May 3, 2006
PARC COUNCIL RESOLUTION NO. 34-01-06
IN RE: MOTION FOR RECONSIDERATION OF HACIENDA LUISITA INC. (HLI), REP. BY ITS CORPORATE SECRETARY, DATED JANUARY 2, 2006
PARC RESOLUTION NO. 2005-32-01, SERIES OF 2005, REVOKING/RECALLING TDC/HLI SDO PLAN
Submitted for resolution of the PARC Council is the Motion for Reconsideration dated January 02, 2006 of the Hacienda Luisita, Incorporated seeking the reconsideration of PARC Resolution No. 2005-32-01 revoking/recalling the TDC/HLI Stock Distribution Option Plan.
On 13 January 2006, the EXCOM VALIDATION COMMITTEE was reactivated to study, deliberate and submit its recommendation on the HLI Motion for Reconsideration.
After three (3) meetings, the EXCOM VALIDATION COMMITTEE finally arrived at a decision on the subject matter. The said Committee finally recommended the denial of the Motion for Reconsideration of the HLI.
The recommendation made in the form of a Resolution dated March 24, 2006 was submitted to the EXECUTIVE COMMITTEE and the latter Committee approved the Resolution on April 25, 2006. Of the 15 members present in the deliberation fourteen (14) voted for the denial and one member abstained. Three (3) members were absent despite due notice.
After full deliberation of the 16-page Resolution of the EXCOM VALIDATION COMMITTEE approved by the PARC ExCom, the Council hereby adopts the same as its own decision. CTSAaH
The Resolution reads as follows:
"RESOLUTION
"I. Antecedents and facts:
"Acting upon the separate petitions of the Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA) and the Supervisory Group of the HLI, dated December 4, 2003, and October 14, 2003, respectively, the Presidential Agrarian Reform Council (PARC) Executive Committee Chairman, DAR Secretary Nasser C. Pangandaman, after conducting ocular inspection, inquiries, meetings and investigation thereon, recommended the recall/revocation of the November 21, 1989 approval by PARC of the Tarlac Development Corporation (TDC)/Hacienda Luisita Inc., (HLI) Stock Distribution Plan (SDP) under its Resolution No. 89-12-2, simultaneously recommending the coverage and compulsory acquisition of the agricultural land involved under the Comprehensive Agrarian Reform Program (CARP) pursuant to Section 31 of Republic Act No. 6657. Submitted to the PARC Executive Committee (ExCom), the same was referred to a Validation Committee constituted by it.
"The PARC, in its 32nd Meeting on 20 December 2005, passed Resolution No. 2005-32-01 approving and confirming the recommendation of the PARC Executive Committee (PARC Excom) which adopted in toto the report of the PARC ExCom Validation Committee, to recall/revoke its approval of the TDC/HLI Stock Distribution Option (SDO) plan; and, further resolving to place the agricultural lands subject thereof under the compulsory land acquisition scheme of the CARP. On 02 January 2006, the HLI filed a Motion for Reconsideration. In a meeting of the PARC on January 13, 2006, the PARC Excom Validation Committee was re-activated and called upon to act thereon.
"For non-receipt of copies of the three (3) documents mentioned in subject PARC resolution (DAR ExCom Resolution, Report of the PARC Excom Validation Committee and the DAR Recommendation) HLI was allegedly constrained in instant motion to limit its arguments on the grounds cited by the separate petitioners (Motion, p. 2). However, despite actual receipt of copy of the requested documents, no further submission was made that this Disquisition will be constricted to the issues cited in the Motion and sequentially considered as prevented therein. And, though the issues raised in the Motion have substantially been put in issue already by HLI in its Comment on the separate petitions, considered and resolved by the PARC in the resolution now sought to be reconsidered, in the interest of the simple sense of justice, same will hereunder be again discussed and evaluated.
"II. Alleged errors/flawns, grounds cited:
"Supportive of its January 2, 2006 motion for reconsideration, HLI principally alleged
1. Lack of jurisdiction.
2. "Question on the validity of the SDOA is a judicial, not administrative function, and must be resolved only by the regular courts."
3. Absence of certificate of compliance does not confer upon the PARC jurisdiction over issues on the validity of the SDOA.
