8epubllc of Lhe hlllpplnes

SUkLML CCUk1
Manlla

SLCCnu ulvlSlCn
C8 no 100113 SepLember 3 1991
kLNA1C CAL1ANC pet|t|oner
vs
CnkIS1IAN MCNSCD nCN ICVI1C k SALCNGA CCMMISSICN CN ACIN1MLN1 and nCN
GUILLLkMC CAkAGUL |n h|s capac|ty as Secretary of 8udget and Management respondents
8enaLo L CayeLano for and ln hls own behalf
Sablna L AcuL !r and Mylene CarclaAlbano cocounsel for peLlLloner
A8AS !p
We are faced here wlLh a conLroversy of farreachlng proporLlons Whlle osLenslbly only legal
lssues are lnvolved Lhe CourLs declslon ln Lhls case would lndublLably have a profound effecL
on Lhe pollLlcal aspecL of our naLlonal exlsLence
1he 1987 ConsLlLuLlon provldes ln SecLlon 1 (1) ArLlcle lxC
1here shall be a Commlsslon on LlecLlons composed of a Chalrman and slx Commlssloners who
shall be naLuralborn clLlzens of Lhe hlllpplnes and aL Lhe Llme of Lhelr appolnLmenL aL leasL
LhlrLyflve years of age holders of a college degree and musL noL have been candldaLes for any
elecLlve poslLlon ln Lhe lmmedlaLely precedlng elecLlons Powever a ma[orlLy Lhereof
lncludlng Lhe Chalrman shall be members of Lhe hlllpplne 8ar who have been engaged ln Lhe
pracLlce of law for aL leasL Len years (Lmphasls supplled
1he aforequoLed provlslon ls paLLerned afLer SecLlon l(l) ArLlcle xllC of Lhe 1973 ConsLlLuLlon
whlch slmllarly provldes
1here shall be an lndependenL Commlsslon on LlecLlons composed of a Chalrman and elghL
Commlssloners who shall be naLuralborn clLlzens of Lhe hlllpplnes and aL Lhe Llme of Lhelr
appolnLmenL aL leasL LhlrLyflve years of age and holders of a college degree Powever a
ma[orlLy Lhereof lncludlng Lhe Chalrman shall be members of Lhe hlllpplne 8ar who have
been engaged ln Lhe pracLlce of law for aL leasL Len years (Lmphasls supplled)
8egreLLably however Lhere seems Lo be no [urlsprudence as Lo whaL consLlLuLes pracLlce of
law as a legal quallflcaLlon Lo an appolnLlve offlce
8lack deflnes pracLlce of law as
1he rend|t|on of serv|ces requ|r|ng the know|edge and the app||cat|on of |ega| pr|nc|p|es and
techn|que to serve the |nterest of another w|th h|s consent It |s not ||m|ted to appear|ng |n
court or adv|s|ng and ass|st|ng |n the conduct of ||t|gat|on but embraces the preparat|on of
p|ead|ngs and other papers |nc|dent to act|ons and spec|a| proceed|ngs conveyanc|ng the
preparat|on of |ega| |nstruments of a|| k|nds and the g|v|ng of a|| |ega| adv|ce to c||ents lL
embraces all advlce Lo cllenLs and all acLlons Laken for Lhem ln maLLers connecLed wlLh Lhe law
An aLLorney engages ln Lhe pracLlce of law by malnLalnlng an offlce where he ls held ouL Lo be
an aLLorney uslng a leLLerhead descrlblng hlmself as an aLLorney counsellng cllenLs ln legal
maLLers negoLlaLlng wlLh opposlng counsel abouL pendlng llLlgaLlon and flxlng and collecLlng
fees for servlces rendered by hls assoclaLe (8lacks Law ulcLlonary 3rd ed)
1he pracLlce of law ls noL llmlLed Lo Lhe conducL of cases ln courL (Land 1lLle AbsLracL and 1rusL
Co v uworken 129 Chlo SL 23 193 nL 630) A person ls also consldered Lo be ln Lhe pracLlce
of law when he
for valuable conslderaLlon engages ln Lhe buslness of advlslng person flrms assoclaLlons or
corporaLlons as Lo Lhelr rlghLs under Lhe law or appears ln a represenLaLlve capaclLy as an
advocaLe ln proceedlngs pendlng or prospecLlve before any courL commlssloner referee
board body commlLLee or commlsslon consLlLuLed by law or auLhorlzed Lo seLLle
conLroversles and Lhere ln such represenLaLlve capaclLy performs any acL or acLs for Lhe
purpose of obLalnlng or defendlng Lhe rlghLs of Lhelr cllenLs under Lhe law CLherwlse sLaLed
one who ln a represenLaLlve capaclLy engages ln Lhe buslness of advlslng cllenLs as Lo Lhelr
rlghLs under Lhe law or whlle so engaged performs any acL or acLs elLher ln courL or ouLslde of
courL for LhaL purpose ls engaged ln Lhe pracLlce of law (SLaLe ex rel McklLLrlck vCS uudley
and Co 102 SW 2d 893 340 Mo 832)
1hls CourL ln Lhe case of hlllpplne Lawyers AssoclaLlon vAgrava (103 hll 173176177)
sLaLed
1he pracLlce of law ls noL llmlLed Lo Lhe conducL of cases or llLlgaLlon ln courL lL embraces Lhe
preparaLlon of pleadlngs and oLher papers lncldenL Lo acLlons and speclal proceedlngs Lhe
managemenL of such acLlons and proceedlngs on behalf of cllenLs before [udges and courLs and
ln addlLlon conveylng ln general all advlce Lo cllenLs and all acLlon Laken for Lhem ln maLLers
connecLed wlLh Lhe law lncorporaLlon servlces assessmenL and condemnaLlon servlces
conLemplaLlng an appearance before a [udlclal body Lhe foreclosure of a morLgage
enforcemenL of a credlLors clalm ln bankrupLcy and lnsolvency proceedlngs and conducLlng
proceedlngs ln aLLachmenL and ln maLLers of esLaLe and guardlanshlp have been held Lo
consLlLuLe law pracLlce as do Lhe preparaLlon and drafLlng of legal lnsLrumenLs where Lhe work
done lnvolves Lhe deLermlnaLlon by Lhe Lralned legal mlnd of Lhe legal effecL of facLs and
condlLlons (3 Am !r p 262 263) (Lmphasls supplled)
racLlce of law under modem condlLlons conslsLs ln no small parL of work performed ouLslde of
any courL and havlng no lmmedlaLe relaLlon Lo proceedlngs ln courL lL embraces conveyanclng
Lhe glvlng of legal advlce on a large varleLy of sub[ecLs and Lhe preparaLlon and execuLlon of
legal lnsLrumenLs coverlng an exLenslve fleld of buslness and LrusL relaLlons and oLher affalrs
AlLhough Lhese LransacLlons may have no dlrecL connecLlon wlLh courL proceedlngs Lhey are
always sub[ecL Lo become lnvolved ln llLlgaLlon 1hey requlre ln many aspecLs a hlgh degree of
legal sklll a wlde experlence wlLh men and affalrs and greaL capaclLy for adapLaLlon Lo dlfflculL
and complex slLuaLlons 1hese cusLomary funcLlons of an aLLorney or counselor aL law bear an
lnLlmaLe relaLlon Lo Lhe admlnlsLraLlon of [usLlce by Lhe courLs no valld dlsLlncLlon so far as
concerns Lhe quesLlon seL forLh ln Lhe order can be drawn beLween LhaL parL of Lhe work of Lhe
lawyer whlch lnvolves appearance ln courL and LhaL parL whlch lnvolves advlce and drafLlng of
lnsLrumenLs ln hls offlce lL ls of lmporLance Lo Lhe welfare of Lhe publlc LhaL Lhese manlfold
cusLomary funcLlons be performed by persons possessed of adequaLe learnlng and sklll of
sound moral characLer and acLlng aL all Llmes under Lhe heavy LrusL obllgaLlons Lo cllenLs whlch
resLs upon all aLLorneys (Moran CommenLs on Lhe 8ules of CourL vol 3 1933 ed p 663
666 clLlng ln re Cplnlon of Lhe !usLlces Mass 194 nL 313 quoLed ln 8hode ls 8ar Assoc v
AuLomoblle Servlce Assoc 8l 179 A 139144) (Lmphasls ours)
1he unlverslLy of Lhe hlllpplnes Law CenLer ln conducLlng orlenLaLlon brleflng for new lawyers
(19741973) llsLed Lhe dlmenslons of Lhe pracLlce of law ln even broader Lerms as advocacy
counselllng and publlc servlce
Cne may be a pracLlclng aLLorney ln followlng any llne of employmenL ln Lhe professlon lf whaL
he does exacLs knowledge of Lhe law and ls of a klnd usual for aLLorneys engaglng ln Lhe acLlve
pracLlce of Lhelr professlon and he follows some one or more llnes of employmenL such as Lhls
he ls a pracLlclng aLLorney aL law wlLhln Lhe meanlng of Lhe sLaLuLe (8arr v Cardell 133 nW
312)
racLlce of law means any acLlvlLy ln or ouL of courL whlch requlres Lhe appllcaLlon of law
legal procedure knowledge Lralnlng and experlence 1o engage ln Lhe pracLlce of law ls Lo
perform Lhose acLs whlch are characLerlsLlcs of Lhe professlon Cenerally Lo pracLlce law ls Lo
glve noLlce or render any klnd of servlce whlch devlce or servlce requlres Lhe use ln any degree
of legal knowledge or sklll (111 AL8 23)
1he followlng records of Lhe 1986 ConsLlLuLlonal Commlsslon show LhaL lL has adopLed a llberal
lnLerpreLaLlon of Lhe Lerm pracLlce of law
M8 lCZ 8efore we suspend Lhe sesslon may l make a manlfesLaLlon whlch l forgoL Lo do
durlng our revlew of Lhe provlslons on Lhe Commlsslon on AudlL May l be allowed Lo make a
very brlef sLaLemenL?
1PL 8LSlulnC ClllCL8 (Mr !amlr)
1he Commlssloner wlll please proceed
M8 lCZ 1hls has Lo do wlLh Lhe quallflcaLlons of Lhe members of Lhe Commlsslon on AudlL
Among oLhers Lhe quallflcaLlons provlded for by SecLlon l ls LhaL 1hey musL be Members of
Lhe hlllpplne 8ar l am quoLlng from Lhe provlslon who have been engaged ln Lhe
pracLlce of law for aL leasL Len years
1o avold any mlsundersLandlng whlch would resulL ln excludlng members of Lhe 8ar who are
now employed ln Lhe CCA or Commlsslon on AudlL we would llke Lo make Lhe clarlflcaLlon LhaL
Lhls provlslon on quallflcaLlons regardlng members of Lhe 8ar does noL necessarlly refer or
lnvolve acLual pracLlce of law ouLslde Lhe CCA We have Lo lnLerpreL Lhls Lo mean LhaL as long as
Lhe lawyers who are employed ln Lhe CCA are uslng Lhelr legal knowledge or legal LalenL ln Lhelr
respecLlve work wlLhln CCA Lhen Lhey are quallfled Lo be consldered for appolnLmenL as
members or commlssloners even chalrman of Lhe Commlsslon on AudlL
1hls has been dlscussed by Lhe CommlLLee on ConsLlLuLlonal Commlsslons and Agencles and we
deem lL lmporLanL Lo Lake lL up on Lhe floor so LhaL Lhls lnLerpreLaLlon may be made avallable
whenever Lhls provlslon on Lhe quallflcaLlons as regards members of Lhe hlllpplne 8ar
engaglng ln Lhe pracLlce of law for aL leasL Len years ls Laken up
M8 CLL Wlll Commlssloner loz yleld Lo [usL one quesLlon
M8 lCZ ?es Mr resldlng Cfflcer
M8 CLL ls he ln effecL saylng LhaL servlce ln Lhe CCA by a lawyer ls equlvalenL Lo Lhe
requlremenL of a law pracLlce LhaL ls seL forLh ln Lhe ArLlcle on Lhe Commlsslon on AudlL?
M8 lCZ We musL conslder Lhe facL LhaL Lhe work of CCA alLhough lL ls audlLlng wlll
necessarlly lnvolve legal work lL wlll lnvolve legal work And Lherefore lawyers who are
employed ln CCA now would have Lhe necessary quallflcaLlons ln accordance wlLh Lhe rovlslon
on quallflcaLlons under our provlslons on Lhe Commlsslon on AudlL And Lherefore Lhe answer
ls yes
M8 CLL ?es So LhaL Lhe consLrucLlon glven Lo Lhls ls LhaL Lhls ls equlvalenL Lo Lhe pracLlce of
law
M8 lCZ ?es Mr resldlng Cfflcer
M8 CLL 1hank you
( Lmphasls supplled)
SecLlon 1(1) ArLlcle lxu of Lhe 1987 ConsLlLuLlon provldes among oLhers LhaL Lhe Chalrman
and Lwo Commlssloners of Lhe Commlsslon on AudlL (CCA) should elLher be cerLlfled publlc
accounLanLs wlLh noL less Lhan Len years of audlLlng pracLlce or members of Lhe hlllpplne 8ar
who have been engaged ln Lhe pracLlce of law for aL leasL Len years (emphasls supplled)
Corollary Lo Lhls ls Lhe Lerm prlvaLe pracLlLloner and whlch ls ln many ways synonymous wlLh
Lhe word lawyer 1oday alLhough many lawyers do noL engage ln prlvaLe pracLlce lL ls sLlll a
facL LhaL Lhe ma[orlLy of lawyers are prlvaLe pracLlLloners (Cary Munneke CpporLunlLles ln Law
Careers vCM Career Porlzons llllnols 1986 p 13)
AL Lhls polnL lL mlghL be helpful Lo deflne prlvaLe pracLlce 1he Lerm as commonly undersLood
means an lndlvldual or organlzaLlon engaged ln Lhe buslness of dellverlng legal servlces
(lbld) Lawyers who pracLlce alone are ofLen called sole pracLlLloners Croups of lawyers are
called flrms 1he flrm ls usually a parLnershlp and members of Lhe flrm are Lhe parLners Some
flrms may be organlzed as professlonal corporaLlons and Lhe members called shareholders ln
elLher case Lhe members of Lhe flrm are Lhe experlenced aLLorneys ln mosL flrms Lhere are
younger or more lnexperlenced salarled aLLorneyscalled assoclaLes (lbld)
1he LesL LhaL deflnes law pracLlce by looklng Lo LradlLlonal areas of law pracLlce ls essenLlally
LauLologous unhelpful deflnlng Lhe pracLlce of law as LhaL whlch lawyers do (Charles W
Wolfram Modern Legal LLhlcs WesL ubllshlng Co MlnnesoLa 1986 p 393) 1he pracLlce of
law ls deflned as Lhe performance of any acLs ln or ouL of courL commonly undersLood Lo
be Lhe pracLlce of law (SLaLe 8ar Assn v ConnecLlcuL 8ank 1rusL Co 143 Conn 222 140
A2d 863 870 1938 quoLlng Crlevance Comm v ayne 128 Conn 323 22 A2d 623 626
1941) 8ecause lawyers perform almosL every funcLlon known ln Lhe commerclal and
governmenLal realm such a deflnlLlon would obvlously be Loo global Lo be workable(Wolfram
op clL)
1he appearance of a lawyer ln llLlgaLlon ln behalf of a cllenL ls aL once Lhe mosL publlcly famlllar
role for lawyers as well as an uncommon role for Lhe average lawyer MosL lawyers spend llLLle
Llme ln courLrooms and a large percenLage spend Lhelr enLlre pracLlce wlLhouL llLlgaLlng a case
(lbld p 393) noneLheless many lawyers do conLlnue Lo llLlgaLe and Lhe llLlgaLlng lawyers role
colors much of boLh Lhe publlc lmage and Lhe self percepLlon of Lhe legal professlon (lbld)
ln Lhls regard Lhus Lhe domlnance of llLlgaLlon ln Lhe publlc mlnd reflecLs hlsLory noL reallLy
(lbld) Why ls Lhls so? 8ecall LhaL Lhe laLe Alexander SyClp a corporaLe lawyer once arLlculaLed
on Lhe lmporLance of a lawyer as a buslness counselor ln Lhls wlse Lven Loday Lhere are sLlll
unlnformed laymen whose concepL of an aLLorney ls one who prlnclpally Lrles cases before Lhe
courLs 1he members of Lhe bench and bar and Lhe lnformed laymen such as buslnessmen
know LhaL ln mosL developed socleLles Loday subsLanLlally more legal work ls LransacLed ln law
offlces Lhan ln Lhe courLrooms Ceneral pracLlLloners of law who do boLh llLlgaLlon and non
llLlgaLlon work also know LhaL ln mosL cases Lhey flnd Lhemselves spendlng more Llme dolng
whaL ls loosely desccrlbed as buslness counsellng Lhan ln Lrylng cases 1he buslness lawyer
has been descrlbed as Lhe planner Lhe dlagnosLlclan and Lhe Lrlal lawyer Lhe surgeon lL need
noL be sLressed LhaL ln law as ln medlclne surgery should be avolded where lnLernal
medlclne can be effecLlve (8uslness SLar CorporaLe llnance Law !an 11 1989 p 4)
ln Lhe course of a worklng day Lhe average general pracLlLloner wlg engage ln a number of legal
Lasks each lnvolvlng dlfferenL legal docLrlnes legal skllls legal processes legal lnsLlLuLlons
cllenLs and oLher lnLeresLed parLles Lven Lhe lncreaslng numbers of lawyers ln speclallzed
pracLlce wlg usually perform aL leasL some legal servlces ouLslde Lhelr speclalLy And even
wlLhln a narrow speclalLy such as Lax pracLlce a lawyer wlll shlfL from one legal Lask or role such
as advlceglvlng Lo an lmporLanLly dlfferenL one such as represenLlng a cllenL before an
admlnlsLraLlve agency (Wolfram supra p 687)
8y no means wlll mosL of Lhls work lnvolve llLlgaLlon unless Lhe lawyer ls one of Lhe relaLlvely
rare Lypes a llLlgaLor who speclallzes ln Lhls work Lo Lhe excluslon of much else lnsLead Lhe
work wlll requlre Lhe lawyer Lo have masLered Lhe full range of LradlLlonal lawyer skllls of cllenL
counselllng advlceglvlng documenL drafLlng and negoLlaLlon And lncreaslngly lawyers flnd
LhaL Lhe new skllls of evaluaLlon and medlaLlon are boLh effecLlve for many cllenLs and a source
of employmenL (lbld)
MosL lawyers wlll engage ln nonllLlgaLlon legal work or ln llLlgaLlon work LhaL ls consLralned ln
very lmporLanL ways aL leasL LheoreLlcally so as Lo remove from lL some of Lhe sallenL feaLures
of adversarlal llLlgaLlon Cf Lhese speclal roles Lhe mosL promlnenL ls LhaL of prosecuLor ln
some lawyers work Lhe consLralnLs are lmposed boLh by Lhe naLure of Lhe cllenL and by Lhe
way ln whlch Lhe lawyer ls organlzed lnLo a soclal unlL Lo perform LhaL work 1he mosL common
of Lhese roles are Lhose of corporaLe pracLlce and governmenL legal servlce (lbld)
ln several lssues of Lhe 8uslness SLar a buslness dally hereln below quoLed are emerglng
Lrends ln corporaLe law pracLlce a deparLure from Lhe LradlLlonal concepL of pracLlce of law
We are experlenclng Loday whaL Lruly may be called a revoluLlonary LransformaLlon ln
corporaLe law pracLlce Lawyers and oLher professlonal groups ln parLlcular Lhose members
parLlclpaLlng ln varlous legalpollcy declslonal conLexLs are flndlng LhaL undersLandlng Lhe
ma[or emerglng Lrends ln corporaLlon law ls lndlspensable Lo lnLelllgenL declslonmaklng
ConsLrucLlve ad[usLmenL Lo ma[or corporaLe problems of Loday requlres an accuraLe
undersLandlng of Lhe naLure and lmpllcaLlons of Lhe corporaLe law research funcLlon
accompanled by an acceleraLlng raLe of lnformaLlon accumulaLlon 1he recognlLlon of Lhe need
for such lmproved corporaLe legal pollcy formulaLlon parLlcularly modelmaklng and
conLlngency plannlng has lmpressed upon us Lhe lnadequacy of LradlLlonal procedures ln
many declslonal conLexLs
ln a complex legal problem Lhe mass of lnformaLlon Lo be processed Lhe sorLlng and welghlng
of slgnlflcanL condlLlonal facLors Lhe appralsal of ma[or Lrends Lhe necesslLy of esLlmaLlng Lhe
consequences of glven courses of acLlon and Lhe need for fasL declslon and response ln
slLuaLlons of acuLe danger have prompLed Lhe use of sophlsLlcaLed concepLs of lnformaLlon flow
Lheory operaLlonal analysls auLomaLlc daLa processlng and elecLronlc compuLlng equlpmenL
undersLandably an lmproved declslonal sLrucLure musL sLress Lhe predlcLlve componenL of Lhe
pollcymaklng process whereln a model of Lhe declslonal conLexL or a segmenL Lhereof ls
developed Lo LesL pro[ecLed alLernaLlve courses of acLlon ln Lerms of fuLurlsLlc effecLs flowlng
Lherefrom
AlLhough members of Lhe legal professlon are regularly engaged ln predlcLlng and pro[ecLlng
Lhe Lrends of Lhe law Lhe sub[ecL of corporaLe flnance law has recelved relaLlvely llLLle
organlzed and formallzed aLLenLlon ln Lhe phllosophy of advanclng corporaLe legal educaLlon
noneLheless a crossdlsclpllnary approach Lo legal research has become a vlLal necesslLy
CerLalnly Lhe general orlenLaLlon for producLlve conLrlbuLlons by Lhose Lralned prlmarlly ln Lhe
law can be lmproved Lhrough an early lnLroducLlon Lo mulLlvarlable declslonal conLexL and Lhe
varlous approaches for handllng such problems Lawyers parLlcularly wlLh elLher a masLers or
docLoraLe degree ln buslness admlnlsLraLlon or managemenL funcLlonlng aL Lhe legal pollcy
level of declslonmaklng now have some appreclaLlon for Lhe concepLs and analyLlcal
Lechnlques of oLher professlons whlch are currenLly engaged ln slmllar Lypes of complex
declslonmaklng
1ruLh Lo Lell many slLuaLlons lnvolvlng corporaLe flnance problems would requlre Lhe servlces
of an asLuLe aLLorney because of Lhe complex legal lmpllcaLlons LhaL arlse from each and every
necessary sLep ln securlng and malnLalnlng Lhe buslness lssue ralsed (8uslness SLar CorporaLe
llnance Law !an 11 1989 p 4)
ln our llLlgaLlonprone counLry a corporaLe lawyer ls asslduously referred Lo as Lhe abogado de
campanllla Pe ls Lhe blgLlme lawyer earnlng blg money and wlLh a cllenLele composed of
Lhe Lycoons and magnaLes of buslness and lndusLry
uesplLe Lhe growlng number of corporaLe lawyers many people could noL explaln whaL lL ls
LhaL a corporaLe lawyer does lor one Lhe number of aLLorneys employed by a slngle
corporaLlon wlll vary wlLh Lhe slze and Lype of Lhe corporaLlon Many smaller and some large
corporaLlons farm ouL all Lhelr legal problems Lo prlvaLe law flrms Many oLhers have lnhouse
counsel only for cerLaln maLLers CLher corporaLlon have a sLaff large enough Lo handle mosL
legal problems lnhouse
A corporaLe lawyer for all lnLenLs and purposes ls a lawyer who handles Lhe legal affalrs of a
corporaLlon Pls areas of concern or [urlsdlcLlon may lnclude lnLer alla corporaLe legal
research Lax laws research acLlng ouL as corporaLe secreLary (ln board meeLlngs) appearances
ln boLh courLs and oLher ad[udlcaLory agencles (lncludlng Lhe SecurlLles and Lxchange
Commlsslon) and ln oLher capaclLles whlch requlre an ablllLy Lo deal wlLh Lhe law
AL any raLe a corporaLe lawyer may assume responslblllLles oLher Lhan Lhe legal affalrs of Lhe
buslness of Lhe corporaLlon he ls represenLlng 1hese lnclude such maLLers as deLermlnlng
pollcy and becomlng lnvolved ln managemenL ( Lmphasls supplled)
ln a blg company for example one may have a feellng of belng lsolaLed from Lhe acLlon or noL
undersLandlng how ones work acLually flLs lnLo Lhe work of Lhe orgarnlzaLlon 1hls can be
frusLraLlng Lo someone who needs Lo see Lhe resulLs of hls work flrsL hand ln shorL a corporaLe
lawyer ls someLlmes offered Lhls forLune Lo be more closely lnvolved ln Lhe runnlng of Lhe
buslness
Moreover a corporaLe lawyers servlces may someLlmes be engaged by a mulLlnaLlonal
corporaLlon (MnC) Some large MnCs provlde one of Lhe few opporLunlLles avallable Lo
corporaLe lawyers Lo enLer Lhe lnLernaLlonal law fleld AfLer all lnLernaLlonal law ls pracLlced ln
a relaLlvely small number of companles and law flrms 8ecause worklng ln a forelgn counLry ls
percelved by many as glamorous Lllls ls an area coveLed by corporaLe lawyers ln mosL cases
however Lhe overseas [obs go Lo experlenced aLLorneys whlle Lhe younger aLLorneys do Lhelr
lnLernaLlonal pracLlce ln law llbrarles (8uslness SLar CorporaLe Law racLlce May 231990
p 4)
1hls brlngs us Lo Lhe lnevlLable le Lhe role of Lhe lawyer ln Lhe realm of flnance 1o borrow
Lhe llnes of ParvardeducaLed lawyer 8ruce WasserLeln Lo wlL A bad lawyer ls one who falls
Lo spoL problems a good lawyer ls one who percelves Lhe dlfflculLles and Lhe excellenL lawyer
ls one who surmounLs Lhem (8uslness SLar CorporaLe llnance Law !an 11 1989 p 4)
1oday Lhe sLudy of corporaLe law pracLlce dlrely needs a shoL ln Lhe arm so Lo speak no
longer are we Lalklng of Lhe LradlLlonal law Leachlng meLhod of conflnlng Lhe sub[ecL sLudy Lo
Lhe CorporaLlon Code and Lhe SecurlLles Code buL an lncurslon as well lnLo Lhe lnLerLwlnlng
modern managemenL lssues
Such corporaLe legal managemenL lssues deal prlmarlly wlLh Lhree (3) Lypes of learnlng (1)
acqulslLlon of lnslghLs lnLo currenL advances whlch are of parLlcular slgnlflcance Lo Lhe
corporaLe counsel (2) an lnLroducLlon Lo usable dlsclpllnary sklns appllcable Lo a corporaLe
counsels managemenL responslblllLles and (3) a devoLlon Lo Lhe organlzaLlon and managemenL
of Lhe legal funcLlon lLself
1hese Lhree sub[ecL areas may be LhoughL of as lnLersecLlng clrcles wlLh a shared area llnklng
Lhem CLherwlse known as lnLersecLlng managerlal [urlsprudence lL forms a unlfylng Lheme
for Lhe corporaLe counsels LoLal learnlng
Some currenL advances ln behavlor and pollcy sclences affecL Lhe counsels role lor LhaL
maLLer Lhe corporaLe lawyer revlews Lhe globallzaLlon process lncludlng Lhe resulLlng sLraLeglc
reposlLlonlng LhaL Lhe flrms he provldes counsel for are requlred Lo make and Lhe need Lo Lhlnk
abouL a corporaLlons sLraLegy aL mulLlple levels 1he sallence of Lhe naLlonsLaLe ls belng
reduced as flrms deal boLh wlLh global mulLlnaLlonal enLlLles and slmulLaneously wlLh sub
naLlonal governmenLal unlLs llrms lncreaslngly collaboraLe noL only wlLh publlc enLlLles buL
wlLh each oLher ofLen wlLh Lhose who are compeLlLors ln oLher arenas
Also Lhe naLure of Lhe lawyers parLlclpaLlon ln declslonmaklng wlLhln Lhe corporaLlon ls
rapldly changlng 1he modem corporaLe lawyer has galned a new role as a sLakeholder ln
some cases parLlclpaLlng ln Lhe organlzaLlon and operaLlons of governance Lhrough
parLlclpaLlon on boards and oLher declslonmaklng roles CfLen Lhese new paLLerns develop
alongslde exlsLlng legal lnsLlLuLlons and laws are percelved as barrlers 1hese Lrends are
compllcaLed as corporaLlons organlze for global operaLlons ( Lmphasls supplled)

