7/$hen the land $as spposed to have been pla#ed nder C*RP

*tt!. Dela =er#ed If !o are tal+in or referrin 2interrpted6

?sti#e *bad NoneU Ko tell %e. None. &he! ave p no rihts to land

*tt!. Dela =er#ed &he! did not do the sa%e thin as $e did in 1/7/, Kor @onor.



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?sti#e *bad No, if the! $ere not $or+ers in 1/7/ $hat land did the! ive p None, if the!be#o%e $or+ers later on.

*tt!. Dela =er#ed None, Kor @onor, I $as referrin, Kor @onor, to the oriinal 2interrpted6

?sti#e *bad So $h! is it that the rihts of those $ho ave p their lands $old be dilted,be#ase the #o%pan! has #hosen to se the shares as re$ard s!ste% for ne$ $or+ers $ho#o%e in It is not that the ne$ $or+ers, in effe#t, be#o%e st $or+ers of the #orporation $hosesto#+holders $ere alread! fi(ed. &he &*DECO $ho has shares there abot si(t! si( per#ent288J6 and the five thosand for hndred ninet! eiht 20,/76 far%ers at the ti%e of the SDO*E(plain to %e. >h!, $h! $ill !o ( ( ( $hat riht or $here did !o et that riht to se thisshares, to $ater do$n the shares of those $ho shold have been benefited, and to se it as are$ard s!ste% de#ided b! the #o%pan!1)

orse, @LI hiredfar%$or+ers in addition to the oriinal 8,)/8 :s, s#h that, as indi#ated in the Co%plian#edated *st ), )515 sb%itted b! @LI to the Cort, the total n%ber of far%$or+ers of @LI asof said date stood at 15,05). *ll these far%$or+ers, $hi#h in#lde the oriinal 8,)/8 :s,$ere iven shares ot of the 117,/1,/98.70 @LI shares representin the .)/8J of the totalotstandin #apital sto#+ of @LI. Clearl!, the %ini%% individal allo#ation of ea#h oriinal

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