4. PARC approval of the SDOA with its initial implementation is legally deemed compliance with the requirements of the CARP. SaCDTA
5. PARC cannot change one modality to another once adopted and implemented.
6. Even assuming arguendo that the PARC and Secretary Pangandaman have such jurisdiction, power and/or authority, the SDOA, after sixteen (16) years from its execution in 1988 and 1989 and implementation thereof, can no longer be recalled, nullified, revoked or rescinded by the PARC and Secretary Pangandaman.
"III. EVALUATION/Disposition:
"1. On the jurisdiction of the PARC (DAR).
"HLI avers that neither Republic Act No. 6657 nor Executive Order 229 vests upon the PARC the jurisdiction, power and/or authority to nullify, cancel or resolve or rescind the Stock Distribution Option Agreement (SDOA) by and between the corporate landowner or corporation and the farmworkers on the stock distribution under Section 31 of RA 6657; that while the power to approve may include the power to disapprove, it does not include the power to recall or revoke the approval after the approved agreement has been performed or implemented by the parties thereto and, better still after sixteen (16) years from its execution by the parties and approval by PARC. Accordingly, if SDO is a voidable contract as claimed by AMBALA, Articles 1390 of the Civil Code provides that the annulment shall be done through a proper action in court and not in the administrative body like the PARC (Motion, p. 2 et seq.).
"Incidentally, the Department of Justice, in a Memorandum dated 27 October 2005 (Annex 1), opined that the PARC is vested with the jurisdiction to resolve complaints involving the revocation of SDO, and specifically the matter on the instant HLI SDO issue. Moreover, the law and rules applicable are categorical with respect to the authority of the PARC to approve the SDP (Sec. 10, E.O. 229, in conjunction with Sec. 31 (d), 2nd par., R.A. 6657 and Sec. 10 of DAR A.O. No. 10, s. of 1988) as well as to revoke the Certificate of Compliance, if already issued thereto, for non-compliance with the requirements (Sec. 12, ibid.). Further, the PARC can make its own independent evaluation and assessment of the stock distribution plan of the corporate landowner-applicant and in prescribing other requirements. SEIDAC
"Further, this Committee observes that there appears evidently a misappreciation by HLI of the subject of the recall/revocation resolution of PARC. What the challenged Resolution, now sought herein to be reconsidered, revoked/recalled was the approval itself of the Stock Distribution Plan (SDP) of the HLI and not, as HLI appears to comprehend (Motion, p. 4), the memorandum agreement (SDOA) that it entered into with the farmers (petitioners herein). Hence, the conclusion is unavoidable that the claim of HLI that subject PARC action was violative of substantive due process and of the non-impairment of the obligation of the contract clause, is misplaced. The PARC, or even DAR, in the performance of its official duties had no participation in the said SDOA as, in fact, was not even a party thereto. Put simply, the recall/revocation resolution relates to the approval of the SDP (not of the SDOA) of TDC/HLI pursuant to Section 31 of Republic Act No. 6657 under its Resolution No. 89-12-2. There was no intention whatsoever to interfere, disturb, change or alter said Memorandum of Agreement (usually referred to by HLI as SDOA).
"By and large, the rule is well accepted that where a general power is conferred or duty enjoined, every particular power necessary for the exercise of one or the performance of the other is also conferred (Angara vs. Electoral Commission, 63 Phils 139; Radiowealth, Inc. vs. Agregado, 96 Phils 429; People vs. Lakandula, G.R. No. 31103, July 20, 1983; etc.) Many instances may be cited depicting the exercise of such incidental powers or the performance of such acts as are necessary to make the power effective but of relevance herein is the case where it was declared that the power to approve a license was deemed to include, by implications, the power to revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which it is derived (Gordon vs. Veridiano, 167 SCRA 5). We then see no reason why the PARC be denied the authority to revoke a matter that, previously, it has approved.