1he pracLlslng lawyer of Loday ls famlllar as well wlLh governmenLal pollcles Loward Lhe
promoLlon and managemenL of Lechnology new collaboraLlve arrangemenLs for promoLlng
speclflc Lechnologles or compeLlLlveness more generally requlre approaches from lndusLry LhaL
dlffer from older more adversarlal relaLlonshlps and LradlLlonal forms of seeklng Lo lnfluence
governmenLal pollcles And Lhere are lessons Lo be learned from oLher counLrles ln Lurope
LsprlL Lureka and 8ace are examples of collaboraLlve efforLs beLween governmenLal and
buslness !apans Ml1l ls world famous (Lmphasls supplled)
lollowlng Lhe concepL of boundary spannlng Lhe offlce of Lhe CorporaLe Counsel comprlses a
dlsLlncL group wlLhln Lhe managerlal sLrucLure of all klnds of organlzaLlons LffecLlveness of
boLh longLerm and Lemporary groups wlLhln organlzaLlons has been found Lo be relaLed Lo
lndenLlflable facLors ln Lhe groupconLexL lnLeracLlon such as Lhe groups acLlvely revlslng Lhelr
knowledge of Lhe envlronmenL coordlnaLlng work wlLh ouLslders promoLlng Leam
achlevemenLs wlLhln Lhe organlzaLlon ln general such exLernal acLlvlLles are beLLer predlcLors
of Leam performance Lhan lnLernal group processes
ln a crlsls slLuaLlon Lhe legal managerlal capablllLles of Lhe corporaLe lawyer vlsavls Lhe
managerlal meLLle of corporaLlons are challenged CurrenL research ls seeklng ways boLh Lo
anLlclpaLe effecLlve managerlal procedures and Lo undersLand relaLlonshlps of flnanclal llablllLy
and lnsurance conslderaLlons (Lmphasls supplled)
8egardlng Lhe skllls Lo apply by Lhe corporaLe counsel Lhree facLors are apropos
llrsL SysLem uynamlcs 1he fleld of sysLems dynamlcs has been found an effecLlve Lool for new
managerlal Lhlnklng regardlng boLh plannlng and presslng lmmedlaLe problems An
undersLandlng of Lhe role of feedback loops lnvenLory levels and raLes of flow enable users Lo
slmulaLe all sorLs of sysLemaLlc problems physlcal economlc managerlal soclal and
psychologlcal new programmlng Lechnlques now make Lhe sysLem dynamlcs prlnclples more
accesslble Lo managers lncludlng corporaLe counsels (Lmphasls supplled)
Second ueclslon Analysls 1hls enables users Lo make beLLer declslons lnvolvlng complexlLy and
uncerLalnLy ln Lhe conLexL of a law deparLmenL lL can be used Lo appralse Lhe seLLlemenL value
of llLlgaLlon ald ln negoLlaLlon seLLlemenL and mlnlmlze Lhe cosL and rlsk lnvolved ln managlng
a porLfollo of cases (Lmphasls supplled)
1hlrd Modellng for negoLlaLlon ManagemenL CompuLerbased models can be used dlrecLly by
parLles and medlaLors ln all lands of negoLlaLlons All lnLegraLed seL of such Lools provlde
coherenL and effecLlve negoLlaLlon supporL lncludlng handson on lnsLrucLlon ln Lhese
Lechnlques A slmulaLlon case of an lnLernaLlonal [olnL venLure may be used Lo lllusLraLe Lhe
polnL
8e Lhls as lL may Lhe organlzaLlon and managemenL of Lhe legal funcLlon concern Lhree
polnLed areas of conslderaLlon Lhus
revenLlve Lawyerlng lannlng by lawyers requlres speclal skllls LhaL comprlse a ma[or parL of
Lhe general counsels responslblllLles 1hey dlffer from Lhose of remedlal law revenLlve
lawyerlng ls concerned wlLh mlnlmlzlng Lhe rlsks of legal Lrouble and maxlmlzlng legal rlghLs for
such legal enLlLles aL LhaL Llme when LransacLlonal or slmllar facLs are belng consldered and
made
Managerlal !urlsprudence 1hls ls Lhe framework wlLhln whlch are underLaken Lhose acLlvlLles
of Lhe flrm Lo whlch legal consequences aLLach lL needs Lo be dlrecLly supporLlve of Lhls
naLlons evolvlng economlc and organlzaLlonal fabrlc as flrms change Lo sLay compeLlLlve ln a
global lnLerdependenL envlronmenL 1he pracLlce and Lheory of law ls noL adequaLe Loday Lo
faclllLaLe Lhe relaLlonshlps needed ln Lrylng Lo make a global economy work
CrganlzaLlon and luncLlonlng of Lhe CorporaLe Counsels Cfflce 1he general counsel has
emerged ln Lhe lasL decade as one of Lhe mosL vlbranL subseLs of Lhe legal professlon 1he
corporaLe counsel hear responslblllLy for key aspecLs of Lhe flrms sLraLeglc lssues lncludlng
sLrucLurlng lLs global operaLlons managlng lmproved relaLlonshlps wlLh an lncreaslngly
dlverslfled body of employees managlng expanded llablllLy exposure creaLlng new and varled
lnLeracLlons wlLh publlc declslonmakers coplng lnLernally wlLh more complex make or by
declslons
1hls whole exerclse drlves home Lhe Lhesls LhaL knowlng corporaLe law ls noL enough Lo make
one a good general corporaLe counsel nor Lo glve hlm a full sense of how Lhe legal sysLem
shapes corporaLe acLlvlLles And even lf Lhe corporaLe lawyers alm ls noL Lhe undersLand all of
Lhe laws effecLs on corporaLe acLlvlLles he musL aL Lhe very leasL also galn a worklng
knowledge of Lhe managemenL lssues lf only Lo be able Lo grasp noL only Lhe baslc legal
consLlLuLlon or makeup of Lhe modem corporaLlon 8uslness SLar 1he CorporaLe Counsel
Aprll 10 1991 p 4)
1he challenge for lawyers (boLh of Lhe bar and Lhe bench) ls Lo have more Lhan a passlng
knowledge of flnanclal law affecLlng each aspecL of Lhelr work ?eL many would admlL Lo
lgnorance of vasL LracLs of Lhe flnanclal law LerrlLory WhaL Lransplres nexL ls a dllemma of
professlonal securlLy Wlll Lhe lawyer admlL lgnorance and rlsk opprobrlum? or wlll he felgn
undersLandlng and rlsk exposure? (8uslness SLar CorporaLe llnance law !an 11 1989 p 4)
8espondenL ChrlsLlan Monsod was nomlnaLed by resldenL Corazon C Aqulno Lo Lhe poslLlon
of Chalrman of Lhe CCMLLLC ln a leLLer recelved by Lhe SecreLarlaL of Lhe Commlsslon on
AppolnLmenLs on Aprll 23 1991 eLlLloner opposed Lhe nomlnaLlon because allegedly Monsod
does noL possess Lhe requlred quallflcaLlon of havlng been engaged ln Lhe pracLlce of law for aL
leasL Len years
Cn !une 3 1991 Lhe Commlsslon on AppolnLmenLs conflrmed Lhe nomlnaLlon of Monsod as
Chalrman of Lhe CCMLLLC Cn !une 18 1991 he Look hls oaLh of offlce Cn Lhe same day he
assumed offlce as Chalrman of Lhe CCMLLLC
Challenglng Lhe valldlLy of Lhe conflrmaLlon by Lhe Commlsslon on AppolnLmenLs of Monsods
nomlnaLlon peLlLloner as a clLlzen and Laxpayer flled Lhe lnsLanL peLlLlon for cerLlorarl and
rohlblLlon praylng LhaL sald conflrmaLlon and Lhe consequenL appolnLmenL of Monsod as
Chalrman of Lhe Commlsslon on LlecLlons be declared null and vold
ALLy ChrlsLlan Monsod ls a member of Lhe hlllpplne 8ar havlng passed Lhe bar examlnaLlons
of 1960 wlLh a grade of 8633 Pe has been a dues paylng member of Lhe lnLegraLed 8ar of
Lhe hlllpplnes slnce lLs lncepLlon ln 197273 Pe has also been paylng hls professlonal llcense
fees as lawyer for more Lhan Len years (p 124 8ollo)
AfLer graduaLlng from Lhe College of Law (u) and havlng hurdled Lhe bar ALLy Monsod
worked ln Lhe law offlce of hls faLher uurlng hls sLlnL ln Lhe World 8ank Croup (19631970)
Monsod worked as an operaLlons offlcer for abouL Lwo years ln CosLa 8lca and anama whlch
lnvolved geLLlng acqualnLed wlLh Lhe laws of membercounLrles negoLlaLlng loans and
coordlnaLlng legal economlc and pro[ecL work of Lhe 8ank upon reLurnlng Lo Lhe hlllpplnes
ln 1970 he worked wlLh Lhe Meralco Croup served as chlef execuLlve offlcer of an lnvesLmenL
bank and subsequenLly of a buslness conglomeraLe and slnce 1986 has rendered servlces Lo
varlous companles as a legal and economlc consulLanL or chlef execuLlve offlcer As former
SecreLaryCeneral (1986) and naLlonal Chalrman (1987) of nAMl8LL Monsods work lnvolved
belng knowledgeable ln elecLlon law Pe appeared for nAMl8LL ln lLs accredlLaLlon hearlngs
before Lhe Comelec ln Lhe fleld of advocacy Monsod ln hls personal capaclLy and as former
CoChalrman of Lhe 8lshops 8uslnessmens Conference for Puman uevelopmenL has worked
wlLh Lhe under prlvlleged secLors such as Lhe farmer and urban poor groups ln lnlLlaLlng
lobbylng for and engaglng ln afflrmaLlve acLlon for Lhe agrarlan reform law and laLely Lhe urban
land reform blll Monsod also made use of hls legal knowledge as a member of Lhe uavlde
Commlsslon a quasL [udlclal body whlch conducLed numerous hearlngs (1990) and as a
member of Lhe ConsLlLuLlonal Commlsslon (19861987) and Chalrman of lLs CommlLLee on
AccounLablllLy of ubllc Cfflcers for whlch he was clLed by Lhe resldenL of Lhe Commlsslon
!usLlce Cecllla Munozalma for lnnumerable amendmenLs Lo reconclle governmenL funcLlons
wlLh lndlvldual freedoms and publlc accounLablllLy and Lhe parLyllsL sysLem for Lhe Pouse of
8epresenLaLlve (pp 128129 8ollo) ( Lmphasls supplled)
!usL a word abouL Lhe work of a negoLlaLlng Leam of whlch ALLy Monsod used Lo be a member
ln a loan agreemenL for lnsLance a negoLlaLlng panel acLs as a Leam and whlch ls adequaLely
consLlLuLed Lo meeL Lhe varlous conLlngencles LhaL arlse durlng a negoLlaLlon 8esldes Lop
offlclals of Lhe 8orrower concerned Lhere are Lhe legal offlcer (such as Lhe legal counsel) Lhe
flnance manager and an operaLlons offlcer (such as an offlclal lnvolved ln negoLlaLlng Lhe
conLracLs) who comprlse Lhe members of Lhe Leam (Culllermo v Sollven Loan negoLlaLlng
SLraLegles for ueveloplng CounLry 8orrowers SLaff aper no 2 CenLral 8ank of Lhe
hlllpplnes Manlla 1982 p 11) (Lmphasls supplled)
AfLer a fashlon Lhe loan agreemenL ls llke a counLrys ConsLlLuLlon lL lays down Lhe law as far
as Lhe loan LransacLlon ls concerned 1hus Lhe meaL of any Loan AgreemenL can be
comparLmenLallzed lnLo flve (3) fundamenLal parLs (1) buslness Lerms (2) borrowers
represenLaLlon (3) condlLlons of closlng (4) covenanLs and (3) evenLs of defaulL (lbld p 13)
ln Lhe same veln lawyers play an lmporLanL role ln any debL resLrucLurlng program lor aslde
from performlng Lhe Lasks of leglslaLlve drafLlng and legal advlslng Lhey score naLlonal
developmenL pollcles as key facLors ln malnLalnlng Lhelr counLrles soverelgnLy (Condensed
from Lhe work paper enLlLled WanLed uevelopmenL Lawyers for ueveloplng naLlons
submlLLed by L Mlchael Pager reglonal legal advlser of Lhe unlLed SLaLes Agency for
lnLernaLlonal uevelopmenL durlng Lhe Sesslon on Law for Lhe uevelopmenL of naLlons aL Lhe
Abld[an World Conference ln lvory CoasL sponsored by Lhe World eace 1hrough Law CenLer
on AugusL 2631 1973) ( Lmphasls supplled)
Loan concesslons and compromlses perhaps even more so Lhan purely renegoLlaLlon pollcles
demand experLlse ln Lhe law of conLracLs ln leglslaLlon and agreemenL drafLlng and ln
renegoLlaLlon necessarlly a soverelgn lawyer may work wlLh an lnLernaLlonal buslness
speclallsL or an economlsL ln Lhe formulaLlon of a model loan agreemenL uebL resLrucLurlng
conLracL agreemenLs conLaln such a mlxLure of Lechnlcal language LhaL Lhey should be carefully
drafLed and slgned only wlLh Lhe advlse of compeLenL counsel ln con[uncLlon wlLh Lhe guldance
of adequaLe Lechnlcal supporL personnel (See lnLernaLlonal Law AspecLs of Lhe hlllpplne
LxLernal uebLs an unpubllshed dlsserLaLlon uS1 CraduaLe School of Law 1987 p 321) (
Lmphasls supplled)
A crlLlcal aspecL of soverelgn debL resLrucLurlng/conLracL consLrucLlon ls Lhe seL of Lerms and
condlLlons whlch deLermlnes Lhe conLracLual remedles for a fallure Lo perform one or more
elemenLs of Lhe conLracL A good agreemenL musL noL only deflne Lhe responslblllLles of boLh
parLles buL musL also sLaLe Lhe recourse open Lo elLher parLy when Lhe oLher falls Lo dlscharge
an obllgaLlon lor a compleaL debL resLrucLurlng represenLs a devoLlon Lo LhaL prlnclple whlch
ln Lhe ulLlmaLe analysls ls slne qua non for forelgn loan agreemenLsan adherence Lo Lhe rule of
law ln domesLlc and lnLernaLlonal affalrs of whose klnd uS Supreme CourL !usLlce Cllver
Wendell Polmes !r once sald 1hey carry no banners Lhey beaL no drums buL where Lhey
are men learn LhaL busLle and bush are noL Lhe equal of quleL genlus and serene masLery (See
8lcardo ! 8omulo 1he 8ole of Lawyers ln lorelgn lnvesLmenLs lnLegraLed 8ar of Lhe
hlllpplne !ournal vol 13 nos 3 and 4 1hlrd and lourLh CuarLers 1977 p 263)
lnLerpreLed ln Lhe llghL of Lhe varlous deflnlLlons of Lhe Lerm racLlce of law parLlcularly Lhe
modern concepL of law pracLlce and Laklng lnLo conslderaLlon Lhe llberal consLrucLlon lnLended
by Lhe framers of Lhe ConsLlLuLlon ALLy Monsods pasL work experlences as a lawyer
economlsL a lawyermanager a lawyerenLrepreneur of lndusLry a lawyernegoLlaLor of
conLracLs and a lawyerleglslaLor of boLh Lhe rlch and Lhe poor verlly more Lhan saLlsfy Lhe
consLlLuLlonal requlremenL LhaL he has been engaged ln Lhe pracLlce of law for aL leasL Len
years
8esldes ln Lhe leadlng case of Luego v Clvll Servlce Commlsslon 143 SC8A 327 Lhe CourL sald
AppolnLmenL ls an essenLlally dlscreLlonary power and musL be performed by Lhe offlcer ln
whlch lL ls vesLed accordlng Lo hls besL llghLs Lhe only condlLlon belng LhaL Lhe appolnLee
should possess Lhe quallflcaLlons requlred by law lf he does Lhen Lhe appolnLmenL cannoL be
faulLed on Lhe ground LhaL Lhere are oLhers beLLer quallfled who should have been preferred
1hls ls a pollLlcal quesLlon lnvolvlng conslderaLlons of wlsdom whlch only Lhe appolnLlng
auLhorlLy can declde (emphasls supplled)
no less emphaLlc was Lhe CourL ln Lhe case of (CenLral 8ank v Clvll Servlce Commlsslon 171
SC8A 744) where lL sLaLed
lL ls wellseLLled LhaL when Lhe appolnLee ls quallfled as ln Lhls case and all Lhe oLher legal
requlremenLs are saLlsfled Lhe Commlsslon has no alLernaLlve buL Lo aLLesL Lo Lhe appolnLmenL
ln accordance wlLh Lhe Clvll Servlce Law 1he Commlsslon has no auLhorlLy Lo revoke an
appolnLmenL on Lhe ground LhaL anoLher person ls more quallfled for a parLlcular poslLlon lL
also has no auLhorlLy Lo dlrecL Lhe appolnLmenL of a subsLlLuLe of lLs cholce 1o do so would be
an encroachmenL on Lhe dlscreLlon vesLed upon Lhe appolnLlng auLhorlLy An appolnLmenL ls
essenLlally wlLhln Lhe dlscreLlonary power of whomsoever lL ls vesLed sub[ecL Lo Lhe only
condlLlon LhaL Lhe appolnLee should possess Lhe quallflcaLlons requlred by law ( Lmphasls
supplled)
1he appolnLlng process ln a regular appolnLmenL as ln Lhe case aL bar conslsLs of four (4)
sLages (1) nomlnaLlon (2) conflrmaLlon by Lhe Commlsslon on AppolnLmenLs (3) lssuance of a
commlsslon (ln Lhe hlllpplnes upon submlsslon by Lhe Commlsslon on AppolnLmenLs of lLs
cerLlflcaLe of conflrmaLlon Lhe resldenL lssues Lhe permanenL appolnLmenL and (4)
accepLance eg oaLhLaklng posLlng of bond eLc (Lacson v 8omero no L3081 CcLober
14 1949 Conzales Law on ubllc Cfflcers p 200)
1he power of Lhe Commlsslon on AppolnLmenLs Lo glve lLs consenL Lo Lhe nomlnaLlon of
Monsod as Chalrman of Lhe Commlsslon on LlecLlons ls mandaLed by SecLlon 1(2) SubArLlcle C
ArLlcle lx of Lhe ConsLlLuLlon whlch provldes
1he Chalrman and Lhe Commlsloners shall be appolnLed by Lhe resldenL wlLh Lhe consenL of
Lhe Commlsslon on AppolnLmenLs for a Lerm of seven years wlLhouL reappolnLmenL Cf Lhose
flrsL appolnLed Lhree Members shall hold offlce for seven years Lwo Members for flve years
and Lhe lasL Members for Lhree years wlLhouL reappolnLmenL AppolnLmenL Lo any vacancy
shall be only for Lhe unexplred Lerm of Lhe predecessor ln no case shall any Member be
appolnLed or deslgnaLed ln a Lemporary or acLlng capaclLy
AnenL !usLlce 1eodoro adlllas separaLe oplnlon sufflce lL Lo say LhaL hls deflnlLlon of Lhe
pracLlce of law ls Lhe LradlLlonal or sLereoLyped noLlon of law pracLlce as dlsLlngulshed from Lhe
modern concepL of Lhe pracLlce of law whlch modern connoLaLlon ls exacLly whaL was lnLended
by Lhe emlnenL framers of Lhe 1987 ConsLlLuLlon Moreover !usLlce adlllas deflnlLlon would
requlre generally a hablLual law pracLlce perhaps pracLlsed Lwo or Lhree Llmes a week and
would ouLlaw say law pracLlce once or Lwlce a year for Len consecuLlve years Clearly Lhls ls far
from Lhe consLlLuLlonal lnLenL
upon Lhe oLher hand Lhe separaLe oplnlon of !usLlce lsaganl Cruz sLaLes LhaL ln my wrlLLen
oplnlon l made use of a deflnlLlon of law pracLlce whlch really means noLhlng because Lhe
deflnlLlon says LhaL law pracLlce ls whaL people ordlnarlly mean by Lhe pracLlce of law
1rue l clLed Lhe deflnlLlon buL only by way of sarcasm as evldenL from my sLaLemenL LhaL Lhe
deflnlLlon of law pracLlce by LradlLlonal areas of law pracLlce ls essenLlally LauLologous or
deflnlng a phrase by means of Lhe phrase lLself LhaL ls belng deflned
!usLlce Cruz goes on Lo say ln subsLance LhaL slnce Lhe law covers almosL all slLuaLlons mosL
lndlvlduals ln maklng use of Lhe law or ln advlslng oLhers on whaL Lhe law means are acLually
pracLlclng law ln LhaL sense perhaps buL we should noL lose slghL of Lhe facL LhaL Mr Monsod
ls a lawyer a member of Lhe hlllpplne 8ar who has been pracLlslng law for over Len years 1hls
ls dlfferenL from Lhe acLs of persons pracLlslng law wlLhouL flrsL becomlng lawyers
!usLlce Cruz also says LhaL Lhe Supreme CourL can even dlsquallfy an elecLed resldenL of Lhe
hlllpplnes say on Lhe ground LhaL he lacks one or more quallflcaLlons 1hls maLLer l greaLly
doubL lor one Lhlng how can an acLlon or peLlLlon be broughL agalnsL Lhe resldenL? And even
assumlng LhaL he ls lndeed dlsquallfled how can Lhe acLlon be enLerLalned slnce he ls Lhe
lncumbenL resldenL?
We now proceed
1he Commlsslon on Lhe basls of evldence submlLLed dollng Lhe publlc hearlngs on Monsods
conflrmaLlon lmpllclLly deLermlned LhaL he possessed Lhe necessary quallflcaLlons as requlred
by law 1he [udgmenL rendered by Lhe Commlsslon ln Lhe exerclse of such an acknowledged
power ls beyond [udlclal lnLerference excepL only upon a clear showlng of a grave abuse of
dlscreLlon amounLlng Lo lack or excess of [urlsdlcLlon (ArL vlll Sec 1 ConsLlLuLlon) 1hus only
where such grave abuse of dlscreLlon ls clearly shown shall Lhe CourL lnLerfere wlLh Lhe
Commlsslons [udgmenL ln Lhe lnsLanL case Lhere ls no occaslon for Lhe exerclse of Lhe CourLs
correcLlve power slnce no abuse much less a grave abuse of dlscreLlon LhaL would amounL Lo
lack or excess of [urlsdlcLlon and would warranL Lhe lssuance of Lhe wrlLs prayed for has been
clearly shown
AddlLlonally conslder Lhe followlng
(1) lf Lhe Commlsslon on AppolnLmenLs re[ecLs a nomlnee by Lhe resldenL may Lhe
Supreme CourL reverse Lhe Commlsslon and Lhus ln effecL conflrm Lhe appolnLmenL? Clearly
Lhe answer ls ln Lhe negaLlve
(2) ln Lhe same veln may Lhe CourL re[ecL Lhe nomlnee whom Lhe Commlsslon has
conflrmed? 1he answer ls llkewlse clear
(3) lf Lhe unlLed SLaLes SenaLe (whlch ls Lhe conflrmlng body ln Lhe uS Congress) decldes
Lo conflrm a resldenLlal nomlnee lL would be lncredlble LhaL Lhe uS Supreme CourL would
sLlll reverse Lhe uS SenaLe
llnally one slgnlflcanL legal maxlm ls
We musL lnLerpreL noL by Lhe leLLer LhaL kllleLh buL by Lhe splrlL LhaL glveLh llfe
1ake Lhls hypoLheLlcal case of Samson and uelllah Cnce Lhe procuraLor of !udea asked uelllah
(who was Samsons beloved) for help ln capLurlng Samson uelllah agreed on condlLlon LhaL
no blade shall Louch hls skln
no blood shall flow from hls velns
When Samson (hls long halr cuL by uelllah) was capLured Lhe procuraLor placed an lron rod
burnlng whlLehoL Lwo or Lhree lnches away from ln fronL of Samsons eyes 1hls bllnded Lhe
man upon hearlng of whaL had happened Lo her beloved uelllah was beslde herself wlLh
anger and fumlng wlLh rlghLeous fury accused Lhe procuraLor of reneglng on hls word 1he
procuraLor calmly replled uld any blade Louch hls skln? uld any blood flow from hls velns?
1he procuraLor was clearly relylng on Lhe leLLer noL Lhe splrlL of Lhe agreemenL
ln vlew of Lhe foregolng Lhls peLlLlon ls hereby ulSMlSSLu
SC C8uL8Lu
SeparaLe Cplnlons
NAkVASA I concurr|ng
l concur wlLh Lhe declslon of Lhe ma[orlLy wrlLLen by Mr !usLlce aras albelL only ln Lhe resulL
lL does noL appear Lo me LhaL Lhere has been an adequaLe showlng LhaL Lhe challenged
deLermlnaLlon by Lhe Commlsslon on AppolnLmenLsLhaL Lhe appolnLmenL of respondenL
Monsod as Chalrman of Lhe Commlsslon on LlecLlons should on Lhe basls of hls sLaLed
quallflcaLlons and afLer due assessmenL Lhereof be conflrmedwas aLLended by error so gross
as Lo amounL Lo grave abuse of dlscreLlon and consequenLly merlLs nulllflcaLlon by Lhls CourL ln
accordance wlLh Lhe second paragraph of SecLlon 1 ArLlcle vlll of Lhe ConsLlLuLlon l Lherefore
voLe Lo uLn? Lhe peLlLlon
ADILLA I d|ssent|ng
1he records of Lhls case wlll show LhaL when Lhe CourL flrsL dellberaLed on Lhe eLlLlon aL bar l
voLed noL only Lo requlre Lhe respondenLs Lo commenL on Lhe eLlLlon buL l was Lhe sole voLe
for Lhe lssuance of a Lemporary resLralnlng order Lo en[oln respondenL Monsod from assumlng
Lhe poslLlon of CCMLLLC Chalrman whlle Lhe CourL dellberaLed on hls consLlLuLlonal
quallflcaLlon for Lhe offlce My purpose ln voLlng for a 18C was Lo prevenL Lhe lnconvenlence
and even embarrassmenL Lo all parLles concerned were Lhe CourL Lo flnally declde for
respondenL Monsods dlsquallflcaLlon Moreover a readlng of Lhe eLlLlon Lhen ln relaLlon Lo
esLabllshed [urlsprudence already showed prlma facle LhaL respondenL Monsod dld noL possess
Lhe needed quallflcaLlon LhaL ls he had noL engaged ln Lhe pracLlce of law for aL leasL Len (10)
years prlor Lo hls appolnLmenL as CCMLLLC Chalrman
AfLer conslderlng carefully respondenL Monsods commenL l am even more convlnced LhaL Lhe
consLlLuLlonal requlremenL of pracLlce of law for aL leasL Len (10) years has noL been meL
1he procedural barrlers lnLerposed by respondenLs deserve scanL conslderaLlon because
ulLlmaLely Lhe core lssue Lo be resolved ln Lhls peLlLlon ls Lhe proper consLrual of Lhe
consLlLuLlonal provlslon requlrlng a ma[orlLy of Lhe membershlp of CCMLLLC lncludlng Lhe
Chalrman Lhereof Lo have been engaged ln Lhe pracLlce of law for aL leasL Len (10) years (ArL
lx(C) SecLlon 1(1) 1987 ConsLlLuLlon) CuesLlons lnvolvlng Lhe consLrucLlon of consLlLuLlonal
provlslons are besL lefL Lo [udlclal resoluLlon As declared ln Angara v LlecLoral Commlsslon (63
hll 139) upon Lhe [udlclal deparLmenL ls Lhrown Lhe solemn and lnescapable obllgaLlon of
lnLerpreLlng Lhe ConsLlLuLlon and deflnlng consLlLuLlonal boundarles
1he ConsLlLuLlon has lmposed clear and speclflc sLandards for a CCMLLLC Chalrman Among
Lhese are LhaL he musL have been engaged ln Lhe pracLlce of law for aL leasL Len (10) years lL
ls Lhe bounden duLy of Lhls CourL Lo ensure LhaL such sLandard ls meL and complled wlLh
WhaL consLlLuLes pracLlce of law? As commonly undersLood pracLlce refers Lo Lhe acLual
performance or appllcaLlon of knowledge as dlsLlngulshed from mere possesslon of knowledge
lL connoLes an acLlve hablLual repeaLed or cusLomary acLlon 1 1o pracLlce law or any
professlon for LhaL maLLer means Lo exerclse or pursue an employmenL or professlon acLlvely
hablLually repeaLedly or cusLomarlly
1herefore a docLor of medlclne who ls employed and ls hablLually performlng Lhe Lasks of a
nurslng alde cannoL be sald Lo be ln Lhe pracLlce of medlclne A cerLlfled publlc accounLanL
who works as a clerk cannoL be sald Lo pracLlce hls professlon as an accounLanL ln Lhe same
way a lawyer who ls employed as a buslness execuLlve or a corporaLe manager oLher Lhan as
head or aLLorney of a Legal ueparLmenL of a corporaLlon or a governmenLal agency cannoL be
sald Lo be ln Lhe pracLlce of law
As apLly held by Lhls CourL ln Lhe case of eople vs vlllanueva 2
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlons a
successlon of acLs of Lhe same klnd ln oLher words lL ls frequenL hablLual exerclse (SLaLe vs
CoLner 127 p 1 87 kan 864 42 L8A MS 768) racLlce of law Lo fall wlLhln Lhe prohlblLlon of
sLaLuLe has been lnLerpreLed as cusLomarlly or hablLually holdlng ones self ouL Lo Lhe publlc as
a lawyer and demandlng paymenL for such servlces (SLaLe vs 8ryan 4 SL 322 98 nC
644647) (emphasls supplled)
lL ls worLh menLlonlng LhaL Lhe respondenL Commlsslon on AppolnLmenLs ln a Memorandum lL
prepared enumeraLed several facLors deLermlnaLlve of wheLher a parLlcular acLlvlLy consLlLuLes
pracLlce of law lL sLaLes
1 PablLuallLy 1he Lerm pracLlce of law lmplles cusLomarlly or hablLually holdlng ones
self ouL Lo Lhe publlc as a lawyer (eople vs vlllanueva 14 SC8A 109 clLlng SLaLe v 8oyen 4 SL
322 98 nC 644) such as when one sends a clrcular announclng Lhe esLabllshmenL of a law
offlce for Lhe general pracLlce of law (uS v ney 8osque 8 hll 146) or when one Lakes Lhe
oaLh of offlce as a lawyer before a noLary publlc and flles a manlfesLaLlon wlLh Lhe Supreme
CourL lnformlng lL of hls lnLenLlon Lo pracLlce law ln all courLs ln Lhe counLry (eople v ue Luna
102 hll 968)
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlon a
successlon of acLs of Lhe same klnd ln oLher words lL ls a hablLual exerclse (eople v
vlllanueva 14 SC8A 109 clLlng SLaLe v CoLner 127 p 1 87 kan 864)
2 CompensaLlon racLlce of law lmplles LhaL one musL have presenLed hlmself Lo be ln
Lhe acLlve and conLlnued pracLlce of Lhe legal professlon and LhaL hls professlonal servlces are
avallable Lo Lhe publlc for compensaLlon as a servlce of hls llvellhood or ln conslderaLlon of hls
sald servlces (eople v vlllanueva supra) Pence charglng for servlces such as preparaLlon of
documenLs lnvolvlng Lhe use of legal knowledge and sklll ls wlLhln Lhe Lerm pracLlce of law
(Lrnanl ano 8ar 8evlewer ln Legal and !udlclal LLhlcs 1988 ed p 8 clLlng eople v eoples
SLockyards SLaLe 8ank 176 n8 901) and one who renders an oplnlon as Lo Lhe proper
lnLerpreLaLlon of a sLaLuLe and recelves pay for lL ls Lo LhaL exLenL pracLlclng law (MarLln
supra p 806 clLlng Mendelaun v CllberL and 8arkeL Mfg Co 290 n?S 462) lf compensaLlon
ls expecLed all advlce Lo cllenLs and all acLlon Laken for Lhem ln maLLers connecLed wlLh Lhe
law are pracLlclng law (Llwood llLcheLLe eL al v ArLhur C 1aylor 94AL8 336339)
3 AppllcaLlon of law legal prlnclple pracLlce or procedure whlch calls for legal knowledge
Lralnlng and experlence ls wlLhln Lhe Lerm pracLlce of law (MarLln supra)
4 ALLorneycllenL relaLlonshlp Lngaglng ln Lhe pracLlce of law presupposes Lhe exlsLence
of lawyercllenL relaLlonshlp Pence where a lawyer underLakes an acLlvlLy whlch requlres
knowledge of law buL lnvolves no aLLorneycllenL relaLlonshlp such as Leachlng law or wrlLlng
law books or arLlcles he cannoL be sald Lo be engaged ln Lhe pracLlce of hls professlon or a
lawyer (Agpalo Legal LLhlcs 1989 ed p 30) 3
1he aboveenumeraLed facLors would l belleve be useful alds ln deLermlnlng wheLher or noL
respondenL Monsod meeLs Lhe consLlLuLlonal quallflcaLlon of pracLlce of law for aL leasL Len
(10) years aL Lhe Llme of hls appolnLmenL as CCMLLLC Chalrman
1he followlng relevanL quesLlons may be asked
1 uld respondenL Monsod perform any of Lhe Lasks whlch are pecullar Lo Lhe pracLlce of
law?
2 uld respondenL perform such Lasks cusLomarlly or hablLually?
3 Assumlng LhaL he performed any of such Lasks hablLually dld he do so PA8l1uALL? lC8
A1 LLAS1 1Ln (10) ?LA8S prlor Lo hls appolnLmenL as CCMLLLC Chalrman?
Clven Lhe employmenL or [ob hlsLory of respondenL Monsod as appears from Lhe records l am
persuaded LhaL lf ever he dld perform any of Lhe Lasks whlch consLlLuLe Lhe pracLlce of law he
dld noL do so PA8l1uALL? for aL leasL Len (10) years prlor Lo hls appolnLmenL as CCMLLLC
Chalrman
Whlle lL may be granLed LhaL he performed Lasks and acLlvlLles whlch could be laLlLudlnarlanly
consldered acLlvlLles pecullar Lo Lhe pracLlce of law llke Lhe drafLlng of legal documenLs and Lhe
renderlng of legal oplnlon or advlce such were lsolaLed LransacLlons or acLlvlLles whlch do noL
quallfy hls pasL endeavors as pracLlce of law 1o become engaged ln Lhe pracLlce of law Lhere
musL be a conLlnulLy or a successlon of acLs As observed by Lhe SollclLor Ceneral ln eople vs
vlllanueva 4
LssenLlally Lhe word prlvaLe pracLlce of law lmplles LhaL one musL have presenLed hlmself Lo be
ln Lhe acLlve and conLlnued pracLlce of Lhe legal professlon and LhaL hls professlonal servlces
are avallable Lo Lhe publlc for a compensaLlon as a source of hls llvellhood or ln conslderaLlon
of hls sald servlces
ACCC8ulnCL? my voLe ls Lo C8An1 Lhe peLlLlon and Lo declare respondenL Monsod as noL
quallfled for Lhe poslLlon of CCMLLLC Chalrman for noL havlng engaged ln Lhe pracLlce of law
for aL leasL Len (10) years prlor Lo hls appolnLmenL Lo such poslLlon
C8uZ ! dlssenLlng
l am slncerely lmpressed by Lhe ponencla of my broLher aras buL flnd l musL dlssenL [usL Lhe
same 1here are cerLaln polnLs on whlch l musL dlffer wlLh hlm whlle of course respecLlng
hlsvlewpolnL
1o begln wlLh l do noL Lhlnk we are lnhlblLed from examlnlng Lhe quallflcaLlons of Lhe
respondenL slmply because hls nomlnaLlon has been conflrmed by Lhe Commlsslon on
AppolnLmenLs ln my vlew Lhls ls noL a pollLlcal quesLlon LhaL we are barred from resolvlng
ueLermlnaLlon of Lhe appolnLees credenLlals ls made on Lhe basls of Lhe esLabllshed facLs noL
Lhe dlscreLlon of LhaL body Lven lf lL were Lhe exerclse of LhaL dlscreLlon would sLlll be sub[ecL
Lo our revlew
ln Luego whlch ls clLed ln Lhe ponencla whaL was lnvolved was Lhe dlscreLlon of Lhe appolnLlng
auLhorlLy Lo choose beLween Lwo clalmanLs Lo Lhe same offlce who boLh possessed Lhe
requlred quallflcaLlons lL was LhaL klnd of dlscreLlon LhaL we sald could noL be revlewed
lf a person elecLed by no less Lhan Lhe soverelgn people may be ousLed by Lhls CourL for lack of
Lhe requlred quallflcaLlons l see no reason why we cannoL dlsquallfled an appolnLee slmply
because he has passed Lhe Commlsslon on AppolnLmenLs
Lven Lhe resldenL of Lhe hlllpplnes may be declared lnellglble by Lhls CourL ln an approprlaLe
proceedlng noLwlLhsLandlng LhaL he has been found accepLable by no less Lhan Lhe
enfranchlsed clLlzenry 1he reason ls LhaL whaL we would be examlnlng ls noL Lhe wlsdom of hls
elecLlon buL wheLher or noL he was quallfled Lo be elecLed ln Lhe flrsL place
Comlng now Lo Lhe quallflcaLlons of Lhe prlvaLe respondenL l fear LhaL Lhe ponencla may have
been Loo sweeplng ln lLs deflnlLlon of Lhe phrase pracLlce of law as Lo render Lhe quallflcaLlon
pracLlcally LooLhless lrom Lhe numerous acLlvlLles accepLed as embraced ln Lhe Lerm l have
Lhe uncomforLable feellng LhaL one does noL even have Lo be a lawyer Lo be engaged ln Lhe
pracLlce of law as long as hls acLlvlLles lnvolve Lhe appllcaLlon of some law however
perlpherally 1he sLock broker and Lhe lnsurance ad[usLer and Lhe realLor could come under Lhe
deflnlLlon as Lhey deal wlLh or glve advlce on maLLers LhaL are llkely Lo become lnvolved ln
llLlgaLlon
1he lawyer ls consldered engaged ln Lhe pracLlce of law even lf hls maln occupaLlon ls anoLher
buslness and he lnLerpreLs and applles some law only as an lncldenL of such buslness 1haL
covers every company organlzed under Lhe CorporaLlon Code and regulaLed by Lhe SLC under
u 902A Conslderlng Lhe ramlflcaLlons of Lhe modern socleLy Lhere ls hardly any acLlvlLy LhaL
ls noL affecLed by some law or governmenL regulaLlon Lhe buslnessman musL know abouL and
observe ln facL agaln golng by Lhe deflnlLlon a lawyer does noL even have Lo be parL of a
buslness concern Lo be consldered a pracLlLloner Pe can be so deemed when on hls own he
renLs a house or buys a car or consulLs a docLor as Lhese acLs lnvolve hls knowledge and
appllcaLlon of Lhe laws regulaLlng such LransacLlons lf he operaLes a publlc uLlllLy vehlcle as hls
maln source of llvellhood he would sLlll be deemed engaged ln Lhe pracLlce of law because he
musL obey Lhe ubllc Servlce AcL and Lhe rules and regulaLlons of Lhe Lnergy 8egulaLory 8oard
1he ponencla quoLes an Amerlcan declslon deflnlng Lhe pracLlce of law as Lhe performance of
any acLs ln or ouL of courL commonly undersLood Lo be Lhe pracLlce of law whlch Lells us
absoluLely noLhlng 1he declslon goes on Lo say LhaL because lawyers perform almosL every
funcLlon known ln Lhe commerclal and governmenLal realm such a deflnlLlon would obvlously
be Loo global Lo be workable
1he effecL of Lhe deflnlLlon glven ln Lhe ponencla ls Lo conslder vlrLually every lawyer Lo be
engaged ln Lhe pracLlce of law even lf he does noL earn hls llvlng or aL leasL parL of lL as a
lawyer lL ls enough LhaL hls acLlvlLles are lncldenLally (even lf only remoLely) connecLed wlLh
some law ordlnance or regulaLlon 1he posslble excepLlon ls Lhe lawyer whose lncome ls
derlved from Leachlng ballroom danclng or escorLlng wrlnkled ladles wlLh pubescenL
preLenslons
1he respondenLs credenLlals are lmpresslve Lo be sure buL Lhey do noL persuade me LhaL he
has been engaged ln Lhe pracLlce of law for Len years as requlred by Lhe ConsLlLuLlon lL ls
conceded LhaL he has been engaged ln buslness and flnance ln whlch areas he has
dlsLlngulshed hlmself buL as an execuLlve and economlsL and noL as a pracLlclng lawyer 1he
plaln facL ls LhaL he has occupled Lhe varlous poslLlons llsLed ln hls resume by vlrLue of hls
experlence and presLlge as a buslnessman and noL as an aLLorneyaLlaw whose prlnclpal
aLLenLlon ls focused on Lhe law Lven lf lL be argued LhaL he was acLlng as a lawyer when he
lobbled ln Congress for agrarlan and urban reform served ln Lhe nAMl8LL and Lhe
ConsLlLuLlonal Commlsslon (LogeLher wlLh nonlawyers llke farmers and prlesLs) and was a
member of Lhe uavlde Commlsslon he has noL proved LhaL hls acLlvlLles ln Lhese capaclLles
exLended over Lhe prescrlbed 10year perlod of acLual pracLlce of Lhe law Pe ls doubLless
emlnenLly quallfled for many oLher poslLlons worLhy of hls abundanL LalenLs buL noL as
Chalrman of Lhe Commlsslon on LlecLlons
l have much admlraLlon for respondenL Monsod no less Lhan for Mr !usLlce aras buL l musL
regreLfully voLe Lo granL Lhe peLlLlon
GU1ILkkL2 Ik I d|ssent|ng
When Lhls peLlLlon was flled Lhere was hope LhaL engaglng ln Lhe pracLlce of law as a
quallflcaLlon for publlc offlce would be seLLled one way or anoLher ln falrly deflnlLlve Lerms
unforLunaLely Lhls was noL Lhe resulL
Cf Lhe fourLeen (14) member CourL 3 are of Lhe vlew LhaL Mr ChrlsLlan Monsod engaged ln Lhe
pracLlce of law (wlLh one of Lhese 3 leavlng hls voLe behlnd whlle on offlclal leave buL noL
expresslng hls clear sLand on Lhe maLLer) 4 caLegorlcally sLaLlng LhaL he dld noL pracLlce law 2
voLlng ln Lhe resulL because Lhere was no error so gross as Lo amounL Lo grave abuse of
dlscreLlon one of offlclal leave wlLh no lnsLrucLlons lefL behlnd on how he vlewed Lhe lssue and
2 noL Laklng parL ln Lhe dellberaLlons and Lhe declslon
1here are Lwo key facLors LhaL make our Lask dlfflculL llrsL ls our revlewlng Lhe work of a
consLlLuLlonal Commlsslon on AppolnLmenLs whose duLy ls preclsely Lo look lnLo Lhe
quallflcaLlons of persons appolnLed Lo hlgh offlce Lven lf Lhe Commlsslon errs we have no
power Lo seL aslde error We can look only lnLo grave abuse of dlscreLlon or whlmslcally and
arblLrarlness Second ls our bellef LhaL Mr Monsod possesses superlor quallflcaLlons ln Lerms of
execuLlve ablllLy proflclency ln managemenL educaLlonal background experlence ln
lnLernaLlonal banklng and flnance and lnsLanL recognlLlon by Lhe publlc Pls lnLegrlLy and
compeLence are noL quesLloned by Lhe peLlLloner WhaL ls before us ls compllance wlLh a
speclflc requlremenL wrlLLen lnLo Lhe ConsLlLuLlon
lnsplLe of my hlgh regard for Mr Monsod l cannoL shlrk my consLlLuLlonal duLy Pe has never
engaged ln Lhe pracLlce of law for even one year Pe ls a member of Lhe bar buL Lo say LhaL he
has pracLlced law ls sLreLchlng Lhe Lerm beyond raLlonal llmlLs
A person may have passed Lhe bar examlnaLlons 8uL lf he has noL dedlcaLed hls llfe Lo Lhe law
lf he has noL engaged ln an acLlvlLy where membershlp ln Lhe bar ls a requlremenL l fall Lo see
how he can clalm Lo have been engaged ln Lhe pracLlce of law
Lngaglng ln Lhe pracLlce of law ls a quallflcaLlon noL only for CCMLLLC chalrman buL also for
appolnLmenL Lo Lhe Supreme CourL and all lower courLs WhaL klnd of !udges or !usLlces wlll we
have lf Lhere maln occupaLlon ls selllng real esLaLe managlng a buslness corporaLlon servlng ln
facLflndlng commlLLee worklng ln medla or operaLlng a farm wlLh no acLlve lnvolvemenL ln
Lhe law wheLher ln CovernmenL or prlvaLe pracLlce excepL LhaL ln one [oyful momenL ln Lhe
dlsLanL pasL Lhey happened Lo pass Lhe bar examlnaLlons?
1he ConsLlLuLlon uses Lhe phrase engaged ln Lhe pracLlce of law for aL leasL Len years 1he
dellberaLe cholce of words shows LhaL Lhe pracLlce envlsloned ls acLlve and regular noL
lsolaLed occaslonal accldenLal lnLermlLLenL lncldenLal seasonal or exLemporaneous 1o be
engaged ln an acLlvlLy for Len years requlres commlLLed parLlclpaLlon ln someLhlng whlch ls
Lhe resulL of ones declslve cholce lL means LhaL one ls occupled and lnvolved ln Lhe enLerprlse
one ls obllged or pledged Lo carry lL ouL wlLh lnLenL and aLLenLlon durlng Lhe Lenyear perlod
l agree wlLh Lhe peLlLloner LhaL based on Lhe blodaLa submlLLed by respondenL Monsod Lo Lhe
Commlsslon on AppolnLmenLs Lhe laLLer has noL been engaged ln Lhe pracLlce of law for aL
leasL Len years ln facL lf appears LhaL Mr Monsod has never pracLlced law excepL for an
alleged one year perlod afLer passlng Lhe bar examlnaLlons when he worked ln hls faLhers law
flrm Lven Lhen hls law pracLlce musL have been exLremely llmlLed because he was also worklng
for MA and h u degrees ln Lconomlcs aL Lhe unlverslLy of ennsylvanla durlng LhaL perlod
Pow could he pracLlce law ln Lhe unlLed SLaLes whlle noL a member of Lhe 8ar Lhere?
1he professlonal llfe of Lhe respondenL follows
1131 8espondenL Monsods acLlvlLles slnce hls passlng Lhe 8ar examlnaLlons ln 1961 conslsL
of Lhe followlng
1 19611963 MA ln Lconomlcs (h u candldaLe) unlverslLy of ennsylvanla
2 19631970 World 8ank Croup LconomlsL lndusLry ueparLmenL CperaLlons LaLln
Amerlcan ueparLmenL ulvlslon Chlef SouLh Asla and Mlddle LasL lnLernaLlonal llnance
CorporaLlon
3 19701973 Meralco Croup LxecuLlve of varlous companles le Meralco SecurlLles
CorporaLlon hlllpplne eLroleum CorporaLlon hlllpplne LlecLrlc CorporaLlon
4 19731976 ?u[ulco Croup resldenL lllCaplLal uevelopmenL CorporaLlon and
afflllaLed companles
3 19761978 llnaclera Manlla Chlef LxecuLlve Cfflcer
6 19781986 CuevenL Croup of Companles Chlef LxecuLlve Cfflcer
7 19861987 hlllpplne ConsLlLuLlonal Commlsslon Member
8 19891991 1he lacLllndlng Commlsslon on Lhe uecember 1989 Coup ALLempL
Member
9 resenLly Chalrman of Lhe 8oard and Chlef LxecuLlve Cfflcer of Lhe followlng
companles
a ACL ConLalner hlllpplnes lnc
b uaLaprep hlllpplnes
c hlllpplne SunsysLems roducLs lnc
d Semlrara Coal CorporaLlon
e C8L 1lmber CorporaLlon
Member of Lhe 8oard of Lhe lollowlng
a Lnglneerlng ConsLrucLlon CorporaLlon of Lhe hlllpplnes
b llrsL hlllpplne Lnergy CorporaLlon
c llrsL hlllpplne Poldlngs CorporaLlon
d llrsL hlllpplne lndusLrlal CorporaLlon
e Craphlc ALeller
f Manlla LlecLrlc Company
g hlllpplne Commerclal CaplLal lnc
h hlllpplne LlecLrlc CorporaLlon
l 1arlac 8eforesLaLlon and LnvlronmenL LnLerprlses
[ 1olong AquaculLure CorporaLlon
k vlsayan AquaculLure CorporaLlon
l Culmaras AquaculLure CorporaLlon (8ollo pp 2122)
1here ls noLhlng ln Lhe above blodaLa whlch even remoLely lndlcaLes LhaL respondenL Monsod
has glven Lhe law enough aLLenLlon or a cerLaln degree of commlLmenL and parLlclpaLlon as
would supporL ln all slncerlLy and candor Lhe clalm of havlng engaged ln lLs pracLlce for aL leasL
Len years lnsLead of worklng as a lawyer he has lawyers worklng for hlm lnsLead of glvlng
recelvlng LhaL legal advlce of legal servlces he was Lhe oneadvlce and Lhose servlces as an
execuLlve buL noL as a lawyer
1he dellberaLlons before Lhe Commlsslon on AppolnLmenLs show an efforL Lo equaLe engaged
ln Lhe pracLlce of law wlLh Lhe use of legal knowledge ln varlous flelds of endeavor such as
commerce lndusLry clvlc work blue rlbbon lnvesLlgaLlons agrarlan reform eLc where such
knowledge would be helpful
l regreL LhaL l cannoL [oln ln playlng fasL and loose wlLh a Lerm whlch even an ordlnary layman
accepLs as havlng a famlllar and cusLomary welldeflned meanlng Lvery resldenL of Lhls counLry
who has reached Lhe age of dlscernmenL has Lo know follow or apply Lhe law aL varlous Llmes
ln hls llfe Legal knowledge ls useful lf noL necessary for Lhe buslness execuLlve leglslaLor
mayor barangay capLaln Leacher pollceman farmer flsherman markeL vendor and sLudenL
Lo name only a few And yeL can Lhese people honesLly asserL LhaL as such Lhey are engaged ln
Lhe pracLlce of law?
1he ConsLlLuLlon requlres havlng been engaged ln Lhe pracLlce of law for aL leasL Len years lL
ls noL saLlsfled wlLh havlng been a member of Lhe hlllpplne bar for aL leasL Len years
Some Amerlcan courLs have deflned Lhe pracLlce of law as follows
1he pracLlce of law lnvolves noL only appearance ln courL ln connecLlon wlLh llLlgaLlon buL also
servlces rendered ouL of courL and lL lncludes Lhe glvlng of advlce or Lhe renderlng of any
servlces requlrlng Lhe use of legal sklll or knowledge such as preparlng a wlll conLracL or oLher
lnsLrumenL Lhe legal effecL of whlch under Lhe facLs and condlLlons lnvolved musL be carefully
deLermlned eople ex rel Chlcago 8ar Assn v 1lnkoff 399 lll 282 77 nL2d 693 eople ex
rel llllnols SLaLe 8ar Assn v eoples SLock ?ards SLaLe 8ank 344 lll 462176 nL 901 and
cases clLed
lL would be dlfflculL lf noL lmposslble Lo lay down a formula or deflnlLlon of whaL consLlLuLes
Lhe pracLlce of law racLlclng law has been deflned as racLlclng as an aLLorney or counselor
aL law accordlng Lo Lhe laws and cusLoms of our courLs ls Lhe glvlng of advlce or rendlLlon of
any sorL of servlce by any person flrm or corporaLlon when Lhe glvlng of such advlce or
rendlLlon of such servlce requlres Lhe use of any degree of legal knowledge or sklll WlLhouL
adopLlng LhaL deflnlLlon we referred Lo lL as belng subsLanLlally correcL ln eople ex rel llllnols
SLaLe 8ar Assn v eoples SLock ?ards SLaLe 8ank 344 lll 462176 nL 901 (eople v Schafer
87 nL 2d 773 776)
lor ones acLlons Lo come wlLhln Lhe purvlew of pracLlce of law Lhey should noL only be
acLlvlLles pecullar Lo Lhe work of a lawyer Lhey should also be performed hablLually frequenLly
or cusLomarlly Lo wlL
xxx xxx xxx
8espondenLs answers Lo quesLlons propounded Lo hlm were raLher evaslve Pe was asked
wheLher or noL he ever prepared conLracLs for Lhe parLles ln realesLaLe LransacLlons where he
was noL Lhe procurlng agenL Pe answered very seldom ln answer Lo Lhe quesLlon as Lo how
many Llmes he had prepared conLracLs for Lhe parLles durlng Lhe LwenLyone years of hls
buslness he sald l have no ldea When asked lf lL would be more Lhan half a dozen Llmes hls
answer was l suppose Asked lf he dld noL recall maklng Lhe sLaLemenL Lo several parLles LhaL he
had prepared conLracLs ln a large number of lnsLances he answered l donL recall exacLly whaL
was sald When asked lf he dld noL remember saylng LhaL he had made a pracLlce of preparlng
deeds morLgages and conLracLs and charglng a fee Lo Lhe parLles Lherefor ln lnsLances where
he was noL Lhe broker ln Lhe deal he answered Well l donL belleve so LhaL ls noL a pracLlce
ressed furLher for an answer as Lo hls pracLlce ln preparlng conLracLs and deeds for parLles
where he was noL Lhe broker he flnally answered l have done abouL everyLhlng LhaL ls on Lhe
books as far as real esLaLe ls concerned
xxx xxx xxx
8espondenL Lakes Lhe poslLlon LhaL because he ls a realesLaLe broker he has a lawful rlghL Lo do
any legal work ln connecLlon wlLh realesLaLe LransacLlons especlally ln drawlng of realesLaLe
conLracLs deeds morLgages noLes and Lhe llke 1here ls no doubL buL LhaL he has engaged ln
Lhese pracLlces over Lhe years and has charged for hls servlces ln LhaL connecLlon (eople v
Schafer 87 nL 2d 773)
xxx xxx xxx
An aLLorney ln Lhe mosL general sense ls a person deslgnaLed or employed by anoLher Lo acL
ln hls sLead an agenL more especlally one of a class of persons auLhorlzed Lo appear and acL
for sulLors or defendanLs ln legal proceedlngs SLrlcLly Lhese professlonal persons are aLLorneys
aL law and nonprofesslonal agenLs are properly sLyled aLLorneys ln facL buL Lhe slngle word
ls much used as meanlng an aLLorney aL law A person may be an aLLorney ln facLo for anoLher
wlLhouL belng an aLLorney aL law Abb Law ulcL ALLorney A publlc aLLorney or aLLorney aL
law says WebsLer ls an offlcer of a courL of law legally quallfled Lo prosecuLe and defend
acLlons ln such courL on Lhe reLalner of cllenLs 1he prlnclpal duLles of an aLLorney are (1) Lo be
Lrue Lo Lhe courL and Lo hls cllenL (2) Lo manage Lhe buslness of hls cllenL wlLh care sklll and
lnLegrlLy (3) Lo keep hls cllenL lnformed as Lo Lhe sLaLe of hls buslness (4) Lo keep hls secreLs
conflded Lo hlm as such Pls rlghLs are Lo be [usLly compensaLed for hls servlces 8ouv Law
ulcL LlL ALLorney 1he LranslLlve verb pracLlce as deflned by WebsLer means Lo do or
perform frequenLly cusLomarlly or hablLually Lo perform by a successlon of acLs as Lo
pracLlce gamlng Lo carry on ln pracLlce or repeaLed acLlon Lo apply as a Lheory Lo real llfe
Lo exerclse as a professlon Lrade arL eLc as Lo pracLlce law or medlclne eLc (SLaLe v
8ryan SL 322 323 Lmphasls supplled)
ln Lhls [urlsdlcLlon we have ruled LhaL Lhe pracLlce of law denoLes frequency or a successlon of
acLs 1hus we sLaLed ln Lhe case of eople v vlllanueva (14 SC8A 109 1963)
xxx xxx xxx
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlons
a successlon of acLs of Lhe same klnd ln oLher words lL ls frequenL hablLual exerclse (SLaLe v
CoLner 127 p 1 87 kan 864 42 L8A MS 768) racLlce of law Lo fall wlLhln Lhe prohlblLlon of
sLaLuLe has been lnLerpreLed as cusLomarlly or hablLually holdlng ones self ouL Lo Lhe publlc as
a lawyer and demandlng paymenL for such servlces (aL p 112)
lL ls Lo be noLed LhaL Lhe Commlsslon on AppolnLmenL lLself recognlzes hablLuallLy as a requlred
componenL of Lhe meanlng of pracLlce of law ln a Memorandum prepared and lssued by lL Lo
wlL
l PablLuallLy 1he Lerm pracLlce of law lmplles cusLomarllyor hablLually holdlng ones self
ouL Lo Lhe publlc as a lawyer (eople v vlllanueva 14 SC8A 109 clLlng SLaLe v 8ryan 4 SL 322
98 nC 644) such as when one sends a clrcular announclng Lhe esLabllshmenL of a law offlce for
Lhe general pracLlce of law (uS v noy 8osque 8 hll 146) or when one Lakes Lhe oaLh of
offlce as a lawyer before a noLary publlc and flles a manlfesLaLlon wlLh Lhe Supreme CourL
lnformlng lL of hls lnLenLlon Lo pracLlce law ln all courLs ln Lhe counLry (eople v ue Luna 102
hll 968)
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlon a
successlon of acLs of Lhe same klnd ln oLher words lL ls a hablLual exerclse (eople v
vlllanueva 14 SC8A 1 09 clLlng SLaLe v CoLner 1 27 p 1 87 kan 864) (8ollo p 113)
xxx xxx xxx
Whlle Lhe career as a buslnessman of respondenL Monsod may have proflLed from hls legal
knowledge Lhe use of such legal knowledge ls lncldenLal and conslsLs of lsolaLed acLlvlLles
whlch do noL fall under Lhe denomlnaLlon of pracLlce of law Admlsslon Lo Lhe pracLlce of law
was noL requlred for membershlp ln Lhe ConsLlLuLlonal Commlsslon or ln Lhe lacLllndlng
Commlsslon on Lhe 1989 Coup ALLempL Any speclflc legal acLlvlLles whlch may have been
asslgned Lo Mr Monsod whlle a member may be llkened Lo lsolaLed LransacLlons of forelgn
corporaLlons ln Lhe hlllpplnes whlch do noL caLegorlze Lhe forelgn corporaLlons as dolng
buslness ln Lhe hlllpplnes As ln Lhe pracLlce of law dolng buslness also should be acLlve and
conLlnuous lsolaLed buslness LransacLlons or occaslonal lncldenLal and casual LransacLlons are
noL wlLhln Lhe conLexL of dolng buslness 1hls was our rullng ln Lhe case of AnLam ConsolldaLed
lnc v CourL of appeals 143 SC8A 288 1986)
8espondenL Monsod corporaLe execuLlve clvlc leader and member of Lhe ConsLlLuLlonal
Commlsslon may possess Lhe background compeLence lnLegrlLy and dedlcaLlon Lo quallfy for
such hlgh offlces as resldenL vlceresldenL SenaLor Congressman or Covernor buL Lhe
ConsLlLuLlon ln prescrlblng Lhe speclflc quallflcaLlon of havlng engaged ln Lhe pracLlce of law for
aL leasL Len (10) years for Lhe poslLlon of CCMLLLC Chalrman has ordered LhaL he may noL be
conflrmed for LhaL offlce 1he ConsLlLuLlon charges Lhe publlc respondenLs no less Lhan Lhls
CourL Lo obey lLs mandaLe
l Lherefore belleve LhaL Lhe Commlsslon on AppolnLmenLs commlLLed grave abuse of
dlscreLlon ln conflrmlng Lhe nomlnaLlon of respondenL Monsod as Chalrman of Lhe CCMLLLC
l voLe Lo C8An1 Lhe peLlLlon
8ldln ! dlssenL
SeparaLe Cplnlons
nA8vASA ! concurrlng
l concur wlLh Lhe declslon of Lhe ma[orlLy wrlLLen by Mr !usLlce aras albelL only ln Lhe resulL
lL does noL appear Lo me LhaL Lhere has been an adequaLe showlng LhaL Lhe challenged
deLermlnaLlon by Lhe Commlsslon on AppolnLmenLsLhaL Lhe appolnLmenL of respondenL
Monsod as Chalrman of Lhe Commlsslon on LlecLlons should on Lhe basls of hls sLaLed
quallflcaLlons and afLer due assessmenL Lhereof be conflrmedwas aLLended by error so gross
as Lo amounL Lo grave abuse of dlscreLlon and consequenLly merlLs nulllflcaLlon by Lhls CourL ln
accordance wlLh Lhe second paragraph of SecLlon 1 ArLlcle vlll of Lhe ConsLlLuLlon l Lherefore
voLe Lo uLn? Lhe peLlLlon
MelencloPerrera ! concur
AulLLA ! dlssenLlng
1he records of Lhls case wlll show LhaL when Lhe CourL flrsL dellberaLed on Lhe eLlLlon aL bar l
voLed noL only Lo requlre Lhe respondenLs Lo commenL on Lhe eLlLlon buL l was Lhe sole voLe
for Lhe lssuance of a Lemporary resLralnlng order Lo en[oln respondenL Monsod from assumlng
Lhe poslLlon of CCMLLLC Chalrman whlle Lhe CourL dellberaLed on hls consLlLuLlonal
quallflcaLlon for Lhe offlce My purpose ln voLlng for a 18C was Lo prevenL Lhe lnconvenlence
and even embarrassmenL Lo all parLles concerned were Lhe CourL Lo flnally declde for
respondenL Monsods dlsquallflcaLlon Moreover a readlng of Lhe eLlLlon Lhen ln relaLlon Lo
esLabllshed [urlsprudence already showed prlma facle LhaL respondenL Monsod dld noL possess
Lhe needed quallflcaLlon LhaL ls he had noL engaged ln Lhe pracLlce of law for aL leasL Len (10)
years prlor Lo hls appolnLmenL as CCMLLLC Chalrman
AfLer conslderlng carefully respondenL Monsods commenL l am even more convlnced LhaL Lhe
consLlLuLlonal requlremenL of pracLlce of law for aL leasL Len (10) years has noL been meL
1he procedural barrlers lnLerposed by respondenLs deserve scanL conslderaLlon because
ulLlmaLely Lhe core lssue Lo be resolved ln Lhls peLlLlon ls Lhe proper consLrual of Lhe
consLlLuLlonal provlslon requlrlng a ma[orlLy of Lhe membershlp of CCMLLLC lncludlng Lhe
Chalrman Lhereof Lo have been engaged ln Lhe pracLlce of law for aL leasL Len (10) years (ArL
lx(C) SecLlon 1(1) 1987 ConsLlLuLlon) CuesLlons lnvolvlng Lhe consLrucLlon of consLlLuLlonal
provlslons are besL lefL Lo [udlclal resoluLlon As declared ln Angara v LlecLoral Commlsslon (63
hll 139) upon Lhe [udlclal deparLmenL ls Lhrown Lhe solemn and lnescapable obllgaLlon of
lnLerpreLlng Lhe ConsLlLuLlon and deflnlng consLlLuLlonal boundarles
1he ConsLlLuLlon has lmposed clear and speclflc sLandards for a CCMLLLC Chalrman Among
Lhese are LhaL he musL have been engaged ln Lhe pracLlce of law for aL leasL Len (10) years lL
ls Lhe bounden duLy of Lhls CourL Lo ensure LhaL such sLandard ls meL and complled wlLh
WhaL consLlLuLes pracLlce of law? As commonly undersLood pracLlce refers Lo Lhe acLual
performance or appllcaLlon of knowledge as dlsLlngulshed from mere possesslon of knowledge
lL connoLes an acLlve hablLual repeaLed or cusLomary acLlon 1 1o pracLlce law or any
professlon for LhaL maLLer means Lo exerclse or pursue an employmenL or professlon acLlvely
hablLually repeaLedly or cusLomarlly
1herefore a docLor of medlclne who ls employed and ls hablLually performlng Lhe Lasks of a
nurslng alde cannoL be sald Lo be ln Lhe pracLlce of medlclne A cerLlfled publlc accounLanL
who works as a clerk cannoL be sald Lo pracLlce hls professlon as an accounLanL ln Lhe same
way a lawyer who ls employed as a buslness execuLlve or a corporaLe manager oLher Lhan as
head or aLLorney of a Legal ueparLmenL of a corporaLlon or a governmenLal agency cannoL be
sald Lo be ln Lhe pracLlce of law
As apLly held by Lhls CourL ln Lhe case of eople vs vlllanueva 2
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlons a
successlon of acLs of Lhe same klnd ln oLher words lL ls frequenL hablLual exerclse (SLaLe vs
CoLner 127 p 1 87 kan 864 42 L8A MS 768) racLlce of law Lo fall wlLhln Lhe prohlblLlon of
sLaLuLe has been lnLerpreLed as cusLomarlly or hablLually holdlng ones self ouL Lo Lhe publlc as
a lawyer and demandlng paymenL for such servlces (SLaLe vs 8ryan 4 SL 322 98 nC
644647) (emphasls supplled)
lL ls worLh menLlonlng LhaL Lhe respondenL Commlsslon on AppolnLmenLs ln a Memorandum lL
prepared enumeraLed several facLors deLermlnaLlve of wheLher a parLlcular acLlvlLy consLlLuLes
pracLlce of law lL sLaLes
1 PablLuallLy 1he Lerm pracLlce of law lmplles cusLomarlly or hablLually holdlng ones
self ouL Lo Lhe publlc as a lawyer (eople vs vlllanueva 14 SC8A 109 clLlng SLaLe v 8oyen 4 SL
322 98 nC 644) such as when one sends a clrcular announclng Lhe esLabllshmenL of a law
offlce for Lhe general pracLlce of law (uS v ney 8osque 8 hll 146) or when one Lakes Lhe
oaLh of offlce as a lawyer before a noLary publlc and flles a manlfesLaLlon wlLh Lhe Supreme
CourL lnformlng lL of hls lnLenLlon Lo pracLlce law ln all courLs ln Lhe counLry (eople v ue Luna
102 hll 968)
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlon a
successlon of acLs of Lhe same klnd ln oLher words lL ls a hablLual exerclse (eople v
vlllanueva 14 SC8A 109 clLlng SLaLe v CoLner 127 p 1 87 kan 864)
2 CompensaLlon racLlce of law lmplles LhaL one musL have presenLed hlmself Lo be ln
Lhe acLlve and conLlnued pracLlce of Lhe legal professlon and LhaL hls professlonal servlces are
avallable Lo Lhe publlc for compensaLlon as a servlce of hls llvellhood or ln conslderaLlon of hls
sald servlces (eople v vlllanueva supra) Pence charglng for servlces such as preparaLlon of
documenLs lnvolvlng Lhe use of legal knowledge and sklll ls wlLhln Lhe Lerm pracLlce of law
(Lrnanl ano 8ar 8evlewer ln Legal and !udlclal LLhlcs 1988 ed p 8 clLlng eople v eoples
SLockyards SLaLe 8ank 176 n8 901) and one who renders an oplnlon as Lo Lhe proper
lnLerpreLaLlon of a sLaLuLe and recelves pay for lL ls Lo LhaL exLenL pracLlclng law (MarLln
supra p 806 clLlng Mendelaun v CllberL and 8arkeL Mfg Co 290 n?S 462) lf compensaLlon
ls expecLed all advlce Lo cllenLs and all acLlon Laken for Lhem ln maLLers connecLed wlLh Lhe
law are pracLlclng law (Llwood llLcheLLe eL al v ArLhur C 1aylor 94AL8 336339)
3 AppllcaLlon of law legal prlnclple pracLlce or procedure whlch calls for legal knowledge
Lralnlng and experlence ls wlLhln Lhe Lerm pracLlce of law (MarLln supra)
4 ALLorneycllenL relaLlonshlp Lngaglng ln Lhe pracLlce of law presupposes Lhe exlsLence
of lawyercllenL relaLlonshlp Pence where a lawyer underLakes an acLlvlLy whlch requlres
knowledge of law buL lnvolves no aLLorneycllenL relaLlonshlp such as Leachlng law or wrlLlng
law books or arLlcles he cannoL be sald Lo be engaged ln Lhe pracLlce of hls professlon or a
lawyer (Agpalo Legal LLhlcs 1989 ed p 30) 3
1he aboveenumeraLed facLors would l belleve be useful alds ln deLermlnlng wheLher or noL
respondenL Monsod meeLs Lhe consLlLuLlonal quallflcaLlon of pracLlce of law for aL leasL Len
(10) years aL Lhe Llme of hls appolnLmenL as CCMLLLC Chalrman
1he followlng relevanL quesLlons may be asked
1 uld respondenL Monsod perform any of Lhe Lasks whlch are pecullar Lo Lhe pracLlce of
law?
2 uld respondenL perform such Lasks cusLomarlly or hablLually?
3 Assumlng LhaL he performed any of such Lasks hablLually dld he do so PA8l1uALL? lC8
A1 LLAS1 1Ln (10) ?LA8S prlor Lo hls appolnLmenL as CCMLLLC Chalrman?
Clven Lhe employmenL or [ob hlsLory of respondenL Monsod as appears from Lhe records l am
persuaded LhaL lf ever he dld perform any of Lhe Lasks whlch consLlLuLe Lhe pracLlce of law he
dld noL do so PA8l1uALL? for aL leasL Len (10) years prlor Lo hls appolnLmenL as CCMLLLC
Chalrman
Whlle lL may be granLed LhaL he performed Lasks and acLlvlLles whlch could be laLlLudlnarlanly
consldered acLlvlLles pecullar Lo Lhe pracLlce of law llke Lhe drafLlng of legal documenLs and Lhe
renderlng of legal oplnlon or advlce such were lsolaLed LransacLlons or acLlvlLles whlch do noL
quallfy hls pasL endeavors as pracLlce of law 1o become engaged ln Lhe pracLlce of law Lhere
musL be a conLlnulLy or a successlon of acLs As observed by Lhe SollclLor Ceneral ln eople vs
vlllanueva 4
LssenLlally Lhe word prlvaLe pracLlce of law lmplles LhaL one musL have presenLed hlmself Lo be
ln Lhe acLlve and conLlnued pracLlce of Lhe legal professlon and LhaL hls professlonal servlces
are avallable Lo Lhe publlc for a compensaLlon as a source of hls llvellhood or ln conslderaLlon
of hls sald servlces
ACCC8ulnCL? my voLe ls Lo C8An1 Lhe peLlLlon and Lo declare respondenL Monsod as noL
quallfled for Lhe poslLlon of CCMLLLC Chalrman for noL havlng engaged ln Lhe pracLlce of law
for aL leasL Len (10) years prlor Lo hls appolnLmenL Lo such poslLlon
CkU2 I d|ssent|ng
l am slncerely lmpressed by Lhe ponencla of my broLher aras buL flnd l musL dlssenL [usL Lhe
same 1here are cerLaln polnLs on whlch l musL dlffer wlLh hlm whlle of course respecLlng
hlsvlewpolnL
1o begln wlLh l do noL Lhlnk we are lnhlblLed from examlnlng Lhe quallflcaLlons of Lhe
respondenL slmply because hls nomlnaLlon has been conflrmed by Lhe Commlsslon on
AppolnLmenLs ln my vlew Lhls ls noL a pollLlcal quesLlon LhaL we are barred from resolvlng
ueLermlnaLlon of Lhe appolnLees credenLlals ls made on Lhe basls of Lhe esLabllshed facLs noL
Lhe dlscreLlon of LhaL body Lven lf lL were Lhe exerclse of LhaL dlscreLlon would sLlll be sub[ecL
Lo our revlew
ln Luego whlch ls clLed ln Lhe ponencla whaL was lnvolved was Lhe dlscreLlon of Lhe appolnLlng
auLhorlLy Lo choose beLween Lwo clalmanLs Lo Lhe same offlce who boLh possessed Lhe
requlred quallflcaLlons lL was LhaL klnd of dlscreLlon LhaL we sald could noL be revlewed
lf a person elecLed by no less Lhan Lhe soverelgn people may be ousLed by Lhls CourL for lack of
Lhe requlred quallflcaLlons l see no reason why we cannoL dlsquallfled an appolnLee slmply
because he has passed Lhe Commlsslon on AppolnLmenLs
Lven Lhe resldenL of Lhe hlllpplnes may be declared lnellglble by Lhls CourL ln an approprlaLe
proceedlng noLwlLhsLandlng LhaL he has been found accepLable by no less Lhan Lhe
enfranchlsed clLlzenry 1he reason ls LhaL whaL we would be examlnlng ls noL Lhe wlsdom of hls
elecLlon buL wheLher or noL he was quallfled Lo be elecLed ln Lhe flrsL place
Comlng now Lo Lhe quallflcaLlons of Lhe prlvaLe respondenL l fear LhaL Lhe ponencla may have
been Loo sweeplng ln lLs deflnlLlon of Lhe phrase pracLlce of law as Lo render Lhe quallflcaLlon
pracLlcally LooLhless lrom Lhe numerous acLlvlLles accepLed as embraced ln Lhe Lerm l have
Lhe uncomforLable feellng LhaL one does noL even have Lo be a lawyer Lo be engaged ln Lhe
pracLlce of law as long as hls acLlvlLles lnvolve Lhe appllcaLlon of some law however
perlpherally 1he sLock broker and Lhe lnsurance ad[usLer and Lhe realLor could come under Lhe
deflnlLlon as Lhey deal wlLh or glve advlce on maLLers LhaL are llkely Lo become lnvolved ln
llLlgaLlon
1he lawyer ls consldered engaged ln Lhe pracLlce of law even lf hls maln occupaLlon ls anoLher
buslness and he lnLerpreLs and applles some law only as an lncldenL of such buslness 1haL
covers every company organlzed under Lhe CorporaLlon Code and regulaLed by Lhe SLC under
u 902A Conslderlng Lhe ramlflcaLlons of Lhe modern socleLy Lhere ls hardly any acLlvlLy LhaL
ls noL affecLed by some law or governmenL regulaLlon Lhe buslnessman musL know abouL and
observe ln facL agaln golng by Lhe deflnlLlon a lawyer does noL even have Lo be parL of a
buslness concern Lo be consldered a pracLlLloner Pe can be so deemed when on hls own he
renLs a house or buys a car or consulLs a docLor as Lhese acLs lnvolve hls knowledge and
appllcaLlon of Lhe laws regulaLlng such LransacLlons lf he operaLes a publlc uLlllLy vehlcle as hls
maln source of llvellhood he would sLlll be deemed engaged ln Lhe pracLlce of law because he
musL obey Lhe ubllc Servlce AcL and Lhe rules and regulaLlons of Lhe Lnergy 8egulaLory 8oard
1he ponencla quoLes an Amerlcan declslon deflnlng Lhe pracLlce of law as Lhe performance of
any acLs ln or ouL of courL commonly undersLood Lo be Lhe pracLlce of law whlch Lells us
absoluLely noLhlng 1he declslon goes on Lo say LhaL because lawyers perform almosL every
funcLlon known ln Lhe commerclal and governmenLal realm such a deflnlLlon would obvlously
be Loo global Lo be workable
1he effecL of Lhe deflnlLlon glven ln Lhe ponencla ls Lo conslder vlrLually every lawyer Lo be
engaged ln Lhe pracLlce of law even lf he does noL earn hls llvlng or aL leasL parL of lL as a
lawyer lL ls enough LhaL hls acLlvlLles are lncldenLally (even lf only remoLely) connecLed wlLh
some law ordlnance or regulaLlon 1he posslble excepLlon ls Lhe lawyer whose lncome ls
derlved from Leachlng ballroom danclng or escorLlng wrlnkled ladles wlLh pubescenL
preLenslons
1he respondenLs credenLlals are lmpresslve Lo be sure buL Lhey do noL persuade me LhaL he
has been engaged ln Lhe pracLlce of law for Len years as requlred by Lhe ConsLlLuLlon lL ls
conceded LhaL he has been engaged ln buslness and flnance ln whlch areas he has
dlsLlngulshed hlmself buL as an execuLlve and economlsL and noL as a pracLlclng lawyer 1he
plaln facL ls LhaL he has occupled Lhe varlous poslLlons llsLed ln hls resume by vlrLue of hls
experlence and presLlge as a buslnessman and noL as an aLLorneyaLlaw whose prlnclpal
aLLenLlon ls focused on Lhe law Lven lf lL be argued LhaL he was acLlng as a lawyer when he
lobbled ln Congress for agrarlan and urban reform served ln Lhe nAMl8LL and Lhe
ConsLlLuLlonal Commlsslon (LogeLher wlLh nonlawyers llke farmers and prlesLs) and was a
member of Lhe uavlde Commlsslon he has noL proved LhaL hls acLlvlLles ln Lhese capaclLles
exLended over Lhe prescrlbed 10year perlod of acLual pracLlce of Lhe law Pe ls doubLless
emlnenLly quallfled for many oLher poslLlons worLhy of hls abundanL LalenLs buL noL as
Chalrman of Lhe Commlsslon on LlecLlons
l have much admlraLlon for respondenL Monsod no less Lhan for Mr !usLlce aras buL l musL
regreLfully voLe Lo granL Lhe peLlLlon
GU1ILkkL2 Ik I d|ssent|ng
When Lhls peLlLlon was flled Lhere was hope LhaL engaglng ln Lhe pracLlce of law as a
quallflcaLlon for publlc offlce would be seLLled one way or anoLher ln falrly deflnlLlve Lerms
unforLunaLely Lhls was noL Lhe resulL
Cf Lhe fourLeen (14) member CourL 3 are of Lhe vlew LhaL Mr ChrlsLlan Monsod engaged ln Lhe
pracLlce of law (wlLh one of Lhese 3 leavlng hls voLe behlnd whlle on offlclal leave buL noL
expresslng hls clear sLand on Lhe maLLer) 4 caLegorlcally sLaLlng LhaL he dld noL pracLlce law 2
voLlng ln Lhe resulL because Lhere was no error so gross as Lo amounL Lo grave abuse of
dlscreLlon one of offlclal leave wlLh no lnsLrucLlons lefL behlnd on how he vlewed Lhe lssue and
2 noL Laklng parL ln Lhe dellberaLlons and Lhe declslon
1here are Lwo key facLors LhaL make our Lask dlfflculL llrsL ls our revlewlng Lhe work of a
consLlLuLlonal Commlsslon on AppolnLmenLs whose duLy ls preclsely Lo look lnLo Lhe
quallflcaLlons of persons appolnLed Lo hlgh offlce Lven lf Lhe Commlsslon errs we have no
power Lo seL aslde error We can look only lnLo grave abuse of dlscreLlon or whlmslcally and
arblLrarlness Second ls our bellef LhaL Mr Monsod possesses superlor quallflcaLlons ln Lerms of
execuLlve ablllLy proflclency ln managemenL educaLlonal background experlence ln
lnLernaLlonal banklng and flnance and lnsLanL recognlLlon by Lhe publlc Pls lnLegrlLy and
compeLence are noL quesLloned by Lhe peLlLloner WhaL ls before us ls compllance wlLh a
speclflc requlremenL wrlLLen lnLo Lhe ConsLlLuLlon
lnsplLe of my hlgh regard for Mr Monsod l cannoL shlrk my consLlLuLlonal duLy Pe has never
engaged ln Lhe pracLlce of law for even one year Pe ls a member of Lhe bar buL Lo say LhaL he
has pracLlced law ls sLreLchlng Lhe Lerm beyond raLlonal llmlLs
A person may have passed Lhe bar examlnaLlons 8uL lf he has noL dedlcaLed hls llfe Lo Lhe law
lf he has noL engaged ln an acLlvlLy where membershlp ln Lhe bar ls a requlremenL l fall Lo see
how he can clalm Lo have been engaged ln Lhe pracLlce of law
Lngaglng ln Lhe pracLlce of law ls a quallflcaLlon noL only for CCMLLLC chalrman buL also for
appolnLmenL Lo Lhe Supreme CourL and all lower courLs WhaL klnd of !udges or !usLlces wlll we
have lf Lhere maln occupaLlon ls selllng real esLaLe managlng a buslness corporaLlon servlng ln
facLflndlng commlLLee worklng ln medla or operaLlng a farm wlLh no acLlve lnvolvemenL ln
Lhe law wheLher ln CovernmenL or prlvaLe pracLlce excepL LhaL ln one [oyful momenL ln Lhe
dlsLanL pasL Lhey happened Lo pass Lhe bar examlnaLlons?
1he ConsLlLuLlon uses Lhe phrase engaged ln Lhe pracLlce of law for aL leasL Len years 1he
dellberaLe cholce of words shows LhaL Lhe pracLlce envlsloned ls acLlve and regular noL
lsolaLed occaslonal accldenLal lnLermlLLenL lncldenLal seasonal or exLemporaneous 1o be
engaged ln an acLlvlLy for Len years requlres commlLLed parLlclpaLlon ln someLhlng whlch ls
Lhe resulL of ones declslve cholce lL means LhaL one ls occupled and lnvolved ln Lhe enLerprlse
one ls obllged or pledged Lo carry lL ouL wlLh lnLenL and aLLenLlon durlng Lhe Lenyear perlod
l agree wlLh Lhe peLlLloner LhaL based on Lhe blodaLa submlLLed by respondenL Monsod Lo Lhe
Commlsslon on AppolnLmenLs Lhe laLLer has noL been engaged ln Lhe pracLlce of law for aL
leasL Len years ln facL lf appears LhaL Mr Monsod has never pracLlced law excepL for an
alleged one year perlod afLer passlng Lhe bar examlnaLlons when he worked ln hls faLhers law
flrm Lven Lhen hls law pracLlce musL have been exLremely llmlLed because he was also worklng
for MA and h u degrees ln Lconomlcs aL Lhe unlverslLy of ennsylvanla durlng LhaL perlod
Pow could he pracLlce law ln Lhe unlLed SLaLes whlle noL a member of Lhe 8ar Lhere?
1he professlonal llfe of Lhe respondenL follows
1131 8espondenL Monsods acLlvlLles slnce hls passlng Lhe 8ar examlnaLlons ln 1961 conslsL
of Lhe followlng
1 19611963 MA ln Lconomlcs (h u candldaLe) unlverslLy of ennsylvanla
2 19631970 World 8ank Croup LconomlsL lndusLry ueparLmenL CperaLlons LaLln
Amerlcan ueparLmenL ulvlslon Chlef SouLh Asla and Mlddle LasL lnLernaLlonal llnance
CorporaLlon
3 19701973 Meralco Croup LxecuLlve of varlous companles le Meralco SecurlLles
CorporaLlon hlllpplne eLroleum CorporaLlon hlllpplne LlecLrlc CorporaLlon
4 19731976 ?u[ulco Croup resldenL lllCaplLal uevelopmenL CorporaLlon and
afflllaLed companles
3 19761978 llnaclera Manlla Chlef LxecuLlve Cfflcer
6 19781986 CuevenL Croup of Companles Chlef LxecuLlve Cfflcer
7 19861987 hlllpplne ConsLlLuLlonal Commlsslon Member
8 19891991 1he lacLllndlng Commlsslon on Lhe uecember 1989 Coup ALLempL
Member
9 resenLly Chalrman of Lhe 8oard and Chlef LxecuLlve Cfflcer of Lhe followlng
companles
a ACL ConLalner hlllpplnes lnc
b uaLaprep hlllpplnes
c hlllpplne SunsysLems roducLs lnc
d Semlrara Coal CorporaLlon
e C8L 1lmber CorporaLlon
Member of Lhe 8oard of Lhe lollowlng
a Lnglneerlng ConsLrucLlon CorporaLlon of Lhe hlllpplnes
b llrsL hlllpplne Lnergy CorporaLlon
c llrsL hlllpplne Poldlngs CorporaLlon
d llrsL hlllpplne lndusLrlal CorporaLlon
e Craphlc ALeller
f Manlla LlecLrlc Company
g hlllpplne Commerclal CaplLal lnc
h hlllpplne LlecLrlc CorporaLlon
l 1arlac 8eforesLaLlon and LnvlronmenL LnLerprlses
[ 1olong AquaculLure CorporaLlon
k vlsayan AquaculLure CorporaLlon
l Culmaras AquaculLure CorporaLlon (8ollo pp 2122)
1here ls noLhlng ln Lhe above blodaLa whlch even remoLely lndlcaLes LhaL respondenL Monsod
has glven Lhe law enough aLLenLlon or a cerLaln degree of commlLmenL and parLlclpaLlon as
would supporL ln all slncerlLy and candor Lhe clalm of havlng engaged ln lLs pracLlce for aL leasL
Len years lnsLead of worklng as a lawyer he has lawyers worklng for hlm lnsLead of glvlng
recelvlng LhaL legal advlce of legal servlces he was Lhe one advlce and Lhose servlces as an
execuLlve buL noL as a lawyer
1he dellberaLlons before Lhe Commlsslon on AppolnLmenLs show an efforL Lo equaLe engaged
ln Lhe pracLlce of law wlLh Lhe use of legal knowledge ln varlous flelds of endeavor such as
commerce lndusLry clvlc work blue rlbbon lnvesLlgaLlons agrarlan reform eLc where such
knowledge would be helpful
l regreL LhaL l cannoL [oln ln playlng fasL and loose wlLh a Lerm whlch even an ordlnary layman
accepLs as havlng a famlllar and cusLomary welldeflned meanlng Lvery resldenL of Lhls counLry
who has reached Lhe age of dlscernmenL has Lo know follow or apply Lhe law aL varlous Llmes
ln hls llfe Legal knowledge ls useful lf noL necessary for Lhe buslness execuLlve leglslaLor
mayor barangay capLaln Leacher pollceman farmer flsherman markeL vendor and sLudenL
Lo name only a few And yeL can Lhese people honesLly asserL LhaL as such Lhey are engaged ln
Lhe pracLlce of law?
1he ConsLlLuLlon requlres havlng been engaged ln Lhe pracLlce of law for aL leasL Len years lL
ls noL saLlsfled wlLh havlng been a member of Lhe hlllpplne bar for aL leasL Len years
Some Amerlcan courLs have deflned Lhe pracLlce of law as follows
1he pracLlce of law lnvolves noL only appearance ln courL ln connecLlon wlLh llLlgaLlon buL also
servlces rendered ouL of courL and lL lncludes Lhe glvlng of advlce or Lhe renderlng of any
servlces requlrlng Lhe use of legal sklll or knowledge such as preparlng a wlll conLracL or oLher
lnsLrumenL Lhe legal effecL of whlch under Lhe facLs and condlLlons lnvolved musL be carefully
deLermlned eople ex rel Chlcago 8ar Assn v 1lnkoff 399 lll 282 77 nL2d 693 eople ex
rel llllnols SLaLe 8ar Assn v eoples SLock ?ards SLaLe 8ank 344 lll 462176 nL 901 and
cases clLed
lL would be dlfflculL lf noL lmposslble Lo lay down a formula or deflnlLlon of whaL consLlLuLes
Lhe pracLlce of law racLlclng law has been deflned as racLlclng as an aLLorney or counselor
aL law accordlng Lo Lhe laws and cusLoms of our courLs ls Lhe glvlng of advlce or rendlLlon of
any sorL of servlce by any person flrm or corporaLlon when Lhe glvlng of such advlce or
rendlLlon of such servlce requlres Lhe use of any degree of legal knowledge or sklll WlLhouL
adopLlng LhaL deflnlLlon we referred Lo lL as belng subsLanLlally correcL ln eople ex rel llllnols
SLaLe 8ar Assn v eoples SLock ?ards SLaLe 8ank 344 lll 462176 nL 901 (eople v Schafer
87 nL 2d 773 776)
lor ones acLlons Lo come wlLhln Lhe purvlew of pracLlce of law Lhey should noL only be
acLlvlLles pecullar Lo Lhe work of a lawyer Lhey should also be performed hablLually frequenLly
or cusLomarlly Lo wlL
xxx xxx xxx
8espondenLs answers Lo quesLlons propounded Lo hlm were raLher evaslve Pe was asked
wheLher or noL he ever prepared conLracLs for Lhe parLles ln realesLaLe LransacLlons where he
was noL Lhe procurlng agenL Pe answered very seldom ln answer Lo Lhe quesLlon as Lo how
many Llmes he had prepared conLracLs for Lhe parLles durlng Lhe LwenLyone years of hls
buslness he sald l have no ldea When asked lf lL would be more Lhan half a dozen Llmes hls
answer was l suppose Asked lf he dld noL recall maklng Lhe sLaLemenL Lo several parLles LhaL he
had prepared conLracLs ln a large number of lnsLances he answered l donL recall exacLly whaL
was sald When asked lf he dld noL remember saylng LhaL he had made a pracLlce of preparlng
deeds morLgages and conLracLs and charglng a fee Lo Lhe parLles Lherefor ln lnsLances where
he was noL Lhe broker ln Lhe deal he answered Well l donL belleve so LhaL ls noL a pracLlce
ressed furLher for an answer as Lo hls pracLlce ln preparlng conLracLs and deeds for parLles
where he was noL Lhe broker he flnally answered l have done abouL everyLhlng LhaL ls on Lhe
books as far as real esLaLe ls concerned
xxx xxx xxx
8espondenL Lakes Lhe poslLlon LhaL because he ls a realesLaLe broker he has a lawful rlghL Lo do
any legal work ln connecLlon wlLh realesLaLe LransacLlons especlally ln drawlng of realesLaLe
conLracLs deeds morLgages noLes and Lhe llke 1here ls no doubL buL LhaL he has engaged ln
Lhese pracLlces over Lhe years and has charged for hls servlces ln LhaL connecLlon (eople v
Schafer 87 nL 2d 773)
xxx xxx xxx
An aLLorney ln Lhe mosL general sense ls a person deslgnaLed or employed by anoLher Lo acL
ln hls sLead an agenL more especlally one of a class of persons auLhorlzed Lo appear and acL
for sulLors or defendanLs ln legal proceedlngs SLrlcLly Lhese professlonal persons are aLLorneys
aL law and nonprofesslonal agenLs are properly sLyled aLLorneys ln facL buL Lhe slngle word
ls much used as meanlng an aLLorney aL law A person may be an aLLorney ln facLo for anoLher
wlLhouL belng an aLLorney aL law Abb Law ulcL ALLorney A publlc aLLorney or aLLorney aL
law says WebsLer ls an offlcer of a courL of law legally quallfled Lo prosecuLe and defend
acLlons ln such courL on Lhe reLalner of cllenLs 1he prlnclpal duLles of an aLLorney are (1) Lo be
Lrue Lo Lhe courL and Lo hls cllenL (2) Lo manage Lhe buslness of hls cllenL wlLh care sklll and
lnLegrlLy (3) Lo keep hls cllenL lnformed as Lo Lhe sLaLe of hls buslness (4) Lo keep hls secreLs
conflded Lo hlm as such Pls rlghLs are Lo be [usLly compensaLed for hls servlces 8ouv Law
ulcL LlL ALLorney 1he LranslLlve verb pracLlce as deflned by WebsLer means Lo do or
perform frequenLly cusLomarlly or hablLually Lo perform by a successlon of acLs as Lo
pracLlce gamlng Lo carry on ln pracLlce or repeaLed acLlon Lo apply as a Lheory Lo real llfe
Lo exerclse as a professlon Lrade arL eLc as Lo pracLlce law or medlclne eLc (SLaLe v
8ryan SL 322 323 Lmphasls supplled)
ln Lhls [urlsdlcLlon we have ruled LhaL Lhe pracLlce of law denoLes frequency or a successlon of
acLs 1hus we sLaLed ln Lhe case of eople v vlllanueva (14 SC8A 109 1963)
xxx xxx xxx
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlons
a successlon of acLs of Lhe same klnd ln oLher words lL ls frequenL hablLual exerclse (SLaLe v
CoLner 127 p 1 87 kan 864 42 L8A MS 768) racLlce of law Lo fall wlLhln Lhe prohlblLlon of
sLaLuLe has been lnLerpreLed as cusLomarlly or hablLually holdlng ones self ouL Lo Lhe publlc as
a lawyer and demandlng paymenL for such servlces (aL p 112)
lL ls Lo be noLed LhaL Lhe Commlsslon on AppolnLmenL lLself recognlzes hablLuallLy as a requlred
componenL of Lhe meanlng of pracLlce of law ln a Memorandum prepared and lssued by lL Lo
wlL
l PablLuallLy 1he Lerm pracLlce of law lmplles cusLomarllyor hablLually holdlng ones self
ouL Lo Lhe publlc as a lawyer (eople v vlllanueva 14 SC8A 109 clLlng SLaLe v 8ryan 4 SL 322
98 nC 644) such as when one sends a clrcular announclng Lhe esLabllshmenL of a law offlce for
Lhe general pracLlce of law (uS v noy 8osque 8 hll 146) or when one Lakes Lhe oaLh of
offlce as a lawyer before a noLary publlc and flles a manlfesLaLlon wlLh Lhe Supreme CourL
lnformlng lL of hls lnLenLlon Lo pracLlce law ln all courLs ln Lhe counLry (eople v ue Luna 102
hll 968)
racLlce ls more Lhan an lsolaLed appearance for lL conslsLs ln frequenL or cusLomary acLlon a
successlon of acLs of Lhe same klnd ln oLher words lL ls a hablLual exerclse (eople v
vlllanueva 14 SC8A 1 09 clLlng SLaLe v CoLner 1 27 p 1 87 kan 864) (8ollo p 113)
xxx xxx xxx
Whlle Lhe career as a buslnessman of respondenL Monsod may have proflLed from hls legal
knowledge Lhe use of such legal knowledge ls lncldenLal and conslsLs of lsolaLed acLlvlLles
whlch do noL fall under Lhe denomlnaLlon of pracLlce of law Admlsslon Lo Lhe pracLlce of law
was noL requlred for membershlp ln Lhe ConsLlLuLlonal Commlsslon or ln Lhe lacLllndlng
Commlsslon on Lhe 1989 Coup ALLempL Any speclflc legal acLlvlLles whlch may have been
asslgned Lo Mr Monsod whlle a member may be llkened Lo lsolaLed LransacLlons of forelgn
corporaLlons ln Lhe hlllpplnes whlch do noL caLegorlze Lhe forelgn corporaLlons as dolng
buslness ln Lhe hlllpplnes As ln Lhe pracLlce of law dolng buslness also should be acLlve and
conLlnuous lsolaLed buslness LransacLlons or occaslonal lncldenLal and casual LransacLlons are
noL wlLhln Lhe conLexL of dolng buslness 1hls was our rullng ln Lhe case of AnLam ConsolldaLed
lnc v CourL of appeals 143 SC8A 288 1986)
8espondenL Monsod corporaLe execuLlve clvlc leader and member of Lhe ConsLlLuLlonal
Commlsslon may possess Lhe background compeLence lnLegrlLy and dedlcaLlon Lo quallfy for
such hlgh offlces as resldenL vlceresldenL SenaLor Congressman or Covernor buL Lhe
ConsLlLuLlon ln prescrlblng Lhe speclflc quallflcaLlon of havlng engaged ln Lhe pracLlce of law for
aL leasL Len (10) years for Lhe poslLlon of CCMLLLC Chalrman has ordered LhaL he may noL be
conflrmed for LhaL offlce 1he ConsLlLuLlon charges Lhe publlc respondenLs no less Lhan Lhls
CourL Lo obey lLs mandaLe
l Lherefore belleve LhaL Lhe Commlsslon on AppolnLmenLs commlLLed grave abuse of
dlscreLlon ln conflrmlng Lhe nomlnaLlon of respondenL Monsod as Chalrman of Lhe CCMLLLC
l voLe Lo C8An1 Lhe peLlLlon






8epubllc of Lhe hlllpplnes
Su8LML CCu81
Manlla

SLCCND DIVISICN



C8 no L23813 !une 28 1974

AuLLlnC P LLuLSMA peLlLloner
vs
PCn 8AlALL C CLlMACC resldlng !udge of Lhe CourL of llrsL lnsLance of negros CccldenLal
8ranch l Sllay ClLy respondenL

Adellno P Ledesma ln hls own behalf

Pon 8afael C Cllmaco ln hls own behalf
lL8nAnuC !p

WhaL ls assalled ln Lhls cerLlorarl proceedlng ls an order of respondenL !udge denylng a moLlon
flled by peLlLloner Lo be allowed Lo wlLhdraw as counsel de oflclo 1 Cne of Lhe grounds for such
a moLlon was hls allegaLlon LhaL wlLh hls appolnLmenL as LlecLlon 8eglsLrar by Lhe Commlsslon
on LlecLlons he was noL ln a poslLlon Lo devoLe full Llme Lo Lhe defense of Lhe Lwo accused 1he
denlal by respondenL !udge of such a plea noLwlLhsLandlng Lhe conformlLy of Lhe defendanLs
was due lLs prlnclpal effecL belng Lo delay Lhls case 2 lL was llkewlse noLed LhaL Lhe
prosecuLlon had already resLed and LhaL peLlLloner was prevlously counsel de parLe hls
deslgnaLlon ln Lhe former caLegory belng preclsely Lo proLecL hlm ln hls new poslLlon wlLhouL
pre[udlclng Lhe accused lL cannoL be plauslbly asserLed LhaL such fallure Lo allow wlLhdrawal of
de oflclo counsel could ordlnarlly be characLerlzed as a grave abuse of dlscreLlon correcLlble by
cerLlorarl 1here ls however Lhe overrldlng concern for Lhe rlghL Lo counsel of Lhe accused LhaL
musL be Laken serlously lnLo conslderaLlon ln approprlaLe cases lL should LllL Lhe balance 1hls
ls noL one of Lhem WhaL ls easlly dlscernlble was Lhe obvlous relucLance of peLlLloner Lo
comply wlLh Lhe responslblllLles lncumbenL on Lhe counsel de oflclo 1hen Loo even on Lhe
assumpLlon LhaL he conLlnues ln hls poslLlon hls volume of work ls llkely Lo be very much less aL
presenL 1here ls noL now Lhe sllghLesL preLexL for hlm Lo shlrk an obllgaLlon a member of Lhe
bar who expecLs Lo remaln ln good sLandlng should fulflll 1he peLlLlon ls clearly wlLhouL merlL