"With more reason instant. The SDP of the HLI/TDC has not been fully approved and/or implemented yet as shown by the fact that the stipulated purpose of stock distribution is still on-going, per stipulation in the SDOA of HLI. Not every share of stock constituting the total equity of the farmers can be said as already accounted for and distributed, despite the alleged "acceleration". Precisely, to date DAR has not issued HLI the corresponding certificate of compliance contemplated under Section 11 of DAR Administrative Order No. 10, series of 1988, pertinently providing:
'Section 11. Implementation-Monitoring of Plan. — The approved stock distribution plan shall be implemented within three (3) months from receipt by the corporate landowner-applicant of the approval thereof by the PARC and the transfer of` the shares of stocks in the names of the qualified beneficiaries shall be recorded in the stock and transfer books and submitted to the Securities and Exchange Commission (SEC) within sixty (60) days from the said implementation of the stock distribution plan.
'Upon completion, the corporate landowner-applicant shall be issued a Certificate of Compliance. The Secretary of Agrarian Reform or his designated representatives shall strictly monitor the implementation to determine whether or not there has been compliance with the approved stock distribution plan as well as the requirements of the CARP. For this purpose, the corporate landowner-applicant shall make available its premises for ocular inspection, its personnel for interview, and its records for examination at normal business hours".
"Having found the SDP implementation to be not in consonance with the underlying policy of agrarian reform, that is, enhanced quality of life of the farmers (Sec. 2, Republic Act No. 6657), a recall of the approval of the still being implemented SDP of HLI/TDC would also appear in order.
"2. On the issue that validity of the SDOA is a judicial function to be discharged by the regular courts.
"HLI argues that "questions involving (interpolation, ours) the validity of the SDOA must thus be resolved by the regular courts and not by an administrative body like the PARC. For the resolution of the validity or voidness of the contracts remains a legal or judicial question as it requires the exercise of judicial function. It requires the ascertainment of what laws are applicable to the dispute, the interpretation and appreciation of those laws, and the rendering of a judgment based thereon." (Gonzales vs. Climax Mining Ltd., G.R. No. 161957, Feb. 28, 2005, 452 SCRA 607, 623.) "allegations of fraud and duress in the execution of a contract are matters within the jurisdiction of the ordinary courts of law. These questions are legal in nature and require the application of laws and jurisprudence which is necessarily a judicial function." (Ibid., at p. 624.) Indeed, "controversies or disagreements of civil or contractual nature between litigants which are questions of a judicial nature that may be adjudicated only by the courts of justice" (Motion, p. 6). TCDHIc
"The basic issue involved herein is the approval pursuant to Section 31 of Republic Act No. 6657 by the PARC of the SDP of TDC/HLI. Having been found thereafter to be not consistent with the rationale underlying said Section 31, conjunctively with the declared policy under Section 2 of the same law, PARC decided to have the approval revoked or recalled before further harm, damage and ridicule to the sincerity and integrity of the Comprehensive Agrarian Reform Program (CARP) is irretrievably compromised.
"The claim of HLI, therefore, is a discord. While its arguments centers on the contractual stipulations of the SDOA, subject herein is the administrative action of implementation of CARP that is the primary and exclusive responsibility of PARC, with the Department of Agrarian Reform (DAR) as its lead implementing agency. Discharging the said duty then by PARC should not have been put in issue. Being purely an administrative implementation of the CARP, judicial intervention will not, as a rule, be warranted.
"3. On the claim that PARC acquired jurisdiction due to absence of certificate of compliance.
"HLI argues that "the PARC's assumption of jurisdiction over the question on the validity of the SDOA is based on the fact that no Certificate of Compliance has yet been issued by the DAR up to the present. This Certificate is to be issued by DAR under Section 11 of DAR Administrative Order No. 10, series of 1988 . . . . There is nothing in this Administrative Order that confers jurisdiction upon the PARC to cancel or resolve, revoke, or nullify the SDOA or to have a continuing power to approve or disapprove the SDOA even after it has been executed or performed by the parties thereto. This is so because, as the Order itself describes it, it contains merely the "GUIDELINES AND PROCEDURES FOR CORPORATE LANDOWNERS DESIRING TO AVAIL THEMSELVES OF THE STOCK DISTRIBUTION PLAN UNDER SEC. 30 OF R.A. 6657 AND SUPERSEDING DEPARTMENT OF AGRARIAN REFORM ADMINISTRATIVE ORDER NO. 4' 87. For indeed, only a law (not guidelines, procedures or rules and regulations) can confer jurisdiction, particularly jurisdiction, power or authority to resolve questions on the validity of a contract or 'controversies or disagreements of civil or contractual nature between litigants which are questions of a judicial nature that may be adjudicated only by the courts of justice' (Motion, p. 6).
"Further, HLI declared that "'This stock distribution to the farmworkers-beneficiaries was accelerated that as of June 2004, or in only fifteen (15) years, instead of thirty (30) years as stipulated in the SDOA completely distributed all the shares of stock to its stockholders, including the farmworkers-beneficiaries.
"Thus, full and complete execution or performance of the obligations of TDC and HLI under the SDOA was made or done in 2004, yet the DAR has not yet up to now issue any certificate of completion. And what is more reprehensible is that the DAR and PARC are using DAR's failure to issue certificate of completion as a reason or ground to grant PARC jurisdiction, power or authority to recall or revoke or nullify, cancel or resolve, or rescind the SDOA, after it was completely executed or performed by the parties thereto. Did the DAR deliberately withhold to issue Certificate of Compliance and wait for TDC/HLI to (sic) fully and completely executed (sic) or performed (sic) their obligations under the SDOA and after such execution or performance, exercise PARC's supposed jurisdiction, power or authority to nullify, cancel or resolve, or rescind the SDOA? The provisions of the Civil Code discussed above simply do not allow this" (Motion, p. 8).
'PARC, by the foregoing, is now the respondent. Alleging deliberate withholding of the certificate of compliance, bad faith is inevitably ascribed to the PARC for utilizing ". . . DAR's failure to issue certificate of compliance as reason or ground to grant PARC jurisdiction, power or authority to recall, revoke or nullify, cancel or resolve, or rescind the SDOA, after it was completely executed or performed by the parties thereto . . .".
'This Committee finds the factual allegation not only misstated but also inaccurate. Assumptions have been made and conclusions, arrived at, despite the defects, as will be elucidated hereunder, of the premises. Firstly, there is no truth to the impression sought to be created by the HLI that the SDP has already been implemented only that DAR failed to issue the certificate of compliance. Rather, the SDP was stipulated by HLI to be completed in thirty (30) years and now is only the 15th/16th year. Secondly, the allegation that all of the shares of stock have already been distributed to the farmers, by way of acceleration, was only triggered by the filing of protest/complaints by the disillusioned farmers against the SDP of TDC/HLI. Thirdly, the farmers refused to accept the said stocks certificates as the contemplated/promised benefits to them was not realized due, inter alia, to the financial crisis being suffered, and admitted, by HLI. And fourthly, the competence of PARC to rescind/resolve the SDP of TDC/HLI is not based/derived from the non-issuance of certificate of compliance but on provisions of law and jurisprudence, as exemplified earlier.
"4. The initial implementation of the SDP was already compliance with the CARP.
"HLI argues that Section 10 of Executive Order No. 229, July 22, 1987 (providing the Mechanisms for the Implementation of CARP), which has Suppletory Application to RA 6657 pursuant to Section 75 thereof provides that, "the approval by the PARC of a plan for such stock distribution, and its initial implementation, shall be deemed compliance with the land distribution requirements of the CARP."
"The provision cited refers to a predecessor law on the matter and Section 31 of Republic Act No. 6657 has deleted/omitted the word "initial" and, in lieu thereof provided:
'Sec. 31. Corporate landowner. — . . .
'Corporations or associations which voluntarily divest a proportion of their capital stock equity or participation in favor of their workers or other qualified beneficiaries under this section shall be deemed to have complied with the provisions of this Act . . . " (underscoring and emphasis added).
"The deletion of the qualifying term "initial" from the abovequoted provision of law is a silent but clear indicium of the legislative intent to prefer consummated/perfected implementation rather than mere "initial". The law, as it is now worded, contemplates of final "divestment" of "a portion of their capital stock equity or participation in favor of their workers". TDC/HLI's SDP, however, stipulates that its SDP will fully materialize only in thirty (30) years, thus, practically suspended the "compliance". The attempt to fully execute it, after the complaints/petitions have been filed against it, coupled by the refusal manifested by the farmer beneficiaries to accept the remaining stocks certificates, are believed to have effectively prevented it from the contemplated "compliance with the CARP". Section 31 of Republic Act No. 6657 has not made any distinction that to still incorporate therein the word "initial" or ascribed it such signification is virtual legislation by interpretation which should not be countenanced.