Accordlng Lo Lhe undlspuLed facLs peLlLloner on CcLober 13 1964 was appolnLed LlecLlon
8eglsLrar for Lhe MunlclpallLy of Cadlz rovlnce of negros CccldenLal 1hen and Lhere he
commenced Lo dlscharge lLs duLles As he was counsel de parLe for one of Lhe accused ln a case
pendlng ln Lhe sala of respondenL !udge he flled a moLlon Lo wlLhdraw as such noL only dld
respondenL !udge deny such moLlon buL he also appolnLed hlm counsel de oflclo for Lhe Lwo
defendanLs SubsequenLly on november 3 1964 peLlLloner flled an urgenL moLlon Lo be
allowed Lo wlLhdraw as counsel de oflclo premlsed on Lhe pollcy of Lhe Commlsslon on
LlecLlons Lo requlre full Llme servlce as well as on Lhe volume or pressure of work of peLlLloner
whlch could prevenL hlm from handllng adequaLely Lhe defense 8espondenL !udge ln Lhe
challenged order of november 6 1964 denled sald moLlon A moLlon for reconslderaLlon
havlng proved fuLlle he lnsLlLuLed Lhls cerLlorarl proceedlng 3

As noLed aL Lhe ouLseL Lhe peLlLlon musL fall

1 1he assalled order of november 6 1964 denylng Lhe urgenL moLlon of peLlLloner Lo wlLhdraw
as counsel de oflclo speaks for lLself lL began wlLh a remlnder LhaL a crlme was allegedly
commlLLed on lebruary 17 1962 wlLh Lhe proceedlngs havlng sLarLed ln Lhe munlclpal courL of
Cadlz on !uly 11 1962 1hen respondenL !udge spoke of hls order of CcLober 16 1964 whlch
reads Lhus ln vlew of Lhe ob[ecLlon of Lhe prosecuLlon Lo Lhe moLlon for posLponemenL of
CcLober 13 1964 (alleglng LhaL counsel for Lhe accused cannoL conLlnue appearlng ln Lhls case
wlLhouL Lhe express auLhorlLy of Lhe Commlsslon on LlecLlons) and slnce accordlng Lo Lhe
prosecuLlon Lhere are Lwo wlLnesses who are ready Lo Lake Lhe sLand afLer whlch Lhe
governmenL would resL Lhe moLlon for posLponemenL ls denled When counsel for Lhe accused
assumed offlce as LlecLlon 8eglsLrar on CcLober 13 1964 he knew slnce CcLober 2 1964 LhaL
Lhe Lrlal would be resumed Loday neverLheless ln order noL Lo pre[udlce Lhe clvll servlce sLaLus
of counsel for Lhe accused he ls hereby deslgnaLed counsel de oflclo for Lhe accused 1he
defense obLalned posLponemenLs on May 17 1963 !une 13 1963 !une 14 1963 CcLober 28
1963 november 27 1963 lebruary 11 1964 March 9 1964 !une 8 1964 !uly 26 1964 and
SepLember 7 1964 4 8eference was Lhen made Lo anoLher order of lebruary 11 1964 upon
peLlLlon of ALLy Adellno P Ledesma alleglng lndlsposlLlon Lhe conLlnuaLlon of Lhe Lrlal of Lhls
case ls hereby Lransferred Lo March 9 1964 aL 830 ln Lhe mornlng 1he defense ls remlnded
LhaL aL lLs lnsLance Lhls case has been posLponed aL leasL elghL (8) Llmes and LhaL Lhe
governmenL wlLnesses have Lo come all Lhe way from Manapala 3 AfLer whlch lL was noLed ln
such order LhaL Lhere was no lncompaLlblllLy beLween Lhe duLy of peLlLloner Lo Lhe accused and
Lo Lhe courL and Lhe performance of hls Lask as an elecLlon reglsLrar of Lhe Commlsslon on
LlecLlons and LhaL Lhe ends of [usLlce would be served by allowlng and requlrlng Mr Ledesma
Lo conLlnue as counsel de oflclo slnce Lhe prosecuLlon has already resLed lLs case 6

2 WhaL ls readlly apparenL Lherefore ls LhaL peLlLloner was less Lhan duly mlndful of hls
obllgaLlon as counsel de oflclo Pe oughL Lo have known LhaL membershlp ln Lhe bar ls a
prlvllege burdened wlLh condlLlons lL could be LhaL for some lawyers especlally Lhe neophyLes
ln Lhe professlon belng appolnLed counsel de oflclo ls an lrksome chore lor Lhose holdlng such
bellef lL may come as a surprlse LhaL counsel of repuLe and of emlnence welcome such an
opporLunlLy lL makes even more manlfesL LhaL law ls lndeed a professlon dedlcaLed Lo Lhe ldeal
of servlce and noL a mere Lrade lL ls undersLandable Lhen why a hlgh degree of fldellLy Lo duLy
ls requlred of one so deslgnaLed A recenL sLaLemenL of Lhe docLrlne ls found ln eople v
uaban 7 1here ls need anew ln Lhls dlsclpllnary proceedlng Lo lay sLress on Lhe fundamenLal
posLulaLe LhaL membershlp ln Lhe bar carrles wlLh lL a responslblllLy Lo llve up Lo lLs exacLlng
sLandard 1he law ls a professlon noL a Lrade or a crafL 1hose enrolled ln lLs ranks are called
upon Lo ald ln Lhe performance of one of Lhe baslc purposes of Lhe SLaLe Lhe admlnlsLraLlon of
[usLlce 1o avold any frusLraLlon Lhereof especlally ln Lhe case of an lndlgenL defendanL a
lawyer may be requlred Lo acL as counsel de oflclo 1he facL LhaL hls servlces are rendered
wlLhouL remuneraLlon should noL occaslon a dlmlnuLlon ln hls zeal 8aLher Lhe conLrary 1hls ls
noL of course Lo lgnore LhaL oLher presslng maLLers do compeLe for hls aLLenLlon AfLer all he
has hls pracLlce Lo aLLend Lo 1haL clrcumsLance possesses a hlgh degree of relevance slnce a
lawyer has Lo llve cerLalnly he cannoL afford elLher Lo neglecL hls paylng cases noneLheless
whaL ls lncumbenL upon hlm as counsel de oflclo musL be fulfllled 8

So lL has been from Lhe 1903 declslon of ln re 8obles Lahesa 9 where respondenL was de oflclo
counsel Lhe oplnlon penned by !usLlce Carson maklng clear 1hls CourL should exacL from lLs
offlcers and subordlnaLes Lhe mosL scrupulous performance of Lhelr offlclal duLles especlally
when negllgence ln Lhe performance of Lhose duLles necessarlly resulLs ln delays ln Lhe
prosecuLlon of crlmlnal cases 10 !usLlce Sanchez ln eople v LsLebla 11 relLeraLed such a
vlew ln Lhese words lL ls Lrue LhaL he ls a courLappolnLed counsel 8uL we do say LhaL as such
counsel de oflclo he has as hlgh a duLy Lo Lhe accused as one employed and pald by defendanL
hlmself 8ecause as ln Lhe case of Lhe laLLer he musL exerclse hls besL efforLs and professlonal
ablllLy ln behalf of Lhe person asslgned Lo hls care Pe ls Lo render effecLlve asslsLance 1he
accuseddefendanL expecLs of hlm due dlllgence noL mere perfuncLory represenLaLlon lor
lndeed a lawyer who ls a vanguard ln Lhe basLlon of [usLlce ls expecLed Lo have a blgger dose of
soclal consclence and a llLLle less of selflnLeresL 12
1he weakness of Lhe peLlLlon ls Lhus qulLe evldenL
3 lf respondenL !udge were requlred Lo answer Lhe peLlLlon lL was only due Lo Lhe
apprehenslon LhaL conslderlng Lhe frame of mlnd of a counsel loaLh and relucLanL Lo fulflll hls
obllgaLlon Lhe welfare of Lhe accused could be pre[udlced Pls rlghL Lo counsel could ln effecL
be rendered nugaLory lLs lmporLance was rlghLfully sLressed by Chlef !usLlce Moran ln eople v
Polgado ln Lhese words ln crlmlnal cases Lhere can be no falr hearlng unless Lhe accused be
glven an opporLunlLy Lo be heard by counsel 1he rlghL Lo be heard would be of llLLle avall lf lL
does noL lnclude Lhe rlghL Lo be heard by counsel Lven Lhe mosL lnLelllgenL or educaLed man
may have no sklll ln Lhe sclence of law parLlcularly ln Lhe rules of procedure and wlLhouL
counsel he may be convlcLed noL because he ls gullLy buL because he does noL know how Lo
esLabllsh hls lnnocence And Lhls can happen more easlly Lo persons who are lgnoranL or
uneducaLed lL ls for Lhls reason LhaL Lhe rlghL Lo be asslsLed by counsel ls deemed so lmporLanL
LhaL lL has become a consLlLuLlonal rlghL and lL ls so lmplemenLed LhaL under rules of procedure
lL ls noL enough for Lhe CourL Lo apprlse an accused of hls rlghL Lo have an aLLorney lL ls noL
enough Lo ask hlm wheLher he deslres Lhe ald of an aLLorney buL lL ls essenLlal LhaL Lhe courL
should asslgn one de oflclo for hlm lf he so deslres and he ls poor or granL hlm a reasonable
Llme Lo procure an aLLorney of hls
own 13 So lL was under Lhe prevlous Crganlc AcLs 14 1he presenL ConsLlLuLlon ls even more
emphaLlc lor ln addlLlon Lo relLeraLlng LhaL Lhe accused shall en[oy Lhe rlghL Lo be heard by
hlmself and counsel 13 Lhere ls Lhls new provlslon Any person under lnvesLlgaLlon for Lhe
commlsslon of an offense shall have Lhe rlghL Lo remaln sllenL and Lo counsel and Lo be
lnformed of such rlghL no force vlolence LhreaL lnLlmldaLlon or any oLher means whlch
vlLlaLes Lhe free wlll shall be used agalnsL hlm Any confesslon obLalned ln vlolaLlon of Lhls
secLlon shall be lnadmlsslble ln evldence 16

1hus ls made manlfesL Lhe lndlspensable role of a member of Lhe 8ar ln Lhe defense of an
accused Such a conslderaLlon could have sufflced for peLlLloner noL belng allowed Lo wlLhdraw
as counsel de oflclo lor he dld beLray by hls moves hls lack of enLhuslasm for Lhe Lask
enLrusLed Lo hlm Lo puL maLLers mlldly Pe dld polnL Lhough Lo hls responslblllLy as an elecLlon
reglsLrar Assumlng hls good falLh no such excuse could be avalled now 1here ls noL llkely aL
presenL and ln Lhe lmmedlaLe fuLure an exorblLanL demand on hls Llme lL may llkewlse be
assumed conslderlng whaL has been seL forLh above LhaL peLlLloner would exerL hlmself
sufflclenLly Lo perform hls Lask as defense counsel wlLh compeLence lf noL wlLh zeal lf only Lo
erase doubLs as Lo hls flLness Lo remaln a member of Lhe professlon ln good sLandlng 1he
admonlLlon ls ever Llmely for Lhose enrolled ln Lhe ranks of legal pracLlLloners LhaL Lhere are
Llmes and Lhls ls one of Lhem when duLy Lo courL and Lo cllenL Lakes precedence over Lhe
prompLlngs of selflnLeresL

WPL8LlC8L Lhe peLlLlon for cerLlorarl ls dlsmlssed CosLs agalnsL peLlLloner











8epubllc of Lhe hlllpplnes
Su8LML CCu81
Manlla

Ln 8AnC

C8 no 171101 !uly 3 2011

nACILNDA LUISI1A INCCkCkA1LD et|t|oner
LUISI1A INDUS1kIAL Akk CCkCkA1ICN and kI2AL CCMMLkCIAL 8ANkING CCkCkA1ICN
et|t|oners|nIntervent|on
vs
kLSIDLN1IAL AGkAkIAN kLICkM CCUNCIL SLCkL1Ak NASSLk ANGANDAMAN CI 1nL
DLAk1MLN1 CI AGkAkIAN kLICkM ALANSA NG MGA MANGGAGAWANG 8UkID NG
nACILNDA LUISI1A kLNL GALANG NCLL MALLAkI and IULIC SUNIGA1 and h|s SULkVISCk
GkCU CI 1nL nACILNDA LUISI1A INC and WINDSCk ANDAA kespondents

u L C l S l C n

vLLASCC !8 !

Land for Lhe landless a shlbboleLh Lhe landed genLry doubLless has recelved wlLh much
mlsglvlng lf noL reslsLance even lf only Lhe number of agrarlan sulLs flled serves Lo be Lhe
norm 1hrough Lhe years Lhls baLLle cry and rooL of dlscord conLlnues Lo reflecL Lhe seemlngly
ceaseless dlscourse on and greaL dlsparlLy ln Lhe dlsLrlbuLlon of land among Lhe people
dramaLlzlng Lhe lncreaslngly urgenL demand of Lhe dlspossessed x x x for a ploL of earLh as
Lhelr place ln Lhe sun2 As admlnlsLraLlons and pollLlcal allgnmenLs change pollcles advanced
and agrarlan reform laws enacLed Lhe laLesL belng whaL ls consldered a comprehenslve plece
Lhe face of land reform varles and ls masked ln myrlads of ways 1he sLaLed goal however
remalns Lhe same clear Lhe way for Lhe Lrue freedom of Lhe farmer3

Land reform or Lhe broader Lerm agrarlan reform has been a governmenL pollcy even before
Lhe CommonwealLh era ln facL aL Lhe onseL of Lhe Amerlcan reglme lnlLlal sLeps Loward land
reform were already Laken Lo address soclal unresL4 1hen under Lhe 1933 ConsLlLuLlon
speclflc provlslons on soclal [usLlce and exproprlaLlon of landed esLaLes for dlsLrlbuLlon Lo
LenanLs as a soluLlon Lo land ownershlp and Lenancy lssues were lncorporaLed

ln 1933 Lhe Land 8eform AcL (8epubllc AcL no 8A 1400) was passed seLLlng ln moLlon Lhe
exproprlaLlon of all LenanLed esLaLes3

Cn AugusL 8 1963 Lhe AgrlculLural Land 8eform Code (8A 3844) was enacLed6 abollshlng
share Lenancy and converLlng all lnsLances of share Lenancy lnLo leasehold Lenancy7 8A 3844
creaLed Lhe Land 8ank of Lhe hlllpplnes (L8) Lo provlde supporL ln all phases of agrarlan
reform

As lLs ma[or LhrusL 8A 3844 almed Lo creaLe a sysLem of ownerculLlvaLorshlp ln rlce and corn
supposedly Lo be accompllshed by exproprlaLlng lands ln excess of 73 hecLares for Lhelr
evenLual resale Lo LenanLs 1he law however had Lhls resLrlcLlng feaLure lLs operaLlons were
conflned malnly Lo areas ln CenLral Luzon and lLs lmplemenLaLlon aL any level of lnLenslLy
llmlLed Lo Lhe plloL pro[ecL ln nueva Lcl[a8

SubsequenLly Congress passed Lhe Code of Agrarlan 8eform (8A 6389) declarlng Lhe enLlre
counLry a land reform area and provldlng for Lhe auLomaLlc converslon of Lenancy Lo leasehold
Lenancy ln all areas lrom 73 hecLares Lhe reLenLlon llmlL was cuL down Lo seven hecLares9

8arely a monLh afLer declarlng marLlal law ln SepLember 1972 Lhen resldenL lerdlnand
Marcos lssued resldenLlal uecree no 27 (u 27) for Lhe emanclpaLlon of Lhe Llller from Lhe
bondage of Lhe soll10 8ased on Lhls lssuance LenanLfarmers dependlng on Lhe slze of Lhe
landholdlng worked on can elLher purchase Lhe land Lhey Lllled or shlfL from share Lo flxedrenL
leasehold Lenancy11 Whlle LouLed as revoluLlonary Lhe scope of Lhe agrarlan reform
program u 27 enunclaLed covered only LenanLed prlvaLelyowned rlce and corn lands12

1hen came Lhe revoluLlonary governmenL of Lhen resldenL Corazon C Aqulno and Lhe drafLlng
and evenLual raLlflcaLlon of Lhe 1987 ConsLlLuLlon lLs provlslons foreshadowed Lhe
esLabllshmenL of a legal framework for Lhe formulaLlon of an expanslve approach Lo land
reform affecLlng all agrlculLural lands and coverlng boLh LenanLfarmers and regular
farmworkers13

So lL was LhaL roclamaLlon no 131 Serles of 1987 was lssued lnsLlLuLlng a comprehenslve
agrarlan reform program (CA8) Lo cover all agrlculLural lands regardless of Lenurlal
arrangemenL and commodlLy produced as provlded ln Lhe ConsLlLuLlon

Cn !uly 22 1987 LxecuLlve Crder no 229 (LC 229) was lssued provldlng as lLs LlLle14 lndlcaLes
Lhe mechanlsms for CA8 lmplemenLaLlon lL creaLed Lhe resldenLlal Agrarlan 8eform Councll
(A8C) as Lhe hlghesL pollcymaklng body LhaL formulaLes all pollcles rules and regulaLlons
necessary for Lhe lmplemenLaLlon of CA8

Cn !une 13 1988 8A 6637 or Lhe Comprehenslve Agrarlan 8eform Law of 1988 also known as
CA8L or Lhe CA8 Law Look effecL usherlng ln a new process of land classlflcaLlon acqulslLlon
and dlsLrlbuLlon As Lo be expecLed 8A 6637 meL sLlff opposlLlon lLs valldlLy or some of lLs
provlslons challenged aL every posslble Lurn AssoclaLlon of Small Landowners ln Lhe
hlllpplnes lnc v SecreLary of Agrarlan 8eform 13 sLaLed Lhe observaLlon LhaL Lhe assaulL was
lnevlLable Lhe CA8 belng an unLrled and unLesLed pro[ecL an experlmenL even as all llfe ls
an experlmenL Lhe CourL sald borrowlng from !usLlce Polmes

1he Case

ln Lhls eLlLlon for CerLlorarl and rohlblLlon under 8ule 63 wlLh prayer for prellmlnary
ln[uncLlve rellef peLlLloner Paclenda LulslLa lnc (PLl) assalls and seeks Lo seL aslde A8C
8esoluLlon no 2003320116 and 8esoluLlon no 2006340117 lssued on uecember 22 2003
and May 3 2006 respecLlvely as well as Lhe lmplemenLlng noLlce of Coverage daLed !anuary 2
2006 (noLlce of Coverage)18

1he lacLs

AL Lhe core of Lhe case ls Paclenda LulslLa de 1arlac (Paclenda LulslLa) once a 6443hecLare
mlxed agrlculLurallndusLrlalresldenLlal expanse sLraddllng several munlclpallLles of 1arlac and
owned by Companla Ceneral de 1abacos de llllplnas (1abacalera) ln 1937 Lhe Spanlsh owners
of 1abacalera offered Lo sell Paclenda LulslLa as well as Lhelr conLrolllng lnLeresL ln Lhe sugar
mlll wlLhln Lhe haclenda Lhe CenLral Azucarera de 1arlac (CA1) as an lndlvlslble LransacLlon
1he 1arlac uevelopmenL CorporaLlon (1adeco) Lhen owned and/or conLrolled by Lhe !ose
Co[uangco Sr Croup was wllllng Lo buy As agreed upon 1adeco underLook Lo pay Lhe
purchase prlce for Paclenda LulslLa ln pesos whlle LhaL for Lhe conLrolllng lnLeresL ln CA1 ln uS
dollars19

1o faclllLaLe Lhe adverLed saleandpurchase package Lhe hlllpplne governmenL Lhrough Lhe
Lhen CenLral 8ank of Lhe hlllpplnes asslsLed Lhe buyer Lo obLaln a dollar loan from a uS
bank20 Also Lhe CovernmenL Servlce lnsurance SysLem (CSlS) 8oard of 1rusLees exLended on
november 27 1937 a h 3911 mllllon loan ln favor of 1adeco Lo pay Lhe peso prlce
componenL of Lhe sale Cne of Lhe condlLlons conLalned ln Lhe approvlng CSlS 8esoluLlon no
3203 as laLer amended by 8esoluLlon no 336 Serles of 1938 reads as follows

1haL Lhe loLs comprlslng Lhe Paclenda LulslLa shall be subdlvlded by Lhe appllcanLcorporaLlon
and sold aL cosL Lo Lhe LenanLs should Lhere be any and whenever condlLlons should exlsL
warranLlng such acLlon under Lhe provlslons of Lhe Land 1enure AcL21


As of March 31 1938 1adeco had fully pald Lhe purchase prlce for Lhe acqulslLlon of Paclenda
LulslLa and 1abacalera's lnLeresL ln CA122

1he deLalls of Lhe evenLs LhaL happened nexL lnvolvlng Lhe haclenda and Lhe pollLlcal color
some of Lhe parLles embossed are of mlnlmal slgnlflcance Lo Lhls narraLlon and need no
belaborlng Sufflce lL Lo sLaLe LhaL on May 7 1980 Lhe marLlal law admlnlsLraLlon flled a sulL
before Lhe Manlla 8eglonal 1rlal CourL (81C) agalnsL 1adeco eL al for Lhem Lo surrender
Paclenda LulslLa Lo Lhe Lhen MlnlsLry of Agrarlan 8eform (MA8 now Lhe ueparLmenL of
Agrarlan 8eform uA8) so LhaL Lhe land can be dlsLrlbuLed Lo farmers aL cosL 8espondlng
1adeco or lLs owners alleged LhaL Paclenda LulslLa does noL have LenanLs besldes whlch sugar
landsof whlch Lhe haclenda conslsLedare noL covered by exlsLlng agrarlan reform
leglslaLlons As percelved Lhen Lhe governmenL commenced Lhe case agalnsL 1adeco as a
pollLlcal message Lo Lhe famlly of Lhe laLe 8enlgno Aqulno !r23

LvenLually Lhe Manlla 81C rendered [udgmenL orderlng 1adeco Lo surrender Paclenda LulslLa
Lo Lhe MA8 1herefrom 1adeco appealed Lo Lhe CourL of Appeals (CA)

Cn March 17 1988 Lhe Cfflce of Lhe SollclLor Ceneral (CSC) moved Lo wlLhdraw Lhe
governmenL's case agalnsL 1adeco eL al 8y 8esoluLlon of May 18 1988 Lhe CA dlsmlssed Lhe
case Lhe Marcos governmenL lnlLlally lnsLlLuLed and won agalnsL 1adeco eL al 1he dlsmlssal
acLlon was however made sub[ecL Lo Lhe obLenLlon by 1adeco of Lhe A8C's approval of a
sLock dlsLrlbuLlon plan (Su) LhaL musL lnlLlally be lmplemenLed afLer such approval shall have
been secured24 1he appellaLe courL wroLe

1he defendanLsappellanLs x x x flled a moLlon on Aprll 13 1988 [olnlng Lhe x x x governmenLal
agencles concerned ln movlng for Lhe dlsmlssal of Lhe case sub[ecL however Lo Lhe followlng
condlLlons embodled ln Lhe leLLer daLed Aprll 8 1988 (Annex 2) of Lhe SecreLary of Lhe uA8
quoLed as follows

1 Should 1AuLCC fall Lo obLaln approval of Lhe sLock dlsLrlbuLlon plan for fallure Lo comply
wlLh all Lhe requlremenLs for corporaLe landowners seL forLh ln Lhe guldellnes lssued by Lhe
A8C or

2 lf such sLock dlsLrlbuLlon plan ls approved by A8C buL 1AuLCC falls Lo lnlLlally lmplemenL lL

x x x x

WPL8LlC8L Lhe presenL case on appeal ls hereby dlsmlssed wlLhouL pre[udlce and should be
revlved lf any of Lhe condlLlons as above seL forLh ls noL duly complled wlLh by Lhe 1AuLCC23

Markedly SecLlon 10 of LC 22926 allows corporaLe landowners as an alLernaLlve Lo Lhe acLual
land Lransfer scheme of CA8 Lo glve quallfled beneflclarles Lhe rlghL Lo purchase shares of
sLocks of Lhe corporaLlon under a sLock ownershlp arrangemenL and/or landLoshare raLlo

Llke LC 229 8A 6637 under Lhe laLLer's Sec 31 also provldes Lwo (2) alLernaLlve modallLles
le land or sLock Lransfer pursuanL Lo elLher of whlch Lhe corporaLe landowner can comply
wlLh CA8 buL sub[ecL Lo welldeflned condlLlons and Llmellne requlremenLs Sec 31 of 8A
6637 provldes

SLC 31 CorporaLe LandownersCorporaLe landowners may volunLarlly Lransfer ownershlp
over Lhelr agrlculLural landholdlngs Lo Lhe 8epubllc of Lhe hlllpplnes pursuanL Lo SecLlon 20
hereof or Lo quallfled beneflclarles x x x

upon cerLlflcaLlon by Lhe uA8 corporaLlons ownlng agrlculLural lands may glve Lhelr quallfled
beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL
Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe
company's LoLal asseLs under such Lerms and condlLlons as may be agreed upon by Lhem ln no
case shall Lhe compensaLlon recelved by Lhe workers aL Lhe Llme Lhe shares of sLocks are
dlsLrlbuLed be reduced x x x

CorporaLlons or assoclaLlons whlch volunLarlly dlvesL a proporLlon of Lhelr caplLal sLock equlLy
or parLlclpaLlon ln favor of Lhelr workers or oLher quallfled beneflclarles under Lhls secLlon shall
be deemed Lo have complled wlLh Lhe provlslons of Lhls AcL rovlded 1haL Lhe followlng
condlLlons are complled wlLh

(a) ln order Lo safeguard Lhe rlghL of beneflclarles who own shares of sLocks Lo dlvldends and
oLher flnanclal beneflLs Lhe books of Lhe corporaLlon or assoclaLlon shall be sub[ecL Lo perlodlc
audlL by cerLlfled publlc accounLanLs chosen by Lhe beneflclarles

(b) lrrespecLlve of Lhe value of Lhelr equlLy ln Lhe corporaLlon or assoclaLlon Lhe beneflclarles
shall be assured of aL leasL one (1) represenLaLlve ln Lhe board of dlrecLors or ln a managemenL
or execuLlve commlLLee lf one exlsLs of Lhe corporaLlon or assoclaLlon

(c) Any shares acqulred by such workers and beneflclarles shall have Lhe same rlghLs and
feaLures as all oLher shares and

(d) Any Lransfer of shares of sLocks by Lhe orlglnal beneflclarles shall be vold ab lnlLlo unless
sald LransacLlon ls ln favor of a quallfled and reglsLered beneflclary wlLhln Lhe same
corporaLlon

lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe volunLary land or sLock Lransfer
envlsloned above ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe
A8C wlLhln Lhe same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall
be sub[ecL Lo Lhe compulsory coverage of Lhls AcL (Lmphasls added)

vlsvls Lhe sLock dlsLrlbuLlon aspecL of Lhe aforequoLed Sec 31 uA8 lssued AdmlnlsLraLlve
Crder no 10 Serles of 1988 (uAC 10)27 enLlLled Culdellnes and rocedures for CorporaLe
Landowners ueslrlng Lo Avall 1hemselves of Lhe SLock ulsLrlbuLlon lan under SecLlon 31 of 8A
6637

lrom Lhe sLarL Lhe sLock dlsLrlbuLlon scheme appeared Lo be 1adeco's preferred opLlon for on
AugusL 23 198828 lL organlzed a splnoff corporaLlon PLl as vehlcle Lo faclllLaLe sLock
acqulslLlon by Lhe farmworkers lor Lhls purpose 1adeco asslgned and conveyed Lo PLl Lhe
agrlculLural land porLlon (491373 hecLares) and oLher farmrelaLed properLles of Paclenda
LulslLa ln exchange for PLl shares of sLock29

edro Co[uangco !osephlne C 8eyes 1ereslLa C Lopa !ose Co[uangco !r and az C 1eopaco
were Lhe lncorporaLors of PLl30

1o accommodaLe Lhe asseLs Lransfer from 1adeco Lo PLl Lhe laLLer wlLh Lhe SecurlLles and
Lxchange Commlsslon's (SLC's) approval lncreased lLs caplLal sLock on May 10 1989 from h
1300000 dlvlded lnLo 1300000 shares wlLh a par value of h 1/share Lo h 400000000
dlvlded lnLo 400000000 shares also wlLh par value of h 1/share 130000000 of whlch were
Lo be lssued only Lo quallfled and reglsLered beneflclarles of Lhe CA8 and Lhe remalnlng
230000000 Lo any sLockholder of Lhe corporaLlon31

As appearlng ln lLs proposed Su Lhe properLles and asseLs of 1adeco conLrlbuLed Lo Lhe caplLal
sLock of PLl as appralsed and approved by Lhe SLC have an aggregaLe value of h
390334220 or afLer deducLlng Lhe LoLal llablllLles of Lhe farm amounLlng Lo h 233422738 a
neL value of h 333331462 1hls LranslaLed Lo 333331462 shares wlLh a par value of h
1/share32

Cn May 9 1989 some 93 of Lhe Lhen farmworkerbeneflclarles (lW8s) complemenL of
Paclenda LulslLa slgnlfled ln a referendum Lhelr accepLance of Lhe proposed PLl's SLock
ulsLrlbuLlon CpLlon lan Cn May 11 1989 Lhe SLock ulsLrlbuLlon CpLlon AgreemenL (SuCA)
sLyled as a Memorandum of AgreemenL (MCA)33 was enLered lnLo by 1adeco PLl and Lhe
3848 quallfled lW8s34 and aLLesLed Lo by Lhen uA8 SecreLary hlllp !ulco 1he SuCA embodled
Lhe basls and mechanlcs of Lhe Su whlch would evenLually be submlLLed Lo Lhe A8C for
approval ln Lhe SuCA Lhe parLles agreed Lo Lhe followlng

1 1he percenLage of Lhe value of Lhe agrlculLural land of Paclenda LulslLa (19663000000) ln
relaLlon Lo Lhe LoLal asseLs (39033422000) Lransferred and conveyed Lo Lhe SLCCnu A81?
PLl ls 33296 LhaL under Lhe law ls Lhe proporLlon of Lhe ouLsLandlng caplLal sLock of Lhe
SLCCnu A81? whlch ls 33333146200 or 333331462 shares wlLh a par value of 100 per
share LhaL has Lo be dlsLrlbuLed Lo Lhe 1Pl8u A81? lW8s under Lhe sLock dlsLrlbuLlon plan
Lhe sald 33296 Lhereof belng 11839197683 or 11839197683 shares

2 1he quallfled beneflclarles of Lhe sLock dlsLrlbuLlon plan shall be Lhe farmworkers who
appear ln Lhe annual payroll lncluslve of Lhe permanenL and seasonal employees who are
regularly or perlodlcally employed by Lhe SLCCnu A81?

3 AL Lhe end of each flscal year for a perlod of 30 years Lhe SLCCnu A81? shall arrange wlLh
Lhe ll8S1 A81? 1adeco Lhe acqulslLlon and dlsLrlbuLlon Lo Lhe 1Pl8u A81? on Lhe basls of
number of days worked and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of 11839197683 shares
of Lhe caplLal sLock of Lhe SLCCnu A81? LhaL are presenLly owned and held by Lhe ll8S1
A81? unLll such Llme as Lhe enLlre block of 11839197683 shares shall have been compleLely
acqulred and dlsLrlbuLed Lo Lhe 1Pl8u A81?


41he SLCCnu A81? shall guaranLee Lo Lhe quallfled beneflclarles of Lhe Su LhaL every year
Lhey wlll recelve on Lop of Lhelr regular compensaLlon an amounL LhaL approxlmaLes Lhe
equlvalenL of Lhree (3) of Lhe LoLal gross sales from Lhe producLlon of Lhe agrlculLural land
wheLher lL be ln Lhe form of cash dlvldends or lncenLlve bonuses or boLh

3 Lven lf only a parL or fracLlon of Lhe shares earmarked for dlsLrlbuLlon wlll have been
acqulred from Lhe ll8S1 A81? and dlsLrlbuLed Lo Lhe 1Pl8u A81? ll8S1 A81? shall execuLe
aL Lhe beglnnlng of each flscal year an lrrevocable proxy valld and effecLlve for one (1) year ln
favor of Lhe farmworkers appearlng as shareholders of Lhe SLCCnu A81? aL Lhe sLarL of sald
year whlch wlll empower Lhe 1Pl8u A81? or Lhelr represenLaLlve Lo voLe ln sLockholders' and
board of dlrecLors' meeLlngs of Lhe SLCCnu A81? convened durlng Lhe year Lhe enLlre
33296 of Lhe ouLsLandlng caplLal sLock of Lhe SLCCnu A81? earmarked for dlsLrlbuLlon and
Lhus be able Lo galn such number of seaLs ln Lhe board of dlrecLors of Lhe SLCCnu A81? LhaL
Lhe whole 33296 of Lhe shares sub[ecL Lo dlsLrlbuLlon wlll be enLlLled Lo

6 ln addlLlon Lhe SLCCnu A81? shall wlLhln a reasonable Llme subdlvlde and allocaLe for free
and wlLhouL charge among Lhe quallfled famllybeneflclarles resldlng ln Lhe place where Lhe
agrlculLural land ls slLuaLed resldenLlal or homeloLs of noL more Lhan 240 sqm each wlLh each
famllybeneflclary belng assured of recelvlng and ownlng a homeloL ln Lhe barangay where lL
acLually resldes on Lhe daLe of Lhe execuLlon of Lhls AgreemenL

7 1hls AgreemenL ls enLered lnLo by Lhe parLles ln Lhe splrlL of Lhe (CA8) of Lhe governmenL
and wlLh Lhe supervlslon of Lhe uA8 wlLh Lhe end ln vlew of lmprovlng Lhe loL of Lhe quallfled
beneflclarles of Lhe Su and obLalnlng for Lhem greaLer beneflLs (Lmphasls added)

As may be gleaned from Lhe SuCA lncluded as parL of Lhe dlsLrlbuLlon plan are (a) producLlon
sharlng equlvalenL Lo Lhree percenL (3) of gross sales from Lhe producLlon of Lhe agrlculLural
land payable Lo Lhe lW8s ln cash dlvldends or lncenLlve bonus and (b) dlsLrlbuLlon of free
homeloLs of noL more Lhan 240 square meLers each Lo famllybeneflclarles 1he producLlon
sharlng as Lhe Su lndlcaLed ls payable lrrespecLlve of wheLher PLl makes money or noL
lmplylng LhaL Lhe beneflLs do noL parLake Lhe naLure of dlvldends as Lhe Lerm ls ordlnarlly
undersLood under corporaLlon law

Whlle a llLLle blL hard Lo follow glven LhaL durlng Lhe perlod maLerlal Lhe asslgned value of Lhe
agrlculLural land ln Lhe haclenda was h 19663 mllllon whlle Lhe LoLal asseLs of PLl was h
39033 mllllon wlLh neL asseLs of h 33333 mllllon 1adeco/PLl would admlL LhaL Lhe raLlo of
Lhe landLoshares of sLock corresponds Lo 333 of Lhe ouLsLandlng caplLal sLock of Lhe PLl
equlvalenL Lo 11839197683 shares of sLock wlLh a par value of h 1/share

SubsequenLly PLl submlLLed Lo uA8 lLs Su deslgnaLed as roposal for SLock ulsLrlbuLlon
under CA833 whlch was subsLanLlally based on Lhe SuCA

noLably ln a followup referendum Lhe uA8 conducLed on CcLober 14 1989 3117 lW8s ouL
of 3313 who parLlclpaLed opLed Lo recelve shares ln PLl36 Cne hundred LhlrLyLwo (132)
chose acLual land dlsLrlbuLlon37

AfLer a revlew of Lhe Su Lhen uA8 SecreLary Mlrlam uefensorSanLlago (Sec uefensor
SanLlago) addressed a leLLer daLed november 6 198938 Lo edro S Co[uangco (Co[uangco)
Lhen 1adeco presldenL proposlng LhaL Lhe Su be revlsed along Lhe followlng llnes

1 1haL over Lhe lmplemenLaLlon perlod of Lhe Su 1adeco/PLl shall ensure LhaL Lhere wlll
be no dlluLlon ln Lhe shares of sLocks of lndlvldual lW8s

2 1haL a safeguard shall be provlded by 1adeco/PLl agalnsL Lhe dlluLlon of Lhe percenLage
shareholdlngs of Lhe lW8s le LhaL Lhe 33 shareholdlngs of Lhe lW8s wlll be malnLalned
aL any glven Llme

3 1haL Lhe mechanlcs for dlsLrlbuLlng Lhe sLocks be expllclLly sLaLed ln Lhe MCA slgned
beLween Lhe 1adeco PLl and lLs lW8s prlor Lo Lhe lmplemenLaLlon of Lhe sLock plan

4 1haL Lhe sLock dlsLrlbuLlon plan provlde for clear and deflnlLe Lerms for deLermlnlng Lhe
acLual number of seaLs Lo be allocaLed for Lhe lW8s ln Lhe PLl 8oard

3 1haL PLl provlde guldellnes and a LlmeLable for Lhe dlsLrlbuLlon of homeloLs Lo quallfled
lW8s and

6 1haL Lhe 3 cash dlvldends menLloned ln Lhe Su be expressly provlded for ln Lhe MCA

ln a leLLerreply of november 14 1989 Lo Sec uefensorSanLlago 1adeco/PLl explalned LhaL
Lhe proposed revlslons of Lhe Su are already embodled ln boLh Lhe Su and MCA39 lollowlng
LhaL exchange Lhe A8C under Lhen Sec uefensorSanLlago by 8esoluLlon no 8912240
daLed november 21 1989 approved Lhe Su of 1adeco/PLl41

AL Lhe Llme of Lhe Su approval PLl had a pool of farmworkers numberlng 6296 more or less
composed of permanenL seasonal and casual masLer llsL/payroll and nonmasLer llsL members

lrom 1989 Lo 2003 PLl clalmed Lo have exLended Lhe followlng beneflLs Lo Lhe lW8s

(a) 3 bllllon pesos (3000000000) worLh of salarles wages and frlnge beneflLs

(b) 39 mllllon shares of sLock dlsLrlbuLed for free Lo Lhe lW8s

(c) 130 mllllon pesos (130000000) represenLlng 3 of Lhe gross produce

(d) 373 mllllon pesos (37300000) represenLlng 3 from Lhe sale of 300 hecLares of
converLed agrlculLural land of Paclenda LulslLa

(e) 240square meLer homeloLs dlsLrlbuLed for free

(f) 24 mllllon pesos (2400000) represenLlng 3 from Lhe sale of 80 hecLares aL 80 mllllon
pesos (80000000) for Lhe SC1Lx

(g) Soclal servlce beneflLs such as buL noL llmlLed Lo free hosplLallzaLlon/medlcal/maLernlLy
servlces old age/deaLh beneflLs and no lnLeresL bearlng salary/educaLlonal loans and rlce sugar
accounLs 42

1wo separaLe groups subsequenLly conLesLed Lhls clalm of PLl

Cn AugusL 13 1993 PLl applled for Lhe converslon of 300 hecLares of land of Lhe haclenda from
agrlculLural Lo lndusLrlal use43 pursuanL Lo Sec 63 of 8A 6637 provldlng

SLC 63 Converslon of LandsAfLer Lhe lapse of flve (3) years from lLs award when Lhe land
ceases Lo be economlcally feaslble and sound for agrlculLural purposes or Lhe locallLy has
become urbanlzed and Lhe land wlll have a greaLer economlc value for resldenLlal commerclal
or lndusLrlal purposes Lhe uA8 upon appllcaLlon of Lhe beneflclary or Lhe landowner wlLh due
noLlce Lo Lhe affecLed parLles and sub[ecL Lo exlsLlng laws may auLhorlze Lhe reclasslflcaLlon or
converslon of Lhe land and lLs dlsposlLlon rovlded 1haL Lhe beneflclary shall have fully pald lLs
obllgaLlon

1he appllcaLlon accordlng Lo PLl had Lhe backlng of 3000 or so lW8s lncludlng respondenL
8ene Calang and !ose !ullo Sunlga as evldenced by Lhe ManlfesLo of SupporL Lhey slgned and
whlch was submlLLed Lo Lhe uA844 AfLer Lhe usual processlng Lhe uA8 Lhru Lhen Sec LrnesLo
Carllao approved Lhe appllcaLlon on AugusL 14 1996 per uA8 Converslon Crder no
030601074764(93) Serles of 199643 sub[ecL Lo paymenL of Lhree percenL (3) of Lhe gross
selllng prlce Lo Lhe lW8s and Lo PLl's conLlnued compllance wlLh lLs underLaklngs under Lhe
Su among oLher condlLlons

Cn uecember 13 1996 PLl ln exchange for subscrlpLlon of 12000000 shares of sLocks of
CenLennary Poldlngs lnc (CenLennary) ceded 300 hecLares of Lhe converLed area Lo Lhe
laLLer46 ConsequenLly PLl's 1ransfer CerLlflcaLe of 1lLle (1C1) no 28791047 was canceled and
1C1 no 29209148 was lssued ln Lhe name of CenLennary PLl Lransferred Lhe remalnlng 200
hecLares covered by 1C1 no 287909 Lo LulslLa 8ealLy CorporaLlon (L8C)49 ln Lwo separaLe
LransacLlons ln 1997 and 1998 boLh unlformly lnvolvlng 100 hecLares for h 230 mllllon
each30

CenLennary a corporaLlon wlLh an auLhorlzed caplLal sLock of h 12100000 dlvlded lnLo
12100000 shares and whollyowned by PLl had Lhe followlng lncorporaLors edro Co[uangco
!osephlne C 8eyes 1ereslLa C Lopa LrnesLo C 1eopaco and 8ernardo 8 Lahoz

SubsequenLly CenLennary sold31 Lhe enLlre 300 hecLares Lo LulslLa lndusLrlal ark CorporaLlon
(LlCC) for h 730 mllllon 1he laLLer acqulred lL for Lhe purpose of developlng an lndusLrlal
complex32 As a resulL CenLennary's 1C1 no 292091 was canceled Lo be replaced by 1C1 no
31098633 ln Lhe name of LlCC

lrom Lhe area covered by 1C1 no 310986 was carved ouL Lwo (2) parcels for whlch Lwo (2)
separaLe LlLles were lssued ln Lhe name of LlCC speclflcally (a) 1C1 no 36380034 and (b) 1C1
no 36380133 coverlng 180 and four hecLares respecLlvely 1C1 no 310986 was accordlngly
parLlally canceled

LaLer on ln a ueed of AbsoluLe AsslgnmenL daLed november 23 2004 LlCC Lransferred Lhe
parcels covered by lLs 1C1 nos 363800 and 363801 Lo Lhe 8lzal Commerclal 8anklng
CorporaLlon (8C8C) by way of daclon en pago ln paymenL of LlCC's h 43169373210 loan
obllgaLlons LlCC's LlLles were canceled and new ones 1C1 nos 391031 and 391032 were
lssued Lo 8C8C

AparL from Lhe 300 hecLares alluded Lo anoLher 8031 hecLares were laLer deLached from Lhe
area coverage of Paclenda LulslLa whlch had been acqulred by Lhe governmenL as parL of Lhe
SublcClark1arlac Lxpressway (SC1Lx) complex ln absoluLe Lerms 433373 hecLares remalned
of Lhe orlglnal 4913 hecLares 1adeco ceded Lo PLl36

Such ln shorL was Lhe sLaLe of Lhlngs when Lwo separaLe peLlLlons boLh undaLed reached Lhe
uA8 ln Lhe laLLer parL of 2003 ln Lhe flrsL denomlnaLed as eLlLlon/roLesL37 respondenLs !ose
!ullo Sunlga and Wlndsor Andaya ldenLlfylng Lhemselves as head of Lhe Supervlsory Croup of
PLl (Supervlsory Croup) and 60 oLher supervlsors soughL Lo revoke Lhe SuCA alleglng LhaL PLl
had falled Lo glve Lhem Lhelr dlvldends and Lhe one percenL (1) share ln gross sales as well as
Lhe LhlrLyLhree percenL (33) share ln Lhe proceeds of Lhe sale of Lhe converLed 300 hecLares
of land 1hey furLher clalmed LhaL Lhelr llves have noL lmproved conLrary Lo Lhe promlse and
raLlonale for Lhe adopLlon of Lhe SuCA 1hey also clLed vlolaLlons by PLl of Lhe SuCA's Lerms38
1hey prayed for a renegoLlaLlon of Lhe SuCA or ln Lhe alLernaLlve lLs revocaLlon

8evocaLlon and nulllflcaLlon of Lhe SuCA and Lhe dlsLrlbuLlon of Lhe lands ln Lhe haclenda were
Lhe call ln Lhe second peLlLlon sLyled as eLlsyon (eLlLlon)39 1he eLlsyon was osLenslbly flled
on uecember 4 2003 by Alyansa ng mga Manggagawang 8ukld ng Paclenda LulslLa (AM8ALA)
where Lhe handwrlLLen name of respondenLs 8ene Calang as angulo AM8ALA and noel
Mallarl as SecCen AM8ALA60 appeared As alleged Lhe peLlLlon was flled on behalf of
AM8ALA's members purporLedly composlng abouL 80 of Lhe 3339 lW8s of Paclenda LulslLa

PLl would evenLually answer61 Lhe peLlLlon/proLesL of Lhe Supervlsory Croup Cn Lhe oLher
hand PLl's answer62 Lo Lhe AM8ALA peLlLlon was conLalned ln lLs leLLer daLed !anuary 21 2003
also flled wlLh uA8

Meanwhlle Lhe uA8 consLlLuLed a Speclal 1ask lorce Lo aLLend Lo lssues relaLlng Lo Lhe Su of
PLl Among oLher duLles Lhe Speclal 1ask lorce was mandaLed Lo revlew Lhe Lerms and
condlLlons of Lhe SuCA and A8C 8esoluLlon no 89122 relaLlve Lo PLl's Su evaluaLe PLl's
compllance reporLs evaluaLe Lhe merlLs of Lhe peLlLlons for Lhe revocaLlon of Lhe Su conducL
ocular lnspecLlons or fleld lnvesLlgaLlons and recommend approprlaLe remedlal measures for
approval of Lhe SecreLary63

AfLer lnvesLlgaLlon and evaluaLlon Lhe Speclal 1ask lorce submlLLed lLs 1ermlnal 8eporL
Paclenda LulslLa lncorporaLed (PLl) SLock ulsLrlbuLlon lan (Su) ConfllcL64 daLed SepLember
22 2003 (1ermlnal 8eporL) flndlng LhaL PLl has noL complled wlLh lLs obllgaLlons under 8A
6637 desplLe Lhe lmplemenLaLlon of Lhe Su63 1he 1ermlnal 8eporL and Lhe Speclal 1ask
lorce's recommendaLlons were adopLed by Lhen uA8 Sec nasser angandaman (Sec
angandaman)66

SubsequenLly Sec angandaman recommended Lo Lhe A8C LxecuLlve CommlLLee (Lxcom) (a)
Lhe recall/revocaLlon of A8C 8esoluLlon no 89122 daLed november 21 1989 approvlng PLl's
Su and (b) Lhe acqulslLlon of Paclenda LulslLa Lhrough Lhe compulsory acqulslLlon scheme
lollowlng revlew Lhe A8C valldaLlon CommlLLee favorably endorsed Lhe uA8 SecreLary's
recommendaLlon aforesLaLed67

Cn uecember 22 2003 Lhe A8C lssued Lhe assalled 8esoluLlon no 20033201 dlsposlng as
follows

nCW 1PL8LlC8L on moLlon duly seconded 8LSCLvLu as lL ls PL8L8? 8LSCLvLu Lo approve
and conflrm Lhe recommendaLlon of Lhe A8C LxecuLlve CommlLLee adopLlng ln LoLo Lhe reporL
of Lhe A8C LxCom valldaLlon CommlLLee afflrmlng Lhe recommendaLlon of Lhe uA8 Lo
recall/revoke Lhe SuC plan of 1arlac uevelopmenL CorporaLlon/Paclenda LulslLa lncorporaLed

8LSCLvLu furLher LhaL Lhe lands sub[ecL of Lhe recalled/revoked 1uC/PLl SuC plan be
forLhwlLh placed under Lhe compulsory coverage or mandaLed land acqulslLlon scheme of Lhe
CA8

A8CvLu68

A copy of 8esoluLlon no 20033201 was served on PLl Lhe followlng day uecember 23
wlLhouL any copy of Lhe documenLs adverLed Lo ln Lhe resoluLlon aLLached A leLLerrequesL
daLed uecember 28 200369 for cerLlfled coples of sald documenLs was senL Lo buL was noL
acLed upon by Lhe A8C secreLarlaL

1herefrom PLl on !anuary 2 2006 soughL reconslderaLlon70 Cn Lhe same day Lhe uA8 1arlac
provlnclal offlce lssued Lhe noLlce of Coverage71 whlch PLl recelved on !anuary 4 2006

lLs moLlon noLwlLhsLandlng PLl has flled Lhe lnsLanL recourse ln llghL of whaL lL conslders as Lhe
uA8's hasLy placlng of Paclenda LulslLa under CA8 even before A8C could rule or even read
Lhe moLlon for reconslderaLlon72 As PLl laLer rued lL can noL know from Lhe abovequoLed
resoluLlon Lhe facLs and Lhe law upon whlch lL ls based73

A8C would evenLually deny PLl's moLlon for reconslderaLlon vla 8esoluLlon no 20063401
daLed May 3 2006

8y 8esoluLlon of !une 14 200674 Lhe CourL acLlng on PLl's moLlon lssued a Lemporary
resLralnlng order73 en[olnlng Lhe lmplemenLaLlon of 8esoluLlon no 20033201 and Lhe noLlce
of coverage

Cn !uly 13 2006 Lhe CSC for publlc respondenLs A8C and Lhe uA8 flled lLs CommenL76 on
Lhe peLlLlon

Cn uecember 2 2006 noel Mallarl lmpleaded by PLl as respondenL ln hls capaclLy as Sec
Cen AM8ALA flled hls ManlfesLaLlon and MoLlon wlLh CommenL ALLached daLed uecember 4
2006 (ManlfesLaLlon and MoLlon)77 ln lL Mallarl sLaLed LhaL he has broken away from AM8ALA
wlLh oLher AM8ALA exmembers and formed larmworkers Agrarlan 8eform MovemenL lnc
(lA8M)78 Should Lhls shlfL ln alllance deny hlm sLandlng Mallarl also prayed LhaL lA8M be
allowed Lo lnLervene

As evenLs would laLer develop Mallarl had a parLlng of ways wlLh oLher lA8M members
parLlcularly wouldbe lnLervenors 8enaLo Lallc eL al As Lhlngs sLand Mallarl reLurned Lo Lhe
AM8ALA fold creaLlng Lhe AM8ALAnoel Mallarl facLlon and leavlng 8enaLo Lallc eL al as Lhe
remalnlng members of lA8M who soughL Lo lnLervene

Cn !anuary 10 2007 Lhe Supervlsory Croup79 and Lhe AM8ALA8ene Calang facLlon submlLLed
Lhelr CommenL/CpposlLlon daLed uecember 17 200680

Cn CcLober 30 2007 8C8C flled a MoLlon for Leave Lo lnLervene and Lo llle and AdmlL
ALLached eLlLlonlnlnLervenLlon daLed CcLober 18 200781 LlCC laLer followed wlLh a slmllar
moLlon82 ln boLh moLlons 8C8C and LlCC conLended LhaL Lhe assalled resoluLlon effecLlvely
nulllfled Lhe 1C1s under Lhelr respecLlve names as Lhe properLles covered ln Lhe 1C1s were
verlLably lncluded ln Lhe !anuary 2 2006 noLlce of coverage ln Lhe maln Lhey clalmed LhaL Lhe
revocaLlon of Lhe Su cannoL legally affecL Lhelr rlghLs as lnnocenL purchasers for value 8oLh
moLlons for leave Lo lnLervene were granLed and Lhe correspondlng peLlLlonslnlnLervenLlon
admlLLed

Cn AugusL 18 2010 Lhe CourL heard Lhe maln and lnLervenlng peLlLloners on oral argumenLs
Cn Lhe oLher hand Lhe CourL on AugusL 24 2010 heard publlc respondenLs as well as Lhe
respecLlve counsels of Lhe AM8ALAMallarlSupervlsory Croup Lhe AM8ALACalang facLlon
and Lhe lA8M and lLs 27 members83 argue Lhelr case

rlor Lo Lhe oral argumenLs however PLl AM8ALA represenLed by Mallarl Lhe Supervlsory
Croup represenLed by Sunlga and Andaya and Lhe unlLed LulslLa Workers unlon represenLed
by Lldlfonso lngol flled wlLh Lhe CourL a [olnL submlsslon and moLlon for approval of a
Compromlse AgreemenL (Lngllsh and 1agalog verslons) daLed AugusL 6 2010

Cn AugusL 31 2010 Lhe CourL ln a bld Lo resolve Lhe dlspuLe Lhrough an amlcable seLLlemenL
lssued a 8esoluLlon84 creaLlng a MedlaLlon anel composed of Lhen AssoclaLe !usLlce Ma Allcla
AusLrlaMarLlnez as chalrperson and former CA !usLlces PecLor Pofllena and 1ereslLa uyLlacco
llores as members MeeLlngs on flve (3) separaLe daLes le SepLember 8 9 14 20 and 27
2010 were conducLed uesplLe perseverlng and palnsLaklng efforLs on Lhe parL of Lhe panel
medlaLlon had Lo be dlsconLlnued when no accepLable agreemenL could be reached

1he lssues

PLl ralses Lhe followlng lssues for our conslderaLlon

l

WPL1PL8 C8 nC1 u8LlC 8LSCnuLn1S A8C Anu SLC8L1A8? AnCAnuAMAn PAvL
!u8lSulC1lCn CWL8 Anu/C8 Au1PC8l1? 1C nuLLll? 8LCALL 8LvCkL C8 8LSClnu 1PL
SuCA

ll

ll SC x x x CAn 1PL? S1lLL LxL8ClSL SuCP !u8lSulC1lCn CWL8 Anu/C8 Au1PC8l1? A1
1PlS 1lML lL Al1L8 Slx1LLn (16) ?LA8S l8CM 1PL LxLCu1lCn Cl 1PL SuCA Anu l1S
lMLLMLn1A1lCn Wl1PCu1 vlCLA1lnC SLC1lCnS 1 Anu 10 Cl A81lCLL lll (8lLL Cl 8lCP1S)
Cl 1PL CCnS1l1u1lCn ACAlnS1 uL8lvA1lCn Cl 8CL81? Wl1PCu1 uuL 8CCLSS Cl LAW
Anu 1PL lMAl8MLn1 Cl CCn18AC1uAL 8lCP1S Anu C8LlCA1lCnS? MC8LCvL8 A8L 1PL8L
LLCAL C8CunuS unuL8 1PL ClvlL CCuL vlz A81lCLL 1191 x x x A81lCLLS 1380 1381 Anu
1382 x x x A81lCLL 1390 x x x Anu A81lCLL 1409 x x x 1PA1 CAn 8L lnvCkLu 1C nuLLll?
8LCALL 8LvCkL C8 8LSClnu 1PL SuCA?

lll

WPL1PL8 1PL L1l1lCnS 1C nuLLll? 8LCALL 8LvCkL C8 8LSClnu 1PL SuCA PAvL An?
LLCAL 8ASlS C8 C8CunuS Anu WPL1PL8 1PL L1l1lCnL8S 1PL8Lln A8L 1PL 8LAL A81lLS
lnln1L8LS1 1C llLL SAlu L1l1lCnS

lv

WPL1PL8 1PL 8lCP1S C8LlCA1lCnS Anu 8LMLulLS Cl 1PL A81lLS 1C 1PL SuCA A8L nCW
CCvL8nLu 8? 1PL CC8C8A1lCn CCuL (8A1AS AM8AnSA 8LC 68) Anu nC1 8? 1PL x x x
CA8L x x x

Cn Lhe oLher hand 8C8C submlLs Lhe followlng lssues

l

8LSCnuLn1 A8C CCMMl11Lu C8AvL A8uSL Cl ulSC8L1lCn AMCun1lnC 1C LACk C8
LxCLSS Cl !u8lSulC1lCn WPLn l1 ulu nC1 LxCLuuL 1PL Su8!LC1 8CL81? l8CM 1PL
CCvL8ACL Cl 1PL CA8 uLSl1L 1PL lAC1 1PA1 L1l1lCnL8ln1L8vLnC8 8C8C PAS
ACCul8Lu vLS1Lu 8lCP1S Anu lnuLlLASl8LL 1l1LL CvL8 1PL Su8!LC1 8CL81? AS An
lnnCCLn1 u8CPASL8 lC8 vALuL

A 1PL ASSAlLLu 8LSCLu1lCn nC 20033201 Anu 1PL nC1lCL Cl CCvL8ACL uA1Lu 02
!AnuA8? 2006 PAvL 1PL LllLC1 Cl nuLLll?lnC 1C1 nCS 391031 Anu 391032 ln 1PL nAML
Cl L1l1lCnL8ln1L8vLnC8 8C8C

8 AS An lnnCCLn1 u8CPASL8 lC8 vALuL L1l1lCnL8ln1L8vLnC8 8C8C CAnnC1 8L
8L!uulCLu 8? A Su8SLCuLn1 8LvCCA1lCn C8 8LSClSSlCn Cl 1PL SuCA

ll

1PL ASSAlLLu 8LSCLu1lCn nC 20033201 Anu 1PL nC1lCL Cl CCvL8ACL uA1Lu 02
!AnuA8? 2006 WL8L lSSuLu Wl1PCu1 AllC8ulnC L1l1lCnL8ln1L8vLnC8 8C8C l1S 8lCP1
1C uuL 8CCLSS AS An lnnCCLn1 u8CPASL8 lC8 vALuL

LlCC llke 8C8C asserLs havlng acqulred vesLed and lndefeaslble rlghLs over cerLaln porLlons of
Lhe converLed properLy and hence would ascrlbe on A8C Lhe commlsslon of grave abuse of
dlscreLlon when lL lncluded Lhose porLlons ln Lhe noLlce of coverage And aparL from ralslng
lssues ldenLlcal wlLh Lhose of PLl such as buL noL llmlLed Lo Lhe absence of valld grounds Lo
warranL Lhe resclsslon and/or revocaLlon of Lhe Su LlCC would allege LhaL Lhe assalled
resoluLlon and Lhe noLlce of coverage were lssued wlLhouL affordlng lL Lhe rlghL Lo due process
as an lnnocenL purchaser for value 1he governmenL LlCC also argues ls esLopped from
recoverlng properLles whlch have slnce passed Lo lnnocenL parLles

Slmply formulaLed Lhe prlnclpal deLermlnaLlve lssues Lendered ln Lhe maln peLlLlon and Lo
whlch all oLher relaLed quesLlons musL yleld boll down Lo Lhe followlng (1) maLLers of sLandlng
(2) Lhe consLlLuLlonallLy of Sec 31 of 8A 6637 (3) Lhe [urlsdlcLlon of A8C Lo recall or revoke
PLl's Su (4) Lhe valldlLy or proprleLy of such recall or revocaLory acLlon and (3) corollary Lo
(4) Lhe valldlLy of Lhe Lerms and condlLlons of Lhe Su as embodled ln Lhe SuCA

Cur 8ullng

l

We flrsL proceed Lo Lhe examlnaLlon of Lhe prellmlnary lssues before delvlng on Lhe more
serlous challenges bearlng on Lhe valldlLy of A8C's assalled lssuance and Lhe grounds for lL

Supervlsory Croup AM8ALA and Lhelr
respecLlve leaders are real parLleslnlnLeresL

PLl would deny real parLylnlnLeresL sLaLus Lo Lhe purporLed leaders of Lhe Supervlsory Croup
and AM8ALA le !ullo Sunlga Wlndsor Andaya and 8ene Calang who flled Lhe revocaLory
peLlLlons before Lhe uA8 As PLl would have lL Calang Lhe selfsLyled head of AM8ALA galned
PLl employmenL ln !une 1990 and Lhus could noL have been a parLy Lo Lhe SuCA execuLed a
year earller83 As regards Lhe Supervlsory Croup PLl alleges LhaL supervlsors are noL regular
farmworkers buL Lhe company noneLheless consldered Lhem lW8s under Lhe SuCA as a mere
concesslon Lo enable Lhem Lo en[oy Lhe same beneflLs glven quallfled regular farmworkers
Powever lf Lhe SuCA would be canceled and land dlsLrlbuLlon effecLed so PLl clalms clLlng
lorLlch v Corona86 Lhe supervlsors would be excluded from recelvlng lands as farmworkers
oLher Lhan Lhe regular farmworkers who are merely enLlLled Lo Lhe frulLs of Lhe land87

1he SuCA no less ldenLlfles Lhe Su quallfled beneflclarles as Lhe farmworkers who appear
ln Lhe annual payroll lncluslve of Lhe permanenL and seasonal employees who are regularly or
perlodlcally employed by PLl88 Calang per PLl's own admlsslon ls employed by PLl and ls
Lhus a quallfled beneflclary of Lhe Su he comes wlLhln Lhe deflnlLlon of a real parLyln
lnLeresL under Sec 2 8ule 3 of Lhe 8ules of CourL meanlng one who sLands Lo be beneflLed or
ln[ured by Lhe [udgmenL ln Lhe sulL or ls Lhe parLy enLlLled Lo Lhe avalls of Lhe sulL

1he same holds Lrue wlLh respecL Lo Lhe Supervlsory Croup whose members were admlLLedly
employed by PLl and whose names and slgnaLures even appeared ln Lhe annex of Lhe SuCA
8elng quallfled beneflclarles of Lhe Su Sunlga and Lhe oLher 61 supervlsors are cerLalnly
parLles who would beneflL or be pre[udlced by Lhe [udgmenL recalllng Lhe Su or replaclng lL
wlLh some oLher modallLy Lo comply wlLh 8A 6637

Lven assumlng LhaL members of Lhe Supervlsory Croup are noL regular farmworkers buL are ln
Lhe caLegory of oLher farmworkers menLloned ln Sec 4 ArLlcle xlll of Lhe ConsLlLuLlon89 Lhus
only enLlLled Lo a share of Lhe frulLs of Lhe land as lndeed lorLlch Leaches Lhls does noL deLracL
from Lhe facL LhaL Lhey are sLlll ldenLlfled as belng among Lhe Su quallfled beneflclarles As
such Lhey are Lhus enLlLled Lo brlng an acLlon upon Lhe Su90 AL any raLe Lhe followlng
admlsslon made by ALLy Cener Asunclon counsel of PLl durlng Lhe oral argumenLs should puL
Lo resL any llngerlng doubL as Lo Lhe sLaLus of proLesLers Calang Sunlga and Andaya

!usLlce 8ersamln x x x l heard you a whlle ago LhaL you were concedlng Lhe quallfled farmer
beneflclarles of Paclenda LulslLa were real parLles ln lnLeresL?