"5. On the change of modality (stock distribution to land distribution and vice versa)
"HLI argues that "Once a particular modality of agrarian reform has been adopted and implemented, the same cannot be changed by the PARC and/or DAR., i.g. (sic) from stock distribution to land distribution, or vice versa. Thus, a tenant who has been awarded his landholding cannot, after the tenant has reaped the benefits thereof and after the landowner has been fully paid by the Land Bank of the Philippines for the compensation thereof, return (nor PARC can order the return or change of the modality) the landholding to the landowner and demand his acquisition of shares of stock in the corporate landowner which, by that time, had already been dissolved because it has more land to plant sugar cane enough to meet its domestic and international sugar supply commitments" (Motion p. 8).
'It is thus most unfair and unjust for the PARC to now recall, revoke, nullify and rescind the SDOA and order the shift of agrarian reform modality from stock distribution to land distribution after the parties thereto have fully and completely complied with the terms and conditions thereof and after the parties have fully and completely executed and performed their respective obligations under it — simply because the DAR withholds the issuance or fails to issue a certificate of compliance" (Motion, p. 9).
'There is no gainsaying to the fact, as the Committee views it, that availment of SDO was an exception to the general concept of agrarian reform, in lieu of land distribution. In fact, it was a peculiarity under the CARP as the option was limited only for a period of two (2) years from effectivity of Republic Act No. 6657, i.e., June 15, 1988. It takes effect only upon completion of the requirements prescribed and there could be no reversion. In contradistinction, there was herein no full implementation of the SDP and, in the process, violations or non-compliance with the warranties/assurances under Section 31 of Republic Act No. 6657 and DAR A.O. No. 10, mentioned earlier, surfaced rendering thereby ineffectual the approved SDP of TDC/HLI. Besides, there is no truth to the claim that "the parties thereto have fully and completely complied with the terms and conditions thereof." The fact is, HLI failed, especially in the realization of the expected benefits/income to the farmers which were boasted as better than what they will earn if the land itself were distributed to them. aTADCE
'In the implementation of the CARP, PARC undoubtedly has the full administrative direction as to the ways and means to realize it. Vested rights may be a limitation but they come about only with respect to consummated transactions. Not herein. The parties, particularly the HLI (TDC), have yet to perform what is respectively expected of them. And it was for this reason that DAR has not, to date, issued movant HLI the corresponding certificate of compliance as to remove it from the sphere of CARP implementation.
"6. On the alleged violation of the constitution (due process and non-impairment of obligation and contract) and of the law as there was no mention of the law under which such revocation or cancellation shall be done. And allegedly, it can only be done under any of the modes provided under the New Civil Code which HLI has enumerated in the Motion.
"On the alleged violations of the Constitution, HLI argues:
'(1) The PARC Resolution herein sought to be reconsidered is violative of the due process clause of the Court (sic), both procedural and substantive, as it deprives HLI of its agricultural land without due process of law (see Sec. 1, Art. III of the 1987 Constitution [Bill of Rights]). Said agricultural land is owned by HLI which has a separate personality from its stockholders, TDC and farmworker beneficiaries themselves. The traking (sic) of its property without hearing and compensation is a denial of the due process clause.
'(2) And, although HLI was required to answer the aforesaid petitions, the same answers were not considered by the PARC in its aforesaid Resolution and, worse, HLI was not given the opportunity to present its evidence in support of its said answers.
'(3) The resolution sought to be reconsidered herein is a form of a board resolution of the Municipal or City Councils and corporations and, therefore, partakes the nature of a regulation which cannot, under our Constitution, Sec. 10, Art. III (Bill of Rights), impair the obligation of contracts.
'(4) The Resolution sought to be reconsidered also deprives HLI the right to due process. As ruled in Ang Tibay vs. Court of Industrial Relations, No. 46496, Feb. 127, 1940, 69 Phil. 635, 641-644), there are Cardinal Primary Rights that are to be respected even in administrative proceedings, . . . (Motion, pp. 9-10)
"The Committee generally finds untenable the foregoing. Please take note that there is yet no "taking" of property as to set into motion the right of the owner (herein, HLI/TDC) to just compensation. It will take effect only upon "acquisition" by DAR pursuant to Section 16 of Republic Act No. 6657 for redistribution thereof to the identified farmer beneficiaries and, thereunder, it is expressly provided that just compensation be paid the dispossessed landowner. Substantive due process cannot then, at this stage, be offended.