ALLy Asunclon ?es ?our Ponor please real parLy ln lnLeresL whlch LhaL quesLlon refers Lo Lhe
complalnLs of proLesL lnlLlaLed before Lhe uA8 and Lhe real parLy ln lnLeresL Lhere be
consldered as possessed by Lhe farmer beneflclarles who lnlLlaLed Lhe proLesL91

lurLher under Sec 30 paragraph 4 of 8A 6637 farmerleaders are expressly allowed Lo
represenL Lhemselves Lhelr fellow farmers or Lhelr organlzaLlons ln any proceedlngs before Lhe
uA8 Speclflcally

SLC 30 Cuasl!udlclal owers of Lhe uA8x x x

x x x x

8esponslble farmer leaders shall be allowed Lo represenL Lhemselves Lhelr fellow farmers or
Lhelr organlzaLlons ln any proceedlngs before Lhe uA8 rovlded however LhaL when Lhere are
Lwo or more represenLaLlves for any lndlvldual or group Lhe represenLaLlves should choose
only one among Lhemselves Lo represenL such parLy or group before any uA8 proceedlngs
(Lmphasls supplled)

Clearly Lhe respecLlve leaders of Lhe Supervlsory Croup and AM8ALA are conLexLually real
parLleslnlnLeresL allowed by law Lo flle a peLlLlon before Lhe uA8 or A8C

1hls ls noL necessarlly Lo say however LhaL Calang represenLs AM8ALA for as records show
and as PLl apLly noLed92 hls peLlsyon flled wlLh uA8 dld noL carry Lhe usual auLhorlzaLlon of
Lhe lndlvlduals ln whose behalf lL was supposed Lo have been lnsLlLuLed 1o daLe such
auLhorlzaLlon documenL whlch would loglcally lnclude a llsL of Lhe names of Lhe auLhorlzlng
lW8s has yeL Lo be submlLLed Lo be parL of Lhe records

A8C's AuLhorlLy Lo 8evoke a SLock ulsLrlbuLlon lan

Cn Lhe posLulaLe LhaL Lhe sub[ecL [urlsdlcLlon ls conferred by law PLl malnLalns LhaL A8C ls
wlLhouL auLhorlLy Lo revoke an Su for nelLher 8A 6637 nor LC 229 expressly vesLs A8C wlLh
such auLhorlLy Whlle as PLl argued LC 229 empowers A8C Lo approve Lhe plan for sLock
dlsLrlbuLlon ln approprlaLe cases Lhe empowermenL only lncludes Lhe power Lo dlsapprove buL
noL Lo recall lLs prevlous approval of Lhe Su afLer lL has been lmplemenLed by Lhe parLles93 1o
PLl lL ls Lhe courL whlch has [urlsdlcLlon and auLhorlLy Lo order Lhe revocaLlon or resclsslon of
Lhe A8Capproved Su

We dlsagree

under Sec 31 of 8A 6637 as lmplemenLed by uAC 10 Lhe auLhorlLy Lo approve Lhe plan for
sLock dlsLrlbuLlon of Lhe corporaLe landowner belongs Lo A8C Powever conLrary Lo peLlLloner
PLl's posLure A8C also has Lhe power Lo revoke Lhe Su whlch lL prevlously approved lL may
be as urged LhaL 8A 6637 or oLher execuLlve lssuances on agrarlan reform do noL expllclLly vesL
Lhe A8C wlLh Lhe power Lo revoke/recall an approved Su Such power or auLhorlLy however
ls deemed possessed by A8C under Lhe prlnclple of necessary lmpllcaLlon a baslc posLulaLe
LhaL whaL ls lmplled ln a sLaLuLe ls as much a parL of lL as LhaL whlch ls expressed94

We have explalned LhaL every sLaLuLe ls undersLood by lmpllcaLlon Lo conLaln all such
provlslons as may be necessary Lo effecLuaLe lLs ob[ecL and purpose or Lo make effecLlve rlghLs
powers prlvlleges or [urlsdlcLlon whlch lL granLs lncludlng all such collaLeral and subsldlary
consequences as may be falrly and loglcally lnferred from lLs Lerms93 lurLher every
sLaLuLory granL of power rlghL or prlvllege ls deemed Lo lnclude all lncldenLal power rlghL or
prlvllege96

Cordon v verldlano ll ls lnsLrucLlve

1he power Lo approve a llcense lncludes by lmpllcaLlon even lf noL expressly granLed Lhe
power Lo revoke lL 8y exLenslon Lhe power Lo revoke ls llmlLed by Lhe auLhorlLy Lo granL Lhe
llcense from whlch lL ls derlved ln Lhe flrsL place 1hus lf Lhe luA granLs a llcense upon lLs
flndlng LhaL Lhe appllcanL drug sLore has complled wlLh Lhe requlremenLs of Lhe general laws
and Lhe lmplemenLlng admlnlsLraLlve rules and regulaLlons lL ls only for Lhelr vlolaLlon LhaL Lhe
luA may revoke Lhe sald llcense 8y Lhe same Loken havlng granLed Lhe permlL upon hls
ascerLalnmenL LhaL Lhe condlLlons Lhereof as applled x x x have been complled wlLh lL ls only
for Lhe vlolaLlon of such condlLlons LhaL Lhe mayor may revoke Lhe sald permlL97 (Lmphasls
supplled)

lollowlng Lhe docLrlne of necessary lmpllcaLlon lL may be sLaLed LhaL Lhe confermenL of
express power Lo approve a plan for sLock dlsLrlbuLlon of Lhe agrlculLural land of corporaLe
owners necessarlly lncludes Lhe power Lo revoke or recall Lhe approval of Lhe plan

As publlc respondenLs apLly observe Lo deny A8C such revocaLory power would reduce lL lnLo
a LooLhless agency of CA8 because Lhe very same agency Lasked Lo ensure compllance by Lhe
corporaLe landowner wlLh Lhe approved Su would be wlLhouL auLhorlLy Lo lmpose sancLlons
for noncompllance wlLh lL98 WlLh Lhe vlew We Lake of Lhe case only A8C can effecL such
revocaLlon 1he uA8 SecreLary by hls own auLhorlLy as such cannoL plauslbly do so as Lhe
accepLance and/or approval of Lhe Su soughL Lo be Laken back or undone ls Lhe acL of A8C
whose offlclal composlLlon lncludes no less Lhe resldenL as chalr Lhe uA8 SecreLary as vlce
chalr and aL leasL eleven (11) oLher deparLmenL heads99

Cn anoLher buL relaLed lssue Lhe PLl folsLs on Lhe CourL Lhe argumenL LhaL sub[ecLlng lLs
landholdlngs Lo compulsory dlsLrlbuLlon afLer lLs approved Su has been lmplemenLed would
lmpalr Lhe conLracLual obllgaLlons creaLed under Lhe SuCA

1he broad sweep of PLl's argumenL lgnores cerLaln esLabllshed legal precepLs and musL
Lherefore be re[ecLed

A law auLhorlzlng lnLerference when approprlaLe ln Lhe conLracLual relaLlons beLween or
among parLles ls deemed read lnLo Lhe conLracL and lLs lmplemenLaLlon cannoL successfully be
reslsLed by force of Lhe nonlmpalrmenL guaranLee 1here ls ln LhaL lnsLance no lmplngemenL
of Lhe lmpalrmenL clause Lhe nonlmpalrmenL proLecLlon belng appllcable only Lo laws LhaL
derogaLe prlor acLs or conLracLs by enlarglng abrldglng or ln any manner changlng Lhe lnLenLlon
of Lhe parLles lmpalrmenL ln flne obLalns lf a subsequenL law changes Lhe Lerms of a conLracL
beLween Lhe parLles lmposes new condlLlons dlspenses wlLh Lhose agreed upon or wlLhdraws
exlsLlng remedles for Lhe enforcemenL of Lhe rlghLs of Lhe parLles100 necessarlly Lhe
consLlLuLlonal proscrlpLlon would noL apply Lo laws already ln effecL aL Lhe Llme of conLracL
execuLlon as ln Lhe case of 8A 6637 ln relaLlon Lo uAC 10 vlsvls PLl's SuCA As held ln
Serrano v CallanL MarlLlme Servlces lnc

1he prohlblLlon agalnsL lmpalrmenL of Lhe obllgaLlon of conLracLs ls allgned wlLh Lhe general
prlnclple LhaL laws newly enacLed have only a prospecLlve operaLlon and cannoL affecL acLs or
conLracLs already perfecLed however as Lo laws already ln exlsLence Lhelr provlslons are read
lnLo conLracLs and deemed a parL Lhereof 1hus Lhe nonlmpalrmenL clause under SecLlon 10
ArLlcle ll of Lhe ConsLlLuLlon ls llmlLed ln appllcaLlon Lo laws abouL Lo be enacLed LhaL would ln
any way derogaLe from exlsLlng acLs or conLracLs by enlarglng abrldglng or ln any manner
changlng Lhe lnLenLlon of Lhe parLles LhereLo101 (Lmphasls supplled)

needless Lo sLress Lhe assalled 8esoluLlon no 20033201 ls noL Lhe klnd of lssuance wlLhln Lhe
amblL of Sec 10 ArL lll of Lhe ConsLlLuLlon provldlng LhaL no law lmpalrlng Lhe obllgaLlon of
conLracLs shall be passed

arenLheLlcally PLl Lags Lhe SuCA as an ordlnary clvll law conLracL and as such a breach of lLs
Lerms and condlLlons ls noL a A8C admlnlsLraLlve maLLer buL one LhaL glves rlse Lo a cause of
acLlon cognlzable by regular courLs102 1hls conLenLlon has llLLle Lo commend lLself 1he SuCA
ls a speclal conLracL lmbued wlLh publlc lnLeresL enLered lnLo and crafLed pursuanL Lo Lhe
provlslons of 8A 6637 lL embodles Lhe Su whlch requlres for lLs valldlLy or aL leasL lLs
enforceablllLy A8C's approval And Lhe facL LhaL Lhe cerLlflcaLe of compllance103Lo be
lssued by agrarlan auLhorlLles upon compleLlon of Lhe dlsLrlbuLlon of sLocksls revocable by
Lhe same lssulng auLhorlLy supporLs Lhe ldea LhaL everyLhlng abouL Lhe lmplemenLaLlon of Lhe
Su ls aL Lhe flrsL lnsLance sub[ecL Lo admlnlsLraLlve ad[udlcaLlon

PLl also parlays Lhe noLlon LhaL Lhe parLles Lo Lhe SuCA should now look Lo Lhe CorporaLlon
Code lnsLead of Lo 8A 6637 ln deLermlnlng Lhelr rlghLs obllgaLlons and remedles 1he Code lL
adds should be Lhe appllcable law on Lhe dlsposlLlon of Lhe agrlculLural land of PLl

ConLrary Lo Lhe vlew of PLl Lhe rlghLs obllgaLlons and remedles of Lhe parLles Lo Lhe SuCA
embodylng Lhe Su are prlmarlly governed by 8A 6637 lL should abundanLly be made clear LhaL
PLl was preclsely creaLed ln order Lo comply wlLh 8A 6637 whlch Lhe CSC apLly descrlbed as
Lhe moLher law of Lhe SuCA and Lhe Su104 lL ls Lhus paradoxlcal for PLl Lo shleld lLself
from Lhe coverage of CA8 by lnvoklng excluslve appllcablllLy of Lhe CorporaLlon Code under
Lhe gulse of belng a corporaLe enLlLy

WlLhouL ln any way mlnlmlzlng Lhe relevance of Lhe CorporaLlon Code slnce Lhe lW8s of PLl are
also sLockholders lLs appllcablllLy ls llmlLed as Lhe rlghLs of Lhe parLles arlslng from Lhe Su
should noL be made Lo supplanL or clrcumvenL Lhe agrarlan reform program

WlLhouL doubL Lhe CorporaLlon Code ls Lhe general law provldlng for Lhe formaLlon
organlzaLlon and regulaLlon of prlvaLe corporaLlons Cn Lhe oLher hand 8A 6637 ls Lhe speclal
law on agrarlan reform As beLween a general and speclal law Lhe laLLer shall prevall
generalla speclallbus non deroganL103 8esldes Lhe presenL lmpasse beLween PLl and Lhe
prlvaLe respondenLs ls noL an lnLracorporaLe dlspuLe whlch necesslLaLes Lhe appllcaLlon of Lhe
CorporaLlon Code WhaL prlvaLe respondenLs quesLloned before Lhe uA8 ls Lhe proper
lmplemenLaLlon of Lhe Su and PLl's compllance wlLh 8A 6637 LvldenLly 8A 6637 should be
Lhe appllcable law Lo Lhe lnsLanL case

PLl furLher conLends LhaL Lhe lncluslon of Lhe agrlculLural land of Paclenda LulslLa under Lhe
coverage of CA8 and Lhe evenLual dlsLrlbuLlon of Lhe land Lo Lhe lW8s would amounL Lo a
dlsposlLlon of all or pracLlcally all of Lhe corporaLe asseLs of PLl PLl would add LhaL Lhls
conLlngency lf ever lL comes Lo pass requlres Lhe appllcablllLy of Lhe CorporaLlon Code
provlslons on corporaLe dlssoluLlon

We are noL persuaded

lndeed Lhe provlslons of Lhe CorporaLlon Code on corporaLe dlssoluLlon would apply lnsofar as
Lhe wlndlng up of PLl's affalrs or llquldaLlon of Lhe asseLs ls concerned Powever Lhe mere
lncluslon of Lhe agrlculLural land of Paclenda LulslLa under Lhe coverage of CA8 and Lhe land's
evenLual dlsLrlbuLlon Lo Lhe lW8s wlll noL wlLhouL more auLomaLlcally Lrlgger Lhe dlssoluLlon
of PLl As sLaLed ln Lhe SuCA lLself Lhe percenLage of Lhe value of Lhe agrlculLural land of
Paclenda LulslLa ln relaLlon Lo Lhe LoLal asseLs Lransferred and conveyed by 1adeco Lo PLl
comprlses only 33296 followlng Lhls equaLlon value of Lhe agrlculLural lands dlvlded by LoLal
corporaLe asseLs 8y no sLreLch of lmaglnaLlon would sald percenLage amounL Lo a dlsposlLlon
of all or pracLlcally all of PLl's corporaLe asseLs should compulsory land acqulslLlon and
dlsLrlbuLlon ensue

1hls brlngs us Lo Lhe valldlLy of Lhe revocaLlon of Lhe approval of Lhe Su slxLeen (16) years afLer
lLs execuLlon pursuanL Lo Sec 31 of 8A 6637 for Lhe reasons seL forLh ln Lhe 1ermlnal 8eporL of
Lhe Speclal 1ask lorce as endorsed by A8C Lxcom 8uL flrsL Lhe maLLer of Lhe consLlLuLlonallLy
of sald secLlon

ConsLlLuLlonal lssue

lA8M asks for Lhe lnvalldaLlon of Sec 31 of 8A 6637 lnsofar as lL affords Lhe corporaLlon as a
mode of CA8 compllance Lo resorL Lo sLock dlsLrlbuLlon an arrangemenL whlch Lo lA8M
lmpalrs Lhe fundamenLal rlghL of farmers and farmworkers under Sec 4 ArL xlll of Lhe
ConsLlLuLlon106

1o a more speclflc buL dlrecL polnL lA8M argues LhaL Sec 31 of 8A 6637 permlLs sLock Lransfer
ln lleu of ouLrlghL agrlculLural land Lransfer ln flne Lhere ls sLock cerLlflcaLe ownershlp of Lhe
farmers or farmworkers lnsLead of Lhem ownlng Lhe land as envlsaged ln Lhe ConsLlLuLlon lor
lA8M Lhls modallLy of dlsLrlbuLlon ls an anomaly Lo be annulled for belng lnconslsLenL wlLh Lhe
baslc concepL of agrarlan reform lngralned ln Sec 4 ArL xlll of Lhe ConsLlLuLlon107

8eacLlng PLl lnslsLs LhaL agrarlan reform ls noL only abouL Lransfer of land ownershlp Lo
farmers and oLher quallfled beneflclarles lL draws aLLenLlon ln Lhls regard Lo Sec 3(a) of 8A
6637 on Lhe concepL and scope of Lhe Lerm agrarlan reform 1he consLlLuLlonallLy of a law
PLl added cannoL as here be aLLacked collaLerally

1he lnsLanL challenge on Lhe consLlLuLlonallLy of Sec 31 of 8A 6637 and necessarlly lLs
counLerparL provlslon ln LC 229 musL fall as explalned below

When Lhe CourL ls called upon Lo exerclse lLs power of [udlclal revlew over and pass upon Lhe
consLlLuLlonallLy of acLs of Lhe execuLlve or leglslaLlve deparLmenLs lL does so only when Lhe
followlng essenLlal requlremenLs are flrsL meL Lo wlL

(1) Lhere ls an acLual case or conLroversy

(2) LhaL Lhe consLlLuLlonal quesLlon ls ralsed aL Lhe earllesL posslble opporLunlLy by a proper
parLy or one wlLh locus sLandl and

(3) Lhe lssue of consLlLuLlonallLy musL be Lhe very lls moLa of Lhe case108

noL all Lhe foregolng requlremenLs are saLlsfled ln Lhe case aL bar

Whlle Lhere ls lndeed an acLual case or conLroversy lnLervenor lA8M composed of a small
mlnorlLy of 27 farmers has yeL Lo explaln lLs fallure Lo challenge Lhe consLlLuLlonallLy of Sec 3l
of 8A 6637 slnce as early as november 21 l989 when A8C approved Lhe Su of Paclenda
LulslLa or aL leasL wlLhln a reasonable Llme LhereafLer and why lLs members recelved beneflLs
from Lhe Su wlLhouL so much of a proLesL lL was only on uecember 4 2003 or 14 years afLer
approval of Lhe Su vla A8C 8esoluLlon no 89122 daLed november 21 1989 LhaL sald plan
and approvlng resoluLlon were soughL Lo be revoked buL noL Lo sLress by lA8M or any of lLs
members buL by peLlLloner AM8ALA lurLhermore Lhe AM8ALA peLlLlon dld nC1 quesLlon Lhe
consLlLuLlonallLy of Sec 31 of 8A 6637 buL concenLraLed on Lhe purporLed flaws and gaps ln Lhe
subsequenL lmplemenLaLlon of Lhe Su Lven Lhe publlc respondenLs as represenLed by Lhe
SollclLor Ceneral dld noL quesLlon Lhe consLlLuLlonallLy of Lhe provlslon Cn Lhe oLher hand
lA8M whose 27 members formerly belonged Lo AM8ALA ralsed Lhe consLlLuLlonallLy of Sec
31 only on May 3 2007 when lL flled lLs SupplemenLal CommenL wlLh Lhe CourL 1hus lL Look
lA8M some elghLeen (18) years from november 21 1989 before lL challenged Lhe
consLlLuLlonallLy of Sec 31 of 8A 6637 whlch ls qulLe Loo laLe ln Lhe day 1he lA8M members
slepL on Lhelr rlghLs and even accepLed beneflLs from Lhe Su wlLh nary a complalnL on Lhe
alleged unconsLlLuLlonallLy of Sec 31 upon whlch Lhe beneflLs were derlved 1he CourL cannoL
now be goaded lnLo resolvlng a consLlLuLlonal lssue LhaL lA8M falled Lo assall afLer Lhe lapse of
a long perlod of Llme and Lhe occurrence of numerous evenLs and acLlvlLles whlch resulLed from
Lhe appllcaLlon of an alleged unconsLlLuLlonal legal provlslon

lL has been emphaslzed ln a number of cases LhaL Lhe quesLlon of consLlLuLlonallLy wlll noL be
passed upon by Lhe CourL unless lL ls properly ralsed and presenLed ln an approprlaLe case aL
Lhe flrsL opporLunlLy109 lA8M ls Lherefore remlss ln belaLedly quesLlonlng Lhe
consLlLuLlonallLy of Sec 31 of 8A 6637 1he second requlremenL LhaL Lhe consLlLuLlonal
quesLlon should be ralsed aL Lhe earllesL posslble opporLunlLy ls clearly wanLlng

1he lasL buL Lhe mosL lmporLanL requlslLe LhaL Lhe consLlLuLlonal lssue musL be Lhe very lls moLa
of Lhe case does noL llkewlse obLaln 1he lls moLa aspecL ls noL presenL Lhe consLlLuLlonal lssue
Lendered noL belng crlLlcal Lo Lhe resoluLlon of Lhe case 1he unyleldlng rule has been Lo avold
whenever plauslble an lssue assalllng Lhe consLlLuLlonallLy of a sLaLuLe or governmenLal acL110
lf some oLher grounds exlsL by whlch [udgmenL can be made wlLhouL Louchlng Lhe
consLlLuLlonallLy of a law such recourse ls favored111 Carcla v LxecuLlve SecreLary explalns
why

Lls MoLa Lhe fourLh requlremenL Lo saLlsfy before Lhls CourL wlll underLake [udlclal revlew
means LhaL Lhe CourL wlll noL pass upon a quesLlon of unconsLlLuLlonallLy alLhough properly
presenLed lf Lhe case can be dlsposed of on some oLher ground such as Lhe appllcaLlon of Lhe
sLaLuLe or Lhe general law 1he peLlLloner musL be able Lo show LhaL Lhe case cannoL be legally
resolved unless Lhe consLlLuLlonal quesLlon ralsed ls deLermlned 1hls requlremenL ls based on
Lhe rule LhaL every law has ln lLs favor Lhe presumpLlon of consLlLuLlonallLy Lo [usLlfy lLs
nulllflcaLlon Lhere musL be a clear and unequlvocal breach of Lhe ConsLlLuLlon and noL one
LhaL ls doubLful speculaLlve or argumenLaLlve112 (lLallcs ln Lhe orlglnal)

1he lls moLa ln Lhls case proceedlng from Lhe baslc poslLlons orlglnally Laken by AM8ALA (Lo
whlch Lhe lA8M members prevlously belonged) and Lhe Supervlsory Croup ls Lhe alleged non
compllance by PLl wlLh Lhe condlLlons of Lhe Su Lo supporL a plea for lLs revocaLlon And
before Lhe CourL Lhe lls moLa ls wheLher or noL A8C acLed ln grave abuse of dlscreLlon when lL
ordered Lhe recall of Lhe Su for such noncompllance and Lhe facL LhaL Lhe Su as couched
and lmplemenLed offends cerLaln consLlLuLlonal and sLaLuLory provlslons 1o be sure any of
Lhese key lssues may be resolved wlLhouL plunglng lnLo Lhe consLlLuLlonallLy of Sec 31 of 8A
6637 Moreover looklng deeply lnLo Lhe underlylng peLlLlons of AM8ALA eL al lL ls noL Lhe
sald secLlon per se LhaL ls lnvalld buL raLher lL ls Lhe alleged appllcaLlon of Lhe sald provlslon ln
Lhe Su LhaL ls flawed

lL may be well Lo noLe aL Lhls [uncLure LhaL Sec 3 of 8A 9700113 amendlng Sec 7 of 8A 6637
has all buL superseded Sec 31 of 8A 6637 vlsvls Lhe sLock dlsLrlbuLlon componenL of sald Sec
31 ln lLs perLlnenL parL Sec 3 of 8A 9700 provldes 1haL afLer !une 30 2009 Lhe modes of
acqulslLlon shall be llmlLed Lo volunLary offer Lo sell and compulsory acqulslLlon 1hus for all
lnLenLs and purposes Lhe sLock dlsLrlbuLlon scheme under Sec 31 of 8A 6637 ls no longer an
avallable opLlon under exlsLlng law 1he quesLlon of wheLher or noL lL ls unconsLlLuLlonal should
be a mooL lssue

lL ls Lrue LhaL Lhe CourL ln some cases has proceeded Lo resolve consLlLuLlonal lssues oLherwlse
already mooL and academlc114 provlded Lhe followlng requlslLes are presenL

x x x flrsL Lhere ls a grave vlolaLlon of Lhe ConsLlLuLlon second Lhe excepLlonal characLer of Lhe
slLuaLlon and Lhe paramounL publlc lnLeresL ls lnvolved Lhlrd when Lhe consLlLuLlonal lssue
ralsed requlres formulaLlon of conLrolllng prlnclples Lo gulde Lhe bench Lhe bar and Lhe publlc
fourLh Lhe case ls capable of repeLlLlon yeL evadlng revlew

1hese requlslLes do noL obLaln ln Lhe case aL bar

lor one Lhere appears Lo be no breach of Lhe fundamenLal law Sec 4 ArLlcle xlll of Lhe
ConsLlLuLlon reads

1he SLaLe shall by law underLake an agrarlan reform program founded on Lhe rlghL of Lhe
farmers and regular farmworkers who are landless Lo CWn dlrecLly or CCLLLC1lvLL? 1PL
LAnuS 1PL? 1lLL or ln Lhe case of oLher farmworkers Lo recelve a [usL share of Lhe frulLs
Lhereof 1o Lhls end Lhe SLaLe shall encourage and underLake Lhe [usL dlsLrlbuLlon of all
agrlculLural lands sub[ecL Lo such prlorlLles and reasonable reLenLlon llmlLs as Lhe Congress may
prescrlbe Laklng lnLo accounL ecologlcal developmenLal or equlLy conslderaLlons and sub[ecL
Lo Lhe paymenL of [usL compensaLlon ln deLermlnlng reLenLlon llmlLs Lhe SLaLe shall respecL
Lhe rlghL of small landowners 1he SLaLe shall furLher provlde lncenLlves for volunLary land
sharlng (Lmphasls supplled)

1he wordlng of Lhe provlslon ls unequlvocalLhe farmers and regular farmworkers have a rlghL
1C CWn ul8LC1L? C8 CCLLLC1lvLL? 1PL LAnuS 1PL? 1lLL 1he baslc law allows Lwo (2) modes
of land dlsLrlbuLlondlrecL and lndlrecL ownershlp ulrecL Lransfer Lo lndlvldual farmers ls Lhe
mosL commonly used meLhod by uA8 and wldely accepLed lndlrecL Lransfer Lhrough collecLlve
ownershlp of Lhe agrlculLural land ls Lhe alLernaLlve Lo dlrecL ownershlp of agrlculLural land by
lndlvldual farmers 1he aforequoLed Sec 4 Lx8LSSL? auLhorlzes collecLlve ownershlp by
farmers no language can be found ln Lhe 1987 ConsLlLuLlon LhaL dlsquallfles or prohlblLs
corporaLlons or cooperaLlves of farmers from belng Lhe legal enLlLy Lhrough whlch collecLlve
ownershlp can be exerclsed 1he word collecLlve ls deflned as lndlcaLlng a number of persons
or Lhlngs consldered as consLlLuLlng one group or aggregaLe113 whlle collecLlvely ls deflned
as ln a collecLlve sense or manner ln a mass or body116 8y uslng Lhe word collecLlvely Lhe
ConsLlLuLlon allows for lndlrecL ownershlp of land and noL [usL ouLrlghL agrlculLural land
Lransfer 1hls ls ln recognlLlon of Lhe facL LhaL land reform may become successful even lf lL ls
done Lhrough Lhe medlum of [urldlcal enLlLles composed of farmers

CollecLlve ownershlp ls permlLLed ln Lwo (2) provlslons of 8A 6637 lLs Sec 29 allows workers'
cooperaLlves or assoclaLlons Lo collecLlvely own Lhe land whlle Lhe second paragraph of Sec 31
allows corporaLlons or assoclaLlons Lo own agrlculLural land wlLh Lhe farmers becomlng
sLockholders or members Sald provlslons read

SLC 29 larms owned or operaLed by corporaLlons or oLher buslness assoclaLlonsln Lhe case
of farms owned or operaLed by corporaLlons or oLher buslness assoclaLlons Lhe followlng rules
shall be observed by Lhe A8C

ln general lands shall be dlsLrlbuLed dlrecLly Lo Lhe lndlvldual workerbeneflclarles

ln case lL ls noL economlcally feaslble and sound Lo dlvlde Lhe land Lhen lL shall be owned
collecLlvely by Lhe worker beneflclarles who shall form a workers' cooperaLlve or assoclaLlon
whlch wlll deal wlLh Lhe corporaLlon or buslness assoclaLlon x x x (Lmphasls supplled)

SLC 31 CorporaLe Landowners x x x

x x x x

upon cerLlflcaLlon by Lhe uA8 corporaLlons ownlng agrlculLural lands may glve Lhelr quallfled
beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL
Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe
company's LoLal asseLs under such Lerms and condlLlons as may be agreed upon by Lhem ln no
case shall Lhe compensaLlon recelved by Lhe workers aL Lhe Llme Lhe shares of sLocks are
dlsLrlbuLed be reduced 1he same prlnclple shall be applled Lo assoclaLlons wlLh respecL Lo
Lhelr equlLy or parLlclpaLlon x x x (Lmphasls supplled)

Clearly workers' cooperaLlves or assoclaLlons under Sec 29 of 8A 6637 and corporaLlons or
assoclaLlons under Lhe succeedlng Sec 31 as dlfferenLlaLed from lndlvldual farmers are
auLhorlzed vehlcles for Lhe collecLlve ownershlp of agrlculLural land CooperaLlves can be
reglsLered wlLh Lhe CooperaLlve uevelopmenL AuLhorlLy and acqulre legal personallLy of Lhelr
own whlle corporaLlons are [urldlcal persons under Lhe CorporaLlon Code 1hus Sec 31 ls
consLlLuLlonal as lL slmply lmplemenLs Sec 4 of ArL xlll of Lhe ConsLlLuLlon LhaL land can be
owned CCLLLC1lvLL? by farmers Lven Lhe framers of Lhe l987 ConsLlLuLlon are ln unlson wlLh
respecL Lo Lhe Lwo (2) modes of ownershlp of agrlculLural lands Lllled by farmersul8LC1 and
CCLLLC1lvL Lhus

M8 nCLLLuC And when we Lalk of Lhe phrase Lo own dlrecLly we mean Lhe prlnclple of
dlrecL ownershlp by Lhe Llller?

M8 MCnSCu ?es

M8 nCLLLuC And when we Lalk of collecLlvely we mean communal ownershlp sLewardshlp
or SLaLe ownershlp?

MS nlLvA ln Lhls secLlon we concelve of cooperaLlves LhaL ls farmers' cooperaLlves ownlng
Lhe land noL Lhe SLaLe

M8 nCLLLuC And when we Lalk of collecLlvely referrlng Lo farmers' cooperaLlves do Lhe
farmers own speclflc areas of land where Lhey only unlLe ln Lhelr efforLs?

MS nlLvA 1haL ls one way

M8 nCLLLuC 8ecause l undersLand LhaL Lhere are Lwo baslc sysLems lnvolved Lhe moshave
Lype of agrlculLure and Lhe klbbuLz So are boLh conLemplaLed ln Lhe reporL?

M8 1AuLC Ang dalawa kaslng pamamaraan ng pagpapaLupad ng Lunay na reporma sa lupa ay
ang pagmamayarl ng lupa na hahaLlln sa lndlvldual na pagmamayarl dlrecLly aL ang
LlnaLawag na samasamang gagawln ng mga magbubukld 1ulad sa negros ang gusLo ng mga
magbubukld ay gawln nlla lLong cooperaLlve or collecLlve farm Ang lblg sablhln ay samasama
nllang sasakahln

x x x x

M8 1lnCSCn x x x When we speak here of Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll
ls Lhls land for Lhe Llllers raLher Lhan land for Lhe landless? 8efore we used Lo hear land for Lhe
landless buL now Lhe slogan ls land for Lhe Llllers ls LhaL rlghL?

M8 1AuLC Ang prlnslpyong umllral dlLo ay lyong land for Lhe Llllers Ang lblg sablhln ng
dlrecLly ay Lulad sa lmplemenLasyon sa rlce and corn lands kung saan lnaarl na ng mga
magsasaka ang lupang blnubungkal nlla Ang lblg sablhln naman ng collecLlvely ay sama
samang paggawa sa lsang lupaln o lsang bukld kaLulad ng slLwasyon sa negros117 (Lmphasls
supplled)

As Commlssloner 1adeo explalned Lhe farmers wlll work on Lhe agrlculLural land samasama
or collecLlvely 1hus Lhe maln requlslLe for collecLlve ownershlp of land ls collecLlve or group
work by farmers of Lhe agrlculLural land lrrespecLlve of wheLher Lhe landowner ls a
cooperaLlve assoclaLlon or corporaLlon composed of farmers as long as concerLed group work
by Lhe farmers on Lhe land ls presenL Lhen lL falls wlLhln Lhe amblL of collecLlve ownershlp
scheme

Llkewlse Sec 4 ArL xlll of Lhe ConsLlLuLlon makes menLlon of a commlLmenL on Lhe parL of Lhe
SLaLe Lo pursue by law an agrarlan reform program founded on Lhe pollcy of land for Lhe
landless buL sub[ecL Lo such prlorlLles as Congress may prescrlbe Laklng lnLo accounL such
absLracL varlable as equlLy conslderaLlons 1he LexLual reference Lo a law and Congress
necessarlly lmplles LhaL Lhe above consLlLuLlonal provlslon ls noL selfexecuLory and LhaL
leglslaLlon ls needed Lo lmplemenL Lhe urgenLly needed program of agrarlan reform And 8A
6637 has been enacLed preclsely pursuanL Lo and as a mechanlsm Lo carry ouL Lhe
consLlLuLlonal dlrecLlves 1hls plece of leglslaLlon ln facL resLaLes118 Lhe agrarlan reform pollcy
esLabllshed ln Lhe aforemenLloned provlslon of Lhe ConsLlLuLlon of promoLlng Lhe welfare of
landless farmers and farmworkers 8A 6637 Lhus deflnes agrarlan reform as Lhe
redlsLrlbuLlon of lands Lo farmers and regular farmworkers who are landless Lo llfL Lhe
economlc sLaLus of Lhe beneflclarles and all oLher arrangemenLs alLernaLlve Lo Lhe physlcal
redlsLrlbuLlon of lands such as producLlon or proflL sharlng labor admlnlsLraLlon and Lhe
dlsLrlbuLlon of shares of sLock whlch wlll allow beneflclarles Lo recelve a [usL share of Lhe frulLs
of Lhe lands Lhey work

WlLh Lhe vlew We Lake of Lhls case Lhe sLock dlsLrlbuLlon opLlon devlsed under Sec 31 of 8A
6637 hews wlLh Lhe agrarlan reform pollcy as lnsLrumenL of soclal [usLlce under Sec 4 of ArLlcle
xlll of Lhe ConsLlLuLlon AlbelL land ownershlp for Lhe landless appears Lo be Lhe domlnanL
Lheme of LhaL pollcy We emphaslze LhaL Sec 4 ArLlcle xlll of Lhe ConsLlLuLlon as couched
does noL consLrlcL Congress Lo passlng an agrarlan reform law planLed on dlrecL land Lransfer Lo
and ownershlp by farmers and no oLher or else Lhe enacLmenL suffers from Lhe vlce of
unconsLlLuLlonallLy lf Lhe lnLenLlon were oLherwlse Lhe framers of Lhe ConsLlLuLlon would have
worded sald secLlon ln a manner mandaLory ln characLer

lor Lhls CourL Sec 31 of 8A 6637 wlLh lLs dlrecL and lndlrecL Lransfer feaLures ls noL
lnconslsLenL wlLh Lhe SLaLe's commlLmenL Lo farmers and farmworkers Lo advance Lhelr
lnLeresLs under Lhe pollcy of soclal [usLlce 1he leglslaLure Lhru Sec 31 of 8A 6637 has chosen a
modallLy for collecLlve ownershlp by whlch Lhe lmperaLlves of soclal [usLlce may ln lLs
esLlmaLlon be approxlmaLed lf noL achleved 1he CourL should be bound by such pollcy cholce

lA8M conLends LhaL Lhe farmers ln Lhe sLock dlsLrlbuLlon scheme under Sec 31 do noL own Lhe
agrlculLural land buL are merely glven sLock cerLlflcaLes 1hus Lhe farmers lose conLrol over Lhe
land Lo Lhe board of dlrecLors and execuLlve offlclals of Lhe corporaLlon who acLually manage
Lhe land 1hey conclude LhaL such arrangemenL runs counLer Lo Lhe mandaLe of Lhe
ConsLlLuLlon LhaL any agrarlan reform musL preserve Lhe conLrol over Lhe land ln Lhe hands of
Lhe Llller

1hls conLenLlon has no merlL

Whlle lL ls Lrue LhaL Lhe farmer ls lssued sLock cerLlflcaLes and does noL dlrecLly own Lhe land
sLlll Lhe CorporaLlon Code ls clear LhaL Lhe lW8 becomes a sLockholder who acqulres an
equlLable lnLeresL ln Lhe asseLs of Lhe corporaLlon whlch lnclude Lhe agrlculLural lands lL was
explalned LhaL Lhe equlLable lnLeresL of Lhe shareholder ln Lhe properLy of Lhe corporaLlon ls
represenLed by Lhe Lerm sLock and Lhe exLenL of hls lnLeresL ls descrlbed by Lhe Lerm shares
1he expresslon shares of sLock when quallfled by words lndlcaLlng number and ownershlp
expresses Lhe exLenL of Lhe owner's lnLeresL ln Lhe corporaLe properLy119 A share of sLock
Lyplfles an allquoL parL of Lhe corporaLlon's properLy or Lhe rlghL Lo share ln lLs proceeds Lo
LhaL exLenL when dlsLrlbuLed accordlng Lo law and equlLy and LhaL lLs holder ls noL Lhe owner of
any parL of Lhe caplLal of Lhe corporaLlon120 Powever Lhe lW8s wlll ulLlmaLely own Lhe
agrlculLural lands owned by Lhe corporaLlon when Lhe corporaLlon ls evenLually dlssolved and
llquldaLed

AnenL Lhe alleged loss of conLrol of Lhe farmers over Lhe agrlculLural land operaLed and
managed by Lhe corporaLlon a readlng of Lhe second paragraph of Sec 31 shows oLherwlse
Sald provlslon provldes LhaL quallfled beneflclarles have Lhe rlghL Lo purchase such proporLlon
of Lhe caplLal sLock of Lhe corporaLlon LhaL Lhe agrlculLural land acLually devoLed Lo agrlculLural
acLlvlLles bears ln relaLlon Lo Lhe company's LoLal asseLs 1he wordlng of Lhe formula ln Lhe
compuLaLlon of Lhe number of shares LhaL can be boughL by Lhe farmers does noL mean loss of
conLrol on Lhe parL of Lhe farmers lL musL be remembered LhaL Lhe deLermlnaLlon of Lhe
percenLage of Lhe caplLal sLock LhaL can be boughL by Lhe farmers depends on Lhe value of Lhe
agrlculLural land and Lhe value of Lhe LoLal asseLs of Lhe corporaLlon

1here ls Lhus noLhlng unconsLlLuLlonal ln Lhe formula prescrlbed by 8A 6637 1he pollcy on
agrarlan reform ls LhaL conLrol over Lhe agrlculLural land musL always be ln Lhe hands of Lhe
farmers 1hen lL falls on Lhe shoulders of uA8 and A8C Lo see Lo lL Lhe farmers should always
own ma[orlLy of Lhe common shares enLlLled Lo elecL Lhe members of Lhe board of dlrecLors Lo
ensure LhaL Lhe farmers wlll have a clear ma[orlLy ln Lhe board 8efore Lhe Su ls approved
sLrlcL scruLlny of Lhe proposed Su musL always be underLaken by Lhe uA8 and A8C such LhaL
Lhe value of Lhe agrlculLural land conLrlbuLed Lo Lhe corporaLlon musL always be more Lhan 30
of Lhe LoLal asseLs of Lhe corporaLlon Lo ensure LhaL Lhe ma[orlLy of Lhe members of Lhe board
of dlrecLors are composed of Lhe farmers 1he A8C composed of Lhe resldenL of Lhe
hlllpplnes and cablneL secreLarles musL see Lo lL LhaL conLrol over Lhe board of dlrecLors resLs
wlLh Lhe farmers by re[ecLlng Lhe lncluslon of nonagrlculLural asseLs whlch wlll yleld Lhe
ma[orlLy ln Lhe board of dlrecLors Lo nonfarmers Any devlaLlon however by A8C or uA8
from Lhe correcL appllcaLlon of Lhe formula prescrlbed by Lhe second paragraph of Sec 31 of 8A
6673 does noL make sald provlslon consLlLuLlonally lnflrm 8aLher lL ls Lhe appllcaLlon of sald
provlslon LhaL can be challenged Lrgo Sec 31 of 8A 6637 does noL Lrench on Lhe consLlLuLlonal
pollcy of ensurlng conLrol by Lhe farmers

A vlew has been advanced LhaL Lhere can be no agrarlan reform unless Lhere ls land dlsLrlbuLlon
and LhaL acLual land dlsLrlbuLlon ls Lhe essenLlal characLerlsLlc of a consLlLuLlonal agrarlan
reform program Cn Lhe conLrary Lhere have been so many lnsLances where desplLe acLual
land dlsLrlbuLlon Lhe lmplemenLaLlon of agrarlan reform was sLlll unsuccessful As a maLLer of
facL Lhls CourL may Lake [udlclal noLlce of cases where lW8s sold Lhe awarded land even Lo
nonquallfled persons and ln vlolaLlon of Lhe prohlblLlon perlod provlded under Lhe law 1hls
only proves Lo show LhaL Lhe mere facL LhaL Lhere ls land dlsLrlbuLlon does noL guaranLee a
successful lmplemenLaLlon of agrarlan reform

As lL were Lhe prlnclple of land Lo Lhe Llller and Lhe old pasLoral model of land ownershlp
where nonhuman [urldlcal persons such as corporaLlons were prohlblLed from ownlng
agrlculLural lands are no longer reallsLlc under exlsLlng condlLlons racLlcally an lndlvldual
farmer wlll ofLen face greaLer dlsadvanLages and dlfflculLles Lhan Lhose who exerclse ownershlp
ln a collecLlve manner Lhrough a cooperaLlve or corporaLlon 1he former ls Loo ofLen lefL Lo hls
own devlces when faced wlLh falllng crops and bad weaLher or compelled Lo obLaln usurlous
loans ln order Lo purchase cosLly ferLlllzers or farmlng equlpmenL 1he experlences learned
from falled land reform acLlvlLles ln varlous parLs of Lhe counLry are lack of flnanclng lack of
farm equlpmenL lack of ferLlllzers lack of guaranLeed buyers of produce lack of farmLo
markeL roads among oLhers 1hus aL Lhe end of Lhe day Lhere ls sLlll no successful
lmplemenLaLlon of agrarlan reform Lo speak of ln such a case

AlLhough success ls noL guaranLeed a cooperaLlve or a corporaLlon sLands ln a beLLer poslLlon
Lo secure fundlng and compeLenLly malnLaln Lhe agrlbuslness Lhan Lhe lndlvldual farmer Whlle
dlrecL slngular ownershlp over farmland does offer advanLages such as Lhe ablllLy Lo make
qulck declslons unhampered by lnLerference from oLhers yeL aL besL Lhese advanLages only
buL offseL Lhe dlsadvanLages LhaL are ofLen assoclaLed wlLh such ownershlp arrangemenL 1hus
governmenL musL be flexlble and creaLlve ln lLs mode of lmplemenLaLlon Lo beLLer lLs chances
of success Cne such opLlon ls collecLlve ownershlp Lhrough [urldlcal persons composed of
farmers

Aslde from Lhe facL LhaL Lhere appears Lo be no vlolaLlon of Lhe ConsLlLuLlon Lhe requlremenL
LhaL Lhe lnsLanL case be capable of repeLlLlon yeL evadlng revlew ls also wanLlng lL would be
speculaLlve for Lhls CourL Lo assume LhaL Lhe leglslaLure wlll enacL anoLher law provldlng for a
slmllar sLock opLlon

As a maLLer of sound pracLlce Lhe CourL wlll noL lnLerfere lnordlnaLely wlLh Lhe exerclse by
Congress of lLs offlclal funcLlons Lhe heavy presumpLlon belng LhaL a law ls Lhe producL of
earnesL sLudles by Congress Lo ensure LhaL no consLlLuLlonal prescrlpLlon or concepL ls
lnfrlnged121 Corollarlly courLs wlll noL pass upon quesLlons of wlsdom expedlency and [usLlce
of leglslaLlon or lLs provlslons 1owards Lhls end all reasonable doubLs should be resolved ln
favor of Lhe consLlLuLlonallLy of a law and Lhe valldlLy of Lhe acLs and processes Laken pursuanL
Lhereof122

ConsequenLly before a sLaLuLe or lLs provlslons duly challenged are volded an unequlvocal
breach of or a clear confllcL wlLh Lhe ConsLlLuLlon noL merely a doubLful or argumenLaLlve one
musL be demonsLraLed ln such a manner as Lo leave no doubL ln Lhe mlnd of Lhe CourL ln oLher
words Lhe grounds for nulllLy musL be beyond reasonable doubL123 lA8M has noL presenLed
compelllng argumenLs Lo overcome Lhe presumpLlon of consLlLuLlonallLy of Sec 31 of 8A 6637

1he wlsdom of Congress ln allowlng an Su Lhrough a corporaLlon as an alLernaLlve mode of
lmplemenLlng agrarlan reform ls noL for [udlclal deLermlnaLlon LsLabllshed [urlsprudence Lells
us LhaL lL ls noL wlLhln Lhe provlnce of Lhe CourL Lo lnqulre lnLo Lhe wlsdom of Lhe law for
lndeed We are bound by words of Lhe sLaLuLe124

ll

1he sLage ls now seL for Lhe deLermlnaLlon of Lhe proprleLy under Lhe premlses of Lhe
revocaLlon or recall of PLl's Su Cr Lo be more preclse Lhe lnqulry should be wheLher or noL
A8C gravely abused lLs dlscreLlon ln revoklng or recalllng Lhe sub[ecL Su and placlng Lhe
haclenda under CA8's compulsory acqulslLlon and dlsLrlbuLlon scheme

1he flndlngs analysls and recommendaLlon of Lhe uA8's Speclal 1ask lorce conLalned and
summarlzed ln lLs 1ermlnal 8eporL provlded Lhe bases for Lhe assalled A8C
revocaLory/recalllng 8esoluLlon 1he flndlngs may be grouped lnLo Lwo (1) Lhe Su ls conLrary
Lo elLher Lhe pollcy on agrarlan reform Sec 31 of 8A 6637 or uAC 10 and (2) Lhe alleged
vlolaLlon by PLl of Lhe condlLlons/Lerms of Lhe Su ln more parLlcular Lerms Lhe followlng are
essenLlally Lhe reasons underplnnlng A8C's revocaLory or recall acLlon

(1) uesplLe Lhe lapse of 16 years from Lhe approval of PLl's Su Lhe llves of Lhe lW8s have
hardly lmproved and Lhe promlsed lncreased lncome has noL maLerlallzed

(2) PLl has falled Lo keep Paclenda LulslLa lnLacL and unfragmenLed

(3) 1he lssuance of PLl shares of sLock on Lhe basls of number of hours workedor Lhe so
called man daysls grossly onerous Lo Lhe lW8s as PLl ln Lhe gulse of roLaLlon can
unllaLerally deny work Lo anyone ln elaboraLlon of Lhls ground A8C's 8esoluLlon no 200634
01 denylng PLl's moLlon for reconslderaLlon of 8esoluLlon no 20033201 sLaLed LhaL Lhe man
days crlLerlon worked Lo dlluLe Lhe enLlLlemenL of Lhe orlglnal share beneflclarles123

(4) 1he dlsLrlbuLlon/Lransfer of shares was noL ln accordance wlLh Lhe Llmellnes flxed by law

(3) PLl has falled Lo comply wlLh lLs obllgaLlons Lo granL 3 of Lhe gross sales every year as
producLlonsharlng beneflL on Lop of Lhe workers' salary and

(6) Several homeloL awardees have yeL Lo recelve Lhelr lndlvldual LlLles

eLlLloner PLl clalms havlng complled wlLh aL leasL subsLanLlally all lLs obllgaLlons under Lhe
Su as approved by A8C lLself and Lags Lhe reasons glven for Lhe revocaLlon of Lhe Su as
unfounded

ubllc respondenLs on Lhe oLher hand aver LhaL Lhe assalled resoluLlon resLs on solld grounds
seL forLh ln Lhe 1ermlnal 8eporL a poslLlon shared by AM8ALA whlch ln some pleadlngs ls
represenLed by Lhe same counsel as LhaL appearlng for Lhe Supervlsory Croup

lA8M for lLs parL poslLs Lhe vlew LhaL legal bases obLaln for Lhe revocaLlon of Lhe Su because
lL does noL conform Lo Sec 31 of 8A 6637 and uAC 10 And Lralnlng lLs slghL on Lhe resulLlng
dlluLlon of Lhe equlLy of Lhe lW8s appearlng ln PLl's masLerllsL lA8M would sLaLe LhaL Lhe Su
as couched and lmplemenLed spawned dlsparlLy when Lhere should be none parlLy when
Lhere should have been dlfferenLlaLlon126

1he peLlLlon ls noL lmpressed wlLh merlL

ln Lhe 1ermlnal 8eporL adopLed by A8C lL ls sLaLed LhaL Lhe Su vlolaLes Lhe agrarlan reform
pollcy under Sec 2 of 8A 6637 as Lhe sald plan falled Lo enhance Lhe dlgnlLy and lmprove Lhe
quallLy of llves of Lhe lW8s Lhrough greaLer producLlvlLy of agrlculLural lands We dlsagree

Sec 2 of 8A 6637 sLaLes

SLC1lCn 2 ueclaraLlon of rlnclples and ollcleslL ls Lhe pollcy of Lhe SLaLe Lo pursue a
Comprehenslve Agrarlan 8eform rogram (CA8) 1he welfare of Lhe landless farmers and farm
workers wlll recelve Lhe hlghesL conslderaLlon Lo promoLe soclal [usLlce and Lo move Lhe naLlon
Lowards sound rural developmenL and lndusLrlallzaLlon and Lhe esLabllshmenL of owner
culLlvaLorshlp of economlcslzed farms as Lhe basls of hlllpplne agrlculLure

1o Lhls end a more equlLable dlsLrlbuLlon and ownershlp of land wlLh due regard Lo Lhe rlghLs
of landowners Lo [usL compensaLlon and Lo Lhe ecologlcal needs of Lhe naLlon shall be
underLaken Lo provlde farmers and farm workers wlLh Lhe opporLunlLy Lo enhance Lhelr dlgnlLy
and lmprove Lhe quallLy of Lhelr llves Lhrough greaLer producLlvlLy of agrlculLural lands

1he agrarlan reform program ls founded on Lhe rlghL of farmers and regular farm workers who
are landless Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll or ln Lhe case of oLher farm
workers Lo recelve a share of Lhe frulLs Lhereof 1o Lhls end Lhe SLaLe shall encourage Lhe [usL
dlsLrlbuLlon of all agrlculLural lands sub[ecL Lo Lhe prlorlLles and reLenLlon llmlLs seL forLh ln Lhls
AcL havlng Laken lnLo accounL ecologlcal developmenLal and equlLy conslderaLlons and
sub[ecL Lo Lhe paymenL of [usL compensaLlon 1he SLaLe shall respecL Lhe rlghL of small
landowners and shall provlde lncenLlves for volunLary landsharlng (Lmphasls supplled)

aragraph 2 of Lhe abovequoLed provlslon speclflcally menLlons LhaL a more equlLable
dlsLrlbuLlon and ownershlp of land x x x shall be underLaken Lo provlde farmers and farm
workers wlLh Lhe opporLunlLy Lo enhance Lhelr dlgnlLy and lmprove Lhe quallLy of Lhelr llves
Lhrough greaLer producLlvlLy of agrlculLural lands Cf noLe ls Lhe Lerm opporLunlLy whlch ls
deflned as a favorable chance or openlng offered by clrcumsLances127 Conslderlng Lhls by no
sLreLch of lmaglnaLlon can sald provlslon be consLrued as a guaranLee ln lmprovlng Lhe llves of
Lhe lW8s AL besL lL merely provldes for a posslblllLy or favorable chance of upllfLlng Lhe
economlc sLaLus of Lhe lW8s whlch may or may noL be aLLalned

erLlnenLly lmprovlng Lhe economlc sLaLus of Lhe lW8s ls nelLher among Lhe legal obllgaLlons
of PLl under Lhe Su nor an lmperaLlve lmposlLlon by 8A 6637 and uAC 10 a vlolaLlon of whlch
would [usLlfy dlscardlng Lhe sLock dlsLrlbuLlon opLlon noLhlng ln LhaL opLlon agreemenL law or
deparLmenL order lndlcaLes oLherwlse

SlgnlflcanLly PLl draws parLlcular aLLenLlon Lo lLs havlng pald lLs lW8s durlng Lhe reglme of Lhe
Su (19892003) some h 3 bllllon by way of salarles/wages and hlgher beneflLs excluslve of
free hosplLal and medlcal beneflLs Lo Lhelr lmmedlaLe famlly And aLLached as Annex C Lo
PLl's Memorandum ls Lhe cerLlfled Lrue reporL of Lhe flnance manager of !ose Co[uangco
Sons CrganlzaLlons1arlac CperaLlons capLloned as PAClLnuA LulSl1A lnC Salarles 8eneflLs
and CredlL rlvlleges (ln 1housand esos) Slnce Lhe SLock CpLlon was Approved by A8C/CA8
deLalllng whaL PLl gave Lhelr workers from 1989 Lo 2003 1he sum LoLal as added up by Lhe
CourL ylelds Lhe followlng numbers 1oLal ulrecL Cash CuL (Salarles/Wages Cash 8eneflLs)
h 2927848 1oLal nonulrecL Cash CuL (PosplLal/Medlcal 8eneflLs) h 303040 1he cash
ouL flgures as sLaLed ln Lhe reporL lnclude Lhe cosL of homeloLs Lhe h 130 mllllon or so
represenLlng 3 of Lhe gross produce of Lhe haclenda and Lhe h 373 mllllon represenLlng
3 from Lhe proceeds of Lhe sale of Lhe 300hecLare converLed lands Whlle noL lncluded ln Lhe
reporL PLl manlfesLs havlng glven Lhe lW8s 3 of Lhe h 80 mllllon pald for Lhe 80 hecLares
of land Lraversed by Lhe SC1Lx128 Cn Lop of Lhese lL ls worLh rememberlng LhaL Lhe shares of
sLocks were glven by PLl Lo Lhe lW8s for free verlly Lhe lW8s have beneflLed from Lhe Su

1o address urglngs LhaL Lhe lW8s be allowed Lo dlsengage from Lhe Su as PLl has noL anyway
earned proflLs Lhrough Lhe years lL cannoL be overemphaslzed LhaL as a maLLer of common
buslness sense no corporaLlon could guaranLee a proflLable run all Lhe Llme As has been
suggesLed one of Lhe key feaLures of an Su of a corporaLe landowner ls Lhe llkellhood of Lhe
corporaLe vehlcle noL earnlng or worse sLlll loslng money129

1he CourL ls fully aware LhaL one of Lhe crlLerla under uAC 10 for Lhe A8C Lo conslder Lhe
advlsablllLy of approvlng a sLock dlsLrlbuLlon plan ls Lhe llkellhood LhaL Lhe plan would resulL ln
lncreased lncome and greaLer beneflLs Lo quallfled beneflclarles Lhan lf Lhe lands were dlvlded
and dlsLrlbuLed Lo Lhem lndlvldually130 8uL as apLly noLed durlng Lhe oral argumenLs uAC 10
oughL Lo have noL as lL cannoL acLually exacL assurance of success on someLhlng LhaL ls sub[ecL
Lo Lhe wlll of man Lhe forces of naLure or Lhe lnherenL rlsky naLure of buslness131 !usL llke ln
acLual land dlsLrlbuLlon an Su cannoL guaranLee as lndeed Lhe SuCA does noL guaranLee a
comforLable llfe for Lhe lW8s 1he CourL can Lake [udlclal noLlce of Lhe facL LhaL Lhere were
many lnsLances whereln afLer a farmworker beneflclary has been awarded wlLh an agrlculLural
land he [usL subsequenLly sells lL and ls evenLually lefL wlLh noLhlng ln Lhe end

ln all Lhen Lhe onerous condlLlon of Lhe lW8s' economlc sLaLus Lhelr llfe of hardshlp lf LhaL
really be Lhe case can hardly be aLLrlbuLed Lo PLl and lLs Su and provlde a valld ground for Lhe
plan's revocaLlon

nelLher does PLl's Su whence Lhe uA8aLLesLed SuCA/MCA ls based lnfrlnge Sec 31 of 8A
6637 albelL publlc respondenLs erroneously submlL oLherwlse

1he provlslons of Lhe flrsL paragraph of Lhe adverLed Sec 31 are wlLhouL relevance Lo Lhe lssue
on Lhe proprleLy of Lhe assalled order revoklng PLl's Su for Lhe paragraph deals wlLh Lhe
Lransfer of agrlculLural lands Lo Lhe governmenL as a mode of CA8 compllance Lhus

SLC 31 CorporaLe LandownersCorporaLe landowners may volunLarlly Lransfer ownershlp
over Lhelr agrlculLural landholdlngs Lo Lhe 8epubllc of Lhe hlllpplnes pursuanL Lo SecLlon 20
hereof or Lo quallfled beneflclarles under such Lerms and condlLlons conslsLenL wlLh Lhls AcL as
Lhey may agree sub[ecL Lo conflrmaLlon by Lhe uA8

1he second and Lhlrd paragraphs wlLh Lhelr subparagraphs of Sec 31 provlde as follows

upon cerLlflcaLlon by Lhe uA8 corporaLlons ownlng agrlculLural lands may glve Lhelr quallfled
beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL
Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe
company's LoLal asseLs under such Lerms and condlLlons as may be agreed upon by Lhem ln no
case shall Lhe compensaLlon recelved by Lhe workers aL Lhe Llme Lhe shares of sLocks are
dlsLrlbuLed be reduced x x x

CorporaLlons or assoclaLlons whlch volunLarlly dlvesL a proporLlon of Lhelr caplLal sLock equlLy
or parLlclpaLlon ln favor of Lhelr workers or oLher quallfled beneflclarles under Lhls secLlon shall
be deemed Lo have complled wlLh Lhe provlslons of Lhls AcL rovlded 1haL Lhe followlng
condlLlons are complled wlLh

(a) ln order Lo safeguard Lhe rlghL of beneflclarles who own shares of sLocks Lo dlvldends and
oLher flnanclal beneflLs Lhe books of Lhe corporaLlon or assoclaLlon shall be sub[ecL Lo perlodlc
audlL by cerLlfled publlc accounLanLs chosen by Lhe beneflclarles

(b) lrrespecLlve of Lhe value of Lhelr equlLy ln Lhe corporaLlon or assoclaLlon Lhe beneflclarles
shall be assured of aL leasL one (1) represenLaLlve ln Lhe board of dlrecLors or ln a managemenL
or execuLlve commlLLee lf one exlsLs of Lhe corporaLlon or assoclaLlon

(c) Any shares acqulred by such workers and beneflclarles shall have Lhe same rlghLs and
feaLures as all oLher shares and

(d) Any Lransfer of shares of sLocks by Lhe orlglnal beneflclarles shall be vold ab lnlLlo unless
sald LransacLlon ls ln favor of a quallfled and reglsLered beneflclary wlLhln Lhe same
corporaLlon

1he mandaLory mlnlmum raLlo of landLoshares of sLock supposed Lo be dlsLrlbuLed or
allocaLed Lo quallfled beneflclarles adverLlng Lo whaL Sec 31 of 8A 6637 refers Lo as LhaL
proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL Lhe agrlculLural land acLually devoLed
Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe company's LoLal asseLs had been observed

aragraph one (1) of Lhe SuCA whlch was based on Lhe Su conforms Lo Sec 31 of 8A 6637
1he sLlpulaLlon reads

1 1he percenLage of Lhe value of Lhe agrlculLural land of Paclenda LulslLa (19663000000) ln
relaLlon Lo Lhe LoLal asseLs (39033422000) Lransferred and conveyed Lo Lhe SLCCnu A81?
ls 33296 LhaL under Lhe law ls Lhe proporLlon of Lhe ouLsLandlng caplLal sLock of Lhe SLCCnu
A81? whlch ls 33333146200 or 333331462 shares wlLh a par value of 100 per share
LhaL has Lo be dlsLrlbuLed Lo Lhe 1Pl8u A81? under Lhe sLock dlsLrlbuLlon plan Lhe sald
33296 Lhereof belng 11839197683 or 11839197683 shares

1he appralsed value of Lhe agrlculLural land ls h 196630000 and of PLl's oLher asseLs ls h
393924220 1he LoLal value of PLl's asseLs ls Lherefore h 390334220132 1he percenLage
of Lhe value of Lhe agrlculLural lands (h 196630000) ln relaLlon Lo Lhe LoLal asseLs (h
390334220) ls 33296 whlch represenLs Lhe sLockholdlngs of Lhe 6296 orlglnal quallfled
farmworkerbeneflclarles (lW8s) ln PLl 1he LoLal number of shares Lo be dlsLrlbuLed Lo sald
quallfled lW8s ls 11839197683 PLl shares 1hls was arrlved aL by geLLlng 33296 of Lhe
333331462 shares whlch ls Lhe ouLsLandlng caplLal sLock of PLl wlLh a value of h
333331462 1hus lf we dlvlde Lhe 11839197683 PLl shares by 6296 lW8s Lhen each lW8 ls
enLlLled Lo 1880432 PLl shares 1hese shares under Lhe Su are Lo be glven Lo lW8s for free

1he CourL flnds LhaL Lhe deLermlnaLlon of Lhe shares Lo be dlsLrlbuLed Lo Lhe 6296 lW8s sLrlcLly
adheres Lo Lhe formula prescrlbed by Sec 31(b) of 8A 6637

AnenL Lhe requlremenL under Sec 31(b) of Lhe Lhlrd paragraph LhaL Lhe lW8s shall be assured
of aL leasL one (1) represenLaLlve ln Lhe board of dlrecLors or ln a managemenL or execuLlve
commlLLee lrrespecLlve of Lhe value of Lhe equlLy of Lhe lW8s ln PLl Lhe CourL flnds LhaL Lhe
SuCA conLalned provlslons maklng cerLaln Lhe lW8s' represenLaLlon ln PLl's governlng board
Lhus

3 Lven lf only a parL or fracLlon of Lhe shares earmarked for dlsLrlbuLlon wlll have been
acqulred from Lhe ll8S1 A81? and dlsLrlbuLed Lo Lhe 1Pl8u A81? ll8S1 A81? shall execuLe
aL Lhe beglnnlng of each flscal year an lrrevocable proxy valld and effecLlve for one (1) year ln
favor of Lhe farmworkers appearlng as shareholders of Lhe SLCCnu A81? aL Lhe sLarL of sald
year whlch wlll empower Lhe 1Pl8u A81? or Lhelr represenLaLlve Lo voLe ln sLockholders' and
board of dlrecLors' meeLlngs of Lhe SLCCnu A81? convened durlng Lhe year Lhe enLlre
33296 of Lhe ouLsLandlng caplLal sLock of Lhe SLCCnu A81? earmarked for dlsLrlbuLlon and
Lhus be able Lo galn such number of seaLs ln Lhe board of dlrecLors of Lhe SLCCnu A81? LhaL
Lhe whole 33296 of Lhe shares sub[ecL Lo dlsLrlbuLlon wlll be enLlLled Lo

Also no allegaLlons have been made agalnsL PLl resLrlcLlng Lhe lnspecLlon of lLs books by
accounLanLs chosen by Lhe lW8s hence Lhe assumpLlon may be made LhaL Lhere has been no
vlolaLlon of Lhe sLaLuLory prescrlpLlon under subparagraph (a) on Lhe audlLlng of PLl's
accounLs

ubllc respondenLs however submlL LhaL Lhe dlsLrlbuLlon of Lhe mandaLory mlnlmum raLlo of
landLoshares of sLock referrlng Lo Lhe 11839197683 shares wlLh par value of h 1 each
should have been made ln full wlLhln Lwo (2) years from Lhe approval of 8A 6637 ln llne wlLh
Lhe lasL paragraph of Sec 31 of sald law133

ubllc respondenLs' submlsslon ls palpably erroneous We have closely examlned Lhe lasL
paragraph alluded Lo wlLh parLlcular focus on Lhe Lwoyear perlod menLloned and noLhlng ln lL
remoLely supporLs Lhe publlc respondenLs' posLure ln lLs perLlnenL parL sald Sec 31 provldes

SLC 31 CorporaLe Landowners x x x

lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe volunLary land or sLock Lransfer
envlsloned above ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe
A8C wlLhln Lhe same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall
be sub[ecL Lo Lhe compulsory coverage of Lhls AcL (Word ln brackeL and emphasls added)

roperly vlewed Lhe words Lwo (2) years clearly refer Lo Lhe perlod wlLhln whlch Lhe
corporaLe landowner Lo avold land Lransfer as a mode of CA8 coverage under 8A 6637 ls Lo
avall of Lhe sLock dlsLrlbuLlon opLlon or Lo have Lhe Su approved 1he PLl secured approval of
lLs Su ln november 1989 well wlLhln Lhe Lwoyear perlod reckoned from !une 1988 when 8A
6637 Look effecL

Pavlng hurdled Lhe alleged breach of Lhe agrarlan reform pollcy under Sec 2 of 8A 6637 as well
as Lhe sLaLuLory lssues We shall now delve lnLo whaL A8C and respondenLs deem Lo be oLher
lnsLances of vlolaLlon of uAC 10 and Lhe Su

Cn Lhe Converslon of Lands

ConLrary Lo Lhe almosL parallel sLance of Lhe respondenLs keeplng Paclenda LulslLa
unfragmenLed ls also noL among Lhe lmperaLlve lmposlLlons by Lhe Su 8A 6637 and uAC 10

1he 1ermlnal 8eporL sLaLes LhaL Lhe proposed dlsLrlbuLlon plan submlLLed ln 1989 Lo Lhe A8C
effecLlvely assured Lhe lnLended sLock beneflclarles LhaL Lhe physlcal lnLegrlLy of Lhe farm shall
remaln lnvlolaLe Accordlngly Lhe 1ermlnal 8eporL and Lhe A8Cassalled resoluLlon would Lake
PLl Lo Lask for securlng approval of Lhe converslon Lo nonagrlculLural uses of 300 hecLares of
Lhe haclenda ln noL Loo many words Lhe 8eporL and Lhe resoluLlon vlew Lhe converslon as an
lnfrlngemenL of Sec 3(a) of uAC 10 whlch reads a LhaL Lhe conLlnued operaLlon of Lhe
corporaLlon wlLh lLs agrlculLural land lnLacL and unfragmenLed ls vlable wlLh poLenLlal for
growLh and lncreased proflLablllLy

1he A8C ls wrong

ln Lhe flrsL place Sec 3(a)[usL llke Lhe succeedlng Sec 3(b) of uAC 10 on lncreased lncome
and greaLer beneflLs Lo quallfled beneflclarlesls buL one of Lhe sLaLed crlLerla Lo gulde A8C
ln decldlng on wheLher or noL Lo accepL an Su Sald Sec 3(a) does noL exacL from Lhe
corporaLe landownerappllcanL Lhe underLaklng Lo keep Lhe farm lnLacL and unfragmenLed ad
lnflnlLum And Lhere ls loglc Lo PLl's sLaLed observaLlon LhaL Lhe key phrase ln Lhe provlslon of
Sec 3(a) ls vlablllLy of corporaLe operaLlons whaL ls Lhus requlred ls noL Lhe agrlculLural
land remalnlng lnLacL x x x buL Lhe vlablllLy of Lhe corporaLe operaLlons wlLh lLs agrlculLural land
belng lnLacL and unfragmenLed CorporaLe operaLlon may be vlable even lf Lhe corporaLe
agrlculLural land does noL remaln lnLacL or unfragmenLed134

lL ls of course anLlcllmacLlc Lo menLlon LhaL uA8 vlewed Lhe converslon as noL vlolaLlve of any
lssuance leL alone undermlnlng Lhe vlablllLy of Paclenda LulslLa's operaLlon as Lhe uA8
SecreLary approved Lhe land converslon applled for and lLs dlsposlLlon vla hls Converslon Crder
daLed AugusL 14 1996 pursuanL Lo Sec 63 of 8A 6637 whlch reads

Sec 63 Converslon of LandsAfLer Lhe lapse of flve years from lLs award when Lhe land ceases
Lo be economlcally feaslble and sound for agrlculLural purposes or Lhe locallLy has become
urbanlzed and Lhe land wlll have a greaLer economlc value for resldenLlal commerclal or
lndusLrlal purposes Lhe uA8 upon appllcaLlon of Lhe beneflclary or landowner wlLh due noLlce
Lo Lhe affecLed parLles and sub[ecL Lo exlsLlng laws may auLhorlze Lhe x x x converslon of Lhe
land and lLs dlsposlLlons x x x

Cn Lhe 3 roducLlon Share

Cn Lhe maLLer of Lhe alleged fallure of PLl Lo comply wlLh sharlng Lhe 3 of Lhe gross
producLlon sales of Lhe haclenda and pay dlvldends from proflL Lhe enLrles ln lLs flnanclal books
Lend Lo lndlcaLe compllance by PLl of Lhe proflLsharlng equlvalenL Lo 3 of Lhe gross sales from
Lhe producLlon of Lhe agrlculLural land on Lop of (a) Lhe salarles and wages due lW8s as
employees of Lhe company and (b) Lhe 3 of Lhe gross selllng prlce of Lhe converLed land and
LhaL porLlon used for Lhe SC1Lx A plauslble evldence of compllance or noncompllance as Lhe
case may be could be Lhe books of accounL of PLl LvldenLly Lhe cry of some groups of noL
havlng recelved Lhelr share from Lhe gross producLlon sales has noL adequaLely been valldaLed
on Lhe ground by Lhe Speclal 1ask lorce

lndeed facLual flndlngs of admlnlsLraLlve agencles are concluslve when supporLed by
subsLanLlal evldence and are accorded due respecL and welghL especlally when Lhey are
afflrmed by Lhe CA133 Powever such rule ls noL absoluLe Cne such excepLlon ls when Lhe
flndlngs of an admlnlsLraLlve agency are concluslons wlLhouL clLaLlon of speclflc evldence on
whlch Lhey are based136 such as ln Lhls parLlcular lnsLance As culled from lLs 1ermlnal 8eporL
lL would appear LhaL Lhe Speclal 1ask lorce re[ecLed PLl's clalm of compllance on Lhe basls of
Lhls raLloclnaLlon

1he 1ask lorce poslLlon 1hough allegedly Lhe Supervlsory Croup recelves Lhe 3 gross
producLlon share and LhaL oLhers alleged LhaL Lhey recelved 30 mllllon pesos sLlll oLhers
malnLaln LhaL Lhey have noL recelved anyLhlng yeL lLem no 4 of Lhe MCA ls clear and musL be
followed 1here ls a dlsLlncLlon beLween Lhe LoLal gross sales from Lhe producLlon of Lhe land
and Lhe proceeds from Lhe sale of Lhe land 1he former refers Lo Lhe frulLs/yleld of Lhe
agrlculLural land whlle Lhe laLLer ls Lhe land lLself 1he phrase Lhe beneflclarles are enLlLled
every year Lo an amounL approxlmaLely equlvalenL Lo 3 would only be feaslble lf Lhe sub[ecL ls
Lhe produce slnce Lhere ls aL leasL one harvesL per year whlle such ls noL Lhe case ln Lhe sale of
Lhe agrlculLural land 1hls negaLes Lhen Lhe clalm of PLl LhaL all LhaL Lhe lW8s can be enLlLled
Lo lf any ls only 3 of Lhe purchase prlce of Lhe converLed land

8esldes Lhe Converslon Crder daLed 14 AugusL 1996 provldes LhaL Lhe beneflLs wages and Lhe
llke presenLly recelved by Lhe lW8s shall noL ln any way be reduced or adversely affecLed
1hree percenL of Lhe gross selllng prlce of Lhe sale of Lhe converLed land shall be awarded Lo
Lhe beneflclarles of Lhe SuC 1he 3 gross producLlon share Lhen ls dlfferenL from Lhe 3
proceeds of Lhe sale of Lhe converLed land and wlLh more reason Lhe 33 share belng clalmed
by Lhe lW8s as parL owners of Lhe Paclenda should have been glven Lhe lW8s as
sLockholders and Lo whlch Lhey could have been enLlLled lf only Lhe land were acqulred and
redlsLrlbuLed Lo Lhem under Lhe CA8

x x x x

1he lW8s do noL recelve any oLher beneflLs under Lhe MCA excepL Lhe aforemenLloned (vlz
shares of sLocks (parLlal) 3 gross producLlon sale (noL all) and homeloLs (noL all)

!udglng from Lhe above sLaLemenLs Lhe Speclal 1ask lorce ls aL besL sllenL on wheLher PLl has
falled Lo comply wlLh Lhe 3 producLlonsharlng obllgaLlon or Lhe 3 of Lhe gross selllng prlce
of Lhe converLed land and Lhe SC1Lx loL ln facL lL admlLs LhaL Lhe lW8s Lhough noL all have
recelved Lhelr share of Lhe gross producLlon sales and ln Lhe sale of Lhe loL Lo SC1Lx AL mosL
Lhen PLl had complled subsLanLlally wlLh Lhls Su underLaklng and Lhe converslon order 1o be
sure Lhls sllghL breach would noL [usLlfy Lhe seLLlng Lo naughL by A8C of Lhe approval acLlon of
Lhe earller A8C Lven ln conLracL law resclsslon predlcaLed on vlolaLlon of reclproclLy wlll noL
be permlLLed for a sllghL or casual breach of conLracL resclsslon may be had only for such
breaches LhaL are subsLanLlal and fundamenLal as Lo defeaL Lhe ob[ecL of Lhe parLles ln maklng
Lhe agreemenL137

uesplLe Lhe foregolng flndlngs Lhe revocaLlon of Lhe approval of Lhe Su ls noL wlLhouL basls as
shown below

Cn 1lLles Lo PomeloLs

under 8A 6637 Lhe dlsLrlbuLlon of homeloLs ls requlred only for corporaLlons or buslness
assoclaLlons ownlng or operaLlng farms whlch opLed for land dlsLrlbuLlon Sec 30 of 8A 6637
sLaLes

SLC 30 PomeloLs and larmloLs for Members of CooperaLlves1he lndlvldual members of Lhe
cooperaLlves or corporaLlons menLloned ln Lhe precedlng secLlon shall be provlded wlLh
homeloLs and small farmloLs for Lhelr famlly use Lo be Laken from Lhe land owned by Lhe
cooperaLlve or corporaLlon

1he precedlng secLlon referred Lo ln Lhe abovequoLed provlslon ls as follows

SLC 29 larms Cwned or CperaLed by CorporaLlons or CLher 8uslness AssoclaLlonsln Lhe case
of farms owned or operaLed by corporaLlons or oLher buslness assoclaLlons Lhe followlng rules
shall be observed by Lhe A8C

ln general lands shall be dlsLrlbuLed dlrecLly Lo Lhe lndlvldual workerbeneflclarles

ln case lL ls noL economlcally feaslble and sound Lo dlvlde Lhe land Lhen lL shall be owned
collecLlvely by Lhe workerbeneflclarles who shall form a workers' cooperaLlve or assoclaLlon
whlch wlll deal wlLh Lhe corporaLlon or buslness assoclaLlon unLll a new agreemenL ls enLered
lnLo by and beLween Lhe workers' cooperaLlve or assoclaLlon and Lhe corporaLlon or buslness
assoclaLlon any agreemenL exlsLlng aL Lhe Llme Lhls AcL Lakes effecL beLween Lhe former and
Lhe prevlous landowner shall be respecLed by boLh Lhe workers' cooperaLlve or assoclaLlon and
Lhe corporaLlon or buslness assoclaLlon

noLlceably Lhe foregolng provlslons do noL make reference Lo corporaLlons whlch opLed for
sLock dlsLrlbuLlon under Sec 31 of 8A 6637 ConcomlLanLly sald corporaLlons are noL obllged Lo
provlde for lL excepL by sLlpulaLlon as ln Lhls case

under Lhe Su PLl underLook Lo subdlvlde and allocaLe for free and wlLhouL charge among
Lhe quallfled famllybeneflclarles x x x resldenLlal or homeloLs of noL more Lhan 240 sq m each
wlLh each famlly beneflclary belng assured of recelvlng and ownlng a homeloL ln Lhe barrlo or
barangay where lL acLually resldes wlLhln a reasonable Llme

More Lhan slxLeen (16) years have elapsed from Lhe Llme Lhe Su was approved by A8C and
yeL lL ls sLlll Lhe conLenLlon of Lhe lW8s LhaL noL all was glven Lhe 240square meLer homeloLs
and of Lhose who were already glven some sLlll do noL have Lhe correspondlng LlLles

uurlng Lhe oral argumenLs PLl was afforded Lhe chance Lo refuLe Lhe foregolng allegaLlon by
submlLLlng proof LhaL Lhe lW8s were already glven Lhe sald homeloLs

!usLlce velasco x x x 1here ls also an allegaLlon LhaL Lhe farmer beneflclarles Lhe quallfled
famlly beneflclarles were noL glven Lhe 240 square meLers each So can you also prove LhaL
Lhe quallfled famlly beneflclarles were already provlded Lhe 240 square meLer homeloLs

ALLy Asunclon We wlll your Ponor please138

CLher Lhan Lhe flnanclal reporL however no oLher subsLanLlal proof showlng LhaL all Lhe
quallfled beneflclarles have recelved homeloLs was submlLLed by PLl Pence Lhls CourL ls
consLralned Lo rule LhaL PLl has noL yeL fully complled wlLh lLs underLaklng Lo dlsLrlbuLe
homeloLs Lo Lhe lW8s under Lhe Su

Cn Man uays and Lhe Mechanlcs of SLock ulsLrlbuLlon

ln our revlew and analysls of par 3 of Lhe SuCA on Lhe mechanlcs and Llmellnes of sLock
dlsLrlbuLlon We flnd LhaL lL vlolaLes Lwo (2) provlslons of uAC 10 ar 3 of Lhe SuCA sLaLes

3 AL Lhe end of each flscal year for a perlod of 30 years Lhe SLCCnu A81? PLl shall arrange
wlLh Lhe ll8S1 A81? 1uC Lhe acqulslLlon and dlsLrlbuLlon Lo Lhe 1Pl8u A81? lW8s on Lhe
basls of number of days worked and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of
11839197683 shares of Lhe caplLal sLock of Lhe SLCCnu A81? LhaL are presenLly owned and
held by Lhe ll8S1 A81? unLll such Llme as Lhe enLlre block of 11839197683 shares shall have
been compleLely acqulred and dlsLrlbuLed Lo Lhe 1Pl8u A81?

8ased on Lhe abovequoLed provlslon Lhe dlsLrlbuLlon of Lhe shares of sLock Lo Lhe lW8s albelL
noL enLalllng a cash ouL from Lhem ls conLlngenL on Lhe number of man days LhaL ls Lhe
number of days LhaL Lhe lW8s have worked durlng Lhe year 1hls formula devlaLes from Sec 1
of uAC 10 whlch decrees Lhe dlsLrlbuLlon of equal number of shares Lo Lhe lW8s as Lhe
mlnlmum raLlo of shares of sLock for purposes of compllance wlLh Sec 31 of 8A 6637 As sLaLed
ln Sec 4 of uAC 10

SecLlon 4 SLock ulsLrlbuLlon lan1he Su submlLLed by Lhe corporaLe landownerappllcanL
shall provlde for Lhe dlsLrlbuLlon of an equal number of shares of Lhe same class and value wlLh
Lhe same rlghLs and feaLures as all oLher shares Lo each of Lhe quallfled beneflclarles 1hls
dlsLrlbuLlon plan ln all cases shall be aL leasL Lhe mlnlmum raLlo for purposes of compllance
wlLh SecLlon 31 of 8A no 6637

Cn Lop of Lhe mlnlmum raLlo provlded under SecLlon 3 of Lhls lmplemenLlng Culdellne Lhe
corporaLe landownerappllcanL may adopL addlLlonal sLock dlsLrlbuLlon schemes Laklng lnLo
accounL facLors such as rank senlorlLy salary poslLlon and oLher clrcumsLances whlch may be
deemed deslrable as a maLLer of sound company pollcy (Lmphasls supplled)

1he above provlso glves Lwo (2) seLs or caLegorles of shares of sLock whlch a quallfled
beneflclary can acqulre from Lhe corporaLlon under Lhe Su 1he flrsL perLalns as earller
explalned Lo Lhe mandaLory mlnlmum raLlo of shares of sLock Lo be dlsLrlbuLed Lo Lhe lW8s ln
compllance wlLh Sec 31 of 8A 6637 1hls mlnlmum raLlo conLemplaLes of LhaL proporLlon of
Lhe caplLal sLock of Lhe corporaLlon LhaL Lhe agrlculLural land acLually devoLed Lo agrlculLural
acLlvlLles bears ln relaLlon Lo Lhe company's LoLal asseLs139 lL ls Lhls seL of shares of sLock
whlch ln llne wlLh Sec 4 of uAC 10 ls supposed Lo be allocaLed for Lhe dlsLrlbuLlon of an equal
number of shares of sLock of Lhe same class and value wlLh Lhe same rlghLs and feaLures as all
oLher shares Lo each of Lhe quallfled beneflclarles

Cn Lhe oLher hand Lhe second seL or caLegory of shares parLakes of a graLulLous exLra granL
meanlng LhaL Lhls seL or caLegory consLlLuLes an augmenLaLlon share/s LhaL Lhe corporaLe
landowner may glve under an addlLlonal sLock dlsLrlbuLlon scheme Laklng lnLo accounL such
varlables as rank senlorlLy salary poslLlon and llke facLors whlch Lhe managemenL ln Lhe
exerclse of lLs sound dlscreLlon may deem deslrable140

8efore anyLhlng else lL should be sLressed LhaL aL Lhe Llme A8C approved PLl's Su PLl
recognlzed 6296 lndlvlduals as quallfled lW8s And under Lhe 30year sLock dlsLrlbuLlon
program envlsaged under Lhe plan lW8s who came ln afLer 1989 new lW8s ln flne may be
accommodaLed as Lhey appear Lo have ln facL been accommodaLed as evldenced by Lhelr
recelpL of PLl shares

now Lhen by provldlng LhaL Lhe number of shares of Lhe orlglnal 1989 lW8s shall depend on
Lhe number of man days PLl vlolaLed Lhe aforequoLed rule on sLock dlsLrlbuLlon and
effecLlvely deprlved Lhe lW8s of equal shares of sLock ln Lhe corporaLlon for ln neL effecL
Lhese 6296 quallfled lW8s who LheoreLlcally had glven up Lhelr rlghLs Lo Lhe land LhaL could
have been dlsLrlbuLed Lo Lhem suffered a dlluLlon of Lhelr due share enLlLlemenL As has been
observed durlng Lhe oral argumenLs PLl has chosen Lo use Lhe shares earmarked for
farmworkers as reward sysLem chlps Lo waLer down Lhe shares of Lhe orlglnal 6296 lW8s141
arLlcularly

!usLlce Abad lf Lhe SuCA dld noL Lake place Lhe oLher Lhlng LhaL would have happened ls LhaL
Lhere would be CA8?

ALLy uela Merced ?es ?our Ponor

!usLlce Abad 1haL's Lhe only polnL l wanL Lo know x x x now buL Lhey chose Lo enLer SuCA
lnsLead of placlng Lhe land under CA8 And for LhaL reason Lhose who would have goLLen Lhelr
shares of Lhe land acLually gave up Lhelr rlghLs Lo Lhls land ln place of Lhe shares of Lhe sLock ls
LhaL correcL?

ALLy uela Merced lL would be LhaL way ?our Ponor

!usLlce Abad 8lghL now also Lhe governmenL ln a way gave up lLs rlghL Lo own Lhe land
because LhaL way Lhe governmenL Lakes own slc Lhe land and dlsLrlbuLe lL Lo Lhe farmers and
pay for Lhe land ls LhaL correcL?

ALLy uela Merced ?es ?our Ponor

!usLlce Abad And Lhen you gave LhlrLyLhree percenL (33) of Lhe shares of PLl Lo Lhe farmers
aL LhaL Llme LhaL numbered x x x Lhose who slgned flve Lhousand four hundred nlneLy elghL
(3498) beneflclarles ls LhaL correcL?

ALLy uela Merced ?es ?our Ponor

!usLlce Abad 8uL laLer on afLer asslgnlng Lhem Lhelr shares some workers came ln from 1989
1990 1991 1992 and Lhe resL of Lhe years LhaL you gave addlLlonal shares who were noL ln Lhe
orlglnal llsL of owners?

ALLy uela Merced ?es ?our Ponor

!usLlce Abad uld Lhose new workers glve up any rlghL LhaL would have belong Lo Lhem ln 1989
when Lhe land was supposed Lo have been placed under CA8?

ALLy uela Merced lf you are Lalklng or referrlng (lnLerrupLed)

!usLlce Abad none! ?ou Lell me none 1hey gave up no rlghLs Lo land?

ALLy uela Merced 1hey dld noL do Lhe same Lhlng as we dld ln 1989 ?our Ponor

!usLlce Abad no lf Lhey were noL workers ln 1989 whaL land dld Lhey glve up? none lf Lhey
become workers laLer on

ALLy uela Merced none ?our Ponor l was referrlng ?our Ponor Lo Lhe orlglnal
(lnLerrupLed)

!usLlce Abad So why ls lL LhaL Lhe rlghLs of Lhose who gave up Lhelr lands would be dlluLed
because Lhe company has chosen Lo use Lhe shares as reward sysLem for new workers who
come ln? lL ls noL LhaL Lhe new workers ln effecL become [usL workers of Lhe corporaLlon
whose sLockholders were already flxed 1he 1AuLCC who has shares Lhere abouL slxLy slx
percenL (66) and Lhe flve Lhousand four hundred nlneLy elghL (3498) farmers aL Lhe Llme of
Lhe SuCA? Lxplaln Lo me Why why wlll you x x x whaL rlghL or where dld you geL LhaL rlghL Lo
use Lhls shares Lo waLer down Lhe shares of Lhose who should have been beneflLed and Lo use
lL as a reward sysLem declded by Lhe company?142

lrom Lhe above dlscourse lL ls clear as day LhaL Lhe orlglnal 6296 lW8s who were quallfled
beneflclarles aL Lhe Llme of Lhe approval of Lhe Su suffered from waLerlng down of shares As
deLermlned earller each orlglnal lW8 ls enLlLled Lo 1880432 PLl shares 1he orlglnal lW8s goL
less Lhan Lhe guaranLeed 1880432 PLl shares per beneflclary because Lhe acqulslLlon and
dlsLrlbuLlon of Lhe PLl shares were based on man days or number of days worked by Lhe
lW8 ln a year's Llme As explalned by PLl a beneflclary needs Lo work for aL leasL 37 days ln a
flscal year before he or she becomes enLlLled Lo PLl shares lf lL falls below 37 days Lhe lW8
unforLunaLely does noL geL any share aL year end 1he number of PLl shares dlsLrlbuLed varles
dependlng on Lhe number of days Lhe lW8s were allowed Lo work ln one year Worse PLl hlred
farmworkers ln addlLlon Lo Lhe orlglnal 6296 lW8s such LhaL as lndlcaLed ln Lhe Compllance
daLed AugusL 2 2010 submlLLed by PLl Lo Lhe CourL Lhe LoLal number of farmworkers of PLl as
of sald daLe sLood aL 10302 All Lhese farmworkers whlch lnclude Lhe orlglnal 6296 lW8s
were glven shares ouL of Lhe 11893197683 PLl shares represenLlng Lhe 33296 of Lhe LoLal
ouLsLandlng caplLal sLock of PLl Clearly Lhe mlnlmum lndlvldual allocaLlon of each orlglnal lW8
of 1880432 shares was dlluLed as a resulL of Lhe use of man days and Lhe hlrlng of addlLlonal
farmworkers

Colng lnLo anoLher buL relaLed maLLer par 3 of Lhe SuCA expressly provldlng for a 30year
Llmeframe for PLlLolW8s sLock Lransfer ls an arrangemenL conLrary Lo whaL Sec 11 of uAC 10
prescrlbes Sald Sec 11 provldes for Lhe lmplemenLaLlon of Lhe approved sLock dlsLrlbuLlon plan
wlLhln Lhree (3) monLhs from recelpL by Lhe corporaLe landowner of Lhe approval of Lhe plan by
A8C ln facL based on Lhe sald provlslon Lhe Lransfer of Lhe shares of sLock ln Lhe names of
Lhe quallfled lW8s should be recorded ln Lhe sLock and Lransfer books and musL be submlLLed
Lo Lhe SLC wlLhln slxLy (60) days from lmplemenLaLlon As sLaLed

SecLlon 11 lmplemenLaLlon/MonlLorlng of lan1he approved sLock dlsLrlbuLlon plan shall be
lmplemenLed wlLhln Lhree (3) monLhs from recelpL by Lhe corporaLe landownerappllcanL of Lhe
approval Lhereof by Lhe A8C and Lhe Lransfer of Lhe shares of sLocks ln Lhe names of Lhe
quallfled beneflclarles shall be recorded ln sLock and Lransfer books and submlLLed Lo Lhe
SecurlLles and Lxchange Commlsslon (SLC) wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon
of Lhe sLock dlsLrlbuLlon plan (Lmphasls supplled)

lL ls evldenL from Lhe foregolng provlslon LhaL Lhe lmplemenLaLlon LhaL ls Lhe dlsLrlbuLlon of
Lhe shares of sLock Lo Lhe lW8s musL be made wlLhln Lhree (3) monLhs from recelpL by PLl of
Lhe approval of Lhe sLock dlsLrlbuLlon plan by A8C Whlle nelLher of Lhe clashlng parLles has
made a compelllng case of Lhe LhrusL of Lhls provlslon Lhe CourL ls of Lhe vlew and so holds LhaL
Lhe lnLenL ls Lo compel Lhe corporaLe landowner Lo compleLe noL merely lnlLlaLe Lhe Lransfer
process of shares wlLhln LhaL LhreemonLh Llmeframe 8elnforclng Lhls concluslon ls Lhe 60day
sLock Lransfer recordlng (wlLh Lhe SLC) requlremenL reckoned from Lhe lmplemenLaLlon of Lhe
Su

1o Lhe CourL Lhere ls a purpose whlch ls aL once dlscernlble as lL ls pracLlcal for Lhe Lhree
monLh Lhreshold 8emove Lhls Llmellne and Lhe corporaLe landowner can verlLably evade
compllance wlLh agrarlan reform by slmply deferrlng Lo absurd llmlLs Lhe lmplemenLaLlon of Lhe
sLock dlsLrlbuLlon scheme

1he argumenL ls urged LhaL Lhe LhlrLy (30)year dlsLrlbuLlon program ls [usLlfled by Lhe facL LhaL
under Sec 26 of 8A 6637 paymenL by beneflclarles of land dlsLrlbuLlon under CA8 shall be
made ln LhlrLy (30) annual amorLlzaLlons 1o PLl sald secLlon provldes a [usLlfylng dlmenslon Lo
lLs 30year sLock dlsLrlbuLlon program

PLl's rellance on Sec 26 of 8A 6637 quoLed ln parL below ls obvlously mlsplaced as Lhe sald
provlslon clearly deals wlLh land dlsLrlbuLlon

SLC 26 aymenL by 8eneflclarlesLands awarded pursuanL Lo Lhls AcL shall be pald for by Lhe
beneflclarles Lo Lhe L8 ln LhlrLy (30) annual amorLlzaLlons x x x

1hen Loo Lhe ones obllged Lo pay Lhe L8 under Lhe sald provlslon are Lhe beneflclarles Cn
Lhe oLher hand ln Lhe lnsLanL case aslde from Lhe facL LhaL whaL ls lnvolved ls sLock
dlsLrlbuLlon lL ls Lhe corporaLe landowner who has Lhe obllgaLlon Lo dlsLrlbuLe Lhe shares of
sLock among Lhe lW8s

LvldenLly Lhe land Lransfer beneflclarles are glven LhlrLy (30) years wlLhln whlch Lo pay Lhe cosL
of Lhe land Lhus awarded Lhem Lo make lL less cumbersome for Lhem Lo pay Lhe governmenL
1o be sure Lhe reason underplnnlng Lhe 30year accommodaLlon does noL apply Lo corporaLe
landowners ln dlsLrlbuLlng shares of sLock Lo Lhe quallfled beneflclarles as Lhe shares may be
lssued ln a much shorLer perlod of Llme

1aklng lnLo accounL Lhe above dlscusslon Lhe revocaLlon of Lhe Su by A8C should be upheld
for vlolaLlng uAC 10 lL bears sLresslng LhaL under Sec 49 of 8A 6637 Lhe A8C and Lhe uA8
have Lhe power Lo lssue rules and regulaLlons subsLanLlve or procedural 8elng a producL of
such rulemaklng power uAC 10 has Lhe force and effecL of law and musL be duly complled
wlLh143 1he A8C ls Lherefore correcL ln revoklng Lhe Su ConsequenLly Lhe A8C
8esoluLlon no 89122 daLed november 21 l989 approvlng Lhe PLl's Su ls nulllfled and
volded

lll

We now resolve Lhe peLlLlonslnlnLervenLlon whlch aL boLLom unlformly pray for Lhe
excluslon from Lhe coverage of Lhe assalled A8C resoluLlon Lhose porLlons of Lhe converLed
land wlLhln Paclenda LulslLa whlch 8C8C and LlCC acqulred by purchase

8oLh conLend LhaL Lhey are lnnocenL purchasers for value of porLlons of Lhe converLed farm
land 1hus Lhelr plea for Lhe excluslon of LhaL porLlon from A8C 8esoluLlon 20033201 as
lmplemenLed by a uA8lssued noLlce of Coverage daLed !anuary 2 2006 whlch called for
mandaLory CA8 acqulslLlon coverage of lands sub[ecL of Lhe Su

1o resLaLe Lhe anLecedenLs afLer Lhe converslon of Lhe 300 hecLares of land ln Paclenda LulslLa
PLl Lransferred Lhe 300 hecLares Lo CenLennary whlle cedlng Lhe remalnlng 200hecLare
porLlon Lo L8C SubsequenLly LlCC purchased Lhe enLlre Lhree hundred (300) hecLares of land
from CenLennary for Lhe purpose of developlng Lhe land lnLo an lndusLrlal complex144
Accordlngly Lhe 1C1 ln CenLennary's name was canceled and a new one lssued ln LlCC's
name 1hereafLer sald land was subdlvlded lnLo Lwo (2) more parcels of land LaLer on LlCC
Lransferred abouL 184 hecLares Lo 8C8C by way of daclon en pago by vlrLue of whlch 1C1s ln
Lhe name of 8C8C were subsequenLly lssued

under Sec 44 of u 1329 or Lhe roperLy 8eglsLraLlon uecree every reglsLered owner
recelvlng a cerLlflcaLe of LlLle ln pursuance of a decree of reglsLraLlon and every subsequenL
purchaser of reglsLered land Laklng a cerLlflcaLe of LlLle for value and ln good falLh shall hold Lhe
same free from all encumbrances excepL Lhose noLed on Lhe cerLlflcaLe and enumeraLed
Lhereln143

lL ls seLLled docLrlne LhaL one who deals wlLh properLy reglsLered under Lhe 1orrens sysLem
need noL go beyond Lhe four corners of buL can rely on whaL appears on Lhe LlLle Pe ls
charged wlLh noLlce only of such burdens and clalms as are annoLaLed on Lhe LlLle 1hls prlnclple
admlLs of cerLaln excepLlons such as when Lhe parLy has acLual knowledge of facLs and
clrcumsLances LhaL would lmpel a reasonably cauLlous man Lo make such lnqulry or when Lhe
purchaser has knowledge of a defecL or Lhe lack of LlLle ln hls vendor or of sufflclenL facLs Lo
lnduce a reasonably prudenL man Lo lnqulre lnLo Lhe sLaLus of Lhe LlLle of Lhe properLy ln
llLlgaLlon146 A hlgher level of care and dlllgence ls of course expecLed from banks Lhelr
buslness belng lmpressed wlLh publlc lnLeresL147

Mlllena v CourL of Appeals descrlbes a purchaser ln good falLh ln Lhls wlse

x x x A purchaser ln good falLh ls one who buys properLy of anoLher wlLhouL noLlce LhaL some
oLher person has a rlghL Lo or lnLeresL ln such properLy aL Lhe Llme of such purchase or before
he has noLlce of Lhe clalm or lnLeresL of some oLher persons ln Lhe properLy Cood falLh or Lhe
lack of lL ls ln Lhe flnal analysls a quesLlon of lnLenLlon buL ln ascerLalnlng Lhe lnLenLlon by
whlch one ls acLuaLed on a glven occaslon we are necessarlly conLrolled by Lhe evldence as Lo
Lhe conducL and ouLward acLs by whlch alone Lhe lnward moLlve may wlLh safeLy be
deLermlned 1ruly good falLh ls noL a vlslble Langlble facL LhaL can be seen or Louched buL
raLher a sLaLe or condlLlon of mlnd whlch can only be [udged by acLual or fancled Lokens or
slgns CLherwlse sLaLed good falLh x x x refers Lo Lhe sLaLe of mlnd whlch ls manlfesLed by Lhe
acLs of Lhe lndlvldual concerned148 (Lmphasls supplled)

ln flne Lhere are Lwo (2) requlremenLs before one may be consldered a purchaser ln good falLh
namely (1) LhaL Lhe purchaser buys Lhe properLy of anoLher wlLhouL noLlce LhaL some oLher
person has a rlghL Lo or lnLeresL ln such properLy and (2) LhaL Lhe purchaser pays a full and falr
prlce for Lhe properLy aL Lhe Llme of such purchase or before he or she has noLlce of Lhe clalm
of anoLher

lL can rlghLfully be sald LhaL boLh LlCC and 8C8C arebased on Lhe above requlremenLs and
wlLh respecL Lo Lhe adverLed LransacLlons of Lhe converLed land ln quesLlonpurchasers ln
good falLh for value enLlLled Lo Lhe beneflLs arlslng from such sLaLus

llrsL aL Lhe Llme LlCC purchased Lhe enLlre Lhree hundred (300) hecLares of lndusLrlal land
Lhere was no noLlce of any supposed defecL ln Lhe LlLle of lLs Lransferor CenLennary or LhaL any
oLher person has a rlghL Lo or lnLeresL ln such properLy ln facL aL Lhe Llme LlCC acqulred sald
parcels of land only Lhe followlng annoLaLlons appeared on Lhe 1C1 ln Lhe name of CenLennary
Lhe SecreLary's CerLlflcaLe ln favor of 1ereslLa Lopa Lhe SecreLary's CerLlflcaLe ln favor of
ShlnLaro Mural and Lhe converslon of Lhe properLy from agrlculLural Lo lndusLrlal and
resldenLlal use149

1he same ls Lrue wlLh respecL Lo 8C8C AL Lhe Llme lL acqulred porLlons of Paclenda LulslLa only
Lhe followlng general annoLaLlons appeared on Lhe 1C1s of LlCC Lhe ueed of 8esLrlcLlons
llmlLlng lLs use solely as an lndusLrlal esLaLe Lhe SecreLary's CerLlflcaLe ln favor of ko[l komal
and kyosuke Porl and Lhe 8eal LsLaLe MorLgage ln favor of 8C8C Lo guaranLee Lhe paymenL of
h 300 mllllon

lL cannoL be clalmed LhaL 8C8C and LlCC acLed ln bad falLh ln acqulrlng Lhe loLs LhaL were
prevlously covered by Lhe Su Cood falLh conslsLs ln Lhe possessor's bellef LhaL Lhe person
from whom he recelved lL was Lhe owner of Lhe same and could convey hls LlLle Cood falLh
requlres a wellfounded bellef LhaL Lhe person from whom LlLle was recelved was hlmself Lhe
owner of Lhe land wlLh Lhe rlghL Lo convey lL 1here ls good falLh where Lhere ls an honesL
lnLenLlon Lo absLaln from Laklng any unconsclenLlous advanLage from anoLher130 lL ls Lhe
opposlLe of fraud

1o be sure lnLervenor 8C8C and LlCC knew LhaL Lhe loLs Lhey boughL were sub[ecLed Lo CA8
coverage by means of a sLock dlsLrlbuLlon plan as Lhe uA8 converslon order was annoLaLed aL
Lhe back of Lhe LlLles of Lhe loLs Lhey acqulred Powever Lhey are of Lhe honesL bellef LhaL Lhe
sub[ecL loLs were valldly converLed Lo commerclal or lndusLrlal purposes and for whlch sald loLs
were Laken ouL of Lhe CA8 coverage sub[ecL of A8C 8esoluLlon no 89122 and hence can
be legally and valldly acqulred by Lhem AfLer all Sec 63 of 8A 6637 expllclLly allows converslon
and dlsposlLlon of agrlculLural lands prevlously covered by CA8 land acqulslLlon afLer Lhe
lapse of flve (3) years from lLs award when Lhe land ceases Lo be economlcally feaslble and
sound for agrlculLural purposes or Lhe locallLy has become urbanlzed and Lhe land wlll have a
greaLer economlc value for resldenLlal commerclal or lndusLrlal purposes Moreover uA8
noLlfled all Lhe affecLed parLles more parLlcularly Lhe lW8s and gave Lhem Lhe opporLunlLy Lo
commenL or oppose Lhe proposed converslon uA8 afLer golng Lhrough Lhe necessary
processes granLed Lhe converslon of 300 hecLares of Paclenda LulslLa pursuanL Lo lLs prlmary
[urlsdlcLlon under Sec 30 of 8A 6637 Lo deLermlne and ad[udlcaLe agrarlan reform maLLers and
lLs orlglnal excluslve [urlsdlcLlon over all maLLers lnvolvlng Lhe lmplemenLaLlon of agrarlan
reform 1he uA8 converslon order became flnal and execuLory afLer none of Lhe lW8s
lnLerposed an appeal Lo Lhe CA ln Lhls facLual seLLlng 8C8C and LlCC purchased Lhe loLs ln
quesLlon on Lhelr honesL and wellfounded bellef LhaL Lhe prevlous reglsLered owners could
legally sell and convey Lhe loLs Lhough Lhese were prevlously sub[ecL of CA8 coverage Lrgo
8C8C and LlCC acLed ln good falLh ln acqulrlng Lhe sub[ecL loLs

And second boLh LlCC and 8C8C purchased porLlons of Paclenda LulslLa for value
undenlably LlCC acqulred 300 hecLares of land from CenLennary for Lhe amounL of h 730
mllllon pursuanL Lo a ueed of Sale daLed !uly 30 1998131 Cn Lhe oLher hand ln a ueed of
AbsoluLe AsslgnmenL daLed november 23 2004 LlCC conveyed porLlons of Paclenda LulslLa ln
favor of 8C8C by way of daclon en pago Lo pay for a loan of h 43169373210

As bona flde purchasers for value boLh LlCC and 8C8C have acqulred rlghLs whlch cannoL [usL
be dlsregarded by uA8 A8C or even by Lhls CourL As held ln Spouses Chua v Sorlano

WlLh Lhe properLy ln quesLlon havlng already passed Lo Lhe hands of purchasers ln good falLh lL
ls now of no momenL LhaL some lrregularlLy aLLended Lhe lssuance of Lhe SA conslsLenL wlLh
our pronouncemenL ln Pelrs of Spouses 8enlLo Cavlno and !uana LusLe v CourL of Appeals Lo
wlL

x x x Lhe general rule LhaL Lhe dlrecL resulL of a prevlous vold conLracL cannoL be valld ls
lnappllcable ln Lhls case as lL wlll dlrecLly conLravene Lhe 1orrens sysLem of reglsLraLlon Where
lnnocenL Lhlrd persons relylng on Lhe correcLness of Lhe cerLlflcaLe of LlLle Lhus lssued acqulre
rlghLs over Lhe properLy Lhe courL cannoL dlsregard such rlghLs and order Lhe cancellaLlon of
Lhe cerLlflcaLe 1he effecL of such ouLrlghL cancellaLlon wlll be Lo lmpalr publlc confldence ln Lhe
cerLlflcaLe of LlLle 1he sancLlLy of Lhe 1orrens sysLem musL be preserved oLherwlse everyone
deallng wlLh Lhe properLy reglsLered under Lhe sysLem wlll have Lo lnqulre ln every lnsLance as
Lo wheLher Lhe LlLle had been regularly or lrregularly lssued conLrary Lo Lhe evldenL purpose of
Lhe law

8elng purchasers ln good falLh Lhe Chuas already acqulred valld LlLle Lo Lhe properLy A
purchaser ln good falLh holds an lndefeaslble LlLle Lo Lhe properLy and he ls enLlLled Lo Lhe
proLecLlon of Lhe law132 x x x (Lmphasls supplled)

1o be sure Lhe pracLlcallLles of Lhe slLuaLlon have Lo a polnL lnfluenced Cur dlsposlLlon on Lhe
faLe of 8C8C and LlCC AfLer all Lhe CourL Lo borrow from AssoclaLlon of Small Landowners ln
Lhe hlllpplnes lnc133 ls noL a clolsLered lnsLlLuLlon removed from Lhe reallLles on Lhe
ground 1o noLe Lhe approval and lssuances of boLh Lhe naLlonal and local governmenLs
showlng LhaL cerLaln porLlons of Paclenda LulslLa have effecLlvely ceased legally and physlcally
Lo be agrlculLural and Lherefore no longer CA8able are a maLLer of facL whlch cannoL [usL be
lgnored by Lhe CourL and Lhe uA8 Among Lhe approvlng/endorslng lssuances134

(a) 8esoluLlon no 392 daLed 11 uecember 1996 of Lhe Sanggunlang 8ayan of 1arlac favorably
endorslng Lhe 300hecLare lndusLrlal esLaLe pro[ecL of LlCC

(b) 8Cl CerLlflcaLe of 8eglsLraLlon no 96020 daLed 20 uecember 1996 lssued ln accordance
wlLh Lhe Cmnlbus lnvesLmenLs Code of 1987

(c) LZA CerLlflcaLe of 8oard 8esoluLlon no 97202 daLed 27 !une 1997 approvlng LlCC's
appllcaLlon for a mlxed ecozone and proclalmlng Lhe Lhree hundred (300) hecLares of Lhe
lndusLrlal land as a Speclal Lconomlc Zone

(d) 8esoluLlon no 234 daLed 08 AugusL 1997 of Lhe Sanggunlang 8ayan of 1arlac approvlng Lhe
llnal uevelopmenL ermlL for Lhe LulslLa lndusLrlal ark ll ro[ecL

(e) uevelopmenL ermlL daLed 13 AugusL 1997 for Lhe proposed LulslLa lndusLrlal ark ll ro[ecL
lssued by Lhe Cfflce of Lhe Sanggunlang 8ayan of 1arlac133

(f) uLn8 LnvlronmenLal Compllance CerLlflcaLe daLed 01 CcLober 1997 lssued for Lhe proposed
pro[ecL of bulldlng an lndusLrlal complex on Lhree hundred (300) hecLares of lndusLrlal land136

(g) CerLlflcaLe of 8eglsLraLlon no 00794 daLed 26 uecember 1997 lssued by Lhe PLu88 on Lhe
pro[ecL of LulslLa lndusLrlal ark ll wlLh an area of Lhree mllllon (3000000) square meLers137

(h) Llcense Lo Sell no 0076 daLed 26 uecember 1997 lssued by Lhe PLu88 auLhorlzlng Lhe sale
of loLs ln Lhe LulslLa lndusLrlal ark ll

(l) roclamaLlon no 1207 daLed 22 Aprll 1998 enLlLled ueclarlng CerLaln arcels of rlvaLe
Land ln 8arangay San Mlguel MunlclpallLy of 1arlac rovlnce of 1arlac as a Speclal Lconomlc
Zone pursuanL Lo 8epubllc AcL no 7916 deslgnaLlng Lhe LulslLa lndusLrlal ark ll conslsLlng of
Lhree hundred hecLares (300 has) of lndusLrlal land as a Speclal Lconomlc Zone and

([) CerLlflcaLe of 8eglsLraLlon no LZ9803 daLed 07 May 1998 lssued by Lhe LZA sLaLlng LhaL
pursuanL Lo resldenLlal roclamaLlon no 1207 daLed 22 Aprll 1998 and 8epubllc AcL no 7916
LlCC has been reglsLered as an Lcozone ueveloper/CperaLor of LulslLa lndusLrlal ark ll
locaLed ln San Mlguel 1arlac 1arlac

Whlle a mere reclasslflcaLlon of a covered agrlculLural land or lLs lncluslon ln an economlc zone
does noL auLomaLlcally allow Lhe corporaLe or lndlvldual landowner Lo change lLs use138 Lhe
reclasslflcaLlon process ls a prlma facle lndlclum LhaL Lhe land has ceased Lo be economlcally
feaslble and sound for agrlculLural uses And lf only Lo sLress uA8 Converslon Crder no
030601074764(93) lssued ln 1996 by Lhen uA8 SecreLary Carllao had effecLlvely converLed
300 hecLares of haclenda land from agrlculLural Lo lndusLrlal/commerclal use and auLhorlzed
Lhelr dlsposlLlon

ln relylng upon Lhe abovemenLloned approvals proclamaLlon and converslon order boLh 8C8C
and LlCC cannoL be consldered aL faulL for bellevlng LhaL cerLaln porLlons of Paclenda LulslLa
are lndusLrlal/commerclal lands and are Lhus ouLslde Lhe amblL of CA8 1he A8C and
consequenLly uA8 gravely abused lLs dlscreLlon when lL placed LlCC's and 8C8C's properLy
whlch once formed parL of Paclenda LulslLa under Lhe CA8 compulsory acqulslLlon scheme vla
Lhe assalled noLlce of Coverage

As regards Lhe 8031hecLare land Lransferred Lo Lhe governmenL for use as parL of Lhe SC1Lx
Lhls should also be excluded from Lhe compulsory agrarlan reform coverage conslderlng LhaL
Lhe Lransfer was conslsLenL wlLh Lhe governmenL's exerclse of Lhe power of emlnenL
domaln139 and none of Lhe parLles acLually quesLloned Lhe Lransfer

Whlle We afflrm Lhe revocaLlon of Lhe Su on Paclenda LulslLa sub[ecL of A8C 8esoluLlon nos
20033201 and 20063401 Lhe CourL cannoL close lLs eyes Lo cerLaln operaLlve facLs LhaL
had occurred ln Lhe lnLerlm erLlnenLly Lhe operaLlve facL docLrlne reallzes LhaL ln declarlng
a law or execuLlve acLlon null and vold or by exLenslon no longer wlLhouL force and effecL
undue harshness and resulLlng unfalrness musL be avolded 1hls ls as lL should reallsLlcally be
slnce rlghLs mlghL have accrued ln favor of naLural or [urldlcal persons and obllgaLlons [usLly
lncurred ln Lhe meanLlme160 1he acLual exlsLence of a sLaLuLe or execuLlve acL ls prlor Lo such
a deLermlnaLlon an operaLlve facL and may have consequences whlch cannoL [usLly be lgnored
Lhe pasL cannoL always be erased by a new [udlclal declaraLlon161

1he ofLclLed ue Agbayanl v hlllpplne naLlonal 8ank162 dlscussed Lhe effecL Lo be glven Lo a
leglslaLlve or execuLlve acL subsequenLly declared lnvalld

x x x lL does noL admlL of doubL LhaL prlor Lo Lhe declaraLlon of nulllLy such challenged
leglslaLlve or execuLlve acL musL have been ln force and had Lo be complled wlLh 1hls ls so as
unLll afLer Lhe [udlclary ln an approprlaLe case declares lLs lnvalldlLy lL ls enLlLled Lo obedlence
and respecL arLles may have acLed under lL and may have changed Lhelr poslLlons WhaL could
be more flLLlng Lhan LhaL ln a subsequenL llLlgaLlon regard be had Lo whaL has been done whlle
such leglslaLlve or execuLlve acL was ln operaLlon and presumed Lo be valld ln all respecLs lL ls
now accepLed as a docLrlne LhaL prlor Lo lLs belng nulllfled lLs exlsLence as a facL musL be
reckoned wlLh 1hls ls merely Lo reflecL awareness LhaL preclsely because Lhe [udlclary ls Lhe
governmenL organ whlch has Lhe flnal say on wheLher or noL a leglslaLlve or execuLlve measure
ls valld a perlod of Llme may have elapsed before lL can exerclse Lhe power of [udlclal revlew
LhaL may lead Lo a declaraLlon of nulllLy lL would be Lo deprlve Lhe law of lLs quallLy of falrness
and [usLlce Lhen lf Lhere be no recognlLlon of whaL had Lransplred prlor Lo such ad[udlcaLlon

ln Lhe language of an Amerlcan Supreme CourL declslon 1he acLual exlsLence of a sLaLuLe
prlor Lo such a deLermlnaLlon of unconsLlLuLlonallLy ls an operaLlve facL and may have
consequences whlch cannoL [usLly be lgnored 1he pasL cannoL always be erased by a new
[udlclal declaraLlon 1he effecL of Lhe subsequenL rullng as Lo lnvalldlLy may have Lo be
consldered ln varlous aspecLswlLh respecL Lo parLlcular relaLlons lndlvldual and corporaLe
and parLlcular conducL prlvaLe and offlclal x x x

Clven Lhe above perspecLlve and conslderlng LhaL more Lhan Lwo decades had passed slnce Lhe
A8C's approval of Lhe PLl's Su ln con[uncLlon wlLh numerous acLlvlLles performed ln good
falLh by PLl and Lhe rellance by Lhe lW8s on Lhe legallLy and valldlLy of Lhe A8Capproved
Su perforce cerLaln rlghLs of Lhe parLles more parLlcularly Lhe lW8s have Lo be respecLed
pursuanL Lo Lhe appllcaLlon ln a general way of Lhe operaLlve facL docLrlne

A vlew however has been advanced LhaL Lhe operaLlve facL docLrlne ls of mlnlmal or
alLogeLher wlLhouL relevance Lo Lhe lnsLanL case as lL applles only ln conslderlng Lhe effecLs of a
declaraLlon of unconsLlLuLlonallLy of a sLaLuLe and noL of a declaraLlon of nulllLy of a conLracL
1hls ls lncorrecL for Lhls vlew falled Lo conslder ls LhaL lL ls nC1 Lhe SuCA daLed May 11 1989
whlch was revoked ln Lhe lnsLanL case 8aLher lL ls A8C's approval of Lhe PLl's roposal for
SLock ulsLrlbuLlon under CA8 whlch embodled Lhe Su LhaL was nulllfled

A recall of Lhe anLecedenL evenLs would show LhaL on May 11 1989 1adeco PLl and Lhe
quallfled lW8s execuLed Lhe SuCA 1hls agreemenL provlded Lhe basls and mechanlcs of Lhe
Su LhaL was subsequenLly proposed and submlLLed Lo uA8 for approval lL was only afLer lLs
revlew LhaL Lhe A8C Lhrough Lhen Sec uefensorSanLlago lssued Lhe assalled 8esoluLlon no
89122 approvlng Lhe Su Conslderably lL ls noL Lhe SuCA whlch gave legal force and effecL Lo
Lhe sLock dlsLrlbuLlon scheme buL lnsLead lL ls Lhe approval of Lhe Su under Lhe A8C
8esoluLlon no 89122 LhaL gave lL lLs valldlLy

1he above concluslon ls bolsLered by Lhe facL LhaL ln Sec angandaman's recommendaLlon Lo
Lhe A8C Lxcom whaL he proposed ls Lhe recall/revocaLlon of A8C 8esoluLlon no 89122
approvlng PLl's Su and noL Lhe revocaLlon of Lhe SuCA Sec angandaman's
recommendaLlon was favorably endorsed by Lhe A8C valldaLlon CommlLLee Lo Lhe A8C
Lxcom and Lhese recommendaLlons were referred Lo ln Lhe assalled 8esoluLlon no 200332
01 Clearly lL ls noL Lhe SuCA whlch was made Lhe basls for Lhe lmplemenLaLlon of Lhe sLock
dlsLrlbuLlon scheme

1haL Lhe operaLlve facL docLrlne squarely applles Lo execuLlve acLsln Lhls case Lhe approval
by A8C of Lhe PLl proposal for sLock dlsLrlbuLlonls wellseLLled ln our [urlsprudence ln
Chavez v naLlonal Pouslng AuLhorlLy163 We held

eLlLloner posLulaLes LhaL Lhe operaLlve facL docLrlne ls lnappllcable Lo Lhe presenL case
because lL ls an equlLable docLrlne whlch could noL be used Lo counLenance an lnequlLable
resulL LhaL ls conLrary Lo lLs proper offlce

Cn Lhe oLher hand Lhe peLlLloner SollclLor Ceneral argues LhaL Lhe exlsLence of Lhe varlous
agreemenLs lmplemenLlng Lhe SMu8 ls an operaLlve facL LhaL can no longer be dlsLurbed or
slmply lgnored clLlng 8leLa v eople of Lhe hlllpplnes

1he argumenL of Lhe SollclLor Ceneral ls merlLorlous

1he operaLlve facL docLrlne ls embodled ln ue Agbayanl v CourL of Appeals whereln lL ls
sLaLed LhaL a leglslaLlve or execuLlve acL prlor Lo lLs belng declared as unconsLlLuLlonal by Lhe
courLs ls valld and musL be complled wlLh Lhus

x x x x x x x x x

1hls docLrlne was relLeraLed ln Lhe more recenL case of ClLy of MakaLl v Clvll Servlce
Commlsslon whereln we ruled LhaL

Moreover we cerLalnly cannoL nulllfy Lhe ClLy CovernmenLs order of suspenslon as we have
no reason Lo do so much less reLroacLlvely apply such nulllflcaLlon Lo deprlve prlvaLe
respondenL of a compelllng and valld reason for noL flllng Lhe leave appllcaLlon lor as we have
held a vold acL Lhough ln law a mere scrap of paper noneLheless confers leglLlmacy upon pasL
acLs or omlsslons done ln rellance Lhereof ConsequenLly Lhe exlsLence of a sLaLuLe or
execuLlve order prlor Lo lLs belng ad[udged vold ls an operaLlve facL Lo whlch legal
consequences are aLLached lL would lndeed be ghasLly unfalr Lo prevenL prlvaLe respondenL
from relylng upon Lhe order of suspenslon ln lleu of a formal leave appllcaLlon (ClLaLlons
omlLLed Lmphasls supplled)

1he appllcablllLy of Lhe operaLlve facL docLrlne Lo execuLlve acLs was furLher expllcaLed by Lhls
CourL ln 8leLa v eople164 Lhus

eLlLloner conLends LhaL hls arresL by vlrLue of ArresL Search and Selzure Crder (ASSC) no 4734
was lnvalld as Lhe law upon whlch lL was predlcaLed Ceneral Crder no 60 lssued by Lhen
resldenL lerdlnand L Marcos was subsequenLly declared by Lhe CourL ln 1anada v 1uvera
33 Lo have no force and effecL 1hus he asserLs any evldence obLalned pursuanL LhereLo ls
lnadmlsslble ln evldence

We do noL agree ln 1anada Lhe CourL addressed Lhe posslble effecLs of lLs declaraLlon of Lhe
lnvalldlLy of varlous presldenLlal lssuances ulscusslng Lhereln how such a declaraLlon mlghL
affecL acLs done on a presumpLlon of Lhelr valldlLy Lhe CourL sald

ln slmllar slLuaLlons ln Lhe pasL Lhls CourL had Laken Lhe pragmaLlc and reallsLlc course seL
forLh ln ChlcoL CounLy uralnage ulsLrlcL vs 8axLer 8ank Lo wlL

'1he courLs below have proceeded on Lhe Lheory LhaL Lhe AcL of Congress havlng been found Lo
be unconsLlLuLlonal was noL a law LhaL lL was lnoperaLlve conferrlng no rlghLs and lmposlng
no duLles and hence affordlng no basls for Lhe challenged decree lL ls qulLe clear however
LhaL such broad sLaLemenLs as Lo Lhe effecL of a deLermlnaLlon of unconsLlLuLlonallLy musL be
Laken wlLh quallflcaLlons 1he acLual exlsLence of a sLaLuLe prlor Lo Lhe deLermlnaLlon of lLs
lnvalldlLy ls an operaLlve facL and may have consequences whlch cannoL [usLly be lgnored 1he
pasL cannoL always be erased by a new [udlclal declaraLlon 1he effecL of Lhe subsequenL rullng
as Lo lnvalldlLy may have Lo be consldered ln varlous aspecLs wlLh respecL Lo parLlcular
conducL prlvaLe and offlclal CuesLlons of rlghLs clalmed Lo have become vesLed of sLaLus of
prlor deLermlnaLlons deemed Lo have flnallLy and acLed upon accordlngly of publlc pollcy ln Lhe
llghL of Lhe naLure boLh of Lhe sLaLuLe and of lLs prevlous appllcaLlon demand examlnaLlon
1hese quesLlons are among Lhe mosL dlfflculL of Lhose whlch have engaged Lhe aLLenLlon of
courLs sLaLe and federal and lL ls manlfesL from numerous declslons LhaL an alllncluslve
sLaLemenL of a prlnclple of absoluLe reLroacLlve lnvalldlLy cannoL be [usLlfled'

x x x x x x x x x

Slmllarly Lhe lmplemenLaLlon/enforcemenL of presldenLlal decrees prlor Lo Lhelr publlcaLlon ln
Lhe Cfflclal CazeLLe ls 'an operaLlve facL whlch may have consequences whlch cannoL be [usLly
lgnored 1he pasL cannoL always be erased by a new [udlclal declaraLlon LhaL an alllncluslve
sLaLemenL of a prlnclple of absoluLe reLroacLlve lnvalldlLy cannoL be [usLlfled'

1he ChlcoL docLrlne clLed ln 1anada advocaLes LhaL prlor Lo Lhe nulllflcaLlon of a sLaLuLe Lhere
ls an lmperaLlve necesslLy of Laklng lnLo accounL lLs acLual exlsLence as an operaLlve facL
negaLlng Lhe accepLance of a prlnclple of absoluLe reLroacLlve lnvalldlLy WhaLever was done
whlle Lhe leglslaLlve or Lhe execuLlve acL was ln operaLlon should be duly recognlzed and
presumed Lo be valld ln all respecLs 1he ASSC LhaL was lssued ln 1979 under Ceneral Crder no
60 long before our ueclslon ln 1anada and Lhe arresL of peLlLloner ls an operaLlve facL LhaL
can no longer be dlsLurbed or slmply lgnored (ClLaLlons omlLLed Lmphasls supplled)

1o relLeraLe alLhough Lhe assalled 8esoluLlon no 20033201 sLaLes LhaL lL revokes or recalls
Lhe Su whaL lL acLually revoked or recalled was Lhe A8C's approval of Lhe Su embodled ln
8esoluLlon no 89122 ConsequenLly whaL was acLually declared null and vold was an
execuLlve acL A8C 8esoluLlon no 89122163 and noL a conLracL (SuCA) lL ls Lherefore
wrong Lo say LhaL lL was Lhe SuCA whlch was annulled ln Lhe lnsLanL case LvldenLly Lhe
operaLlve facL docLrlne ls appllcable

lv

Whlle Lhe assalled A8C resoluLlons effecLlvely nulllfylng Lhe Paclenda LulslLa Su are upheld
Lhe revocaLlon musL by appllcaLlon of Lhe operaLlve facL prlnclple glve way Lo Lhe rlghL of Lhe
orlglnal 6296 quallfled lW8s Lo choose wheLher Lhey wanL Lo remaln as PLl sLockholders or
noL 1he CourL cannoL Lurn a bllnd eye Lo Lhe facL LhaL ln 1989 93 of Lhe lW8s agreed Lo Lhe
SuCA (or Lhe MCA) whlch became Lhe basls of Lhe Su approved by A8C per lLs 8esoluLlon
no 89122 daLed november 21 1989 lrom 1989 Lo 2003 Lhe lW8s were sald Lo have
recelved from PLl salarles and cash beneflLs hosplLal and medlcal beneflLs 240square meLer
homeloLs 3 of Lhe gross produce from agrlculLural lands and 3 of Lhe proceeds of Lhe sale
of Lhe 300hecLare converLed land and Lhe 8031hecLare loL sold Lo SC1Lx PLl shares LoLallng
11839197683 were dlsLrlbuLed as of Aprll 22 2003166 Cn AugusL 6 20l0 PLl and prlvaLe
respondenLs submlLLed a Compromlse AgreemenL ln whlch PLl gave Lhe lW8s Lhe opLlon of
acqulrlng a plece of agrlculLural land or remaln as PLl sLockholders and as a maLLer of facL
mosL lW8s lndlcaLed Lhelr cholce of remalnlng as sLockholders 1hese facLs and clrcumsLances
Lend Lo lndlcaLe LhaL some lf noL all of Lhe lW8s may acLually deslre Lo conLlnue as PLl
shareholders A maLLer besL lefL Lo Lhelr own dlscreLlon

WlLh respecL Lo Lhe oLher lW8s who were noL llsLed as quallfled beneflclarles as of november
21 1989 when Lhe Su was approved Lhey are noL accorded Lhe rlghL Lo acqulre land buL shall
however conLlnue as PLl sLockholders All Lhe beneflLs and homeloLs167 recelved by Lhe
10302 lW8s (6296 orlglnal lW8s and 4206 nonquallfled lW8s) llsLed as PLl sLockholders as
of AugusL 2 2010 shall be respecLed wlLh no obllgaLlon Lo refund or reLurn Lhem slnce Lhe
beneflLs (excepL Lhe homeloLs) were recelved by Lhe lW8s as farmhands ln Lhe agrlculLural
enLerprlse of PLl and oLher frlnge beneflLs were granLed Lo Lhem pursuanL Lo Lhe exlsLlng
collecLlve bargalnlng agreemenL wlLh 1adeco lf Lhe number of PLl shares ln Lhe names of Lhe
orlglnal lW8s who opL Lo remaln as PLl sLockholders falls below Lhe guaranLeed allocaLlon of
1880432 PLl shares per lW8 Lhe PLl shall asslgn addlLlonal shares Lo sald lW8s Lo compleLe
sald mlnlmum number of shares aL no cosL Lo sald lW8s