"On the procedural aspect, there was no violation of due process. The parties were heard and there was opportunity afforded to the parties to present evidence and argue their cases. Generally stated, the essence of due process is simply to be heard, as applied to administrative proceeding, an opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained of (cf. Arboleda vs. NLRC, 303 SCRA 38; Libres vs. NLRC, 307 SCRA 675; Audion Electric Co., Inc., vs. NLRC, 308 SCRA 340; Trinidad vs. Comelec, 315 SCRA 175). Having availed of the opportunity, the parties, especially movant HLI, should not now be heard arguing non-observance of due process. It does not require trial-type proceeding similar to those in the courts of justice (University of the Philippines Board of Regents vs. Court of Appeals, 313 SCRA 404; Melendres Jr. vs. Comelec, 319 SCRA 262). A party, through its pleadings (cf. Trinidad vs. Comelec, 315 SCRA 175) wherein it is supposed to attach all the documents that will prove his claim, is already heard.
"Parenthetically, the proceedings before the PARC was not legislative in nature as to involve the constitutional safeguard against impairment of obligation and contracts. Besides, insofar as PARC's approval of the SDP subject hereof is concerned, no contract was entered into or obligation assumed that will directly be adversely affected.
"Be that as it may, this Committee, is constrained to consider the lengthy disquisition of HLI (Motion, pp. 10-31, inclusive), on the merits as off-tangent and, accordingly, inconsequential. Threshed out therein were the alleged grounds of the separate petitions, as HLI assessed them. But while focusing thereon, HLI unwittingly failed to assail the grounds cited by PARC in the recall or revocation of its approval of the TDC/HLI SDP. At the expense of being repetitive, the bases therefor are the following, stated in pages 10 to 13 of the PARC-ExCom Validation Committee Resolution dated 12 December 2005, to wit: aHTcDA
The implementation of the HLI/TDC Stock Distribution Plan and of the accompanying Memorandum of Agreement, as well as the Plan and MOA itself, failed to comply with and did not conform to the conditions and requirements of the law, rules, and public policy —
First, HLI's implementation of the distribution of the mandatory minimum ratio of land-to-shares of stock to the ARBs was based on man days, within its policy of no-work no-shares of stock, and not to equal number of shares depending upon their rightful share, as required in the rules, and therefore practically divested the ARBs, as to their qualification/entitlement, as ARBs at HLI's whims, to their disadvantage and prejudice in the form of diminution in the minimum ratio of shares. Having increased to a great extent the number of workers (contractual), the equity share of each permanent employee, as of 1989, naturally had to be, as in fact, reduced.
Further and more importantly, HLI took upon itself, or usurped, the duty or mandate of DAR to qualify the recipient ARBs and imposed its own criteria and discretion in the allocation of the mandatory minimum ratio of land-to-shares of stock by basing the distribution on the number of days worked. Still worse, HLI made allocation to recipients who are not in the ARBs original masterlist as admittedly, it distributed to about 11,955 stockholders of record 59,362,611 shares representing the second half of the total number of shares earmarked for distribution, when in fact there were only 6,296 farm workers or less, at the time when the land was placed under CARP under the SDP/SDO scheme.
Second, the transfer of the mandatory minimum ratio of land-to-shares of stock was not done during the prescribed period ordained by the law and rules. HLI failed to effect on time the complete transfer of the mandated minimum ratio of land-to-shares of stock to the FWBs as required by law, which shares of stock refer to the proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the corporation's total assets (Sec. 31, par. 2, R.A. 6657 in relation to Sec. 3 of A.O. 10, s. 1988). This portion of the outstanding capital stock of the corporation, as identified, relates to the 33.2967%, or 118,391,976.85 shares of stock, with par value of P1.00 each, of the minimum ratio of land-to-shares of stock of the total outstanding capital stock of HLI which the corporation should have transferred in full and at no cost to the FWBs, or the distribution thereof realized, within two (2) years from the approval of R.A. 6657 [Sec. 31 (d) 2nd par.], or should have been implemented within 3 months from receipt by the corporate landowner-applicant of the approval of the SDP by the PARC, and that the transfer of shares of stock in the names of the qualified beneficiaries should have been recorded in the stock transfer books and submitted to the Securities and Exchange Commission (SEC) within sixty (60) days from the implementation of SDP (Sec. 11, A.O. 10, s. 1988). What actually transpired was a deferment for thirty years before there is full stock distribution and till then, the APBs remained farmworkers and not stockholders. And the attempt to distribute the balance after only 16 years, which however, was rejected for loss of interest as explained elsewhere, is more of an admission of the initial, but fatal error of TDC/HLI's SDP that was submitted and approved by PARC in 1989.