WlLh regard Lo Lhe homeloLs already awarded or earmarked Lhe lW8s are noL obllged Lo
reLurn Lhe same Lo PLl or pay for lLs value slnce Lhls ls a beneflL granLed under Lhe Su 1he
homeloLs do noL form parL of Lhe 491373 hecLares covered by Lhe Su buL were Laken from
Lhe 1209234 hecLare resldenLlal loL owned by 1adeco 1hose who dld noL recelve Lhe homeloLs
as of Lhe revocaLlon of Lhe Su on uecember 22 2003 when A8C 8esoluLlon no 20033201
was lssued wlll no longer be enLlLled Lo homeloLs 1hus ln Lhe deLermlnaLlon of Lhe ulLlmaLe
agrlculLural land LhaL wlll be sub[ecLed Lo land dlsLrlbuLlon Lhe aggregaLe area of Lhe homeloLs
wlll no longer be deducLed

1here ls a clalm LhaL slnce Lhe sale and Lransfer of Lhe 300 hecLares of land sub[ecL of Lhe
AugusL 14 1996 Converslon Crder and Lhe 8031hecLare SC1Lx loL came afLer compulsory
coverage has Laken place Lhe lW8s should have Lhelr correspondlng share of Lhe land's value
1here ls merlL ln Lhe clalm Slnce Lhe Su approved by A8C 8esoluLlon no 89122 has been
nulllfled Lhen all Lhe lands sub[ecL of Lhe Su wlll auLomaLlcally be sub[ecL of compulsory
coverage under Sec 31 of 8A 6637 Slnce Lhe CourL excluded Lhe 300hecLare loL sub[ecL of Lhe
AugusL 14 1996 Converslon Crder and Lhe 8031hecLare SC1Lx loL acqulred by Lhe
governmenL from Lhe area covered by Su Lhen PLl and lLs subsldlary CenLennary shall be
llable Lo Lhe lW8s for Lhe prlce recelved for sald loLs PLl shall be llable for Lhe value recelved
for Lhe sale of Lhe 200hecLare land Lo L8C ln Lhe amounL of h 300000000 and Lhe
equlvalenL value of Lhe 12000000 shares of lLs subsldlary CenLennary for Lhe 300hecLare loL
sold Lo LlCC for Lhe conslderaLlon of h 730000000 Llkewlse PLl shall be llable for h
80311300 as conslderaLlon for Lhe sale of Lhe 8031hecLare SC1Lx loL

We however noLe LhaL PLl has allegedly pald 3 of Lhe proceeds of Lhe sale of Lhe 300hecLare
land and 8031hecLare SC1Lx loL Lo Lhe lW8s We also Lake lnLo accounL Lhe paymenL of Laxes
and expenses relaLlng Lo Lhe Lransfer of Lhe land and PLl's sLaLemenL LhaL mosL lf noL all of Lhe
proceeds were used for leglLlmaLe corporaLe purposes ln order Lo deLermlne once and for all
wheLher or noL all Lhe proceeds were properly uLlllzed by PLl and lLs subsldlary CenLennary
uA8 wlll engage Lhe servlces of a repuLable accounLlng flrm Lo be approved by Lhe parLles Lo
audlL Lhe books of PLl Lo deLermlne lf Lhe proceeds of Lhe sale of Lhe 300hecLare land and Lhe
8031hecLare SC1Lx loL were acLually used for leglLlmaLe corporaLe purposes LlLllng expenses
and ln compllance wlLh Lhe AugusL 14 1996 Converslon Crder 1he cosL of Lhe audlL wlll be
shouldered by PLl lf afLer such audlL lL ls deLermlned LhaL Lhere remalns a balance from Lhe
proceeds of Lhe sale Lhen Lhe balance shall be dlsLrlbuLed Lo Lhe quallfled lW8s

A vlew has been advanced LhaL PLl musL pay Lhe lW8s yearly renL for use of Lhe land from
1989 We dlsagree lL should noL be forgoLLen LhaL Lhe lW8s are also sLockholders of PLl and
Lhe beneflLs acqulred by Lhe corporaLlon from lLs possesslon and use of Lhe land ulLlmaLely
redounded Lo Lhe lW8s' beneflL based on lLs buslness operaLlons ln Lhe form of salarles and
oLher frlnge beneflLs under Lhe C8A 1o sLlll requlre PLl Lo pay renL Lo Lhe lW8s wlll resulL ln
double compensaLlon

lor sure PLl wlll sLlll exlsL as a corporaLlon even afLer Lhe revocaLlon of Lhe Su alLhough lL wlll
no longer be operaLlng under Lhe Su buL pursuanL Lo Lhe CorporaLlon Code as a prlvaLe sLock
corporaLlon 1he nonagrlculLural asseLs amounLlng Lo h 393924220 shall remaln wlLh PLl
whlle Lhe agrlculLural lands valued aL h 196630000 wlLh an orlglnal area of 491373
hecLares shall be Lurned over Lo uA8 for dlsLrlbuLlon Lo Lhe lW8s 1o be deducLed from sald
area are Lhe 300hecLare loL sub[ecL of Lhe AugusL 14 1996 Converslon Crder Lhe 8031
hecLare SC1Lx loL and Lhe LoLal area of 68863 square meLers of lndlvldual loLs LhaL should
have been dlsLrlbuLed Lo lW8s by uA8 had Lhey noL opLed Lo sLay ln PLl

PLl shall be pald [usL compensaLlon for Lhe remalnlng agrlculLural land LhaL wlll be Lransferred
Lo uA8 for land dlsLrlbuLlon Lo Lhe lW8s We flnd LhaL Lhe daLe of Lhe Laklng ls november 21
1989 when A8C approved PLl's Su per A8C 8esoluLlon no 89122 uA8 shall coordlnaLe
wlLh L8 for Lhe deLermlnaLlon of [usL compensaLlon We cannoL use May 11 1989 when Lhe
SuCA was execuLed slnce lL was Lhe Su noL Lhe SuCA LhaL was approved by A8C

1he lnsLanL peLlLlon ls LreaLed pro hac vlce ln vlew of Lhe pecullar facLs and clrcumsLances of Lhe
case

WPL8LlC8L Lhe lnsLanL peLlLlon ls uLnlLu A8C 8esoluLlon no 20033201 daLed uecember
22 2003 and 8esoluLlon no 20063401 daLed May 3 2006 placlng Lhe lands sub[ecL of PLl's
Su under compulsory coverage on mandaLed land acqulslLlon scheme of Lhe CA8 are hereby
Alll8MLu wlLh Lhe MCulllCA1lCn LhaL Lhe orlglnal 6296 quallfled lW8s shall have Lhe opLlon
Lo remaln as sLockholders of PLl uA8 shall lmmedlaLely schedule meeLlngs wlLh Lhe sald 6296
lW8s and explaln Lo Lhem Lhe effecLs consequences and legal or pracLlcal lmpllcaLlons of Lhelr
cholce afLer whlch Lhe lW8s wlll be asked Lo manlfesL ln secreL voLlng Lhelr cholces ln Lhe
balloL slgnlng Lhelr slgnaLures or placlng Lhelr Lhumbmarks as Lhe case may be over Lhelr
prlnLed names

Cf Lhe 6296 lW8s he or she who wlshes Lo conLlnue as an PLl sLockholder ls enLlLled Lo
1880432 PLl shares and ln case Lhe PLl shares already glven Lo hlm or her ls less Lhan
1880432 shares Lhe PLl ls ordered Lo lssue or dlsLrlbuLe addlLlonal shares Lo compleLe sald
prescrlbed number of shares aL no cosL Lo Lhe lW8 wlLhln LhlrLy (30) days from flnallLy of Lhls
ueclslon CLher lW8s who do noL belong Lo Lhe orlglnal 6296 quallfled beneflclarles are noL
enLlLled Lo land dlsLrlbuLlon and shall remaln as PLl shareholders All salarles beneflLs 3
producLlon share and 3 share ln Lhe proceeds of Lhe sale of Lhe 300hecLare converLed land
and Lhe 8031hecLare SC1Lx loL and homeloLs already recelved by Lhe 10302 lW8s composed
of 6296 orlglnal lW8s and 4206 nonquallfled lW8s shall be respecLed wlLh no obllgaLlon Lo
refund or reLurn Lhem

WlLhln LhlrLy (30) days afLer deLermlnlng who from among Lhe orlglnal lW8s wlll sLay as
sLockholders uA8 shall segregaLe from Lhe PLl agrlculLural land wlLh an area of 491373
hecLares sub[ecL of A8C's Suapprovlng 8esoluLlon no 89122 Lhe followlng (a) Lhe 300
hecLare loL sub[ecL of Lhe AugusL 14 l996 Converslon Crder (b) Lhe 8031hecLare loL sold Lo or
acqulred by Lhe governmenL as parL of Lhe SC1Lx complex and (c) Lhe aggregaLe area of
68863 square meLers of lndlvldual loLs LhaL each lW8 ls enLlLled Lo under Lhe CA8 had he or
she noL opLed Lo sLay ln PLl as a sLockholder AfLer Lhe segregaLlon process as lndlcaLed ls
done Lhe remalnlng area shall be Lurned over Lo uA8 for lmmedlaLe land dlsLrlbuLlon Lo Lhe
orlglnal quallfled lW8s who opLed noL Lo remaln as PLl sLockholders

1he aforemenLloned area composed of 68863square meLer loLs alloLLed Lo Lhe lW8s who
sLayed wlLh Lhe corporaLlon shall form parL of Lhe PLl asseLs

PLl ls dlrecLed Lo pay Lhe 6296 lW8s Lhe conslderaLlon of h 300000000 recelved by lL from
LulslLa 8ealLy lnc for Lhe sale Lo Lhe laLLer of 200 hecLares ouL of Lhe 300 hecLares covered by
Lhe AugusL 14 1996 Converslon Crder Lhe conslderaLlon of h 730000000 recelved by lLs
owned subsldlary CenLennary Poldlngs lnc for Lhe sale of Lhe remalnlng 300 hecLares of Lhe
aforemenLloned 300hecLare loL Lo LulslLa lndusLrlal ark CorporaLlon and Lhe prlce of h
80311300 pald by Lhe governmenL Lhrough Lhe 8ases Converslon uevelopmenL AuLhorlLy for
Lhe sale of Lhe 8031hecLare loL used for Lhe consLrucLlon of Lhe SC1Lx road neLwork lrom Lhe
LoLal amounL of h 1330311300 (h 300000000 + h 730000000 + h 80311300
h 1330311300) shall be deducLed Lhe 3 of Lhe LoLal gross sales from Lhe producLlon of Lhe
agrlculLural land and Lhe 3 of Lhe proceeds of sald Lransfers LhaL were pald Lo Lhe lW8s Lhe
Laxes and expenses relaLlng Lo Lhe Lransfer of LlLles Lo Lhe Lransferees and Lhe expendlLures
lncurred by PLl and CenLennary Poldlngs lnc for leglLlmaLe corporaLe purposes lor Lhls
purpose uA8 ls ordered Lo engage Lhe servlces of a repuLable accounLlng flrm approved by Lhe
parLles Lo audlL Lhe books of PLl and CenLennary Poldlngs lnc Lo deLermlne lf Lhe h
1330311300 proceeds of Lhe sale of Lhe Lhree (3) aforemenLloned loLs were used or spenL for
leglLlmaLe corporaLe purposes Any unspenL or unused balance as deLermlned by Lhe audlL shall
be dlsLrlbuLed Lo Lhe 6296 orlglnal lW8s

PLl ls enLlLled Lo [usL compensaLlon for Lhe agrlculLural land LhaL wlll be Lransferred Lo uA8 Lo
be reckoned from november 21 1989 per A8C 8esoluLlon no 89122 uA8 and L8 are
ordered Lo deLermlne Lhe compensaLlon due Lo PLl

uA8 shall submlL a compllance reporL afLer slx (6) monLhs from flnallLy of Lhls [udgmenL lL shall
also submlL afLer submlsslon of Lhe compllance reporL quarLerly reporLs on Lhe execuLlon of
Lhls [udgmenL Lo be submlLLed wlLhln Lhe flrsL 13 days aL Lhe end of each quarLer unLll fully
lmplemenLed

1he Lemporary resLralnlng order ls llfLed

SC C8uL8Lu

8LS8l1L8C ! vLLASCC !8
AssoclaLe !usLlce

WL CCnCu8

8LnA1C C CC8CnA
Chlef !usLlce

An1CnlC 1 CA8lC
AssoclaLe !usLlce 1L8LSl1A ! LLCnA8uCuL CAS18C
AssoclaLe !usLlce
A81u8C u 88lCn
AssoclaLe !usLlce (Cn offlclal leave)
ulCSuAuC M L8AL1A*
AssoclaLe !usLlce
LuCAS 8L8SAMln
AssoclaLe !usLlce MA8lAnC C uLL CAS1lLLC
AssoclaLe !usLlce
8C8L81C A A8Au
AssoclaLe !usLlce MA81ln S vlLLA8AMA !8
AssoclaLe !usLlce
!CSL C81uCAL L8LZ
AssoclaLe !usLlce !CSL CA18AL MLnuCZA
AssoclaLe !usLlce
MA8lA LCu8uLS A SL8LnC
AssoclaLe !usLlce

C L 8 1 l l l C A 1 l C n

ursuanL Lo SecLlon 13 ArLlcle vlll of Lhe ConsLlLuLlon lL ls hereby cerLlfled LhaL Lhe concluslons
ln Lhe above ueclslon had been reached ln consulLaLlon before Lhe case was asslgned Lo Lhe
wrlLer of Lhe oplnlon of Lhe CourL

8LnA1C C CC8CnA
Chlef !usLlce


looLnoLes

* Cn offlclal leave

1 !ose !ullo Zunlga ln some parLs of Lhe records

2 AssoclaLlon of Small Landowners ln Lhe hlllpplnes lnc v SecreLary of Agrarlan 8eform C8
no 78742 !uly 14 1989 173 SC8A 343 332

3 ld aL 392

4 ?u[lro Payaml eL al 1oward an AlLernaLlve Land 8eform aradlgm A hlllpplne erspecLlve
33 (1990)

3 ld

6 8ureau of Agrarlan 8eform lnformaLlon and LducaLlon (8A8lL) CommunlcaLlons
uevelopmenL ulvlslon (Cuu) Agrarlan 8eform PlsLory 19 (2006)

7 Salmorln v Zaldlvar C8 no 169691 !uly 23 2008 339 SC8A 364 372

8 ?u[lro Payaml eL al supra noLe 4 aL 37

9 ld

10 ld

11 ld aL 60 8A8lL Cuu supra noLe 6 aL 21

12 8A8lL Cuu supra noLe 6 aL 22

13 ?u[lro Payaml eL al supra noLe 4 aL 71

14 rovldlng Lhe Mechanlsm for Lhe lmplemenLaLlon of Lhe Comprehenslve Agrarlan 8eform
rogram

13 Supra noLe 2

16 8ollo pp 100101

17 ld aL 782800

18 ld aL 103106

19 ld aL 3644 Memorandum of PLl

20 ld aL 3809 Memorandum of larmworkers Agrarlan 8eform MovemenL lnc (lA8M)

21 ld aL 36433646 Memorandum of PLl

22 ld aL 3643

23 ld aL 3810 Memorandum of lA8M

24 ld aL 3811

23 ld aL 3631 Memorandum of PLl

26 SLC1lCn 10 CorporaLe Landowners CorporaLe landowners may glve Lhelr workers and
oLher quallfled beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe
corporaLlon LhaL Lhe land asseLs bear ln relaLlon Lo Lhe corporaLlon's LoLal asseLs and granL
addlLlonal compensaLlon whlch may be used for Lhls purposes 1he approval by Lhe A8C of a
plan for such sLock dlsLrlbuLlon and lLs lnlLlal lmplemenLaLlon shall be deemed compllance
wlLh Lhe land dlsLrlbuLlon requlremenLs of Lhe CA8

27 SecLlon 1

1a) Cuallfled CorporaLe LandownerAppllcanLAll bona flde sLock corporaLlons ownlng
agrlculLural land uLlllzed for agrlculLural producLlon and exlsLlng as such as of !une 13 1988 Lhe
daLe of effecLlvlLy of 8A no 6637 may apply for and avall of Lhe volunLary sLock dlsLrlbuLlon
plan Su provlded ln SecLlon 31 Lhereof new corporaLlons lncorporaLed afLer Lhe effecLlvlLy
of 8A no 6637 may also apply provlded LhaL Lhey are subsldlarles of or splnoffs from Lhelr
moLher corporaLlon x x x

1b) Cuallfled 8eneflclarles1he quallfled beneflclarles ln Lhe Su are all Lhose ldenLlfled
beneflclarles of land Lransfer enumeraLed under SecLlon 22 of 8A 6637

1he Su shall be agreed upon by boLh Lhe corporaLe landownerappllcanL and Lhe quallfled
beneflclarles and sub[ecL Lo approval by A8C x x x

SecLlon 2 AppllcanL and 1lme of llllng1he corporaLe landownerappllcanL shall flle Lhe Su
ln a form Lo be prescrlbed by uA8 and obLaln approval wlLhln Lwo (2) years from Lhe effecLlvlLy
of 8A 6637 buL prlor Lo uA8's noLlce of compulsory acqulslLlon of sald properLy under Lhe same
law

SecLlon 3 roporLlon of ulsLrlbuLlon1he Su of corporaLe landownerappllcanL musL glve
Lhe quallfled beneflclarles Lhe rlghL Lo purchase aL leasL such proporLlon of Lhe caplLal sLock of
Lhe corporaLlon LhaL Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln
relaLlon Lo Lhe corporaLlon's LoLal asseLs under such Lerms and condlLlons as may be agreed
upon by Lhem

SecLlon 4 SLock ulsLrlbuLlon lan1he Su submlLLed by Lhe corporaLe landownerappllcanL
shall provlde for Lhe dlsLrlbuLlon of an equal number of shares of sLock of Lhe same class and
value wlLh Lhe same rlghLs and feaLures as all oLher shares Lo each of Lhe quallfled
beneflclarles 1hls dlsLrlbuLlon plan ln all cases shall be aL leasL Lhe mlnlmum raLlo for purposes
of compllance wlLh SecLlon 31 of 8A 6637

Cn Lop of Lhe mlnlmum raLlo provlded under SecLlon 3 of Lhls lmplemenLlng Culdellne
corporaLe landownerappllcanL may adopL addlLlonal sLock dlsLrlbuLlon schemes Laklng lnLo
accounL facLors such as rank senlorlLy salary poslLlon and oLher clrcumsLances whlch may be
deemed deslrable as a maLLer of sound company pollcy

SecLlon 3 CrlLerla for LvaluaLlon of roposal1he Su submlLLed by Lhe corporaLe landowner
appllcanL shall meeL Lhe followlng mlnlmum crlLerla

a LhaL Lhe conLlnued operaLlon of Lhe corporaLlon wlLh lLs agrlculLural land lnLacL and
unfragmenLed ls vlable wlLh poLenLlal for growLh and lncreased proflLablllLy

b LhaL Lhe plan for sLock dlsLrlbuLlon Lo quallfled beneflclarles would resulL ln lncreased lncome
and greaLer beneflLs Lo Lhem Lhan lf Lhe lands were dlvlded and dlsLrlbuLed Lo Lhem
lndlvldually

c LhaL Lhe sLock dlsLrlbuLlon plan ls accepLable Lo a ma[orlLy deflned as 30 plus 1 of all Lhe
quallfled beneflclarles

d LhaL Lhe plan shall lnclude a provlslon LhaL Lhe books of Lhe corporaLlon shall be sub[ecL Lo
perlodlc audlL by cerLlfled publlc accounLanLs chosen by Lhe beneflclarles

e LhaL lrrespecLlve of Lhe value of Lhe beneflclarles equlLy ln Lhe corporaLlon Lhey shall be
assured of aL leasL one (1) represenLaLlve ln Lhe 8oard of ulrecLors or ln a managemenL or
execuLlve commlLLee lf one exlsLs x x x

f LhaL a beneflclary who avalls of a sLock opLlon musL flrsL execuLe Lhe necessary walver from
belng a beneflclary ln anoLher sLock dlsLrlbuLlon plan x x x

g oLher crlLerla LhaL Lhe uA8 may prescrlbe x x x

SecLlon 6 valuaLlon and CompensaLlon1he valuaLlon of corporaLe asseLs submlLLed by Lhe
corporaLe landownerappllcanL ln Lhls proposal shall be sub[ecL Lo verlflcaLlon and audlL
examlnaLlon by uA8 1he deLermlnaLlon of Lhe value of Lhe agrlculLural land shall be based on
Lhe land valuaLlon guldellnes promulgaLed by uA8

SecLlon 7 Modes of SLock ulsLrlbuLlon1he Su x x x may be effecLed Lhrough dlvesLmenL of
Lhe exlsLlng equlLy holdlngs by sLockholders or oLher modes of sLock dlsLrlbuLlon accepLable Lo
boLh parLles and duly approved by uA8

SecLlon 8 LlmlLed 1ransferablllLy of 8eneflclarles SLocks x x x

SecLlon 9 aymenL of Shares 1he paymenL of Lhe purchase prlce of Lhe shares shall be under
such Lerms and condlLlons agreed upon by Lhe corporaLe landownerappllcanL and Lhe
beneflclarles provlded LhaL ln no case shall Lhe compensaLlon recelved by Lhe workers aL Lhe
Llme Lhe shares of sLock are dlsLrlbuLed be reduced

SecLlon 10 ulsposlLlon of roposalAfLer Lhe evaluaLlon of Lhe Su submlLLed by Lhe
corporaLe landownerappllcanL Lo Lhe uA8 SecreLary he shall forward Lhe same wlLh all Lhe
supporLlng documenLs Lo Lhe resldenLlal Agrarlan 8eform Councll (A8C) Lhrough lLs
LxecuLlve CommlLLee wlLh hls recommendaLlon for flnal acLlon

SecLlon 11 lmplemenLaLlon / MonlLorlng of lan1he approved Su shall be lmplemenLed
wlLhln Lhree (3) monLhs from recelpL by Lhe corporaLe landownerappllcanL of Lhe approval
Lhereof by Lhe A8C and Lhe Lransfer of Lhe shares of sLocks ln Lhe names of Lhe quallfled
beneflclarles shall be recorded ln Lhe sLock and Lransfer books and submlLLed Lo Lhe SecurlLles
and Lxchange Commlsslon (SLC) wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon of Lhe
Su

upon compleLlon Lhe corporaLe landownerappllcanL shall be lssued a CerLlflcaLe of
Compllance 1he uA8 SecreLary x x x shall sLrlcLly monlLor Lhe lmplemenLaLlon Lo deLermlne
wheLher or noL Lhere has been compllance wlLh Lhe approved Su as well as Lhe requlremenLs
of Lhe CA8 lor Lhls purpose Lhe corporaLe landownerappllcanL shall make avallable lLs
premlses for ocular lnspecLlon lLs personnel for lnLervlew and lLs records for examlnaLlon aL
normal buslness hours

SecLlon 12 noncompllance wlLh any of Lhe requlremenLs of SecLlon 31 of 8A 6673 as
lmplemenLed by Lhls lmplemenLlng Culdellnes shall be grounds for Lhe revocaLlon of Lhe
CerLlflcaLe of Compllance lssued Lo Lhe corporaLe landownerappllcanL

SecLlon 13 noLhlng hereln shall be consLrued as precludlng Lhe A8C from maklng lLs own
lndependenL evaluaLlon and assessmenL of Lhe sLock dlsLrlbuLlon plan x x x and ln prescrlblng
oLher requlremenLs

28 8ollo p 386

29 ld aL 148

30 ld aL 3767

31 ld aL 13181319

32 ld aL 37363740

33 ld aL 147130

34 ld aL 3746 1he flgure ls llfLed from A roposal for SLock ulsLrlbuLlon under CA8
Memorandum of PLl Annex A

33 ld aL 37303748

A 8CCSAL lC8 S1CCk ulS18l8u1lCn unuL8 CA8

1arlac uevelopmenL CorporaLlon 1adeco engaged prlnclpally ln agrlculLural pursulLs proposes
Lo comply wlLh Lhe Comprehenslve Agrarlan 8eform rogram (CA8) x x x wlLh regard Lo lLs
farm x x x Paclenda LulslLa by avalllng of SecLlon 31 of 8A 6637 whlch allows a corporaLe
landowner Lo choose beLween physlcally dlvldlng lLs agrlculLural land sub[ecL Lo agrarlan reform
among lLs farmworkers and adopLlng a plan of dlsLrlbuLlon Lo Lhe same beneflclarles of Lhe
shares of Lhe caplLal sLock of Lhe corporaLlon ownlng Lhe agrlculLural land

ln vlew of Lhe facL LhaL Lhe porLlons of Paclenda LulslLa devoLed Lo agrlculLure conslsLlng of
approxlmaLely 491373 hecLares lf dlvlded and dlsLrlbuLed among more or less 7000
farmworkers as poLenLlal beneflclarles would noL be adequaLe Lo glve Lhe sald farmhands a
decenL means of llvellhood 1adeco has declded Lo resorL Lo Lhe dlsLrlbuLlon of shares Lo Lhe
quallfled beneflclarles as Lhe beLLer and more equlLable mode of compllance wlLh Lhe CA8

Cne of Lhe lmporLanL buslnesses of 1adeco was Lo operaLe Paclenda LulslLa whlch ls a
sugarcane farm Lhe agrlculLural parLs of whlch x x x have an aggregaLe area of abouL 491373
hecLares

rlor Lo 1981 1adeco operaLed Lhe sald farm x x x manually 1he only mechanlzed porLlon of
Lhe operaLlon Lhen was Lhe preparaLlon of Lhe land under Lhls sysLem of culLlvaLlon
producLlon was so exlguous LhaL Lhe yleld per hecLare was even below Lhe breakeven polnL 1o
survlve Lhe crlppllng economlc crlsls begoLLen by Lhe depressed prlce of sugar 1adeco began
lnLroduclng ln Paclenda LulslLa ln 1981 new Lechnology ln sugarcane farmlng by way of
mechanlzaLlon 1he slze and conLlguous naLure of Lhe land made Lhe mechanlzed approach
ldeal lLs lnLenLlon was noL Lo cuL cosL Lhru labor dlsplacemenL buL Lo Lake advanLage of Lhe
beLLer producLlvlLy level accrulng Lo Lhls Lype of operaLlon

ln no Llme aL all x x x Lhe yleld per hecLare almosL doubled and wenL up Lo 80 Lons And whaL
was before a marglnal operaLlon became a vlable one

lA8MWC8kL88LnLllClA8lLS

Paclenda LulslLa as an agrlculLural enLerprlse employs aL Lhe momenL 6296 farmworkers
excludlng Lhose whose names have been dropped from Lhe llsL for noL havlng worked ln Lhe
farm for Lhe pasL Lwo years lLs labor complemenL conslsLs of 337 permanenL farmworkers 273
seasonal 3807 casuals who are masLer llsL members and 1877 casuals who are nonmasLer llsL
members alLhough lL acLually needs only 4047 of Lhem Lo run Lhe farm

Slnce lLs acqulslLlon of Paclenda LulslLa ln 1938 1adeco has never resorLed Lo reLrenchmenL ln
personnel even durlng exLremely dlfflculL Llmes x x x whlch saw Lhe sugar lndusLry on Lhe brlnk
of collapse lL has prompLly complled wlLh lncreases ln Lhe mlnlmum wage law 1here has been
no collecLlve bargalnlng negoLlaLlon LhaL dld noL produce an acrossLheboard lncrease ln wages
for labor so LhaL a Paclenda LulslLa worker recelved compensaLlon much hlgher Lhan Lhe floor
wage prescrlbed for Lhe sugar lndusLry

lor Crop ?ear 198788 1adeco pald a LoLal of 4804000000 ln Lerms of salarles and wages
and frlnge beneflLs of lLs employees and farmworkers ln Paclenda LulslLa Among Lhe frlnge
beneflLs presenLly en[oyed by lLs personnel under Lhelr exlsLlng collecLlve bargalnlng
agreemenL C8A wlLh managemenL are Lhe followlng

1) 100 free hosplLallzaLlon and medlcal plan for all employees and workers and Lhelr
spouses chlldren and parenLs

2) Servlce and amelloraLlon bonuses

3) lnLeresLfree loans on educaLlon rlce and sugar and salary and speclal loans

4) 8us fare subsldy for sLudenLs who are chlldren of employees and workers ln Lhe farm and

3) 8eLlremenL plan LhaL ls fully funded and nonconLrlbuLory

1o be enLlLled Lo Lhe abovemenLloned beneflLs a quallfled worker has only Lo work for 37 days
ln one crop year

SlnCll CC8C8A1lCn

1o expedlLe compllance wlLh Lhe requlremenLs of Lhe CA8 on sLock dlsLrlbuLlon and aL Lhe
same Llme assure Lhe farmworkerbeneflclarles of Lhe farm of recelvlng greaLer beneflLs Lhan lf
Lhe agrlculLural land were Lo be dlvlded among Lhem lnsLead 1adeco concelved of separaLlng
Lhe agrlculLural porLlons of Paclenda LulslLa from Lhe resL of lLs buslness and Lransferrlng and
conveylng Lhe sald agrlculLural land and such properLles asseLs equlpmenL rlghLs lnLeresLs
and accounLs relaLed Lo lLs operaLlon lncludlng llablllLles obllgaLlons and encumbrances
lncurred Lhereby Lo anoLher corporaLlon separaLe and dlsLlncL and for LhaL purpose caused
Lhru lLs conLrolllng sLockholders Lhe reglsLraLlon and lncorporaLlon of PLl on AugusL 23 1988
as Lhe enLlLy Lo serve as Lhe splnoff vehlcle ln whose favor Lhe sald properLles and asseLs were
laLer on Lo be Lransferred and conveyed

CaplLal SLrucLure 1o accommodaLe such Lransfer of asseLs PLl wlLh Lhe approval of Lhe
SLC lncreased lLs auLhorlzed caplLal sLock on May 10 1989 from 130000000 dlvlded lnLo
1300000 shares wlLh a par value of 100 per share Lo 40000000000 dlvlded lnLo
400000000 shares also wlLh a par value of 100 per share 130000000 of whlch lssuable only
Lo quallfled and reglsLered beneflclarles of Lhe (CA8) and 230000000 Lo any sLockholder or
sLockholders of Lhe corporaLlon

valuaLlon of AsseLs 1ransferred 8y vlrLue of a ueed of AsslgnmenL and Conveyance execuLed
on March 22 1989 1adeco subscrlbed Lo 33313146200 worLh of shares ln Lhe lncrease ln
auLhorlzed caplLal sLock of Lhe splnoff corporaLlon PLl and ln paymenL of lLs subscrlpLlon
Lransferred and conveyed Lo Lhe laLLer Lhe agrlculLural porLlons of Paclenda LulslLa x x x havlng
a LoLal area of 49137466 hecLares whlch are covered x x x LogeLher wlLh such oLher
properLles asseLs equlpmenL rlghLs lnLeresLs and accounLs as are necessary ln Lhe operaLlon
of Lhe agrlculLural land

Such properLles and asseLs conLrlbuLed by 1adeco Lo Lhe caplLal sLock of PLl as appralsed
and approved by Lhe SLC have an aggregaLe value of 39033422000 buL lnasmuch as Lhe
conveyance of asseLs also lnvolved Lhe Lransfer of llablllLles Lo Lhe splnoff corporaLlon Lhe neL
value lefL afLer deducLlng Lhe LoLal llablllLles of Lhe farm amounLlng Lo 23342273899 ls
33313146200 whlch ls preclsely Lhe amounL of 1adeco's subscrlpLlon Lo Lhe lncrease ln
caplLal sLock of PLl

1he LoLal value of Lhe properLles and asseLs Lransferred and conveyed by 1adeco Lo PLl
amounLlng Lo 39033422000 may be broken down as follows

1) AgrlculLural land x x x LoLallng 49137466
hecLares aL Lhelr falr markeL value
of 4000000 per hecLare 19663000000
2) Machlnery and LqulpmenL x x x conslsLlng
of heavy equlpmenL eLc 4393260000
3) CurrenL AsseLs x x x 16263899300
4) Land lmprovemenLs ln Lhe naLure of
roads culverLs brldges eLc 3188630000
3) unappralsed AsseLs such as rallroad
sysLem and equlpmenL x x x and consLrucLlon
ln progress 880391000
6) Long 1erm noLe 8ecelvable 2806341700
7) 8esldenLlal Land wlLh a LoLal
area of 1209234 hecLares aL Lhelr
appralsal value of 3000 per sq m 6046200000
8) Land conslsLlng of 187 loLs used for
roads rallway canals lagoons x x x
havlng an aggregaLe area
of 2637493 hecLares 3813300000
1he break down of Lhe llablllLles and obllgaLlons conLracLed ln operaLlng Lhe farm land of
Paclenda LulslLa LoLallng 23342273800 and LhaL have Lo be deducLed from Lhe LoLal value
of Lhe properLles and asseLs Lransferred Lo arrlve aL Lhelr neL value ls herelnbelow lndlcaLed

x x x x

1he above valuaLlons of boLh asseLs and llablllLles have been glven Lhe lmprlmaLur of Lhe SLC
by reason of lLs approval of Lhe lncrease ln Lhe auLhorlzed caplLal sLock of PLl Lhe subscrlpLlon
Lo such lncrease of 1adeco and Lhe paymenL by 1adeco of lLs subscrlpLlon Lhru Lransfer of
asseLs and llablllLles ConsequenLly Lhe neL value of Lhe asseLs and properLles Lransferred Lo
PLl of 33313146200 lf added Lo Lhe subscrlpLlon of Lhe lncorporaLors PLl Lo Lhe orlglnal
auLhorlzed caplLal sLock of Lhe sald corporaLlon amounLlng Lo 40000000 would glve us Lhe
LoLal caplLal sLock subscrlbed and ouLsLandlng of PLl of 33333146200 whlch as wlll be seen
laLer on plays an lmporLanL role ln deLermlnlng whaL amounL of shares of Lhe caplLal sLock of
PLl may be dlsLrlbuLed among lLs farmworkerbeneflclarles pursuanL Lo SecLlon 31 of 8epubllc
AcL no 6637

MLCPAnlCS Cl S1CCk ulS18l8u1lCn LAn

under SecLlon 31 of 8A 6637 a corporaLlon ownlng agrlculLural land may dlsLrlbuLe among
Lhe quallfled beneflclarles such proporLlon or percenLage of lLs caplLal sLock LhaL Lhe value of
Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe
corporaLlon's LoLal asseLs Conformably wlLh Lhls legal provlslon 1adeco hereby submlLs for
approval a sLock dlsLrlbuLlon plan LhaL envlslons Lhe followlng

1) 1he percenLage of Lhe value of Lhe agrlculLural porLlons of Paclenda LulslLa
(19663000000) ln relaLlon Lo Lhe LoLal asseLs (39033422000) Lransferred and conveyed Lo
Lhe splnoff corporaLlon x x x ls 333 or Lo be exacL 33296 LhaL ln accordance wlLh law ls
Lhe proporLlon of Lhe ouLsLandlng caplLal sLock of Lhe corporaLlon ownlng Lhe agrlculLural land
whlch ls 33333146200 or 333331462 shares wlLh a par value of 100 per share LhaL ls
proposed Lo be dlsLrlbuLed Lo Lhe quallfled beneflclarles of Lhe plan

2) 1he sald 333 of Lhe ouLsLandlng caplLal sLock of PLl ls 11839197683 or
11839197683 shares wlLh a par value of 100 per share

3) 1he quallfled beneflclarles of Lhe Su shall be Lhe farmworkers who appear ln Lhe annual
payroll lncluslve of Lhe permanenL and seasonal employees who are regularly or perlodlcally
employed by PLl x x x

4) PLl shall arrange wlLh 1adeco aL Lhe end of each flscal year for a perlod of 30 years Lhe
acqulslLlon and dlsLrlbuLlon Lo Lhe farmworkerbeneflclarles on Lhe basls of number of days
worked durlng Lhe year and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of 11839197683 shares
of Lhe caplLal sLock of PLl equlvalenL Lo 11839197683 LhaL are presenLly owned and held
by 1adeco unLll such Llme as Lhe enLlre block of 11839197683 shares shall have been
compleLely acqulred and dlsLrlbuLed among Lhe farmworkerbeneflclarles

3) PLl guaranLees Lo Lhe quallfled beneflclarles of Lhe sLock dlsLrlbuLlon plan LhaL every year
Lhey wlll recelve on Lop of Lhelr regular compensaLlon an amounL LhaL approxlmaLes Lhree
(3) percenL of Lhe LoLal gross sales from Lhe producLlon of Lhe agrlculLural land wheLher lL be
ln Lhe form of cash dlvldends or lncenLlve bonuses or boLh

6) Lven lf only a parL or fracLlon of Lhe shares earmarked for dlsLrlbuLlon wlll have been
acqulred from 1adeco and dlsLrlbuLed among Lhe farmworkerbeneflclarles 1adeco shall
execuLe aL Lhe beglnnlng of each flscal year an lrrevocable proxy valld and effecLlve for one (1)
year ln favor of Lhe farmworkers appearlng as shareholders of PLl aL Lhe sLarL of Lhe sald year
whlch wlll empower Lhe sald farmworkers or Lhelr represenLaLlve Lo voLe ln sLockholders'
meeLlngs of PLl convened durlng Lhe year Lhe enLlre 333 of Lhe ouLsLandlng caplLal sLock of
PLl earmarked for dlsLrlbuLlon and Lhus be able from Lhe very beglnnlng Lo galn such number
of seaLs ln Lhe board of dlrecLors of PLl LhaL Lhe whole 333 of Lhe shares sub[ecL Lo
dlsLrlbuLlon wlll be enLlLled Lo

7) ln addlLlon PLl shall wlLhln a reasonable Llme subdlvlde and allocaLe for free and wlLhouL
charge among Lhe quallfled famllybeneflclarles resldlng ln Lhe place where Lhe agrlculLural land
ls slLuaLed resldenLlal or homeloLs of noL more Lhan 240 sq m each wlLh each famlly
beneflclary belng assured of recelvlng and ownlng a homeloL ln Lhe barrlo or barangay where lL
acLually resldes

S1CCk 8lCP1S Anu 8LS18lC1lCnS

As prevlously explalned Lhe amendmenL of Lhe arLlcles of lncorporaLlon of PLl lncreaslng lLs
caplLal sLock provlded for Lhe classlflcaLlon of lLs shares of sLock lnLo Lwo Lypes Class A and
Class 8 shares Shares of sLock represenLlng Lhe proporLlon of Lhe ouLsLandlng caplLal sLock of
Lhe sald corporaLlon Lo be dlsLrlbuLed among lLs farmworkerbeneflclarles shall consLlLuLe Lhe
Class A shares whlle Lhe resL of Lhe caplLal sLock shall become Class 8 shares or shares sans
any resLrlcLlons and can be lssued Lo any sLockholder

Class A shares have Lhe same rlghLs as Lhe x x x Class 8 shares 8uL Lhelr lssuance belng
llmlLed Lo farmworkerbeneflclarles only Class A shares are sub[ecL Lo Lhe resLrlcLlon LhaL for
a perlod of 10 years from and afLer Lhelr dlsLrlbuLlon no sale Lransfer or conveyance of such
shares x x x shall be valld unless lL be by heredlLary successlon or ln favor of quallfled and
reglsLered beneflclarles wlLhln Lhe same corporaLlon 1hls llmlLaLlon on Lhe LransferablllLy
appears x x x ln Lhe amended arLlcles of lncorporaLlon of PLl and ln due Llme wlll be prlnLed
on Lhe correspondlng cerLlflcaLes of sLock of LhaL Lype of shares

LlmlLlng Lhe effecLlvlLy of Lhe resLrlcLlon Lo 10 years flnds supporL ln SecLlon 27 of Lhe 8epubllc
AcL no 6637 whlch makes land dlsLrlbuLed among beneflclarles under Lhe CA8 non
Lransferable for only 10 years and slnce sLock dlsLrlbuLlon ls a lawful alLernaLlve Lo Lhe
fragmenLaLlon of land Lhe sald legal provlslon should equally apply Lo a case where sLock
opLlon ls Lhe cholce

AuvAn1ACLS Cl S1CCk LAn CvL8 LAnu ulS18l8u1lCn

1here are pulssanL reasons behlnd 1adeco's preference for sLock dlsLrlbuLlon Lo land
apporLlonmenL and Lhey are Lhe followlng

1) 1he physlcal fragmenLaLlon and dlsLrlbuLlon of Lhe agrlculLural segmenLs of Paclenda LulslLa
among poLenLlal farmworkerbeneflclarles who number approxlmaLely 7000 would resulL ln
each lndlvldual farmhand recelvlng less Lhan a hecLare of land LhaL ln no way could produce
enough Lo enable hlm Lo lead a comforLable llfe

2) As Lhe reclplenL of a parcel of agrlculLural land Lhe farmworker has Lo Lake care of ln[ecLlng
Lhe necessary lnpuLs needed by Lhe land and shoulder Lhe cosL of producLlon and

3) 1he farmworker lncurs Lhe obllgaLlon of paylng Lo Lhe governmenL for hls share of Lhe
agrlculLural land alLhough Lhe law allows hlm 30 years wlLhln whlch Lo do lL

Cn Lhe oLher hand Lhe sLock dlsLrlbuLlon plan envlsaged by 1adeco conLemplaLes of

A ulsLrlbuLlng Lhe shares of sLock over a number of years among Lhe quallfled beneflclarles aL
no cosL Lo Lhem

8 Allowlng Lhe farmworker Lo conLlnue Lo work on Lhe land as such and recelve Lhe wages and
oLher beneflLs provlded for by hls C8A wlLh Lhe corporaLe landowner

C LnLlLllng hlm Lo recelve dlvldends wheLher ln cash or ln sLock on Lhe shares already
dlsLrlbuLed Lo hlm and beneflL from whaLever appreclaLlon ln value LhaL Lhe sald shares may
galn as Lhe corporaLlon becomes proflLable

u Cuallfylng hlm Lo become Lhe reclplenL of whaLever lncomeaugmenLlng and beneflL
lmprovlng schemes LhaL Lhe splnoff corporaLlon may esLabllsh such as Lhe paymenL of Lhe
guaranLeed Lhree (3) percenL of gross sales every year and Lhe free resldenLlal or homeloLs Lo
be alloLLed Lo famlly beneflclarles of Lhe plan and

L keeplng Lhe agrlculLural land lnLacL and unfragmenLed Lo malnLaln Lhe vlablllLy of Lhe sugar
operaLlon lnvolvlng Lhe farm as a slngle unlL and Lhus warranL Lo Lhe acknowledged
farmworkerbeneflclarles handlnhand wlLh Lhelr acqulslLlon of Lhe shares of Lhe caplLal sLock
of Lhe corporaLlon ownlng Lhe land a conLlnulng and sLable source of lncome

lndeed Lhe sLock dlsLrlbuLlon plan of 1adeco x x x has many sLrong polnLs and adherence Lo
Lhe law ls one of Lhem

lor lnsLance ln arranglng for Lhe acqulslLlon by Lhe farmworkerbeneflclarles of shares of Lhe
caplLal sLock of Lhe corporaLlon ownlng Lhe land graLls Lhe corporaLe landowner upholds
SecLlon 9 of Lhe Culdellnes and rocedures promulgaLed Lo lmplemenL SecLlon 31 of 8A 6637
whlch prohlblLs Lhe use of governmenL funds ln paylng for Lhe shares Moreover Lhe plan for
Lhe free dlspersal of shares wlll noL ln any way dlmlnlsh Lhe regular compensaLlon belng
recelved by Lhe farmworkerbeneflclarles aL Lhe Llme of share dlsLrlbuLlon whlch ls proscrlbed
by SecLlon 31 of 8A 6637

lMC81AnCL 1C LCCnCMlC uLvLLCMLn1

Paclenda LulslLa aL presenL ls Lhe prlnclpal source of sugarcane needed by a sugar mlll owned
and operaLed by CA1 ln Lhe area lL supplles 30 of Lhe sugarcane requlremenL of Lhe mlll LhaL
has 1830 employees and workers ln lLs employ Any dlsrupLlon ln Lhe presenL operaLlon of
Paclenda LulslLa whlch would affecL lLs presenL producLlvlLy level would Lherefore auLomaLlcally
lnfluence Lhe operaLlonal vlablllLy of Lhe sugar facLory x x x and whlch ln Lurn would have
repercusslons on Lhe llvellhood of Lhe presenL employees and workers of Lhe mlll as well as Lhe
llvellhood of Lhe Lhousands of sugarcane planLers and Lhelr famllles wlLhln Lhe 1arlac sugar
dlsLrlcL belng servlced by Lhe sugar mlll

Cn Lhe oLher hand Lhe wellbelng of Lhe sugar mlll has Lo be Lhe prlme concern also of Lhe
corporaLe owner of Paclenda LulslLa slmply because lL ls Lhe enLlLy LhaL mllls and converLs Lhe
sugarcane produce of Lhe laLLer Lo a flnlshed producL noL only LhaL 8y mllllng wlLh CA1 whlch
has Lhe mosL efflclenL sugar mlll ln Lhe reglon Lhe corporaLe owner of Paclenda LulslLa ln effecL
guaranLees Lo lLself maxlmum recovery from lLs farm's sugarcane someLhlng LhaL ls essenLlal
Lo lLs flnanclal capablllLy ln oLher words Lhe relaLlonshlp beLween farm and mlll ls one of
absoluLe reclproclLy and lnLerdependence Cne cannoL exlsL wlLhouL Lhe oLher

1he lmporLance of Lhe agrlculLural land of Paclenda LulslLa sLaylng undlvlded cannoL be
galnsald lor lL Lo remaln lucraLlve lL has Lo be operaLed as a unlL x x x And on lLs successful
operaLlon resLs Lhe wellbelng of so many buslnesses and underLaklngs ln Lhe provlnce or ln a
wlder perspecLlve ln Lhe reglon LhaL are largely dependenL upon lL for exlsLence

CCnlC8Ml1? Cl lA8MWC8kL88LnLllClA8lLS

Cn May 11 1989 a hlsLorlc evenL Look place ln Paclenda LulslLa when Lhe represenLaLlves of
1adeco and PLl and 3848 farmworkerbeneflclarles lnked Lhelr accord ln Lhe presence of
offlclals of Lhe uA8 Lo a MCA LhaL embodles Lhe sLock dlsLrlbuLlon plan sub[ecL of Lhls
proposal 1he sald 3848 farmworkerbeneflclarles who gave Lhelr conformlLy Lo Lhe agreemenL
represenL 929 of Lhelr enLlre complemenL whlch ls much more Lhan Lhe ma[orlLy (30 plus
one) LhaL Lhe law requlres

CCnCLuSlCn

Pere ls a sLock dlsLrlbuLlon plan LhaL calls for Lhe acqulslLlon and dlsLrlbuLlon every year for Lhe
nexL 30 years of 394639923 shares worLh 394639923 of Lhe caplLal sLock of Lhe
corporaLlon ownlng Lhe agrlculLural land among lLs quallfled farmworkerbeneflclarles aL no
cosL Lo Lhem lL also guaranLees Lo pay Lo Lhem each year Lhe equlvalenL of Lhree (3) percenL
of Lhe gross sales of Lhe producLlon of Lhe land whlch ls abouL 732000000 yearly
lrrespecLlve of wheLher Lhe sald corporaLlon makes money or noL lL conLemplaLes of allowlng
Lhe farmworkerbeneflclarles from Lhe very sLarL Lo occupy such number of seaLs ln Lhe board
of dlrecLors of Lhe corporaLe landowner as Lhe whole number of shares of sLock seL aslde for
dlsLrlbuLlon may enLlLle Lhem so LhaL Lhey could have a say ln forglng Lhelr own desLlny And
lasL buL noL leasL lL lnLends Lo help glve Lhe same farmworkerbeneflclarles who are quallfled
adequaLe shelLer by provldlng resldenLlal or homeloLs noL exceedlng 240 sqm each for free
whlch Lhey can call Lhelr own

1he above sLock dlsLrlbuLlon plan ls hereby submlLLed on Lhe basls of all Lhese beneflLs LhaL Lhe
farmworkerbeneflclarles of Paclenda LulslLa wlll recelve under lLs provlslons ln addlLlon Lo
Lhelr regular compensaLlon as farmhands ln Lhe agrlculLural enLerprlse and Lhe frlnge beneflLs
granLed Lo Lhem by Lhelr C8A wlLh managemenL x x x

36 under uAC 10 Sec 1b) par 2 Lhe accepLance of Lhe Su by Lhe ma[orlLy of all Lhe
quallfled beneflclarles shall be blndlng upon all Lhe sald quallfled beneflclarles wlLhln Lhe
appllcanL corporaLlon

37 8ollo p 14

38 ld aL 13081309

39 ld aL 13101313

40 LnLlLled 8esoluLlon Approvlng Lhe SLock ulsLrlbuLlon lan of 1adeco/PLl

41 8ollo p 131

42 ld aL 36673668

43 ld aL 647630

44 ld aL 80 eLlLlon of PLl ld aL 944 ConsolldaLed 8eply of PLl ld aL 13271328

43 ld aL 631664

46 ld aL 14831487

47 ld aL 14831484

48 ld aL 14921493

49 ld aL 1362

30 ld aL 3669

31 ld aL 14991309 vla a ueed of Sale daLed !uly 30 1998

32 ld aL 1362

33 ld aL 13141318

34 ld aL 13191320

33 ld aL 13211322

36 1Sn AugusL 18 2010 pp 133133

37 8ollo pp 133138 slgned by 62 lndlvlduals

38 ld aL 346

39 ld aL 173183

60 ld aL 442 Mallarl's CommenL Lo eLlLlon Mallarl would per hls accounL breakaway from
AM8ALA Lo form wlLh exAM8ALA members larmers Agrarlan 8eform MovemenL lnc or
lA8M

61 ld aL 139174

62 ld aL 184192

63 ld aL 679680

64 ld aL 386403 1he followlng are Lhe perLlnenL flndlngs of Lhe Speclal 1ask lorce as sLaLed ln
lLs 1ermlnal 8eporL

lv luLn1lllCA1lCn Cl 1PL 8C8LLMS/lSSuLS/CCnCL8nS

MaLrlx on Lhe ComparaLlve vlews of Lhe larmer Croups vlsvls Lhose of PLl ManagemenL
Along WlLh Lhe Correspondlng lCu/CCl 8esulLs was prepared and Lhe compllance reporLs
submlLLed Lhe peLlLlons of Lhe lW8s parLlcularly Lhe AM8ALA and Lhe Supervlsory Croup
LogeLher wlLh Lhe respecLlve responses Lo sald peLlLlons by PLl managemenL and Lhe lCu/CCl
resulLs were uLlllzed Lo make a comparaLlve summary exempllfled hereunder

1 lnulvluuAL lSSuLS 8AlSLu 8? 1PL SuL8vlSC8? C8Cu Cl PAClLnuA LulSl1A
lnCC8C8A1Lu vlSvlS 8L!ClnuL8 Cl PLl Anu C8SL8vA1lCn Cl 1l

11 lssue nonen[oymenL of Lhe rlghLs and prlvlleges LhaL were supposed Lo be glven Lo Lhe
lW8s as sLaLed ln Lhe MCA prompLed Lhe supervlsory group Lo clalm for Lhe one percenL
(1) share from Lhe PLl represenLlng Lhelr share as supervlsors durlng Lhe LranslLlon perlod

PLl managemenL Such clalm ls a LoLal mlsapprehenslon of SecLlon 32 of 8A no 6637 Lhe lasL
paragraph of whlch requlres Lhe paymenL of 1 of Lhe gross sale Lo managerlal supervlsory and
Lechnlcal workers aL Lhe Llme of Lhe effecLlvlLy of 8A no 6637 1here were no such managerlal
employees and supervlsors engaged ln Lemporarlly managlng and supervlslng Lhe operaLlon of
Lhe land unLll lLs flnal Lurnover Lo Lhe farmworkers slnce Lhere was no land Lo Lransfer ln Lhe
flrsL place

1he 1ask lorce poslLlon 1haL SecLlon 32 of 8A no 6637 may noL dlrecLly apply Lo Lhe lnsLanL
case buL Lhe nonreallzaLlon of Lhe sald 1 share of expecLaLlon ln Lhe gross sale ls a cause of
dlsenchanLmenL 1he clalm for Lhe 1 share ls noL lncluded ln Lhe MCA x x x

12 lssue nonrecelpL of Lhe 10 dlvldend

PLl conLends LhaL Lhe dlsLrlbuLlon of sald dlvldend does noL apply Lo corporaLe farms llke PLl
whlch opLed for Lhe Su lan

1ask force flndlng 1he lW8s do noL recelve such flnanclal reLurn desplLe Lhe sLlpulaLlon on Lhe
maLLer

13 lssue Cn Lhe Lhree percenL (3) ouL of Lhe LhlrLy Lhree percenL (33) represenLlng Lhe
equlLy shares glven from Lhe proceeds of Lhe sale of Lhe 300 hecLares (converLed Lo non
agrlculLural use)

1he PLl managemenL argues LhaL Lhe corporaLlon banklng on Lhe legal flcLlon of separaLe
corporaLe exlsLence ls noL obllged Lo glve 33 of Lhe gross selllng prlce of Lhe land slnce Lhe
legal owner ls Lhe corporaLlon lLself and noL Lhe sLockholders And Lhe 3 was glven by Lhe PLl
merely as a bonus for Lhe lW8s

1he 1ask lorce poslLlon 1hough allegedly Lhe supervlsory group recelves Lhe 3 gross
producLlon share and LhaL oLhers alleged LhaL Lhey recelved 30 mllllon pesos sLlll oLhers
malnLaln LhaL Lhey have noL recelved anyLhlng yeL lLem no 4 of Lhe MCA ls clear and musL be
followed 1here ls a dlsLlncLlon beLween Lhe LoLal gross sales from Lhe producLlon of Lhe land
and Lhe proceeds from Lhe sale of Lhe land 1he former refers Lo Lhe frulLs/yleld of Lhe
agrlculLural land whlle Lhe laLLer ls Lhe land lLself 1he phrase Lhe beneflclarles are enLlLled
every year Lo an amounL approxlmaLely equlvalenL Lo 3 would only be feaslble lf Lhe sub[ecL ls
Lhe produce slnce Lhere ls aL leasL one harvesL per year whlle such ls noL Lhe case ln Lhe sale of
Lhe agrlculLural land 1hls negaLes Lhen Lhe clalm of PLl LhaL all LhaL Lhe lW8s can be enLlLled
Lo lf any ls only 3 of Lhe purchase prlce of Lhe converLed land

8esldes Lhe Converslon Crder daLed 14 AugusL 1996 provldes LhaL Lhe beneflLs wages and Lhe
llke presenLly recelved by Lhe lW8s shall noL ln any way be reduced or adversely affecLed
1hree percenL of Lhe gross selllng prlce of Lhe sale of Lhe converLed land shall be awarded Lo
Lhe beneflclarles of Lhe SuC 1he 3 gross producLlon share Lhen ls dlfferenL from Lhe 3
proceeds of Lhe sale of Lhe converLed land and wlLh more reason Lhe 33 share belng clalmed
by Lhe lW8s as parL owners of Lhe Paclenda should have been glven Lhe lW8s as
sLockholders and Lo whlch Lhey could have been enLlLled lf only Lhe land were acqulred and
redlsLrlbuLed Lo Lhem under Lhe CA8

14 lssue lllegal converslon and flnanclal lncapablllLy of PLl Lo proceed wlLh Lhe proposed
developmenL Lhereby leavlng Lhe areas unproducLlve

1he PLl managemenL conLends LhaL Lhe eLlLlon for Converslon was duly approved by Lhe uA8
on 14 AugusL 1996 and lL had Lhe conformlLy of more Lhan 3000 lW8s who slgned a manlfesLo
of supporL

ln Lhe eLlLlons and/durlng Lhe CCl/lCu Ccular lnspecLlon/locused Croup ulscusslon Lhe 300
hecLares sub[ecL of converslon appear Lo sLlll remaln undeveloped A clear example ls Lhe
CenLral 1echno ark whlch has a landscaped enLrance and concreLe roads buL Lhe only Lhlngs
whlch can be seen lnslde Lhe premlses are cogon grasslands 1he lW8s furLher malnLalned LhaL
Lhey were elLher noL glven any moneLary beneflL from Lhe converslon of Lhe 300 hecLares or
LhaL Lhey were only parLlally glven

2 CCnCL8nS MAnllLS1Lu ln 1PL L1l1lCn llLLu 8? 1PL AL?AnSA nC MCA
MAnCCACAWAnC 8uklu nC PAClLnuA LulSl1A (AM8ALA) LLu 8? M8 8LnL CALAnC

21 lssue 1haL uA8 AdmlnlsLraLlve Crder no 10 serles of 1988 guldellnes ln Lhe corporaLe
avallmenL of SuC should observe SecLlon 31 of 8A no 6637 quallfled beneflclarles and
provlde LhaL Lhey (lW8s) be allowed Lo buy Lhe land from Lhe company

1he PLl managemenL poslLs Lhe proposlLlon LhaL SecLlon 31 ls very clear and unamblguous lL
granLs Lo Lhe lW8s Lhe rlghL Lo purchase shares of sLocks ln Lhe corporaLlon LhaL owns Lhe
agrlculLural land lLself and noL Lhe land PLl ls correcL ln Lhls unless Lhe Su ls dlsregarded

22 lssue CancellaLlon of Lhe SuC and lmmedlaLe coverage of Lhe area are requesLed as Lhe
agreemenLs ln Lhe lmplemenLaLlon of Lhe SuC were allegedly noL followed/complled wlLh

1he PLl managemenL warranLed LhaL sub[ecL Su lan ls Lhe mosL feaslble scheme/alLernaLlve
vlsvls physlcal dlsLrlbuLlon of Lhe landholdlng under compulsory acqulslLlon

uurlng Lhe lCu/CCl lL was represenLed LhaL Lhe Lerms condlLlons and beneflLs provlded for ln
Lhe MCA/commlLmenL appear noL Lo have been subsLanLlally followed Pereunder ls a more
deLalled dlscusslon of Lhe lssues

221 Cn Lhe lssue of non compllance wlLh Lhe MCA

* lW8s are supposed Lo recelve 700800 dlvldends annually

* 8001000 producLlon sharlng per year 1he Paclenda ls operaLlng conLlnuously whlch only
proves LhaL Lhe Paclenda ls earnlng

PLl however clalms LhaL lL ls noL lncurrlng proflLs Lhus Lhere are no dlvldends Lo be
dlsLrlbuLed 8uL Lhe shares of sLocks and 3 producLlon share have been glven

lCu/CCl flndlng shows LhaL Lhe number of shares of sLocks Lo be recelved by Lhe lW8s
depends on Lhelr deslgnaLlon (le permanenL casual or seasonal) and on Lhe number of man
days 8eLlred and reLrenched workers are noL glven shares of sLocks and cease as share holders
undlspuLedly Lhe seLup under Lhe MCA ls oneslded ln favor Lhe PLl 1he work schedule upon
whlch Lhe exLenL of enLlLlemenL Lo be granLed shares of sLock ls wholly wlLhln Lhe prerogaLlve
and dlscreLlon of PLl managemenL LhaL a lW8 can sLlll be denled Lhereof by Lhe slmple
expedlency of noL glvlng hlm any worklng hours/days And Lhls ls made posslble by Lhe facL LhaL
Lhere are more farmers/farmworkers ln lLs employ Lhan whaL ls accordlng Lo PLl necessary
Lo make lL operaLlonal

222 Cn Lhe lssue of represenLaLlon

lL was verlfled LhaL Lhe 8oard of ulrecLors elecLlon ls annually conducLed Powever ma[orlLy of
Lhe lW8s are no longer lnLeresLed and ln facL have boycoLLed Lhe elecLlons because of Lhe
mlnorlLy represenLaLlon of Lhe lW8s (4 as agalnsL 7) 1hey clalm LhaL Lhey are always
ouLnumbered and some clalm LhaL Lhe represenLaLlves elecLed are pro managemenL x x x no
frulLful and harmonlous corporaLe acLlvlLles can be expecLed as any reslsLance wlll be counLer
producLlve LhaL Lo conLlnue Lhe operaLlon under Lhe Su LhaL ls challenged hereln wlll only be
an empLy exerclse 1he farmers and farmworkers wlll noL under Lhe clrcumsLances be able Lo
reallze Lhe conLemplaLed recelpL of beneflLs under Lhe rogram

223 Cn Lhe lssue of Lhe 240square meLer homeloL

As Lo Lhe 240 square meLer homeloLs noL all of Lhe lW8s were glven homeloLs Cf Lhose glven
Lhey complaln LhaL Lhey sLlll do noL have Lhe correspondlng LlLles And Lhose already glven
LlLles malnLaln LhaL sald documenLs are useless as such for Lhey cannoL even be used as bank
collaLerals desplLe even Lhe lapse of Lhe 3year prescrlpLlve perlod because banks and oLher
flnanclal lnsLlLuLlons refuse Lo honor Lhe same wlLhouL clearance from Lhe PLl managemenL x x
x

224 Cn Lhe lssue of coverage of Lhe Paclenda

1he PLl conLends LhaL dlvldlng Lhe 491373 hecLares among 6296 beneflclarles would resulL Lo
a farm loL of 078 hecLare per lndlvldual lW8 whlch ls noL an economlc slze farm ulfferences ln
Lhe physlcal condlLlons of Lhe landholdlng musL be consldered such as soll ferLlllLy and
accesslblllLy 1he quesLlon of who would geL Lhe ferLlle or accesslble parL of Lhe land and who
would recelve less would resulL/culmlnaLe ln a baLLle royale among Lhe lW8s

uA8 has esLabllshed guldellnes on Lhe maLLer of such allocaLlons and no problem has been
encounLered ln lLs lmplemenLaLlon of Lhe CA8 8y and large for a whole scale culLlvaLlon and
producLlon formaLlon of cooperaLlves has proven Lo be an effecLlve mechanlsm Lo address Lhe
problem 1he law even encourages Lhe use of such comblnaLlon cf SecLlon 29 (3rd par) 8ep
AcL no 6637lawphl1

223 Cn Lhe agreemenL LhaL oLher beneflLs wlll be glven oLher Lhan Lhose provlded for ln Lhe
MCA

lL was sLlpulaLed LhaL Lhe SuC would provlde Lhe lW8s oLher beneflLs x x x a less Lhan a
hecLarefarm would noL be able Lo provlde llke Lhe 3 of Lhe gross producLlon sales Lo be
shared wlLh Lhe lW8s on Lop of Lhelr regular compensaLlon

1he lW8s do noL recelve any oLher beneflLs under Lhe MCA excepL Lhe aforemenLloned (vlz
shares of sLocks (parLlal) 3 gross producLlon sale (noL all) and homeloLs (noL all)

v 8LLlMlnA8? CCnSluL8A1lCnS

1 1he common lssues ralsed by Lhe peLlLloners are focused on Lhe revocaLlon of Lhe exlsLlng
SuC LhaL was proposed by PLl and approved by Lhe A8C on ground among oLhers LhaL Lhe
provlslons of SecLlon 31 of 8A no 6637 upon whlch Lhe SuC/Su was based ls conLrary Lo Lhe
baslc pollcy of Lhe agrarlan reform program on Land AcqulslLlon and 8edlsLrlbuLlon as may be
gleaned from Lhe second paragraph of SecLlon 2 of 8A no 6637 whlch reads

1o Lhls end a more equlLable dlsLrlbuLlon and ownershlp of land wlLh due regard Lo Lhe rlghLs
of landowners Lo [usL compensaLlon and Lo Lhe ecologlcal needs of Lhe naLlon shall be
underLaken Lo provlde farmers and farmworkers wlLh Lhe opporLunlLy Lo enhance Lhelr dlgnlLy
and Lo lmprove Lhe quallLy of Lhelr llves Lhrough greaLer producLlvlLy of agrlculLural lands
(underscorlng supplled)

Lnvlsloned ln Lhe foregolng provlslon ls Lhe physlcal land Lransfer Lo prospecLlve beneflclarles as
relLeraLed ln SecLlon 3 Lhereof as follows

Schedule of lmplemenLaLlon 1he dlsLrlbuLlon of all lands covered by Lhls AcL shall be
lmplemenLed lmmedlaLely and compleLed wlLhln Len (10) years from Lhe effecLlvlLy Lhereof

2 Whlle SuC/Su ls an alLernaLlve arrangemenL Lo Lhe physlcal dlsLrlbuLlon of lands pursuanL
Lo SecLlon 31 of 8A no 6637 loglc and reason dlcLaLe LhaL such agreemenL musL maLerlallze
wlLhln a speclflc perlod durlng Lhe llfeLlme of CA8 sLaLlng clearly Lhereln when such
arrangemenL musL end 1he aforemenLloned provlslon may be consldered as Lhe provlslon of
Lhe law on suspended coverage parallel Lo Lhe provlslons of SecLlon 11 on Commerclal
larmlng where coverage of CA8 ls deferred for Len (10) years afLer Lhe effecLlvlLy of 8epubllc
AcL no 6637 SLaLed slmply owners of commerclal farms are glven a chance Lo recoup Lhelr
lnvesLmenL for Len (10) years before same ls flnally sub[ecLed Lo coverage under Lhe CA8

vl llnulnCS AnAL?SlS Anu 8LCCMMLnuA1lCn

1 rovldlng for Lhe qulnLessence and splrlL of Lhe agrarlan reform program 8epubllc AcL no
6637 expllclLly provldes

SLC1lCn 2 ueclaraLlon of rlnclples and ollcleslL ls Lhe pollcy of Lhe SLaLe Lo pursue a
Comprehenslve Agrarlan 8eform rogram (CA8) 1he welfare of Lhe landless farmers and
farmworkers wlll recelve Lhe hlghesL conslderaLlon Lo promoLe soclal [usLlce and Lo move Lhe
naLlon Loward sound rural developmenL and lndusLrlallzaLlon and Lhe esLabllshmenL of owner
culLlvaLorshlp of economlcslze farms as Lhe basls of hlllpplne agrlculLure

1o Lhls end a more equlLable dlsLrlbuLlon and ownershlp of land wlLh due regard Lo Lhe rlghLs
of landowners Lo [usL compensaLlon and Lo Lhe ecologlcal needs of Lhe naLlon shall be
underLaken Lo provlde farmers and farmworkers wlLh Lhe opporLunlLy Lo enhance Lhelr dlgnlLy
and lmprove Lhe quallLy of Lhelr llves Lhrough greaLer producLlvlLy of agrlculLural lands
(underscorlng added)1avvphll

WlLhln Lhe conLexL of Lhe foregolng pollcy/ob[ecLlve Lhe farmer/farmworker beneflclarles
(lW8s) ln agrlculLural land owned and operaLed by corporaLlons may be granLed opLlon by Lhe
laLLer wlLh Lhe lnLervenLlon and prlor cerLlflcaLlon of uA8 x x x Lhe rlghL Lo purchase such
proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL Lhe agrlculLural land acLually devoLed Lo
agrlculLural acLlvlLles bears ln relaLlon Lo Lhe company's LoLal asseL x x x (SecLlon 31 8ep AcL
nC 6637) 1oward Lhls end uA8 lssued AdmlnlsLraLlve Crder no 10 serles of 1988 copy of
whlch ls aLLached as Annex k and made an lnLegral parL hereof whlch requlres LhaL Lhe sLock
dlsLrlbuLlon opLlon (SuC) shall meeL Lhe followlng crlLerla readlng lnLer alla

a LhaL Lhe conLlnued operaLlon of Lhe corporaLlon wlLh lLs agrlculLural land lnLacL and
unfragmenLed ls vlable wlLh poLenLlal for growLh and lncreased proflLablllLy

b LhaL Lhe plan for sLock dlsLrlbuLlon Lo quallfled beneflclarles would resulL ln lncreased
lncome and greaLer beneflLs Lo Lhem Lhan lf Lhe lands were dlvlded and dlsLrlbuLed Lo Lhem
lndlvldually

x x x x

And Lo ensure effecLlve and falr lmplemenLaLlon of Lhe conLemplaLed SLock ulsLrlbuLlon lan
(Su) Lhe sald AC also provldes

SLC1lCn 12 8evocaLlon of CerLlflcaLe of Compllancenoncompllance wlLh any of Lhe
requlremenLs of SecLlon 31 of 8A 6637 as lmplemenLed by Lhese lmplemenLlng Culdellnes shall
be grounds for Lhe revocaLlon of Lhe CerLlflcaLe of Compllance lssued Lo Lhe corporaLe
landownerappllcanL

SLC1lCn 13 8eservaLlon ClausenoLhlng hereln shall be consLrued as precludlng Lhe A8C
from maklng lLs own lndependenL evaluaLlon and assessmenL of Lhe sLock dlsLrlbuLlon plan of
Lhe corporaLe landownerappllcanL and from prescrlblng oLher requlremenLs


Pereln however Lhere ls yeL no CerLlflcaLe of Compllance lssued

1he reason ls slmple uesplLe Lhe lapse of slxLeen (16) years from Lhe Llme Lhe Su was
approved ln november 1989 by resoluLlon of Lhe x x x (A8C) Lhe ob[ecLlve and pollcy of CA8
le acqulslLlon and dlsLrlbuLlon (hereln under Lhe Su only shares of sLocks) ls yeL Lo be fully
compleLed Lhe lW8s lnsLead of Lhe promlsed/envlsloned beLLer llfe under Lhe CA8 (Lhereln
as corporaLe owner) do sLlll llve ln wanL ln ab[ecL poverLy hlghllghLed by Lhe resulLlng loss of
llves ln Lhelr valn/fuLlle aLLempL Lo be flnanclally resLored aL leasL Lo where Lhey were before
Lhe CA8 (Su) was lmplemenLed Whlle Lhey were Lhen able Lo make boLh ends meeL wlLh Lhe
Su Lhelr llves became mlserable

2 lor Lhe foregolng conslderaLlons as furLher dramaLlzed by Lhe followlng
vlolaLlons/noncompllance wlLh Lhe guldellnes prescrlbed whlch are legally presumed as
lnLegraLed ln Lhe agreemenLs/accords/sLlpulaLlons arrlved aL Lhereunder llke Lhe PLl Su
namely

21 noncompllance wlLh SecLlon 11 of AdmlnlsLraLlve Crder no 10 Serles of 1988 whlch
provldes

1he approved sLock dlsLrlbuLlon plan shall be lmplemenLed wlLhln Lhree (3) monLhs from
recelpL by Lhe corporaLe landownerappllcanL of Lhe approval Lhereof by Lhe A8C and Lhe
Lransfer of Lhe shares of sLocks ln Lhe names of Lhe quallfled beneflclarles shall be recorded ln
Lhe sLock and Lransfer books and submlLLed Lo Lhe SecurlLles and Lxchange Commlsslon (SLC)
wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon plan

1he Su however submlLLed a 30year lmplemenLaLlon perlod ln Lerms of Lhe Lransfer of
shares of sLocks Lo Lhe farmworkers beneflclarles (lW8s) 1he MCA provldes

AL Lhe end of each flscal year for a perlod of 30 years SLCCnu A81? shall arrange wlLh Lhe
ll8S1 A81? Lhe acqulslLlon and dlsLrlbuLlon Lo Lhe 1Pl8u A81? on Lhe basls of Lhe number of
days worked and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of

lalnly pendlng Lhe lssuance of Lhe correspondlng shares of sLocks Lhe lW8s remaln ordlnary
farmers and/or farmworker and Lhe land remaln under Lhe full ownershlp and conLrol of Lhe
orlglnal owner Lhe PLl/1AuLCC

1o daLe Lhe lssuance and Lransfer of Lhe shares of sLocks LogeLher wlLh Lhe recordlng of Lhe
Lransfer are yeL Lo be complled wlLh

22 noncompllance wlLh Lhe represenLaLlons/warranLles made under SecLlon 3 (a) and (b) of
sald AdmlnlsLraLlve Crder no 10

As clalmed by PLl lLself Lhe corporaLe acLlvlLy has already sLopped LhaL Lhe conLemplaLed
proflLablllLy lncreased lncome and greaLer beneflLs enumeraLed ln Lhe Su have remalned
mere llluslons

23 1he agrlculLural land lnvolved was noL malnLalned unfragmenLed AL leasL 300 hecLares
hereof have been carved ouL afLer lLs land use has been converLed Lo nonagrlculLural uses

1he recall of sald Su/SuC of PLl ls recommended More so slnce

1 lL ls conLrary Lo ubllc ollcy

SecLlon 2 of 8A 6637 provldes LhaL Lhe welfare of landless farmworkers wlll recelve Lhe
hlghesL conslderaLlon Lo promoLe soclal [usLlce As such Lhe SLaLe underLake a more equlLable
dlsLrlbuLlon and ownershlp of land LhaL shall provlde farmworkers wlLh Lhe opporLunlLy Lo
enhance Lhelr dlgnlLy and lmprove Lhe quallLy of Lhelr llves Lhrough greaLer producLlvlLy of
agrlculLural lands

ln Lhe case of Paclenda LulslLa Lhe farmworkers alleged LhaL Lhe quallLy of Lhelr llves has noL
lmproved ln facL lL even deLerloraLed especlally wlLh Lhe PLl ManagemenL declaraLlon LhaL Lhe
company has noL galned proflLs ln Lhe lasL 13 years LhaL Lhere could be no declaraLlon and
dlsLrlbuLlon of dlvldends

2 1he maLLer of lssuance/dlsLrlbuLlon shares of sLocks ln lleu of acLual dlsLrlbuLlon of Lhe
agrlculLural land lnvolved was made LoLally dependenL on Lhe dlscreLlon/caprlce of PLl under
Lhe seLup Lhe agreemenL ls grossly onerous Lo Lhe lW8s as Lhelr man days of work cannoL
deparL from whaLever managemenL of PLl unllaLerally dlrecLs

1hey can be denled Lhe opporLunlLy Lo be granLed a share of sLock by [usL noL allowlng Lhem Lo
work alLogeLher under Lhe gulse of roLaLlon Meanwhlle wlLhln Lhe 30year perlod of bondage
Lhey may already reach reLlremenL or worse geL reLrenched for any reason Lhen Lhey forever
lose whaLever beneflL he could have recelved as regular agrarlan beneflclary under Lhe CA8 lf
only Lhe Su of PLl were noL auLhorlzed and approved

lncldenLally Lhe lW8s dld noL have parLlclpaLlon ln Lhe valuaLlon of Lhe agrlculLural land for Lhe
purpose of deLermlnlng lLs proporLlonaLe equlLy ln relaLlon Lo Lhe LoLal asseLs of Lhe
corporaLlon ApparenLly Lhe sugarlands were undervalued

3 1he lW8s were mlsled lnLo bellevlng by Lhe PLl Lhrough lLs carefully worded roposal LhaL x
x x Lhe sLock dlsLrlbuLlon plan envlsaged by 1adeco ln effecL assured of

A ulsLrlbuLlng Lhe shares of sLock over a numbers of years among Lhe quallfled beneflclarles aL
no cosL Lo Lhem

8 Allowlng Lhe farmworker Lo conLlnue Lo work on Lhe land as such and recelve Lhe wages and
oLher beneflLs provlded for by hls collecLlve bargalnlng agreemenL wlLh Lhe corporaLe
landowner

C LnLlLllng hlm Lo recelve dlvldends wheLher ln cash or ln sLock on Lhe shares already
dlsLrlbuLed Lo hlm and beneflL from whaLever appreclaLlon ln value LhaL Lhe sald shares may
galn as Lhe corporaLlon becomes proflLable

u Cuallfylng hlm Lo become Lhe reclplenL of whaLever lncomeaugmenLlng and beneflL
lmprovlng schemes LhaL Lhe splnoff corporaLlon may esLabllsh such as Lhe paymenL of Lhe
guaranLeed Lhree (3) percenL of gross sales every year and Lhe free resldenLlal or homeloLs Lo
be alloLLed Lo famlly beneflclarles of Lhe plan and

L keeplng Lhe agrlculLural land lnLacL and unfragmenLed Lo malnLaln Lhe vlablllLy of Lhe sugar
operaLlon lnvolvlng Lhe farm as a slngle unlL and Lhus warranL Lo Lhe acknowledged
farmworkerbeneflclarles handlnhand wlLh Lhelr acqulslLlon of Lhe shares of Lhe caplLal
sLock of Lhe corporaLlon owlng Lhe land a conLlnulng and sLable source of lncome (Annex A
supra)

AL Lhe expense of belng repeLlLlve Lhe be sugarcoaLed assurances were more Lhan enough Lo
made Lhem fall for Lhe SuC as Lhey made Lhem feel rlch as sLock holder of a rlch and famous
corporaLlon desplLe Lhe dlrL ln Lhelr hands and Lhe LaLLers Lhey use glven Lhe feellng of
securlLy of Lenure ln Lhelr work when Lhere ls none expecLaLlon Lo recelve dlvldends when Lhe
corporaLlon has already suspended operaLlons allegedly due Lo loses and a sLable sugar
producLlon by malnLalnlng Lhe agrlculLural lands when a subsLanLlal porLlon Lhereof of almosL
1/8 of Lhe LoLal area has already been converLed Lo nonagrlculLural uses

63 ld aL 694699

66 ld aL 339342

67 ld aL 100

68 ld aL 101

69 ld aL 146

70 ld aL 107140

71 ld aL 103106

72 ld aL 19

73 ld aL 32

74 ld aL 233236

73 ld aL 237239

76 ld aL 334367

77 ld aL 436439

78 ALLys Ldgar 8ernal and llorlsa Almodlel slgned Lhe moLlon/manlfesLaLlon as counsel of
Mallarl and/or lA8M

79 1he Supervlsory Croup laLer Leamed up wlLh Lhe AM8ALAMallarl facLlon lor brevlLy Lhey
are referred Lo hereln as Lhe AM8ALAMallarlSupervlsory Croup

80 8ollo pp 330641

81 ld aL 13301339

82 ld aL 13331344

83 1Sn AugusL 24 2010 p 229

84 8ollo pp 30603062

83 ld aL 81

86 C8 no 131437 AugusL 19 1999 312 SC8A 731

87 8ollo p 82

88 ld aL 149

89 Sec 4 1he SLaLe shall by law underLake an agrarlan reform program founded on Lhe rlghL
of farmers and regular farm workers who are landless Lo own dlrecLly or collecLlvely Lhe lands
Lhey Llll or ln Lhe case of oLher farm workers Lo recelve a [usL share of Lhe frulLs Lhereof 1o
Lhls end Lhe SLaLe shall encourage and underLake Lhe [usL dlsLrlbuLlon of all agrlculLural lands
sub[ecL Lo such prlorlLles and reasonable reLenLlon llmlLs as Lhe Congress may prescrlbe Laklng
lnLo accounL ecologlcal developmenLal or equlLy conslderaLlons and sub[ecL Lo Lhe paymenL
of [usL compensaLlon ln deLermlnlng reLenLlon llmlLs Lhe SLaLe shall respecL Lhe rlghL of small
landowners 1he SLaLe shall furLher provlde lncenLlves forvolunLary landsharlng

90 Consumldo v 8os C8 no 166873 !uly 31 2007 328 SC8A 696 702

91 1Sn AugusL 18 2010 p 141

92 8ollo p 871

93 ld aL 38

94 ALlenza v vlllarosa C8 no 161081 May 10 2003 438 SC8A 383 403 clLlng Chua v Clvll
Servlce Commlsslon C8 no 88979 lebruary 7 1992 206 SC8A 63

93 ld

96 ld

97 no L33230 november 8 1988 167 SC8A 31 3960

98 ubllc respondenLs' Memorandum p 24

99 LC 229 Sec 18

100 8AnA1 arLyllsL v CCMLLLC C8 no 177308 AugusL 7 2009 393 SC8A 477 498

101 C8 no 167614 March 24 2009 382 SC8A 234 273276

102 8ollo p 40 1Sn AugusL 18 2010 p 74

103 uAC 10 SecLlon 11 lmplemenLaLlon / MonlLorlng of lan1he approved Su shall be
lmplemenLed wlLhln Lhree (3) monLhs x x x

upon compleLlon of Lhe sLock dlsLrlbuLlon Lhe corporaLe landownerappllcanL shall be lssued
a CerLlflcaLe of Compllance x x x

SecLlon 12 noncompllance wlLh any of Lhe requlremenLs of SecLlon 31 of 8A 6673 as
lmplemenLed by Lhls lmplemenLlng Culdellnes shall be grounds for Lhe revocaLlon of Lhe
CerLlflcaLe of Compllance lssued Lo Lhe corporaLe landownerappllcanL x x x

104 1Sn AugusL 24 2010 p 13

103 koruga v Arcenas C8 nos 168332 and 169033 !une 19 2009 390 SC8A 49 68 clLlng ln
8e eLlLlon for AsslsLance ln Lhe LlquldaLlon of Lhe 8ural 8ank of 8okod (8engueL) lnc ulC v
8ureau of lnLernal 8evenue C8 no 138261 uecember 18 2006 311 SC8A 123 141

106 1Sn AugusL 24 2010 p 203

107 ld

108 Carcla v LxecuLlve SecreLary C8 no 137384 Aprll 2 2009 383 SC8A 119 129 clLlng
lranclso !r v Pouse of 8epresenLaLlves C8 no 160261 november 10 2003 413 SC8A 44

109 A8SC8n 8roadcasLlng CorporaLlon v hlllpplne MulLlMedla SysLem lnc C8 nos
17376970 !anuary 19 2009 376 SC8A 262 289 clLlng hlllpplne veLerans 8ank v CourL of
Appeals C8 no 132361 !une 30 2003 462 SC8A 336 Apex Mlnlng Co lnc v SouLheasL
Mlndanao Cold Mlnlng Corp C8 nos 132613 132628 16261920 and 13287071

110 lranclso !r v Pouse of 8epresenLaLlves supra noLe 108

111 Alvarez v lCC 8esources lnc C8 nos 162243 eLc november 29 2006 308 SC8A 498
332

112 Supra noLe 108 aL 138139

113 An AcL SLrengLhenlng Lhe CA8 LxLendlng Lhe AcqulslLlon and ulsLrlbuLlon of all
AgrlculLural Lands lnsLlLuLlng necessary 8eforms Amendlng for Lhe urpose CerLaln rovlslons
of 8A 6637 as Amended and ApproprlaLlng lunds Lherefor

114 Culzon v Comelec 343 SC8A 633 MaLLel lnc v lranclsco 360 SC8A 306

113 WebsLer's 1hlrd new lnLernaLlonal ulcLlonary unabrldged 444443 (1993)

116 ld aL 443

117 8ecords of Lhe ConsLlLuLlonal Commlsslon vol ll p 678

118 Sec 2 3rd paragraph of 8A 6637 sLaLes 1he agrarlan reform program ls founded on Lhe
rlghL of farmers and regular farmers who are landless Lo own land dlrecLly or collecLlvely Lhe
lands Lhey Llll or ln Lhe case of oLher farmworkers Lo recelve a share of Lhe frulLs Lhereof 1o
Lhls end Lhe SLaLe shall encourage and underLake Lhe [usL dlsLrlbuLlon of all agrlculLural lands
sub[ecL Lo prlorlLles and reLenLlon llmlLs seL forLh ln Lhls AcL x x x

119 11 lleLcher Cyc Corps (1971 8ev vol) Sec 3083

120 Mobllla roducLs lnc v umezawa C8 nos 149337 and 149403 March 4 2003

121 Cawallng v CCMLLLC C8 no 146319 CcLober 26 2001 368 SC8A 433

122 8asco v ACCC8 C8 no 138298 november 29 2000 346 SC8A 483

123 Angara v LlecLoral Commlsslon 63 hll 139 (1936) Cawallng v CCMLLLC supra clLlng
Alvarez v Culngona 232 SC8A 693 (1996)

124 naLlonal lood AuLhorlLy v Masda SecurlLy Agency lnc C8 no 163448 March 8 2003

123 8ollo p 794 1he A8C resoluLlon also sLaLes

PLl's lmplemenLaLlon of Lhe dlsLrlbuLlon of Lhe mandaLory mlnlmum raLlo of landLoshares of
sLock Lo Lhe A88s Agrarlan 8eform 8eneflclarles was based on man days wlLhln lLs pollcy of
nowork noshares of sLock and noL Lo equal number of shares dependlng upon Lhelr rlghLful
share as requlred ln Lhe rules and Lherefore pracLlcally dlvesLed Lhe A88s as Lo Lhelr
quallflcaLlon/enLlLlemenL as A88s aL PLl's whlms Lo Lhelr dlsadvanLage and pre[udlce ln Lhe
form of dlmlnuLlon ln Lhe mlnlmum raLlon of shares Pavlng lncreased x x x Lhe number of
workers (conLracLual) Lhe equlLy share of each permanenL employee as of 1989 naLurally had
Lo be as ln facL reduced

lurLher x x x PLl Look lL upon lLself or usurped Lhe duLy or mandaLe of uA8 Lo quallfy Lhe
reclplenL A88s and lmposed lLs own crlLerla and dlscreLlon ln Lhe allocaLlon of Lhe mandaLory
mlnlmum raLlo of landLo share by baslng Lhe dlsLrlbuLlon on Lhe number of days worked SLlll
worse PLl made allocaLlon Lo reclplenLs who are noL ln Lhe A88s orlglnal masLerllsL as
admlLLedly lL dlsLrlbuLed Lo abouL 11933 sLockholders of record 39362611 shares
represenLlng Lhe second half of Lhe LoLal number of shares earmarked for dlsLrlbuLlon when ln
facL Lhere were only 6296 farm workers or less aL Lhe Llme when Lhe land was placed under
CA8 under Lhe Su/SuC scheme (Lmphasls added)

126 Memorandum of 8enaLo Lallc eL al p 14

127 LlLLle Cxford ulcLlonary 442 (7Lh ed)

128 8ollo p 3676

129 1he SCv Co's lndependenL AudlLors 8eporL on PLl for years ended 2009 2008 and 2007
conLalns Lhe followlng enLrles 1he Company has suffered recurrlng losses from operaLlons
and has subsLanLlal negaLlve worklng caplLal deflclency 1he Company has conLlnued Lo have no
operaLlons and experlenced flnanclal dlfflculLles as a resulL of a sLrlke sLaged by Lhe labor unlon
on november 6 2004 8ollo p 3779 Annex l of PLl's Memorandum

130 Sec 3(2)

131 1Sn AugusL 24 2010 p 123

132 MCA 4Lh Whereas clause

133 Memorandum of publlc respondenLs p 41

134 PLl ConsolldaLed 8eply and CpposlLlon p 63

133 Perlda v lC awnshop and !ewelry SLore C8 no 172601 Aprll 16 2009 383 SC8A 393
401

136 8ascos !r v 1aganahan C8 no 180666 lebruary 18 2009 379 SC8A 633 674673

137 Cannu v Calang C8 no 139323 May 26 2003 439 SC8A 80 9394 Ang v CourL of
Appeals C8 no80038 lebruary 13 1989 170 SC8A 286

138 1Sn AugusL 18 2010 p 38

139 8A 6637 Sec 31

140 uAC 10 s 1988 Sec 1

141 1Sn AugusL 18 2010 p 106

142 ld aL 103106

143 See Abakada Curo arLy LlsL v urlslma C8 no 166713 AugusL 14 2008 362 SC8A 231
288289

144 8ollo p 1362

143 Lu v Manlpon C8 no 147072 May 7 2002 381 SC8A 788 796

146 Sandoval v CourL of Appeals C8 no 106637 AugusL 1 1996 260 SC8A 283 293

147 CavlLe uevelopmenL 8ank v Llm C8 no 131679 lebruary 1 2000 324 SC8A 346 339

148 C8 no 127797 !anuary 31 2000 324 SC8A 126 136137

149 8ollo p 1368

130 uuran v lnLermedlaLe AppellaLe CourL no L64139 SepLember 10 1983 138 SC8A 489
494

131 8ollo pp 14991309

132 C8 no 130066 Aprll 13 2007 321 SC8A 68 8283

133 Supra noLe 2

134 Memorandum of 8C8C p 32

133 ld

136 ld aL 3233

137 ld aL 33

138 8oxas Company lnc v uAM8AnlSW C8 nos 149348 eLc uecember 4 2009 607
SC8A 33 36

139 8A 8974 Sec 6

See
hLLp//wwwcongressgovph/commlLLees/commnews/commnews_deLphp?newsld1231
(lasL vlslLed !une 23 2011)

160 Manlla MoLor Co lnc v llores 99 hll 738 739 (1936)

161 lernandez v Cuerva Co no L21114 november 28 1967 21 SC8A 1093 1104 clLlng
ChlcoL CounLy uralnage ulsL v 8axLer SLaLes 8ank (1940) 308 uS 371

162 no L23127 Aprll 29 1971 38 SC8A 429 434433

163 C8 no 164327 AugusL 13 2007 330 SC8A 233

164 C8 no 147817 AugusL 12 2004 436 SC8A 273

163 See rovlnce of norLh CoLabaLo v C8 eace anel on AncesLral uomaln C8 nos 183391
183732 183893 183931 and 183962 CcLober 14 2008 368 SC8A 402

166 8ollo p 193

167 ld aL 3738 1hese homeloLs do noL form parL of Lhe 491373 hecLares of agrlculLural land
ln Paclenda LulslLa 1hese are parL of Lhe resldenLlal land wlLh a LoLal area of 1209234
hecLares as lndlcaLed ln Lhe Su


1he Lawphll ro[ecL Arellano Law loundaLlon

ulSSLn1lnC ClnlCn

CC8CnA C!

M8 CLL xxxx 8uL when Lhe ConsLlLuLlon dlrecLs Congress Lo Lhe effecL LhaL Lhe SLaLe shall
encourage and underLake dlsLrlbuLlon of all agrlculLural lands sub[ecL Lo llmlLaLlons puL by law
especlally on reLenLlon llmlLs does Lhls conLemplaLe Lhls quesLlon l address Lo Lhe
CommlLLee and parLlcularly Lo Commlssloner 1adeo a blankeL approach Lo all agrlculLural
lands so LhaL we do noL dlsLlngulsh beLween leL us say Lhe owners of Paclenda LulslLa Lhe
blggesL planLaLlon ln Luzon wlLh 6000 hecLares and Lhls chap ln Laguna or Cuezon who has
only 10 hecLares of coconuL planLaLlon? Sa lnyo bang masld aL warl ay masasagasaan ng land
dlsLrlbuLlon ang dalawang lLo ang mayarl ng plnakamalaklng hasyenda dlLo sa Luzon aL lsang
hlndl naman mayaman nl hlndl marlwasa pangkaranlwang Lao lamang na nagmamayarl ng
lsang sukaL ng lupang LlnaLamnan ng nlyog na hlndl hlhlglL sa sampung ekLarya?

M8 1AuLC areho

x x x x x x x x x

M8 CLL xxxx WlLh respecL Lo [usL a few enormous landed esLaLes l have already glven
examples Paclenda LulslLa Lhe blggesL ln Luzon wlLh 6000 hecLares of rlce and corn land and
sugar land and wlLh 6000 LenanLs and workers Lhe Canlubang Sugar LsLaLe [usL across Lhe clLy
ln Laguna and ln Lhe WesL vlsayas alone wlLh abouL 30000 sugar planLers or hacenderos Lhe
aggregaLe for Lhe naLlon escapes me for Lhe momenL ln Lhe ulLlmaLe sLage of Lhe land reform
program as now envlsloned wlll all of Lhese esLaLes be redlsLrlbuLed Lo Lhelr LenanLs and lf
Lhey have no LenanLs Lo whom wlll Lhey be redlsLrlbuLed?

M8 1AuLC 1he prlnclple ls agrarlan land for Lhe Llllers and land for Lhe landless x x x1

Agrarlan reform ls an essenLlal elemenL of soclal [usLlce under Lhe 1987 ConsLlLuLlon lL
mandaLes LhaL farmers and farmworkers have Lhe rlghL Lo own Lhe lands Lhey Llll lndlvldually
or collecLlvely Lhrough cooperaLlves or slmllar organlzaLlons2 lL alms Lo llberaLe farmers and
farmworkers from bondage Lo Lhe soll Lo ensure LhaL Lhey do noL remaln slaves of Lhe land buL
sLewards Lhereof

1he declslon of Lhe CourL ln Lhls case Loday should promoLe Lhe consLlLuLlonal lnLenL of soclal
[usLlce Lhrough genulne and meanlngful agrarlan reform 1hls ls lmperaLlve because Lhe framers
of Lhe 1987 ConsLlLuLlon Lhemselves recognlzed Lhe lmporLance of Paclenda LulslLa ln Lhe
lmplemenLaLlon of agrarlan reform ln Lhe hlllpplnes 1hus Lhls case ls of LranscendenLal
lmporLance as lL ls a LesL of Lhe CourL's fldellLy Lo agrarlan reform soclal [usLlce and Lhe
ConsLlLuLlon

PlsLory of Agrarlan 8eform
ln Lhe hlllpplnes

Agrarlan reform has been envlsloned Lo be llberaLlng for a ma[or buL marglnallzed secLor of
hlllpplne socleLy Lhe landless farmers and farmworkers PlsLory Loo has been sald Lo be
llberaLlng A qulck revlew of Lhe long and LorLuous sLory of Lhe Lolllng masses Lo Llll Lhe land as
freemen and noL as slaves chalned ln bondage Lo a feudallsLlc sysLem of land ownershlp3
should enllghLen us beLLer on Lhe slgnlflcance of Lhe CourL's declslon ln Lhls case

8y 8oyal uecree of november 7 1731 Lhe klng of Spaln acknowledged LhaL Lhe revolLs whlch
broke ouL among peasanLs ln Lhe provlnces of CavlLe 8ulacan Laguna and Morong (now 8lzal)
sLemmed from ln[urles whlch Lhe llllplnos recelved from Lhe managers of Lhe esLaLes whlch
are owned by Lhe rellglous of SL uomlnlc and Lhose of SL AugusLlne usurplng Lhe lands of Lhe
llllplnos wlLhouL leavlng Lhem Lhe freedom of Lhe rlvers for Lhelr flshlng or allowlng Lhem Lo
cuL woods for Lhelr necessary use or even collecL Lhe wlld frulLs xxx4 1he klng approved Lhe
paclflcaLlon measures adopLed by uon edro Calderon Lnrlquez of Lhe 8oyal Audlencla who
demanded from Lhe aforesald rellglous Lhe LlLles of ownershlp of Lhe lands whlch Lhey
possessed and noLwlLhsLandlng Lhe reslsLance LhaL Lhey made Lo hlm xxx dlsLrlbuLed Lo Lhe
vlllages Lhe lands whlch Lhe rellglous orders had usurped and all whlch Lhey held wlLhouL
leglLlmaLe cause he declared Lo be crown lands3

lL has been Lwo cenLurles and Lhree scores slnce Lhe flrsL recorded aLLempL aL compulsory land
redlsLrlbuLlon ln Lhe hlllpplnes

lL proved Lo be lneffecLual Lhough for by Lhe end of Lhe Spanlsh perlod and Lhe beglnnlng of Lhe
Amerlcan era Lhe same rellglous orders sLlll conLrolled vasL LracLs of land commonly known as
frlar lands6 ln hls Speclal 8eporLs Lo Lhe uS resldenL ln 1908 Covernor Ceneral Wllllam
Poward 1afL placed frlar landholdlngs aL 171991 hecLares Lllled by abouL 70000 landless
LenanLs7 noLlng LhaL such slLuaLlon was a mosL poLenLlal source of dlsorder ln Lhe lslands
1afL negoLlaLed wlLh 8ome for Lhe purchase of Lhe frlar lands for $7 Mllllon wlLh slnklng funds8
1he lands were Lo be dlsposed of Lo Lhe LenanLs as rapldly as Lhe publlc lnLeresL wlll permlL9
even aL a neL pecunlary loss Lo Lhe colonlal governmenL10

Powever ln a sudden shlfL of pollcy Lhe uS sold frlar lands on Lerms mosL advanLageous Lo
lL11 large LracLs12 were sold for close Lo $7 Mllllon Lo corporaLe and lndlvldual lnvesLors13
MosL LenanLs ln possesslon were sald Lo have been dlslnLeresLed Lo purchase Lhe lands14 1hey
were exLended asslsLance Lhough ln Lhe form of beLLer sharlng and credlL arrangemenLs Lo
amelloraLe agrarlan relaLlons13

Soon afLer Lhe hlllpplnes was plunged lnLo a serles of peasanL uprlslngs led by Lhe SakdallsLa ln
Lhe 1930's and Lhe Pukbalahap ln Lhe 1930's AppeasemenL came ln Lhe form of 8A 1199
(AgrlculLural 1enancy AcL of 1934) and 8A 1400 (Land 8eform AcL of 1933) 8A 1199 allowed
LenanLs Lo become leaseholders whlle 8A 1400 mandaLed compulsory land redlsLrlbuLlon
Powever 8A 1400 seL unreasonable reLenLlon llmlLs aL 300 hecLares for prlvaLe rlce lands and
600 hecLares for corporaLe lands16

As peasanL unresL conLlnued Lo fesLer 8A 3844 (Land 8eform Code of 1963) was enacLed
lnsLlLuLlng Lhe operaLlon land Lransfer program buL allowlng a maxlmum reLenLlon area of 73
hecLares17 1hls was followed ln 1971 by 8As 6389 and 6390 (Code of Agrarlan 8eforms) whlch
creaLed Lhe ueparLmenL of Agrarlan 8eform relnforced Lhe poslLlon of farmers18 and
expanded Lhe scope of agrarlan reform by reduclng Lhe reLenLlon llmlL Lo 24 hecLares19 ln
1972 resldenL lerdlnand L Marcos lssued u 2 proclalmlng Lhe enLlre hlllpplnes as a land
reform area Powever u 27 subsequenLly resLrlcLed Lhe scope of land reform Lo Lhe
compulsory redlsLrlbuLlon of LenanLed rlce and corn lands exceedlng seven hecLares

1hus more Lhan Lwo and a half cenLurles afLer compulsory land redlsLrlbuLlon was flrsL
aLLempLed ln Lhe hlllpplnes Lhere remalned so much unflnlshed buslness lL ls Lhls whlch Lhe
soclal [usLlce provlslons of Lhe 1987 ConsLlLuLlon were lnLended Lo flnlsh SecLlon 4 ArLlcle xlll
Lhereof commands

SecLlon 4 1he SLaLe shall by law underLake an agrarlan reform program founded on Lhe rlghL
of farmers and regular farmworkers who are landless Lo own dlrecLly or collecLlvely Lhe lands
Lhey Llll or ln Lhe case of oLher farmworkers Lo recelve a [usL share of Lhe frulLs Lhereof 1o Lhls
end Lhe SLaLe shall encourage and underLake Lhe [usL dlsLrlbuLlon of all agrlculLural lands
sub[ecL Lo such prlorlLles and reasonable reLenLlon llmlLs as Lhe Congress may prescrlbe Laklng
lnLo accounL ecologlcal developmenLal or equlLy conslderaLlons and sub[ecL Lo Lhe paymenL
of [usL compensaLlon ln deLermlnlng reLenLlon llmlLs Lhe SLaLe shall respecL Lhe rlghL of small
landowners 1he SLaLe shall furLher provlde lncenLlves for volunLary landsharlng (Lmphasls
supplled)

8y lLs plaln language lL requlres LhaL Lhe law lmplemenLlng Lhe agrarlan reform program
envlsloned by Lhe ConsLlLuLlon should employ a land redlsLrlbuLlon mechanlsm Sub[ecL only Lo
reLenLlon llmlLs as may be prescrlbed by Congress and Lo paymenL of [usL compensaLlon
ownershlp of all agrlculLural lands are Lo be dlsLrlbuLed and Lransferred Lo Lhe farmers and
farmworkers who Llll Lhe land

1here ls absoluLely no doubL ln my mlnd LhaL Lhe ConsLlLuLlon has ordalned land redlsLrlbuLlon
as Lhe mechanlsm of agrarlan reform llrsL lL recognlzes Lhe rlghL of farmers and regular
farmworkers who are landless Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll Second lL
afflrms Lhe prlmacy20 of Lhls rlghL whlch ls enshrlned as Lhe cenLerplece of agrarlan reform
Lhereby guaranLeelng lLs enforcemenL 1hlrd ln Lhe same breaLh lL dlrecLs LhaL Lo such end
Lhe SLaLe shall underLake Lhe [usL dlsLrlbuLlon of all agrlculLural lands21 sub[ecL only Lo
reLenLlon llmlLs and [usL compensaLlon

ursuanL Lo Lhe mandaLe of SecLlon 4 ArLlcle xlll of Lhe ConsLlLuLlon Congress enacLed 8A 6637
(Comprehenslve Agrarlan 8eform Law of 1988) lL was supposed Lo be a revoluLlonary law
lnLroduclng lnnovaLlve approaches Lo agrarlan reform Among lLs novel provlslons (and relevanL
Lo Lhls case) ls SecLlon 31 whlch provldes

SLC 31 CorporaLe Landowners CorporaLe landowners may volunLarlly Lransfer ownershlp
over Lhelr agrlculLural landholdlngs Lo Lhe 8epubllc of Lhe hlllpplnes pursuanL Lo SecLlon 20
hereof or Lo quallfled beneflclarles under such Lerms and condlLlons conslsLenL wlLh Lhls AcL as
Lhey may agree upon sub[ecL Lo conflrmaLlon by Lhe uA8

upon cerLlflcaLlon by Lhe uA8 corporaLlons ownlng agrlculLural lands may glve Lhelr quallfled
beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL
Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe
company's LoLal asseLs under such Lerms and condlLlons as may be agreed upon by Lhem ln no
case shall Lhe compensaLlon recelved by Lhe workers aL Lhe Llme Lhe shares of sLocks are
dlsLrlbuLed be reduced 1he same prlnclple shall be applled Lo assoclaLlons wlLh respecL Lo
Lhelr equlLy or parLlclpaLlon

CorporaLlons or assoclaLlons whlch volunLarlly dlvesL a proporLlon of Lhelr caplLal sLock equlLy
or parLlclpaLlon ln favor of Lhelr workers or oLher quallfled beneflclarles under Lhls secLlon shall
be deemed Lo have complled wlLh Lhe provlslons of Lhls AcL rovlded 1haL Lhe followlng
condlLlons are complled wlLh

a) ln order Lo safeguard Lhe rlghL of beneflclarles who own shares of sLocks Lo dlvldends and
oLher flnanclal beneflLs Lhe books of Lhe corporaLlon or assoclaLlon shall be sub[ecL Lo perlodlc
audlL by cerLlfled publlc accounLanLs chosen by Lhe beneflclarles

b) lrrespecLlve of Lhe value of Lhelr equlLy ln Lhe corporaLlon or assoclaLlon Lhe beneflclarles
shall be assured of aL leasL one (1) represenLaLlve ln Lhe board of dlrecLors or ln a managemenL
or execuLlve commlLLee lf one exlsLs of Lhe corporaLlon or assoclaLlon

c) Any shares acqulred by such workers and beneflclarles shall have Lhe same rlghLs and
feaLures as all oLher shares and

d) Any Lransfer of shares of sLocks by Lhe orlglnal beneflclarles shall be vold ab lnlLlo unless sald
LransacLlon ls ln favor of a quallfled and reglsLered beneflclary wlLhln Lhe same corporaLlon

lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe land or sLock Lransfer envlsloned above
ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe A8C wlLhln Lhe
same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall be sub[ecL Lo
Lhe compulsory coverage of Lhls AcL

SecLlon 31 of 8A 6637 granLs corporaLe landowners llke peLlLloner Paclenda LulslLa lnc (PLl)
Lhe opLlon Lo glve quallfled agrarlan reform beneflclarles Lhe rlghL Lo purchase caplLal sLock of
Lhe corporaLlon proporLlonaLe Lo how much Lhe agrlculLural land acLually devoLed Lo
agrlculLural acLlvlLles bears ln relaLlon Lo Lhe company's LoLal asseLs under such Lerms and
condlLlons as may be agreed upon by Lhem Such volunLary dlvesLmenL of a porLlon of Lhe
corporaLe landowner's caplLal sLock Lo quallfled agrarlan reform beneflclarles ls consldered
compllance wlLh Lhe agrarlan reform law (8A 6637) sub[ecL Lo cerLaln condlLlons

1he lundamenLal lssue

SecLlon 31 of 8A 6637 ls aL Lhe cenLer of Lhls conLroversy as lL ls Lhe basls of Lhe assalled sLock
dlsLrlbuLlon plan execuLed by peLlLloner PLl wlLh farmworkerbeneflclarles

Cn Lhe ConsLlLuLlonallLy
Cf SecLlon 31 of 8A 6637

1he ConsLlLuLlon has vesLed Lhls CourL wlLh Lhe power and duLy Lo deLermlne and declare
wheLher Lhe scales of consLlLuLlonallLy have been kepL ln balance or unduly Llpped wheLher an
offlclal acLlon ls consLlLuLlonal or noL As Lhe fundamenLal and supreme law of Lhe land Lhe
ConsLlLuLlon also serves as Lhe counLerwelghL agalnsL whlch Lhe valldlLy of all acLlons of Lhe
governmenL ls welghed WlLh lL Lhe CourL ascerLalns wheLher Lhe acLlon of a deparLmenL
agency or publlc offlcer preserves Lhe consLlLuLlonal equlllbrlum or dlsLurbs lL

ln Lhls case respondenLs argue LhaL SecLlon 31 of 8A 6637 has been welghed and found
wanLlng22 ln parLlcular lLs consLlLuLlonallLy ls assalled lnsofar as lL provldes peLlLloner PLl Lhe
cholce Lo resorL Lo sLock dlsLrlbuLlon ln order Lo comply wlLh Lhe agrarlan reform program
8espondenLs asserL LhaL Lhe sLock dlsLrlbuLlon arrangemenL ls fundamenLally lnflrm as lL
lmpalrs Lhe rlghL of farmers and farmworkers under SecLlon 4 ArLlcle xlll of Lhe ConsLlLuLlon Lo
own Lhe land Lhey Llll23

lor lLs parL peLlLloner PLl polnLs ouL LhaL Lhe consLlLuLlonal lssue has been ralsed collaLerally
and ls Lherefore proscrlbed

1he ponencla oplnes LhaL Lhe challenge on Lhe consLlLuLlonallLy of SecLlon 31 of 8A 6637 and lLs
counLerparL provlslon ln LC 229 musL fall because such lssue ls noL Lhe lls moLa of Lhe case24
Moreover lL has become mooL and academlc23

l sLrongly dlsagree

Whlle Lhe sword of [udlclal revlew musL be unsheaLhed wlLh resLralnL Lhe CourL musL noL
heslLaLe Lo wleld lL Lo sLrlke down laws LhaL unduly lmpalr baslc rlghLs and consLlLuLlonal values

Moreover [urlsprudence dlcLaLes

lL ls a wellesLabllshed rule LhaL a courL should noL pass upon a consLlLuLlonal quesLlon and
declde a law Lo be unconsLlLuLlonal or lnvalld unless such quesLlon ls ralsed by Lhe parLles and
LhaL when lL ls ralsed lf Lhe record also presenLs some oLher ground upon whlch Lhe courL may
ralse lLs [udgmenL LhaL course wlll be adopLed and Lhe consLlLuLlonal quesLlon wlll be lefL for
conslderaLlon unLll such quesLlon wlll be unavoldable26

ln Lhls case Lhe quesLlon of consLlLuLlonallLy has been ralsed by Lhe parLleslnlnLeresL Lo Lhe
case27 ln addlLlon any dlscusslon of peLlLloner PLl's sLock dlsLrlbuLlon plan necessarlly and
lnescapably lnvolves a dlscusslon of lLs legal basls SecLlon 31 of 8A 6637 More lmporLanLly
publlc lnLeresL and a grave consLlLuLlonal vlolaLlon render Lhe lssue of Lhe consLlLuLlonallLy of
SecLlon 31 of 8A 6637 unavoldable Agrarlan reform ls hlsLorlcally lmbued wlLh publlc lnLeresL
and as Lhe records of Lhe ConsLlLuLlonal Commlsslon show Paclenda LulslLa has always been
vlewed as a llLmus LesL of genulne agrarlan reform lurLhermore Lhe framers emphaslzed Lhe
prlmacy of Lhe rlghL of farmers and farmworkers Lo dlrecLly or collecLlvely own Lhe lands Lhey
Llll 1he dlluLlon of Lhls rlghL noL only weakens Lhe rlghL buL also debases Lhe consLlLuLlonal
lnLenL Lhereby presenLlng a serlous assaulL on Lhe ConsLlLuLlon

lL ls also noLeworLhy LhaL whlle Lhe ponencla evades Lhe lssue of consLlLuLlonallLy lL adverLs Lo
Lhe docLrlne of operaLlve facLs ln lLs aLLempL Lo come up wlLh whaL lL deems Lo be a [usL and
equlLable resoluLlon of Lhls case 1hls ls slgnlflcanL 1he ponencla lLself declares LhaL Lhe
docLrlne of operaLlve facLs ls applled ln order Lo avold undue harshness and resulLlng unfalrness
when a law or execuLlve acLlon ls declared null and vold28 Lherefore unconsLlLuLlonal As Lhe
CourL explalned Lhe docLrlne

under Lhe operaLlve facL docLrlne Lhe law ls recognlzed as unconsLlLuLlonal buL Lhe effecLs of
Lhe unconsLlLuLlonal law prlor Lo lLs declaraLlon of nulllLy may be lefL undlsLurbed as a maLLer
of equlLy and falr play ln facL Lhe lnvocaLlon of Lhe operaLlve facL docLrlne ls an admlsslon LhaL
Lhe law ls unconsLlLuLlonal29

Assumlng for Lhe sake of argumenL LhaL Lhe consLlLuLlonallLy of SecLlon 31 of 8A 6637 has been
superseded and rendered mooL by SecLlon 3 of 8A 9700 vlsavls sLock dlsLrlbuLlon as a form of
compllance wlLh agrarlan reform Lhe lssue does noL Lhereby become LoLally unLouchable
CourLs wlll sLlll declde cases oLherwlse mooL and academlc lf

xxx flrsL Lhere ls a grave vlolaLlon of Lhe ConsLlLuLlon second Lhe excepLlonal characLer of Lhe
slLuaLlon and Lhe paramounL publlc lnLeresL ls lnvolved Lhlrd when Lhe consLlLuLlonal lssue
ralsed requlres formulaLlon of conLrolllng prlnclples Lo gulde Lhe bench Lhe bar and Lhe publlc
and fourLh Lhe case ls capable of repeLlLlon yeL evadlng revlew30

ln Lhls case all Lhe abovemenLloned requlslLes are presenL

llrsL a grave vlolaLlon of Lhe ConsLlLuLlon exlsLs SecLlon 31 of 8A 6637 runs roughshod over Lhe
language and splrlL of SecLlon 4 ArLlcle xlll of Lhe ConsLlLuLlon

1he flrsL senLence of SecLlon 4 ls plaln and unmlsLakeable lL grounds Lhe mandaLe for agrarlan
reform on Lhe rlghL of farmers and regular farmworkers who are landless Lo own dlrecLly or
collecLlvely Lhe land Lhey Llll 1he express language of Lhe provlslon ls clear and unequlvocal
agrarlan reform means LhaL farmers and regular farmworkers who are landless should be glven
dlrecL or collecLlve ownershlp of Lhe land Lhey Llll 1haL ls Lhelr rlghL

unless Lhere ls land dlsLrlbuLlon Lhere can be no agrarlan reform Any program LhaL glves
farmers or farmworkers anyLhlng less Lhan ownershlp of land falls Lo conform Lo Lhe mandaLe
of Lhe ConsLlLuLlon ln oLher words a program LhaL glves quallfled beneflclarles sLock
cerLlflcaLes lnsLead of land ls noL agrarlan reform

AcLual land dlsLrlbuLlon ls Lhe essenLlal characLerlsLlc of a consLlLuLlonal agrarlan reform
program 1he polar sLar when we speak of land reform ls LhaL Lhe farmer has a rlghL Lo Lhe
land he Lllls31 lndeed a readlng of Lhe framers' lnLenL clearly shows LhaL Lhe phllosophy
behlnd agrarlan reform ls Lhe dlsLrlbuLlon of land Lo farmers noLhlng less

M8 nCLLLuC And when we Lalk of Lhe phrase Lo own dlrecLly we mean Lhe prlnclple of
dlrecL ownershlp by Lhe Llller?

M8 MCnSCu ?es

M8 nCLLLuC And when we Lalk of collecLlvely we mean communal ownershlp sLewardshlp
or SLaLe ownershlp?

MS nlLvA ln Lhls secLlon we concelve of cooperaLlves LhaL ls farmers' cooperaLlves ownlng
Lhe land noL Lhe SLaLe

M8 nCLLLuC And when we Lalk of collecLlvely referrlng Lo farmers' cooperaLlves do Lhe
farmers own speclflc areas of land where Lhey only unlLe ln Lhelr efforLs?

MS nlLvA 1haL ls one way

M8 nCLLLuC 8ecause l undersLand LhaL Lhere are Lwo baslc sysLems lnvolved Lhe moshave
Lype of agrlculLure and Lhe klbbuLz So are boLh conLemplaLed ln Lhe reporL?

M8 1AuLC Ang dalawa kaslng pamamaraan ng pagpapaLupad ng Lunay na reporma sa lupa ay
ang pagmamayarl ng lupa na hahaLlln sa lndlvldual na pagmamayarl dlrecLly aL ang
LlnaLawag na samasamang gagawln ng mga magbubukld 1ulad sa negros ang gusLo ng mga
magbubukld ay gawln nlla lLong cooperaLlve or collecLlve farm Ang lblg sablhln ay samasama
nllang sasakahln

M8 8LnnACLn Madam resldenL nals ko lang dagdagan lyong sagoL nl Clnoong 1adeo xxxx

kasl doon sa collecLlve ownershlp kasall dln lyong communal ownershlp ng mga mlnorya
Pallmbawa sa 1anay noong gumawa kaml ng lsang pananallkslk doon nagLaka slla kung baklL
kallangan pang magkaroon ng land reform na kung saan ay blblgyan slla ng Llgllsang LlLulo AL
slla nga ay nagpunLa sa MlnlsLry of Agrarlan 8eform aL slnabl nlla na hlndl lLo ang gusLo nlla
kasl slla naman ay magkakamaganak Ang gusLo nlla ay lupa aL hlndl na kallangan ang Llgllsang
LlLulo Maramlng ganlLong kaso mula sa Cordlllera hanggang Zambales Mlndoro aL Mlndanao
kayaL kasall lLo sa konsepLo ng collecLlve ownershlp

x x x x x x x x x

M8 vlLLACC81A xxx SecLlon 332 glves Lhe opporLunlLy for Llllers of Lhe soll Lo own Lhe land
LhaL Lhey Llll xxx

x x x x x x x x x

M8 1AuLC xxx Ang dahllan ng kahlrapan naLln sa lllplnas ngayon ay ang pagLlLlponLlpon ng
vasL LracLs of land sa kamay ng lllan Lupa ang nagblblgay ng buhay sa magbubukld aL sa lba
pang manggagawa sa bukld kapag lnalls sa kanlla ang lupa parang lnallsan na rln slla ng buhay
kaya klnakallangan Lalagang magkaroon ng LlnaLawag na [usL dlsLrlbuLlon xxx

x x x x x x x x x

M8 1AuLC kasl ganlLo lyan uapaL muna naLlng maklLa ang prlnslpyo ng agrarlan reform lyong
maglng mayarl slya ng lupa na kanlyang blnubungkal lyon ang kaunaunahang prlnslpyo nlLo
xxx

x x x x x x x x x

M8 1lnCSCn xxx When we speak here of Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll ls
Lhls land for Lhe Llllers raLher Lhan land for Lhe landless? 8efore we used Lo hear

land for Lhe landless buL now Lhe slogan ls land for Lhe Llllers ls LhaL rlghL?

M8 1AuLC Ang prlnslpyong umllral dlLo ay lyong land for Lhe Llllers Ang lblg sablhln ng
dlrecLly ay Lulad sa lmplemenLasyon sa rlce and corn lands kung saan lnaarl na ng mga
magsasaka ang lupang blnubungkal nlla Ang lblg sablhln naman ng collecLlvely ay sama
samang paggawa sa lsang lupaln o lsang bukld kaLulad ng slLwasyon sa negros

x x x x x x x x x

M8 8LnnACLn Maaarl kayang magdagdag sa pagpapallwanag ng prlmacy? kasl may culLural
background lLo uahll agrarlan socleLy pa ang llpunang lllplno malgLlng Lalaga ang ugnayan ng
mga magsasaka sa kanllang lupa Pallmbawa slnasabl nlla na ang lupa ay plnagbuhusan na ng
dugo pawls aL luha So land acqulres a symbollc conLenL LhaL ls noL slmply negaLed by growLh
by producLlvlLy eLc 1he prlmacy should be seen ln relaLlon Lo an agrarlan program LhaL leads Lo
a laLer sLage of soclal developmenL whlch aL some polnL ln Llme may already negaLe Lhls klnd of
aLLachmenL 1he assumpLlon ls LhaL Lhere are already cerLaln opLlons avallable Lo Lhe farmers
Marahll ang prlmacy ay ang pagkllala sa pangangallangan ng magsasaka ang pagaarl ng lupa
Ang assumpLlon ay ang pagaarl mlsmo ng lupa becomes Lhe basls for Lhe farmers Lo en[oy Lhe
beneflLs Lhe frulLs of labor xxx (678)

x x x x x x x x x

M8 1AuLC xxx kung slnasabl naLlng sl krlsLo ay llberaLlng dahll ang apl ay lalaya aL ang mga
blhag ay mangallllgLas slnabl rln nl Commlssloner lellclLas Aqulno na kung ang hlsLory ay
llberaLlng dapaL dlng maglng llberaLlng ang Sallgang 8aLas Ang magpapalaya sa aLln ay ang
agrarlan and naLural resources reform

1he prlmary foremosL and paramounL prlnclples and ob[ecLlves are conLalned ln llnes 19 Lo
22 prlmacy of Lhe rlghLs and of farmers and farmworkers Lo own dlrecLly or collecLlvely Lhe
lands Lhey Llll lLo ang kaunaunahan aL plnakamahalagang prlnslpyo aL layunln ng lsang Lunay
na reporma sa lupa na ang nagbubungkal ng lupa ay maglng mayarl nlLo xxx (693696)

1he essenLlal LhrusL of agrarlan reform ls landLoLheLlller 1hus Lo saLlsfy Lhe mandaLe of Lhe
consLlLuLlon any lmplemenLaLlon of agrarlan reform should always preserve Lhe conLrol over
Lhe land ln Lhe hands of lLs Llller or Llllers wheLher lndlvldually or collecLlvely

ConsequenLly any law LhaL goes agalnsL Lhls consLlLuLlonal mandaLe of Lhe acLual granL of land
Lo farmers and regular farmworkers musL be nulllfled lf Lhe ConsLlLuLlon as lL ls now worded
and as lL was lnLended by Lhe framers envlsaged an alLernaLlve Lo acLual land dlsLrlbuLlon (eg
sLock dlsLrlbuLlon) such opLlon could have been easlly and expllclLly provlded for ln lLs LexL or
even concepLuallzed ln Lhe lnLenL of Lhe framers AbsoluLely no such alLernaLlve was provlded
for SecLlon 4 ArLlcle xlll on agrarlan reform ln no uncerLaln Lerms speaks of land Lo be owned
dlrecLly or collecLlvely by farmers and regular farm workers

8y allowlng Lhe dlsLrlbuLlon of caplLal sLock noL land as compllance wlLh agrarlan reform
SecLlon 31 of 8A 6637 dlrecLly and expllclLly conLravenes SecLlon 4 ArLlcle xlll of Lhe
ConsLlLuLlon 1he corporaLe landowner remalns Lo be Lhe owner of Lhe agrlculLural land
Cuallfled beneflclarles are glven ownershlp only of shares of sLock noL Lhe lands Lhey Llll
Landless farmers and farmworkers become landless sLockholders buL sLlll Lllllng Lhe land of Lhe
corporaLe owner Lhereby perpeLuaLlng Lhelr sLaLus as landless farmers and farmworkers

Second Lhls case ls of excepLlonal characLer and lnvolves paramounL publlc lnLeresL ln La
8ugal8'Laan 1rlbal AssoclaLlon lnc33 Lhe CourL remlnded lLself of Lhe need Lo recognlze Lhe
exLraordlnary characLer of Lhe slLuaLlon and Lhe overrldlng publlc lnLeresL lnvolved ln a case
Pere Lhere ls a necesslLy for a caLegorlcal rullng Lo end Lhe uncerLalnLles plagulng agrarlan
reform caused by serlous consLlLuLlonal doubLs on SecLlon 31 of 8A 6637 Whlle Lhe ponencla
would have Lhe doubLs llnger sLrong reasons of fundamenLal publlc pollcy demand LhaL Lhe
lssue of consLlLuLlonallLy be resolved now34 before Lhe sLormy cloud of doubL can cause a
soclal caLaclysm

AL Lhe rlsk of belng repeLlLlve agrarlan reform ls fundamenLally lmbued wlLh publlc lnLeresL and
Lhe lmplemenLaLlon of agrarlan reform aL Paclenda LulslLa has always been of paramounL
lnLeresL lndeed lL was speclflcally and unequlvocally LargeLed when agrarlan reform was belng
dlscussed ln Lhe ConsLlLuLlonal Commlsslon Moreover Lhe CourL should Lake [udlclal
cognlzance of Lhe vlolenL lncldenLs LhaL lnLermlLLenLly occur aL Paclenda LulslLa solely because
of Lhe agrarlan problem Lhere lndeed Paclenda LulslLa proves LhaL for landless farmers and
farmworkers Lhe land Lhey Llll ls Lhelr llfe

1he ConsLlLuLlon does noL only besLow Lhe landless farmers and farmworkers Lhe rlghL Lo own
Lhe land Lhey Llll buL also concedes LhaL rlghL Lo Lhem and makes lL a duLy of Lhe SLaLe Lo
respecL LhaL rlghL Lhrough genulne and auLhenLlc agrarlan reform 1o subverL Lhls rlghL Lhrough
a mechanlsm LhaL allows sLock dlsLrlbuLlon ln lleu of land dlsLrlbuLlon as mandaLed by Lhe
ConsLlLuLlon sLrlkes aL Lhe very hearL of soclal [usLlce As a grave ln[usLlce lL musL be sLruck
down Lhrough Lhe lnvalldaLlon of Lhe sLaLuLory provlslon LhaL permlLs lL

1o leave Lhls lssue unresolved ls Lo allow Lhe furLher creaLlon of laws rules or orders LhaL
permlL pollcles creaLlng unlnLenLlonally or oLherwlse means Lo avold compllance wlLh Lhe
foremosL ob[ecLlve of agrarlan reform Lo glve Lhe humble farmer and farmworker Lhe rlghL Lo
own Lhe land he Lllls 1o leave Lhls maLLer unseLLled ls Lo encourage fuLure subverslon or
frusLraLlon of agrarlan reform soclal [usLlce and Lhe ConsLlLuLlon

1hlrd Lhe consLlLuLlonal lssue ralsed requlres Lhe formulaLlon of conLrolllng prlnclples Lo gulde
Lhe bench Lhe bar and Lhe publlc33 lundamenLal prlnclples of agrarlan reform musL be
esLabllshed ln order LhaL lLs alm may be Lruly aLLalned

Cne such prlnclple LhaL musL be eLched ln sLone ls LhaL no law rule or pollcy can subverL Lhe
ulLlmaLe goal of agrarlan reform Lhe acLual dlsLrlbuLlon of land Lo farmers and farmworkers
who are landless Agrarlan reform requlres LhaL such landless farmers and farmworkers be
glven dlrecL or collecLlve ownershlp of Lhe land Lhey Llll sub[ecL only Lo Lhe reLenLlon llmlLs and
Lhe paymenL of [usL compensaLlon 1here ls no valld subsLlLuLe Lo acLual dlsLrlbuLlon of land
because Lhe rlghL of landless farmers and farmworkers expressly and speclflcally refers Lo a
rlghL Lo own Lhe land Lhey Llll

lourLh Lhls case ls capable of repeLlLlon yeL evadlng revlew As prevlously menLloned lf Lhe
sub[ecL provlslon ls noL sLruck down Loday as unconsLlLuLlonal Lhe posslblllLy of passlng fuLure
laws provldlng for a slmllar opLlon ls omlnously presenL lndeed whaL wlll sLop our leglslaLors
from provldlng arLlflclal alLernaLlves Lo acLual land dlsLrlbuLlon lf Lhls CourL ln Lhe face of an
opporLunlLy Lo do so does noL declare LhaL such alLernaLlves are compleLely agalnsL Lhe
ConsLlLuLlon?