Third, through more than a decade of purported implementation of the SDP-MOA, HLI could not fully account for, and failed to clearly delineate, its full and complete compliance with the following distinct obligations, it assumed, to the FWBs, to wit:
a. As per SDP and MOA — the guaranteed three percent (3) of gross sales every year, which benefit is supposed to be an additional corporate augmenting benefit.
b. Dividends from the retained earnings or profits of the corporation that the law requires to be payable to stockholders. The FWBs are stockholders or shareholders of the corporation, specifically with reference to the mandated land-to-shares of stock minimum ratio under the SDO scheme. The beneficiaries are, and should have been entitled to, dividends and other financial benefits [Sec. 31 (a), ibid.].
c. The production shares equivalent to 3% of the gross sales from the production of the lands and the profit shares equivalent to ten percent (10%) of the net profit after tax, which are both statutory benefits and should have been distributed to the FWBs pending the completion of the transfer of the mandatory minimum ratio of land-to-shares of stock (analogous to land transfer under Sec. 32 of R.A. 6657 in conjunction with Sec. 13, ibid.).
Fourth, HLI and TDC committed to keep, "the agricultural land intact and unfragmented, to maintain the viability of the sugar operation involving the farm as a single unit and thus warrant to the acknowledged farmworker-beneficiaries, hand-in-hand with their acquisitions of the shares of the capital stock of the corporation owning the land, a continuing and stable source of income."
Fifth, the FWBs lamented that their economic condition has become onerous and has miserably deteriorated. HLI avers that it has not been earning for the last several years. This is unfortunate because then the approved SDP undoubtedly failed to satisfy one of the essential criteria requisite to SDO acceptance — that the plan for stock distribution to qualified beneficiaries would result in increased income and greater benefits to them, than if the lands were divided and distributed to them individually or collectively.
"IV. Recommendation:
"In fine, the SDP of HLI/TDC, instead of enhancing/improving the socio-economic status of the farmers (Sec. 2, Republic Act No. 6657), made their lives, after sixteen (16) year of implementation, miserable. The SDP was a failure even before it was fully implemented. More specifically:
1. Despite assurance of potential growth and increased profitability [(Sec. 5 (a), DAR A.O. 10, series of 1988], HLI now admits the difficulty due to financial reverses. Resultantly, the guaranteed dividends, the three per centum (3%) annual gross sales and other income-augmenting or benefit-improving corporate schemes, which could have better-off the farmers than under the scheme of direct distribution of the land to them, remained elusive.
2. The condition of non-fragmentation of the agricultural land involved in the production to maintain the viability of the agricultural (supra) production of the corporation (herein, the HLI) involving the farm as a single unit was not observed. HLI has already caused the segregation therefrom of a substantial portion, with further plans still towards non-agricultural purposes, all to the loss and prejudice of the intended greater agricultural production under the CARP.
3. After 16 years of implementation, the recipients so far of the distributed shares of stock have yet to receive the benefits of a stockholder and not as mere farmworkers. And if they do, as claimed with respect to the 3% of the purchase price of the segregated portion (500 hectares) from subject agricultural landholding, it was only on top of their regular pay. Thus, if one is not anymore employed, for one reason or another, the farmer will not receive any.
4. As more new workers are hired, throughout the suspended period of 30 years, the lesser be the entitlement of the original farmer beneficiaries considering the policy of HLI under its SDP that the share is determined by the actual day's work, proportionately computed.
5. Subject SDP of TDC/HLI has withdrawn from DAR its basic responsibility in the implementation of the CARP of determining the farmers to be benefited. [Sec. 16 (a), Rep. Act No. 6657], thus removed it from the avowed context of CARP. Though indirect, it was effective. The original farmers, under the man-days scheme of stock distribution can still be denied entitlement to a share of stock by just not allowing him to work. In effect, the matter of distribution of shares of stock was made totally dependent on the discretion of HLI management, for, by the simple expediency of denying employment, one will never qualify to receive a share irrespective of whether or not he is an original, regular and/or permanent worker.
6. Under the direct land distribution scheme, the farmer beneficiaries become forthwith landowners upon the acquisition and redistribution by DAR [(Section 16 (D), Rep. Act No. 6657] while under the SDP of TDC/HLI, subject hereof, all the workers will become stockholders only after thirty years, i.e., if HLI still exists as an agricultural (sugar) corporation with its agricultural land component intact. The setup is basically incongruous with Section 11 of DAR A.O. No. 10, series of 1988.
"We recommend denial of the Motion for Reconsideration.
"March 24, 2006. aHDTAI
(SGD.) Usec. ERNESTO L. PINEDA
DOJ
Chairman
(SGD.) Mr. JAIME S.L. TADEO
PSR-FB Sector
with dissenting opinion
(SGD.) Atty. EDUARDO F. HERNANDEZ
PSR-LO Sector
(SGD.) Atty. RAMON K. CERVANTES
LBP
on leave
Atty. ROLAND A. TULAY
DA
(SGD.) Dir. ANA C. DIONE
DOLE-BRW
(SGD.) Adm. RODOLFO M. CAÑEDA
CDA
(SGD.) Atty. CARLO D. SULAY
OP-OES
(SGD.) A/Sec. DELFIN B. SAMSON
DAR-PPLAO"
WHEREFORE, the Council adopts in toto the aforequoted Resolution as its own decision on the Motion for Reconsideration dated January 02, 2006 filed by the Hacienda Luisita, Incorporated.
Promulgated on May 03, 2006.
did not take part
OIC-SEC. NASSER C. PANGANDAMAN
DAR
Chairman
SEC. RAUL M. GONZALES
DOJ
By:
(SGD.) USEC. ERNESTO PINEDA
SEC. DOMINGO F. PANGANIBAN
DA
By:
(SGD.) ASEC. FELIX MONTES
SEC. ANGELO T. REYES
DENR
By:
(SGD.) DIR. ROMEO ACOSTA
SEC. MARGARITO B. TEVES
DOF
By:
(SGD.) DIR. MA. LOURDES DEDAL
SEC. HERMOGENES E. EBDANE, JR.
DPWH
By:
(SGD.) ENGR. ERNESTO S. GREGORIO, JR
OIC-PRES. GILDA E. PICO
LBP
By:
(SGD.) ATTY. RAMON K. CERVANTES
abstention
SEC. PETER B. FAVILA
DTI
By:
(SGD.) MR. MANUEL ABAD
absent
SEC. ROLANDO G. ANDAYA
DBM
By:
DIR. NORA OLIVEROS
SEC. ROMULO L. NERI
NEDA
By:
(SGD.) OIC-ASST. DIR. SHEILA MARIE ENCABO
SEC. PATRICIA A. STO. TOMAS
DOLE
By:
(SGD.) ATTY. GERARDO SADSAD
ADMIN. BALTAZAR H. USIS
NIA
By:
(SGD.) ENGR. REYNALDO C. ADAO
non-voting member
GOV. ZALDY AMPATUAN
ARMM
By:
SEC. ALLEN H. USMAN
EXEC. SEC. EDUARDO I. ERMITA
OP-OES
By:
(SGD.) DIR. NOLIVIENNE ERMITAÑO
SEC. RONALDO PUNO
DILG
By:
(SGD.) ASST. DIR. LEOCADIO TROVELA
(SGD.) MS. MARITA V. ALEJANDRINO
PSR-LO Sector
absent
MR. EDUARDO F. HERNANDEZ
PSR-LO Sector
(SGD.) MR. JAIME S.L. TADEO
PSR-FB Sector
(SGD.) MR. BENJAMIN CUNANAN
PSR-FB Sector
(SGD.) MR. BASILIO PROPONGO
PSR-FB Sector
(SGD.) MR. ROMULO C. TAPAYAN
PSR-FB Sector