We would be woefully remlss ln our duLy of safeguardlng Lhe ConsLlLuLlon and Lhe
consLlLuLlonally guaranLeed rlghL of a hlsLorlcally marglnallzed secLor lf we allowed a subsLanLlal
devlaLlon from lLs language and lnLenL

1he followlng flndlngs of Lhe Speclal 1ask lorce as sLaLed ln lLs 1ermlnal 8eporL36 are worLh
relLeraLlng

sugarcoaLed assurances were more Lhan enough Lo make Lhem fall for Lhe SuC as Lhey
made Lhem feel rlch as sLock holder of a rlch and famous corporaLlon desplLe Lhe dlrL ln Lhelr
hands and Lhe LaLLers Lhey use glven Lhe feellng of securlLy of Lenure ln Lhelr work when Lhere
ls none expecLaLlon Lo recelve dlvldends when Lhe corporaLlon has already suspended
operaLlons allegedly due Lo losses and a sLable sugar producLlon by malnLalnlng Lhe
agrlculLural lands when a subsLanLlal porLlon Lhereof of almosL 1/8 of Lhe LoLal areas has
already been converLed Lo nonagrlculLural uses

1ruly Lhe plLlful consequences of a convoluLed agrarlan reform pollcy such as Lhose reporLed
above can be avolded lf laws were made Lo Lruly fulflll Lhe alm of Lhe consLlLuLlonal provlslons
on agrarlan reform As Lhe ConsLlLuLlon soughL Lo make Lhe farmers and farmworkers masLers
of Lhelr own land Lhe CourL should noL heslLaLe Lo sLaLe wlLhouL mlnclng word LhaL quallfled
agrarlan reform beneflclarles deserve no less Lhan ownershlp of land

1he rlver cannoL rlse hlgher Lhan lLs source An unconsLlLuLlonal provlslon cannoL be Lhe basls
of a consLlLuLlonal acL As Lhe sLock dlsLrlbuLlon plan of peLlLloner PLl ls based on SecLlon 31 of
8A 6637 whlch ls unconsLlLuLlonal Lhe sLock dlsLrlbuLlon plan musL perforce also be
unconsLlLuLlonal

Cn eLlLloner's Long uue CbllgaLlon
Lo ulsLrlbuLe Paclenda LulslLa Lo larmers

AnoLher compelllng reason exlsLs for orderlng peLlLloner PLl Lo dlsLrlbuLe Lhe lands of Paclenda
LulslLa Lo farmworker beneflclarles Lhe naLlonal CovernmenL ln 1937 alded peLlLloner PLl's
predecessorlnlnLeresL ln acqulrlng Paclenda LulslLa wlLh Lhe condlLlon LhaL Lhe acqulslLlon of
Paclenda LulslLa should be made wlLh a vlew Lo dlsLrlbuLlng Lhls haclenda Lo small farmers ln
llne wlLh Lhe governmenL37's soclal [usLlce program38 1he dlsLrlbuLlon of land Lo Lhe
farmers should have been made wlLhln Len years 1haL was a slne qua non condlLlon lL could
have noL been done away wlLh for mere expedlency eLlLloner PLl ls bound by LhaL
condlLlon39

lndeed Lhe naLlonal CovernmenL soughL Lo enforce Lhe condlLlon when lL flled a case on May
7 1980 agalnsL 1arlac uevelopmenL CorporaLlon (1AuLCC) peLlLloner PLl's predecessorln
lnLeresL ln Lhe 8eglonal 1rlal CourL of Manlla 8ranch 4340 1he case dockeLed as Clvll Case no
131634 enLlLled 8epubllc of Lhe hlllpplnes vs 1AuLCC soughL Lhe surrender by 1AuLCC of
Paclenda LulslLa Lo Lhe MlnlsLry of Agrarlan 8eform for dlsLrlbuLlon Lo quallfled farmworker
beneflclarles41 ln a declslon daLed uecember 2 1983 Lhe Lrlal courL upheld Lhe poslLlon of Lhe
naLlonal CovernmenL and ordered 1AuLCC Lo Lransfer conLrol of Paclenda LulslLa Lo Lhe
MlnlsLry of Agrarlan 8eform whlch wlll dlsLrlbuLe Lhe land Lo small farmers afLer paylng
1AuLCC 3988 Mllllon42

1he Lrlal courL's declslon was appealed Lo Lhe CourL of Appeals where lL was dockeLed as CA
C8 Cv no 08364 1he appellaLe courL ln a resoluLlon daLed May 18 1988 dlsmlssed Lhe
appeal wlLhouL pre[udlce

WPL8LlC8L Lhe presenL case on appeal ls hereby dlsmlssed wlLhouL pre[udlce and should be
revlved lf any of Lhe condlLlons as above seL forLh ls noL duly complled wlLh by 1AuLCC

1he condlLlons referred Lo are Lhe followlng

(a) should 1AuLCC fall Lo obLaln approval of Lhe sLock dlsLrlbuLlon plan for fallure Lo comply
wlLh all Lhe requlremenLs for corporaLe landowners seL forLh ln Lhe guldellnes lssued by Lhe
A8C or

(b) lf such sLock dlsLrlbuLlon plan ls approved by A8C buL 1AuLCC falls Lo lnlLlally lmplemenL
lL43

ln Lhls case Lhe sLock dlsLrlbuLlon plan of peLlLloner PLl 1AuLCC's successorlnlnLeresL could
noL have been valldly approved by Lhe A8C as lL was null and vold for belng conLrary Lo law lLs
essenLlal Lerms parLlcularly Lhe man days meLhod for compuLlng Lhe number of shares Lo
whlch a farmworkerbeneflclary ls enLlLled and Lhe exLended perlod for Lhe compleLe
dlsLrlbuLlon of shares Lo quallfled farmworkerbeneflclarles are agalnsL Lhe leLLer and splrlL of
SecLlon 31 of 8A 6637 assumlng LhaL provlslon ls valld and uAC no 101988

Lven assumlng LhaL Lhe approval could have been valldly made by Lhe A8C Lhe subsequenL
revocaLlon of such approval meanL LhaL Lhere was no more approval Lo speak of LhaL Lhe
approval has already been wlLhdrawn 1hus ln any case Lhe declslon of Lhe Lrlal courL should
be revlved albelL on appeal Such revlval means LhaL peLlLloner PLl cannoL now evade lLs
obllgaLlon whlch has long be overdue Paclenda LulslLa should be dlsLrlbuLed Lo quallfled
farmworkerbeneflclarles

Cn Lhe LqulLles of Lhe Case
And lLs CuallflcaLlons

Agrarlan reform's underlylng prlnclple ls Lhe recognlLlon of Lhe rlghLs of farmers and
farmworkers who are landless Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll AcLual land
dlsLrlbuLlon Lo quallfled agrarlan reform beneflclarles ls mandaLory AnyLhlng LhaL promlses
someLhlng oLher Lhan land musL be sLruck down for belng unconsLlLuLlonal

8e LhaL as lL may and regardless of Lhe consLlLuLlonallLy of SecLlon 31 of 8A 6637 Lhe llfLlng of
Lhe Lemporary resLralnlng order ln Lhls case coupled wlLh Lhe afflrmaLlon of A8C 8esoluLlon
no 20033201 daLed uecember 22 2003 removes all barrlers Lo Lhe compulsory acqulslLlon of
Paclenda LulslLa for acLual land dlsLrlbuLlon Lo quallfled farmworkerbeneflclarles 1he sald
A8C resoluLlon dlrecLed LhaL Paclenda LulslLa be forLhwlLh placed under compulsory
coverage or mandaLed land acqulslLlon scheme44 and pursuanL LhereLo a noLlce of
coverage43 was lssued Pence Lhe overall effecL of Lhe llfLlng of Lhe Lemporary resLralnlng
order ln Lhls case should be Lhe lmplemenLaLlon of Lhe compulsory coverage or mandaLory
acqulslLlon scheme on Lhe lands of Paclenda LulslLa

1hls noLwlLhsLandlng and desplLe Lhe nulllLy of SecLlon 31 of 8A 6637 and lLs llleglLlmaLe
offsprlng peLlLloner PLl's sLock dlsLrlbuLlon plan l am wllllng Lo concede LhaL Lhe equlLles of
Lhe case mlghL posslbly call for Lhe appllcaLlon of Lhe docLrlne of operaLlve facLs 1he CourL
cannoL wlLh a slngle sLroke of Lhe pen undo everyLhlng LhaL has Lransplred ln Paclenda LulslLa
vlsvls Lhe relaLlons beLween peLlLloner PLl and Lhe farmworkerbeneflclarles resulLlng from
Lhe execuLlon of Lhe sLock dlsLrlbuLlon plan more Lhan Lwo decades ago A slmpllsLlc declaraLlon
LhaL no legal effecL whaLsoever may be glven Lo any acLlon Laken pursuanL Lo Lhe sLock
dlsLrlbuLlon plan by vlrLue of lLs nulllflcaLlon wlll only resulL ln unreasonable and unfalr
consequences ln vlew of prevlous beneflLs en[oyed and obllgaLlons lncurred by Lhe parLles
under Lhe sald sLock dlsLrlbuLlon plan

LeL me emphaslze however LhaL Lhls Lenuous concesslon ls noL wlLhouL slgnlflcanL
quallflcaLlons

llrsL whlle operaLlve facLs and conslderaLlons of falrness and equlLy mlghL be consldered ln
dlsposlng of Lhls case Lhe quesLlon of consLlLuLlonallLy of SecLlon 31 of 8A 6637 and corollarlly
of peLlLloner PLl's sLock dlsLrlbuLlon plan should be addressed squarely As Lhe sald provlslon
goes agalnsL boLh Lhe leLLer and splrlL of Lhe ConsLlLuLlon Lhe CourL musL caLegorlcally say ln no
uncerLaln Lerms LhaL lL ls null and vold 1he same prlnclple applles Lo peLlLloner PLl's sLock
dlsLrlbuLlon plan

Second pursuanL Lo boLh Lhe express mandaLe and Lhe lnLenL of Lhe ConsLlLuLlon Lhe quallfled
farmerbeneflclarles should be glven ownershlp of Lhe land Lhey Llll 1haL ls Lhelr rlghL and
enLlLlemenL whlch ls sub[ecL only Lo Lhe prescrlbed reLenLlon llmlLs and Lhe paymenL of [usL
compensaLlon as already explalned

uue Lo conslderaLlons of falrness and equlLy however Lhose who wlsh Lo walve Lhelr rlghL Lo
acLually own land and lnsLead declde Lo hold on Lo Lhelr shares of sLock may opL Lo sLay as
sLockholders of peLlLloner PLl noneLheless Lhls scheme should apply ln Lhls case only

1hlrd Lhe proper acLlon on Lhe lnsLanL peLlLlon should be Lo dlsmlss lL lor how can we granL lL
when lL lnvlLes us Lo rule agalnsL Lhe consLlLuLlonal rlghL of landless farmworkerbeneflclarles Lo
acLually own Lhe land Lhey Llll? Pow can we susLaln peLlLloner PLl's clalm LhaL lLs sLock
dlsLrlbuLlon plan should be upheld when we are ln facL declarlng LhaL lL ls vlolaLlve of Lhe law
and of Lhe ConsLlLuLlon? lndeed Lo afflrm Lhe correcLness of A8C 8esoluLlon no 20033201
daLed uecember 22 2003 revoklng Lhe sLock dlsLrlbuLlon plan and dlrecLlng Lhe compulsory
dlsLrlbuLlon of Paclenda LulslLa lands Lo Lhe farmworkerbeneflclarles and aL Lhe same Llme
granL peLlLloner PLl's prayer for Lhe nulllflcaLlon of Lhe sald A8C 8esoluLlon ls an exerclse ln
selfconLradlcLlon

1o say LhaL we are parLlally granLlng Lhe peLlLlon ls Lo say LhaL Lhere ls rlghLness ln peLlLloner
PLl's poslLlon LhaL lL can valldly frusLraLe Lhe acLual dlsLrlbuLlon of Paclenda LulslLa Lo Lhe
farmworkerbeneflclarles 1haL ls fundamenLally and morally wrong

A llnal Word

Cur acLlon here Loday ls noL slmply abouL Paclenda LulslLa or a parLlcular sLock dlsLrlbuLlon
plan Cur recognlLlon of Lhe rlghL under Lhe ConsLlLuLlon of Lhose who Llll Lhe land Lo sLeward lL
ls Lhe CourL's marchlng order Lo dlsmanLle Lhe feudal Lenurlal relaLlons LhaL for cenLurles have
shackled Lhem Lo Lhe soll ln exchange for a plLlful share ln Lhe frulLs and lnsLall Lhem as Lhe
dlrecL or collecLlve masLers of Lhe domaln of Lhelr labor lL ls noL legal nor moral Lo replace
Lhelr shackles wlLh mere sLock cerLlflcaLes or any oLher superflclal alLernaLlve

We Lake acLlon ln Lhese cases Loday Lo promoLe soclal [usLlce champlon Lhe cause of Lhe poor
and dlsLrlbuLe wealLh more equlLably 8y applylng Lhe agrarlan reform provlslon of Lhe
ConsLlLuLlon we seek Lo empower Lhe farmers enhance Lhelr dlgnlLy and lmprove Lhelr llves by
freelng Lhem from Lhelr bondage Lo Lhe land Lhey Llll and maklng Lhem ownersLewards
Lhereof We express lronclad fealLy Lo SecLlon 4 ArLlcle xlll of Lhe ConsLlLuLlon Lo dlsmanLle
Lhe concenLraLlon of land ln Lhe hands of Lhe prlvlleged few 1hus we dlrecL Lhe
lmplemenLaLlon of a genulne agrarlan reform as envlsloned by Lhe ConsLlLuLlon by orderlng Lhe
[usL dlsLrlbuLlon of land for Lhe democraLlzaLlon of producLlve resources

PlsLory wlll be Lhe unforglvlng [udge of Lhls CourL We cannoL correcL a hlsLorlcal anomaly and
prevenL Lhe erupLlon of a soclal volcano by fancy legal argumenLs and lmpresslvely crafLed
devlces for corporaLe conLrol

WPL8LlC8L l voLe LhaL Lhe peLlLlon be ulSMlSSLu SecLlon 31 of 8A 6637 should be declared
nuLL and vClu for belng unconsLlLuLlonal ConsequenLly Lhe sLock dlsLrlbuLlon plan of
peLlLloner PLl should llkewlse be declared nuLL and vClu for belng unconsLlLuLlonal

Accordlngly A8C 8esoluLlon nos 20033201 daLed uecember 22 2003 and 20063401 daLed
May 3 2006 should be Alll8MLu ln so far as Lhey dlrecL Lhe lmplemenLaLlon of compulsory
coverage or mandaLed land acqulslLlon scheme ln Paclenda LulslLa wlLh Lhe MCulllCA1lCn
LhaL pro hac vlce due Lo conslderaLlons of falrness and equlLy quallfled farmworker
beneflclarles may walve Lhelr rlghL Lo acLually own Lhe lands Lhey Llll and sLay as sLockholders of
peLlLloner PLl

8LnA1C C CC8CnA
Chlef !usLlce


looLnoLes

1 8ecord of Lhe ConsLlLuLlonal Commlsslon vol ll pp 663664 Lmphasls supplled

2 ld p 607

3 Land 8eform lllar of Lhe naLlon's 8ecovery Commlssloner Cregorlo u 1lngson 8ecord of
Lhe ConsLlLuLlonal Commlsslon vol lll p 784

4 As LranslaLed Lo Lngllsh ln 8lalr LP 8oberLson !A 1911 1he hlllpplne lslands 1493
1803 vol 1 no 48 2736 ArLhur and Clarke Company Cleveland Accessed Lhrough
hLLp//quodllbumlchedu/p/phllamer/ on 13 March 2011

3 ld

6 SauloAdrlano Lourdes A Ceneral AssessmenL of Lhe Comprehenslve Agrarlan 8eform
rogram pp 311 (1991) hlllpplne lnsLlLuLe for uevelopmenL SLudles Accessed Lhrough
hLLp//dlrp4pldsgovph

7 WM P 1afL (SecreLary of War !anuary 23 1908) and ! M ulcklnson (SecreLary of War
november 23 1910) Speclal 8eporLs on Lhe hlllpplnes Lo Lhe resldenL WashlngLon uC
!anuary 23 1908 p 21 lound ln 1he unlLed SLaLes and lLs 1errlLorles of Lhe unlverslLy of
Mlchlgan Llbrary SouLheasL Asla collecLlon whlch conLalns Lhe full LexL of monographs and
governmenL documenLs publlshed ln Lhe unlLed SLaLes Spaln and Lhe hlllpplnes beLween
1870 and 1923 and accessed Lhrough hLLp//quodllbumlchedu/p/phllamer/ on March 13
2011

8 ld aL p 39

9 ld aL p 83

10 ld

11 1afL explalned LhaL aL Lhe raLe of lnLeresL Lhe bonds draw Lhe cosL of Lhe lands would ln
30 years when Lhe bonds maLure have represenLed more Lhan Lreble Lhe orlglnal cosL 1he
hlllpplne governmenL needs lLs resources for lnLernal lmprovemenLs and lL would have been
poor flnanclerlng Lo pay lnLeresL on Lhe bonds and flnally Lhe prlnclpal and conLlnue Lo hold
Lhese lands unLll Lhey would be Laken up by lnhablLanLs of Lhe lslands whlch would mean ln Lhe
remoLe fuLure ld p 106

12 1he hlllpplne 8lll of 1902 seL Lhe celllngs on Lhe hecLarage of lndlvldual and corporaLe
landholdlngs aL 16 has and 1024 has respecLlvely

13 Supra noLe 7 aL pp 103106

14 ld

13 See ubllc AcL no 4034 (1933)

16 Sec 6

17 Sec 31

18 Among oLhers lL provlded for Lhe auLomaLlc converslon of exlsLlng agrlculLural share
Lenancy Lo agrlculLural leasehold and sLrengLhened Lhe rlghLs of preempLlon and redempLlon

19 Sec 16 amendlng Sec 31 of 8A 3844

20 1he orlglnal formulaLlon of Lhe presenL SecLlon 4 arLlcle xlll was as follows

SLC 3 1he SLaLe shall underLake a genulne agrarlan reform program founded on Lhe prlmacy of
Lhe rlghLs of farmers and farmworkers Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll 1o Lhls
end Lhe SLaLe shall encourage and underLake Lhe [usL dlsLrlbuLlon of all agrlculLural lands
sub[ecL Lo such reLenLlon llmlLs as Lhe naLlonal Assembly may prescrlbe and sub[ecL Lo a falr
and progresslve sysLem of compensaLlon (8ecord of Lhe ConsLlLuLlonal Commlsslon vol ll p
603)

1he dellberaLlons of Lhe members of Lhe ConsLlLuLlonal Commlsslon also reveal Lhe followlng

M8 1AuLC Ang Lunay na reporma sa lupa ay pangunahlng nakabaLay sa kapaklnabangan ng
mg blyaya nlLo sa nagbubungkal ng lupa aL lumlllkha ng yaman nlLo aL sa nagmamayarl ng lupa
(ld p 677)

x x x x x x x x x

M8 8LnnACLn Maaarl kayang magdagdag sa pagpapallwanag ng prlmacy? kasl may culLural
background lLo uahll agrarlan socleLy pa ang llpunang lllplno malgLlng Lalaga ang ugnayan ng
mga magsasaka sa kanllang lupa Pallmbawa slnasabl nlla na ang lupa ay plnagbuhusan na ng
dugo pawls aL luha So land acqulres a symbollc conLenL LhaL ls noL slmply negaLed by growLh
by producLlvlLy eLc 1he prlmacy should be seen ln relaLlon Lo an agrarlan program LhaL leads Lo
a laLer sLage of soclal developmenL whlch aL some polnL ln Llme may already negaLe Lhls klnd of
aLLachmenL 1he assumpLlon ls LhaL Lhere are already cerLaln opLlons avallable Lo Lhe farmers
Marahll ang prlmacy ay ang pagkllala sa pangangallangan ng magsasaka ang pagaarl ng lupa
Ang assumpLlon ay ang pagaarl mlsmo ng lupa becomes Lhe basls for Lhe farmers Lo en[oy Lhe
beneflLs Lhe frulLs of labor xxx (ld p 678)

M8 1AuLC xxx kung slnasabl naLlng sl krlsLo ay llberaLlng dahll ang apl ay lalaya aL ang mga
blhag ay mangallllgLas slnabl rln nl Commlssloner lellclLas Aqulno na kung ang hlsLory ay
llberaLlng dapaL dlng maglng llberaLlng ang Sallgang 8aLas Ang magpapalaya sa aLln ay ang
agrarlan and naLural resources reform

1he prlmary foremosL and paramounL prlnclples and ob[ecLlves are conLalned ln llnes 19 Lo
22 prlmacy of Lhe rlghLs and of farmers and farmworkers Lo own dlrecLly or collecLlvely Lhe
lands Lhey Llll lLo ang kaunaunahan aL plnakamahalagang prlnslpyo aL layunln ng lsang Lunay
na reporma sa lupa na ang nagbubungkal ng lupa ay maglng mayarl nlLo xxx (693696)

M8 uAvluL xxx we dld noL deleLe Lhe concepL of Lhe prlmacy of Lhe rlghLs of farmers and farm
workers ln oLher words Lhls only conflrms Lhe exlsLence of Lhe rlghL as worded lL ls
conflrmaLory of LhaL rlghL 1here ls no need Lo emphaslze LhaL rlghL because LhaL rlghL ls
conceded and lL now becomes Lhe duLy of Lhe SLaLe Lo underLake Lhese genulne and auLhenLlc
land and agrarlan reforms

x x x x x xxxx

M8 1AuLC Mallwanag na nandlLo lyong prlmacy of Lhe rlghLs

M8 uAvluL CerLalnly lL ls lnherenL lL ls conceded and LhaL ls why we glve lL a mandaLe We
make lL a duLy on Lhe parL of Lhe SLaLe Lo respecL LhaL parLlcular rlghL (696697)

21 lormer Chlef !usLlce Pllarlo C uavlde !r Lhen a Commlssloner ln Lhe ConsLlLuLlonal
Commlsslon sLaLed LhaL conslderlng Lhe rlghL of farmers and farmworkers Lo Lhe lands LhaL
Lhey Llll lL now becomes Lhe duLy of Lhe SLaLe Lo underLake Lhese genulne and auLhenLlc land
and agrarlan reforms 8ecords vol ll p 697

22 1he expresslon comes from Lhe uanlel 323 Mene mene Lhekel upharsln lL ls loosely
LranslaLed as ?ou have been welghed and found wanLlng hence you have been dlvlded and
handed Lo oLhers

23 1Sn Aug 24 2010 p 203

24 onencla p 42

23 ld aL 43

26 SoLLo v Commlsslon on LlecLlons 76 hll 316 322 (1946) (Lmphasls supplled)

27 noel Mallarl and larmworkers Agrarlan 8eform MovemenL lnc

28 onencla p 70

29 League of ClLles of Lhe hlllpplnes v Commlsslon on LlecLlons C8 no 176931 24 AugusL
2010 (Lmphasls supplled)

30 Culzon v Commlsslon on LlecLlons C8 no 177927 13 lebruary 2008 343 SC8A 633
MaLLel lnc v lranclsco C8 no 166886 30 !uly 2008 360 SC8A 306

31 Commlssloner lellclLas S Aqulno of Lhe ConsLlLuLlonal Commlsslon made Lhls remark durlng
Lhe dellberaLlons on Lhe provlslon on agrarlan reform Accordlng Lo her whlle a farmer's rlghL
Lo Lhe land he Lllls ls noL an lmmuLable rlghL as Lhe clalm of ownershlp does noL auLomaLlcally
perLaln or correspond Lo Lhe same land LhaL Lhe farmer or farm worker ls acLually and physlcally
Lllllng lL slmply ylelds Lo Lhe llmlLaLlons and ad[usLmenLs provlded for ln Lhe second senLence of
Lhe flrsL paragraph speclflcally Lhe reLenLlon llmlLs (8ecords of Lhe ConsLlLuLlonal Commlsslon
vol lll p 10)

32 As sLaLed earller Lhe presenL SecLlon 4 was numbered SecLlon 3 ln Lhe flrsL drafL

33 La 8ugal8'laan 1rlbal AssoclaLlon lnc eL al v vlcLor C 8amos SecreLary uepL Cf
LnvlronmenL naLural 8esources eL al C8 no 127882 uecember 1 2004

34 Conzales v CCMLLLC C8 no L27833 18 Aprll 1969 27 SC8A 836

33 1hls ls ln consonance wlLh Lhe CourL's symbollc funcLlon of educaLlng Lhe members of Lhe
[udlclary and of Lhe legal professlon as Lo Lhe conLrolllng prlnclples and concepLs on maLLers of
greaL publlc lmporLance (See uavld v Arroyo C8 nos 171396 171409 171483 171483
171400 171489 171424 03 May 2006 489 SC8A 160)

36 8ollo pp 386403

37 1he Lerm used was AdmlnlsLraLlon

38 CenLral 8ank MoneLary 8oard 8esoluLlon no 1240 daLed AugusL 27 1937 as quoLed ln
Alyansa ng mga Manggagawag 8ukld ng Paclenda LulslLa's eLlsyon (ara sa agpapawalang
8lsa sa SLock ulsLrlbuLlon CpLlon) Annex k of Lhe peLlLlon 8ollo pp 173183 173

39 ConLracLs are obllgaLory and as a rule are blndlng Lo boLh parLles Lhelr helrs and asslgns
See ArLlcles 1308 and 1311 new Clvll Code

40 CommenL/CpposlLlon of respondenLs Supervlsory Croup of Paclenda LulslLa lnc p 7 8ollo
pp 330641 p 336

41 ld

42 ld

43 CourL of Appeals resoluLlon daLed May 18 1988 ln CAC8 Cv no 08364

44 8ollo p 101

43 ld aL 103106


1he Lawphll ro[ecL Arellano Law loundaLlon

ulSSLn1lnC ClnlCn

SL8LnC !

WhaL Lhe ma[orlLy has creaLed by lLs ueclslon are several legal and operaLlonal aberraLlons LhaL
wlll only seL back Lhe longLerm resoluLlon of Lhe agrarlan confllcLs lnvolvlng Paclenda LulslLa
and creaLe even more havoc ln our legal sysLem lnsLead of deflnlLlvely puLLlng Lhe mulLlangled
lssues Lo resL Lhe ma[orlLy has only succeeded ln Lhrowlng back Lhe agrarlan problem Lo Lhe
farmers Lhe orlglnal landowners and Lhe ueparLmenL of Agrarlan 8eform (uA8)

llrsL Lhe ma[orlLy ueclslon ruled ln caLegorlcal language Lo (a) deny Lhe eLlLlon of Paclenda
LulslLa lnc (PLl) (b) afflrm A8C 8esoluLlon no 20033201 daLed 22 uecember 2003 and
8esoluLlon no 20063401 daLed 03 May 2006 whlch revoked Lhe approval of Lhe PLl SLock
ulsLrlbuLlon lan (Su) and (c) pronounce LhaL A8C 8esoluLlon no 89912 approvlng Lhe
PLl's SLock ulsLrlbuLlon lan (Su) ls nulllfled and volded Powever wlLhouL any legal basls
lefL Lo supporL Lhe Su afLer Lhe pronouncemenL of Lhe compleLe nulllLy of Lhe admlnlsLraLlve
approval Lhereof Lhe ma[orlLy proceeded Lo allow Lhe farmworkerbeneflclarles (lW8s) of
Paclenda LulslLa Lhe opLlon Lo choose a compleLely legally baseless arrangemenL lL ls legally
baseless because an Su and lLs operaLlng agreemenL a SLock ulsLrlbuLlon CpLlon AgreemenL
(SuCA) can only be valld wlLh Lhe correspondlng A8C approval 1here ls noL a slngle legal Lwlg
on whlch Lhe order Lo proceed wlLh Lhe voLlng opLlon can hang excepL Lhe wlll of Lhls CourL's
ma[orlLy

Second Lhey ruled LhaL Lhe SuCA daLed 11 May 1989 beLween peLlLloner PLl 1arlac
uevelopmenL CorporaLlon (1AuLCC) and Lhe farmworkerbeneflclarles (lW8s) ls lllegal for Lwo
vlolaLlons (a) Lhe dlsLrlbuLlon of shares of sLock based on Lhe number of mandays worked and
(b) Lhe prolonged LhlrLyyear Llme frame for Lhe dlsLrlbuLlon of shares addlLlonally Lhey ruled
LhaL Lhese Lwo arrangemenLs have worked an ln[usLlce on Lhe lW8s conLrary Lo Lhe splrlL and
leLLer of agrarlan reform ?eL Lhe ma[orlLy wlll allow Lhem Lo remaln ln such a pre[udlclal
arrangemenL lf Lhey so declde 1o allow Lhe lW8s Lhe dlsadvanLaged secLor soughL Lo be
upllfLed Lhrough agrarlan reform Lo remaln ln an lllegal arrangemenL slmply because Lhey
choose Lo so remaln ls compleLely conLrary Lo Lhe mandaLory characLer of soclal [usLlce
leglslaLlon

1hlrd whlle Lhe ma[orlLy sLaLes LhaL a sLock dlsLrlbuLlon opLlon agreemenL can only be valld lf
Lhe ma[orlLy of Lhe shares or Lhe conLrol of Lhe corporaLlon ls ln Lhe hands of Lhe farmers Lhey
sLlll ruled LhaL Lhe docLrlne of operaLlve facLs led Lhem Lo unquallfledly valldaLe Lhe presenL
corporaLe arrangemenL whereln Lhe lW8s conLrol only 33 of Lhe shares of peLlLloner PLl
wlLhouL orderlng ln Lhe dlsposlLlve porLlon of Lhe ueclslon a condlLlon precedenL Lo Lhe holdlng
of Lhe referendum Lhe resLrucLurlng of PLl whereby ma[orlLy conLrol ls flrmly lodged ln Lhe
lW8s

lourLh Lhe ma[orlLy employ Lhe docLrlne of operaLlve facLs Lo [usLlfy Lhe voLlng opLlon even lf
[urlsprudence allows Lhls docLrlne Lo be applled only ln Lhe exLreme case ln whlch equlLy
demands lL 1he docLrlne of operaLlve facLs applles only Lo prevenL a resulLlng ln[usLlce lf Lhe
courLs were Lo deny legal effecL Lo acLs done ln good falLh pursuanL Lo an lllegal leglslaLlon or
perhaps even execuLlve acLlon buL prlor Lo Lhe [udlclal declaraLlon of Lhe nulllLy of Lhe
governmenL acLlon Pere Lhere ls no room for Lhe appllcaLlon of Lhe equlLy [urlsdlcLlon of Lhe
CourL when Lhe CA8L ln SecLlon 31 caLegorlcally provldes for dlrecL land dlsLrlbuLlon ln Lhe
evenL a sLock dlsLrlbuLlon ls noL compleLed

llfLh assumlng equlLy were Lo be applled Lhen lL should be applled ln favor of Lhe lW8s by
orderlng dlrecL land dlsLrlbuLlon because LhaL ls Lhe lnequlLy LhaL conLlnues Lo fesLer LhaL Lhe
lW8s who have been promlsed ownershlp of Lhe lands Lhey Llll are denled Lhe same LwenLy
Lhree years afLer Lhe passage of CA8L

SlxLh Lhe ma[orlLy ruled LhaL Lhe lssue of consLlLuLlonallLy of Lhe sLock dlsLrlbuLlon opLlon under
SecLlon 31 of Lhe Comprehenslve Agrarlan 8eform Law 8epubllc AcL no 6637 ls noL Lhe lls
moLa of Lhe case hence Lhe lssue of consLlLuLlonallLy should be avolded lf Lhere ls anoLher
basls for Lhe courL Lo rule on Lhe case ?eL Lhe ma[orlLy proceeded Lo dlscuss and even rule ln
favor of lLs consLlLuLlonallLy

Should Lhere be no reversal of Lhe above aberranL rullng allowlng Lhe lW8s Lo voLe Lo remaln ln
PLl Lhe only way for Lhe rullng Lo noL work Loo grave an ln[usLlce ls lf peLlLloner PLl ls requlred
Lo be resLrucLured ln such a way (1) LhaL Lhe correcL valuaLlon of Lhe lands vlsvls nonland
asseLs be made and (2) LhaL no less Lhan 31 of Lhe conLrolllng shares as well as Lhe beneflclal
ownershlp of peLlLloner PLl be ln Lhe hands of quallfled lW8s unless Lhls ls done uA8 should
noL even proceed Lo conducL a referendum glvlng Lhe lW8s Lhe cholce Lo sLay ln a corporaLlon
of whlch Lhey have no conLrol

l poslL as !usLlce ArLuro u 8rlon does LhaL lW8s be lmmedlaLely empowered Lo dlspose of Lhe
lands as Lhey so deem flL l dlsagree wlLh Lhe ma[orlLy LhaL Lhose who wlll opL Lo leave Lhe SuCA
can only dlspose of Lhelr lands no less Lhan Len (10) years afLer Lhe reglsLraLlon of Lhe cerLlflcaLe
of land ownershlp award (CLCA) or Lhe emanclpaLlon paLenL (L) and noL unLll Lhey have fully
pald Lhe purchase prlce Lo Lhe Land 8ank of Lhe hlllpplnes (L8) 1hese farmers have walLed
for decades for Lhe recognlLlon of Lhelr rlghLs under Lhe Comprehenslve Agrarlan 8eform Law
(CA8L) WheLher we use !usLlce 8rlon's sLarLlng polnL of 11 May 1989 or my sLarLlng polnL of 11
May 1991 LwenLy years have lapsed and Lhe land has been locked under agrlculLural use all
LhaL Llme wlLh no opporLunlLy Lo explolL lLs value for oLher purposes We should allow Lhe
farmers Lhe chance Lo rlde on Lhe cresL of economlc progress by glvlng Lhem Lhe chance Lo
engage ln Lhe markeL noL only as enLrepreneurs as corporaLe or cooperaLlve farmers buL also
as lessors or even as real esLaLe sellers 1he CourL should allow Lhe uA8 Lo devlse a mechanlsm
LhaL would enable dlrecL land Lransfer Lo buyers or codevelopmenL parLners so LhaL Lhe lands
and Lhe farmers can Lruly be free 1hls ls where Lhe CourL's equlLy [urlsdlcLlon can welgh ln
favor of Lhe farmers Lo cuL down Lhe bureaucraLlc red Lape so LhaL genulne economlc
freedom on Lhelr parL can be reallzed noLhlng can be more economlcally sLlfllng Lhan Lo
condemn Lhe use of Lhe land Lo only one agrlculLural and Lo deny Lhe lW8s Lhe besL
economlc use of Lhe land for such a prolonged perlod of Llme

We musL also noL lose slghL of Lhe facL LhaL 3290 hecLares of Lhe Paclenda LulslLa lands have
already been reclasslfled lnLo nonagrlculLural uses lndusLrlal commerclal and resldenLlal by
Lhe Lhen munlclpallLy of 1arlac (whlch ls now a clLy) lf Lhere would agaln be any appllcaLlon of
Lhe equlLy [urlsdlcLlon of Lhe courL lL ls here where equlLy can be applled and Lhe farmers musL
be allowed Lo Lake advanLage of Lhls upgraded classlflcaLlon

l have also proposed LhaL Lhe [usL compensaLlon Lo 1AuLCC/PLl be flxed aL Lhe currenL falr
markeL value as deflned by laws regulaLlons and [urlsprudence whlch ls aL Lhe Llme of Lhe
Laklng 1hls ls Lhe only loglcal concluslon from Lhe ponencla of !usLlce resblLero ! velasco !r
and Lhe oplnlon of !usLlce 8rlon boLh of Lhem and l would requlre peLlLloner PLl Lo reLurn Lo
Lhe lW8s Lhe proceeds from Lhe sale of Lhe lands sold or Lransferred aL Lhe Lhen prevalllng
markeL raLes 1he ueclslon and Lhose Cplnlons Lherefore flx Lhe [usL compensaLlon aL falr
markeL value aL Lhe Llme when Lhe Lransfer LransacLlon Look place preclsely for Lhe reason
LhaL Lhey recognlze LhaL Lhe purchase prlce ls Lhe [usL compensaLlon lL ls noL falr Lo requlre
1AuLCC or peLlLloner PLl Lo accepL less Lhan falr markeL value lf whaL ls belng requlred from
Lhem ls Lhe paymenL Lo Lhe quallfled lW8s of Lhe proceeds of Lhe sale of Lhose lands earller
sold or dlsposed of aL falr markeL value 1here ls an ob[ecLlon LhaL Lo peg Lhe [usL compensaLlon
aL falr markeL value would mean PLl lands would be prohlblLlvely expenslve for Lhe lW8s Lo
acqulre and Lhus Lhey can never pay off Lhe purchase prlce Lherefor 8uL Lo rule oLherwlse ls
un[usL Lo PLl and conLrary Lo Lhe sLaLuLory requlremenL of paymenL Lo landowners of [usL
compensaLlon aL falr markeL value lL ls for uA8 Lo faclllLaLe all klnds of economlc arrangemenLs
whereby Lhe farmers can ulLlmaLely pay off Lhe value of Lhe land lncludlng Lhe dlrecL Lransfer
of Lhe land Lo buyers

l dld noL go Lhe rouLe proposed by !usLlce 8rlon LhaL Lhe [usL compensaLlon be flxed as of 11
May 1989 and LhaL 1AuLCC or peLlLloner PLl noL be awarded any lnLeresL on Lhe amounL Lhey
should have been pald 1here would be ln[usLlce ln such a proposal because noL only ls Lhls
approach lnconslsLenL wlLh !usLlce 8rlon's poslLlon LhaL Lhe markeL prlce pald by LlCC be glven
Lo Lhe lW8s Lhere have already been many lmprovemenLs lnLroduced by 1AuLCC or peLlLloner
PLl slnce LhaL Llme and Lo deny Lhem compensaLlon for Lhe value elLher of Lhose lndusLrlal
frulLs (Lhe lmprovemenLs) or of Lhe clvll frulLs (lnLeresL on Lhe [usL compensaLlon) would be
serlously un[usL 8egardless of Lhe hlsLory of Lhe land lmprovemenLs have been lnLroduced by
1AuLCC/PLl for whlch Lhls CourL musL allow compensaLlon

lL ls noL rlghL for Lhls CourL Lo dlsLlngulsh beLween Lwo classes of persons whose lands Lhe law
has sub[ecLed Lo exproprlaLlon by vlrLue of elLher compulsory acqulslLlon under CA8L or oLher
lawful conflscaLory power such as emlnenL domaln and Lhen Lo condemn CA8L orlglnal
landowners Lo an lnferlor poslLlon by denylng Lhem compensaLlon aL falr markeL value vlsavls
oLhers whose properLles are sub[ecLed Lo compulsory acqulslLlon buL noL by land reform LeL
Lhls be an acld LesL for Lhe governmenL wheLher lL wanLs and ls able Lo ablde by a sLandard of
falrness appllcable Lo all klnds of landowners

lacLual AnLecedenLs

Cn 13 !une 1988 Lhe CA8L Look effecL1 1he CA8L was enacLed Lo promoLe soclal [usLlce for
landless farmers and provlde a more equlLable dlsLrlbuLlon and ownershlp of land wlLh due
regard Lo Lhe rlghLs of landowners Lo [usL compensaLlon and Lo Lhe ecologlcal needs of Lhe
naLlon2 1he CA8L ls a soclal [usLlce and poverLy allevlaLlon program whlch seeks Lo empower
Lhe llves of agrarlan reform beneflclarles Lhrough equlLable dlsLrlbuLlon and ownershlp of Lhe
land based on Lhe prlnclple of land Lo Lhe Llller3 lL was deslgned Lo llberaLe Lhe llllplno
farmer from Lhe shackles of landlordlsm and Lransform hlm lnLo a selfrellanL clLlzen who wlll
parLlclpaLe responslbly ln Lhe affalrs of Lhe naLlon4

under Lhe CA8L corporaLlons LhaL own agrlculLural lands have Lwo opLlons

(a) Land Lransfer opLlon volunLarlly Lransfer Lhe ownershlp of Lhe land Lo Lhe governmenL or Lo
quallfled beneflclarles or

(b) SLock dlsLrlbuLlon opLlon dlvesL or glve quallfled beneflclarles caplLal sLocks ln proporLlon
Lo Lhe value of Lhe agrlculLural lands devoLed Lo agrlculLural acLlvlLles relaLlve Lo Lhe company's
LoLal asseLs3

1arlac uevelopmenL CorporaLlon (1AuLCC) a domesLlc corporaLlon prlnclpally engaged ln
agrlculLural pursulLs owned and operaLed a farm known as Paclenda LulslLa whlch was
covered under Lhe CA8L6 Paclenda LulslLa ls a 6443hecLare agrlculLural land7 LhaL sLraddles
Lhe munlclpallLles of 1arlac Concepclon and La az ln 1arlac provlnce8 AL Lhe Llme Lhere were
6296 farm workers who were quallfled as beneflclarles (herelnafLer lW8s) under Lhe CA8L9

1he managemenL of 1AuLCC and Lhe lW8s allegedly agreed Lo a sLock dlsLrlbuLlon plan
lnsLead of a land Lransfer 1o faclllLaLe Lhe plan boLh parLles agreed Lo creaLe a splnoff
corporaLlon LhaL would recelve Lhe agrlculLural lands and farm relaLedproperLles from
1AuLCC10 ln exchange lW8s would be glven shares ln Lhe splnoff corporaLlon ln proporLlon
Lo Lhe value of Lhe agrlculLural lands11

1hus 1AuLCC formed and organlzed a splnoff corporaLlon Paclenda LulslLa lnc (PLl) whlch
ls Lhe peLlLloner ln Lhe lnsLanL case12 eLlLloner PLl's prlmary purpose was Lo engage ln and
carry on Lhe buslness of planLlng culLlvaLlon producLlon purchase sale barLer or exchange of
all agrlculLural producLs and Lo own operaLe buy sell and recelve as securlLy lands Lo ralse
such producLs or as reasonably and necessarlly requlred by Lhe LransacLlon of Lhe lawful
buslness of Lhe corporaLlon13

Cn 22 March 1989 1AuLCC asslgned and conveyed Lo peLlLloner PLl approxlmaLely 4916
hecLares of agrlculLural lands14 and oLher properLles relaLed Lo Lhe former's agrlculLural
operaLlons ln exchange for shares of sLock ln Lhe splnoff corporaLlon13

Cn 11 May 1989 peLlLloner PLl and 1AuLCC enLered lnLo a Memorandum of AgreemenL wlLh
Lhe lW8s for a sLock dlsLrlbuLlon opLlon wlLh respecL Lo Lhe agrlculLural lands ln Paclenda
LulslLa16 1he SuCA provldes LhaL

1 1he percenLage of Lhe value of Lhe agrlculLural land of Paclenda LulslLa (19663000000) ln
relaLlon Lo Lhe LoLal asseLs (39033422000) Lransferred and conveyed Lo Lhe SLCCnu A81?
peLlLloner PLl ls 33296 LhaL under Lhe law ls Lhe proporLlon of Lhe ouLsLandlng caplLal
sLock of Lhe SLCCnu A81? whlch ls 33333146200 or 333331462 shares wlLh a par value
of 100 per share LhaL has Lo be dlsLrlbuLed Lo Lhe 1Pl8u A81? lW8s under Lhe sLock
dlsLrlbuLlon plan Lhe sald 33296 Lhereof belng 11839197683 or 11839197683 shares

2 1he quallfled beneflclarles of Lhe sLock dlsLrlbuLlon plan shall be Lhe farmworkers who
appear ln Lhe annual payroll lncluslve of Lhe permanenL and seasonal employees who are
regularly or perlodlcally employed by Lhe SLCCnu A81?

3 AL Lhe end of each flscal year for a perlod of 30 years Lhe SLCCnu A81? shall arrange wlLh
Lhe ll8S1 A81? 1AuLCC Lhe acqulslLlon and dlsLrlbuLlon Lo Lhe 1Pl8u A81? on Lhe basls of
number of days worked and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of 11839197683 shares
of Lhe caplLal sLock of Lhe SLCCnu A81? LhaL are presenLly owned and held by Lhe ll8S1
A81? unLll such Llme as Lhe enLlre block of 11839197683 shares shall have been compleLely
acqulred and dlsLrlbuLed Lo Lhe 1Pl8u A81?


4 1he SLCCnu A81? shall guaranLee Lo Lhe quallfled beneflclarles of Lhe sLock dlsLrlbuLlon
plan LhaL every year Lhey wlll recelve on Lop of Lhelr regular compensaLlon an amounL LhaL
approxlmaLes Lhe equlvalenL of Lhree (3) percenL of Lhe LoLal gross sales from Lhe producLlon
of Lhe agrlculLural land wheLher lL be ln Lhe form of cash dlvldends or lncenLlve bonuses or
boLh

3 Lven lf only a parL or fracLlon of Lhe shares earmarked for dlsLrlbuLlon wlll have been
acqulred from Lhe ll8S1 A81? and dlsLrlbuLed Lo Lhe 1Pl8u A81? Lhe ll8S1 A81? shall
execuLe aL Lhe beglnnlng of each flscal year an lrrevocable proxy valld and effecLlve for one (1)
year ln favor of Lhe farmworkers appearlng as shareholders of Lhe SLCCnu A81? aL Lhe sLarL
of Lhe sald year whlch wlll empower Lhe 1Pl8u A81? or Lhelr represenLaLlve Lo voLe ln
sLockholders' and board of dlrecLors' meeLlngs of Lhe SLCCnu A81? convened durlng Lhe year
Lhe enLlre 33296 of Lhe ouLsLandlng caplLal sLock of Lhe SLCCnu A81? earmarked for
dlsLrlbuLlon and Lhus be able Lo galn such number of seaLs ln Lhe board of dlrecLors of Lhe
SLCCnu A81? LhaL Lhe whole 33296 of Lhe shares sub[ecL Lo dlsLrlbuLlon wlll be enLlLled Lo

6 ln addlLlon Lhe SLCCnu A81? shall wlLhln a reasonable Llme subdlvlde and allocaLe for free
and wlLhouL charge among Lhe quallfled famllybeneflclarles resldlng ln Lhe place where Lhe
agrlculLural land ls slLuaLed resldenLlal or homeloLs of noL more Lhan 240 sqm each wlLh each
famllybeneflclary belng assured of recelvlng and ownlng a homeloL ln Lhe barangay where lL
acLually resldes on Lhe daLe of Lhe execuLlon of Lhls AgreemenL

7 1hls AgreemenL ls enLered lnLo by Lhe parLles hereln ln Lhe splrlL of Lhe Comprehenslve
Agrarlan 8eform rogram (CA8) of Lhe governmenL and wlLh Lhe supervlslon of Lhe
ueparLmenL of Agrarlan 8eform wlLh Lhe end ln vlew of lmprovlng Lhe loL of Lhe quallfled
beneflclarles of Lhe sLock dlsLrlbuLlon plan and obLalnlng for Lhem greaLer beneflLs (Lmphasls
supplled)

ln brlef Lhe lW8s were enLlLled Lo 3329 of Lhe LoLal caplLal sLock of peLlLloner PLl Lhe
equlvalenL of Lhe value of Lhe agrlculLural lands compared wlLh lLs LoLal asseLs17 Slnce
peLlLloner PLl's ouLsLandlng caplLal shares of sLock amounLed Lo a LoLal of 333331462 Lhe
lW8s were enLlLled Lo 11839197683 shares under Lhe SuCA18 1hese shares were Lo be
dlsLrlbuLed for free aL Lhe end of each flscal year for a perlod of LhlrLy years Lo quallfled lW8s
on Lhe basls of mandays19

Cn 28 SepLember 1989 Lhe governmenL conducLed a consulLaLlve meeLlng for Lhe beneflL of
Lhe leaders of Lhe lW8s ln Paclenda LulslLa where Lhey were presenLed wlLh Lhe varlous
opLlons avallable under Lhe Comprehenslve Agrarlan 8eform rogram (CA8) and Lhe sallenL
feaLures of Lhe posslble buslness arrangemenLs under Lhe land dlsLrlbuLlon opLlon20
SubsequenLly an lnformaLlon campalgn was conducLed ln Lhe Len affecLed barangays Lo explaln
Lo Lhe lW8s Lhe dlfferenL schemes of ownershlp under Lhe land Lransfer opLlon and oLher
opLlons avallable under Lhe CA821

1he SuCA was slgned by 3898 lW8s ouL of a LoLal work force of 6296 lW8s or 929 of Lhe
lW8s22 SubsequenLly a referendum was conducLed by publlc respondenL ueparLmenL of
Agrarlan 8eform (uA8) where 3117 ouL of Lhe 3313 lW8s parLlclpaLlng voLed ln favor of Lhe
sLock dlsLrlbuLlon only 132 lW8s preferred land Lransfer23 1hereafLer peLlLloner PLl
submlLLed Lhe SuCA for approval Lo Lhe uA824

Cn 06 november 1989 publlc respondenL resldenLlal Agrarlan 8eform Councll (A8C) Lhrough
Lhen uA8 SecreLary Mlrlam uefensorSanLlago lnformed peLlLloner PLl of Lhe favorable
endorsemenL of Lhe SuCA buL ldenLlfled some lssues for Lhe laLLer's conslderaLlon and revlslon
such as Lhe mechanlcs of Lhe sLock dlsLrlbuLlon and Lhe maLLer of Lhe dlluLlon of Lhe shares23

Cn 14 november 1989 peLlLloner PLl ln response clarlfled Lo Lhen uA8 SecreLary uefensor
SanLlago several maLLers regardlng Lhe SuCA speclflcally Lhe dlluLlon of Lhe shares of lW8s
Lhe mechanlcs for Lhe dlsLrlbuLlon of Lhe shares Lhe acLual number of board seaLs Lhe
dlsLrlbuLlon of home loLs and Lhe Lhree percenL cash dlvldend26

Cn 21 november 1989 publlc respondenL A8C unanlmously approved Lhe SuCA of 1AuLCC
and peLlLloner PLl for Lhe Paclenda LulslLa farm27

Accordlng Lo peLlLloner PLl28 from Lhe Llme Lhe SuCA was lmplemenLed ln 1989 Lhe lW8s
recelved Lhe followlng beneflLs under Lhe sLock dlsLrlbuLlon plan

a 1hree bllllon pesos Salarles wages and frlnge beneflLs from 1989 2004

b llfLynlne mllllon pesos Shares of sLock ln peLlLloner PLl glven for free ln flfLeen (13) years
lnsLead of LhlrLy (30) years29

c Cne hundred flfLy mllllon pesos 1hree percenL (3) share ln Lhe gross sales of Lhe
producLlon of Lhe agrlculLural lands of peLlLloner PLl

d 1hlrLyseven mllllon flve hundred Lhousand pesos 1hree percenL (3) share from Lhe
proceeds of Lhe sale of lands

e Pome loLs of Lwo hundred forLy square meLers each Lo 3274 famllles of lW8s for free30 and

f CLher beneflLs31

Cn 10 AugusL 1993 peLlLloner PLl applled for Lhe converslon of flve hundred (300) hecLares of
agrlculLural lands whlch were parL of Lhe 4916 hecLares ln Lhe Paclenda LulslLa farm sub[ecL of
Lhe SuCA32

1he affecLed lW8s flled Lhelr sLaLemenL of supporL for Lhe appllcaLlon for converslon wlLh Lhe
uA833 1he appllcaLlon was also unanlmously approved by Lhe four dlrecLors ln Lhe 8oard of
peLlLloner PLl who represenLed Lhe sLockholder lW8s34 Cn 01 SepLember 1993 Lhe
Sanggunlang 8ayan of 1arlac approved Lhe lnLegraLlon and/or lncluslon of Lhe LulslLa Land use
lan ln Lhe general zonlng map of Lhe Lhen MunlclpallLy of 1arlac and Lhus reclasslfled Lhree
Lhousand Lwo hundred nlneLy (3290) hecLares of Lhe Paclenda LulslLa land from agrlculLural Lo
commerclal lndusLrlal and resldenLlal purposes Lhe land reclasslflcaLlon belng requlred before
approval of Lhe appllcaLlon for converslon33

Cn 14 AugusL 1996 Lhe uA8 approved Lhe appllcaLlon for converslon and reclasslfled 300
hecLares of Paclenda LulslLa agrlculLural lands lnLo lndusLrlal use36

eLlLloner PLl Lransferred and sold Lwo hundred (200) hecLares of Lhe converLed lndusLrlal
lands Lo LulslLa 8ealLy lnc37 for a LoLal amounL of r30000000038

Meanwhlle Lhe old LlLles coverlng Lhe remalnlng 300 hecLares of converLed lands were
cancelled and a new consolldaLed LlLle was lssued ln Lhe name of peLlLloner PLl over LhaL
porLlon of Lhe land39 Cn 13 uecember 1996 peLlLloner PLl asslgned Lhe same 300hecLare
properLy40 Lo CenLennary Poldlngs lnc ln exchange for 12000000 shares ln Lhe laLLer's
company41 A new cerLlflcaLe of LlLle was subsequenLly lssued ln Lhe name of CenLennary
Poldlngs42

1hereafLer peLlLloner PLl enLered lnLo a !olnL venLure AgreemenL wlLh oLher corporaLe
enLlLles43 Lo form LulslLa lndusLrlal ark CorporaLlon (LlCC) whlch was envlsloned Lo be Lhe
corporaLe vehlcle LhaL would purchase and develop Lhe converLed lndusLrlal land ln Paclenda
LulslLa44 AfLer lL was creaLed and organlzed LlCC agreed Lo develop Lhe 300hecLare
properLy lnLo a flrsLclass lndusLrlal esLaLe43 and purchased Lhe properLy from CenLennary
Poldlngs for r73000000046

under Lhe conLracL of sale CenLennary Poldlngs guaranLeed LhaL Lhere were no Lhlrd parLles
wlLh any rlghL or clalm over Lhe properLy47 and LhaL lL had duly obLalned a valld converslon of
Lhe properLy for use as an lndusLrlal esLaLe48 Moreover LlCC alleged LhaL aL Lhe Llme lL
acqulred Lhe properLy from CenLennary Poldlngs Lhe only annoLaLlons found ln Lhe LlLle were
Lhe SecreLary's CerLlflcaLe ln favor of 1ereslLa Lopa Lhe SecreLary's CerLlflcaLe ln favor of
ShlnLaro Mural and Lhe converslon of Lhe properLy from agrlculLural Lo lndusLrlal and resldenLlal
use49

ursuanL Lo Lhe sale a new LlLle was lssued ln Lhe name of LlCC coverlng Lhe 300 hecLare
properLy30 1hls LlLle was laLer on amended Lo accounL for Lhe parLlal subdlvlslon of Lhe 300
hecLare properLy lnLo Lwo separaLe loLs of 180 hecLares and 4 hecLares covered by Lwo
separaLe LlLles31 1he remalnlng 113 hecLares of Lhe orlglnal properLy remalned under LlCC's
orlglnal LlLle32

ln CcLober 1996 LlCC morLgaged lLs properLy ln Paclenda LulslLa Lo 8lzal Commerclal 8anklng
CorporaLlon (8C8C) Lo guaranLy Lhe paymenL of a r300000000 loan whlch was annoLaLed ln
LlCC's LlLle over Lhe properLy33

1he enLlre 300hecLare lndusLrlal esLaLe was LhereafLer deslgnaLed by Lhen resldenL lldel
8amos as a speclal economlc zone (Lhe LulslLa lndusLrlal ark ll) by vlrLue of hls powers under
Lhe Speclal Lconomlc Zone AcL of 199334 1he same lndusLrlal esLaLe pro[ecL of LlCC over Lhe
300hecLare land ln Paclenda LulslLa was also endorsed and supporLed by Lhe Sanggunlang
8ayan of Lhe MunlclpallLy of 1arlac33

LlCC clalms LhaL from 1998 Lo 2001 lL made developmenLs Lo Lhe 300hecLare properLy
Lhrough lLs conLracLor Pazama hlllpplnes lnc whlch lncluded maln roads and subroads wlLh
proper dralnage a power conLrol house deep well and waLer Lanks a dralnage reservolr and
sewerage LreaLmenL planL a LelecommunlcaLlon sysLem underground elecLrlcal dlsLrlbuLlon
llnes concreLe perlmeLer securlLy fences and a securlLy house36 LlCC furLher alleges LhaL lL
pald uS$1478293620 Lo lLs conLracLor for Lhe sald lmprovemenLs and developmenLs Lo Lhe
land37

Cn 23 november 2004 LlCC asslgned and Lransferred Lhrough a daclon en pago Lhe Lwo
subdlvlded lands ln Paclenda LulslLa Lo 8C8C as full paymenL for lLs loan amounLlng Lo
r4316937321038 LlCC's LlLles Lo Lhese Lwo subdlvlded loLs were subsequenLly Lransferred
Lo 8C8C39 AL Lhe Llme of Lhe daclon en pago 8C8C clalmed LhaL Lhere was no annoLaLlon ln
Lhe LlLles of Lhe Lwo subdlvlded properLles whlch showed LhaL Lhere was any conLroversy or
adverse clalm excepL for Lhe deed of resLrlcLlons and lLs own real esLaLe morLgage over Lhe
properLles60

ln november 2009 Lhe 8ases Converslon uevelopmenL AuLhorlLy (8CuA) acqulred
approxlmaLely 84 hecLares of Lhe properLy as a rlghLofway for a segmenL of Lhe SC1Lx (Sublc
Clark1arlacLxpressway)61 An lnLerchange was also consLrucLed on a porLlon of Lhe 1arlac
Clark segmenL Lraverslng peLlLloner's landholdlngs for whlch Lhe governmenL pald r80000000
as [usL compensaLlon Lo peLlLloner PLl62 1he legal lssue relevanL Lo Lhls porLlon of Lhe land and
lLs use and exproprlaLlon by Lhe governmenL was never expounded ln full ln Lhe proceedlngs of
Lhe case buL peLlLloner PLl lnLroduced Lhe maLLer by manlfesLlng LhaL lL ln facL dlsLrlbuLed 3
of Lhe r80000000 Lo Lhe lW8s 1hls asserLlon however ls noL lncluded ln Lhe cerLlfled Lrue
reporL submlLLed by !ose Co[uangco Sons CrganlzaLlons 1arlac CperaLlons63 as Lhe reporL
deLalled all Lhe amounLs PLl gave Lo lLs workers only from 1989 Lo 200364

roceedlngs ln Lhe A8C

Cn 14 CcLober 2003 Lhe Supervlsory Croup of PLl (Supervlsory Croup) flled a
eLlLlon/roLesL wlLh publlc respondenL A8C praylng for Lhe renegoLlaLlon of Lhe SuCA or
alLernaLlvely Lhe dlsLrlbuLlon of peLlLloner PLl's agrlculLural lands Lo Lhe lW8s63 1he
peLlLlon/proLesL of Lhe Supervlsory Croup led by !ose !ullo Zunlga and Wlndsor Andaya
conLalned slxLyLwo slgnaLures of persons who clalmed Lo be supervlsors ln Paclenda LulslLa
and who held shares ln peLlLloner PLl66

eLlLloner PLl flled an Answer daLed 04 november 200467 reslsLlng Lhe demands of Lhe
Supervlsory Croup and relLeraLlng LhaL Lhe SuCA ls lmpervlous Lo any nulllflcaLlon
LermlnaLlon abrogaLlon or renegoLlaLlon slnce Lhe provlslons of Lhe law and Lhe rules have
been complled wlLh68

Cn 04 uecember 2003 prlvaLe respondenL Alyansang Mangagawang 8ukld ng Paclenda LulslLa
(AM8ALA) flled a separaLe eLlsyon ln Lhe ueparLmenL of Agrarlan 8eform69 rlvaLe
respondenL AM8ALA made a slmllar prayer for Lhe revocaLlon of Lhe SuCA ln Paclenda LulslLa
8ene Calang and noel Mallarl who were Lhe resldenL and vlce resldenL of AM8ALA
respecLlvely slgned Lhe peLlLlon70 eLlLloner PLl consequenLly flled an Answer Lo Lhe AM8ALA
peLlLlon71

Cn 22 november 2004 Lhen uA8 SecreLary 8ene vllla creaLed a Speclal 1ask lorce on Lhe
Paclenda LulslLa sLock dlsLrlbuLlon opLlon plan Lo revlew Lhe Lerms and condlLlons of Lhe SuCA
and evaluaLe Lhe compllance reporLs and Lhe merlLs of Lhe Lwo peLlLlons72 Cn 13 AugusL 2003
Lhe uA8 creaLed a Speclal 1eam Lo relnforce Lhe Speclal 1ask lorce

Cn 22 SepLember 2003 Lhe uA8's Speclal 1eam lssued Lhe 1ermlnal 8eporL where lL found LhaL
peLlLloner PLl had noL complled wlLh lLs obllgaLlons under Lhe law on Lhe lmplemenLaLlon of Lhe
sLock dlsLrlbuLlon plan73 Speclflcally Lhe 1ermlnal 8eporL ldenLlfled Lhe followlng defecLs and
vlolaLlons74 (a) absence of Lhe cerLlflcaLe of compllance slnce Lhe sLock dlsLrlbuLlon opLlon
plan had yeL Lo be fully compleLed (b) Lhe prolonged lmplemenLaLlon of Lhe dlsLrlbuLlon of
shares Lo lW8s for a LhlrLyyear perlod (c) converslon of porLlons of Lhe Paclenda LulslLa farm
(300 hecLares) for nonagrlculLural uses and (d) dlsLrlbuLlon of shares based on Lhe number of
days worked by Lhe lW8s

Cn 30 SepLember 2003 Lhe uA8 SecreLary uslng Lhe 1ermlnal 8eporL as basls recommended
Lo Lhe A8C LxecuLlve CommlLLee Lhe recall/revocaLlon of Lhe approval of Lhe SuCA and Lhe
compulsory acqulslLlon of peLlLloner PLl's agrlculLural lands ln reply Lo Lhe uA8 SecreLary's
recommendaLlons Lhe A8C LxecuLlve CommlLLee creaLed a A8C LxCom valldaLlon
CommlLLee Lo revlew and valldaLe Lhe uA8 SecreLary's flndlngs73

Cn 12 CcLober 2003 fourLeen lW8s allegedly flled Lhelr poslLlon paper before Lhe A8C
assalllng lLs fallure Lo Lackle Lhe consLlLuLlonallLy of SecLlon 31 of Lhe CA8L and llmlLlng lLs basls
for lnvalldaLlng Lhe SuCA for vlolaLlng Lhe sald provlslon and lLs lmplemenLlng rules76

Cn 29 november 2003 prlvaLe respondenLs Supervlsory Croup and AM8ALA Lhrough ALLy
!oberL ahllga of Lhe SenLro ara sa 1unay na 8epormang Agraryo loundaLlon (SLn18A) flled
Lhelr Memorandum argulng LhaL Lhe SuCA wlLh peLlLloner PLl was a blg mlsLake and a
monumenLal fallure77 1he consLlLuLlonallLy of Lhe CA8L's provlslons allowlng for Lhe sLock
dlsLrlbuLlon opLlon lLself was however noL ralsed

Cn 22 uecember 2003 afLer conducLlng hearlngs and recelvlng Lhe memoranda flled by Lhe
parLles Lhe A8C lssued 8esoluLlon no 20033201 (Lhe quesLloned A8C 8esoluLlon) whlch
afflrmed Lhe recommendaLlon Lo recall/revoke Lhe sLock dlsLrlbuLlon plan of 1AuLCC and
peLlLloner PLl and placed Lhelr lands under compulsory coverage or mandaLed land acqulslLlon
scheme of Lhe CA8 1he dlsposlLlve porLlon of Lhe quesLloned A8C 8esoluLlon reads

nCW 1PL8LlC8L on moLlon duly seconded 8LSCLvLu as lL ls PL8L8? 8LSCLvLu Lo approve
and conflrm Lhe recommendaLlon of Lhe A8C LxecuLlve CommlLLee adopLlng ln LoLo Lhe reporL
of Lhe A8C LxCom valldaLlon CommlLLee afflrmlng Lhe recommendaLlon of Lhe uA8 Lo
recall/revoke Lhe SuC plan of 1arlac uevelopmenL CorporaLlon/Paclenda LulslLa lncorporaLed

8LSCLvLu furLher LhaL Lhe lands sub[ecL of Lhe recalled/revoked 1uC/PLl SuC plan be
forLhwlLh placed under compulsory coverage or mandaLed land acqulslLlon scheme of Lhe
Comprehenslve Agrarlan 8eform rogram78 (Lmphasls supplled)

ursuanL Lo Lhe quesLloned A8C 8esoluLlon Lhen uA8 SecreLary nasser angandaman (publlc
respondenL angandaman) ordered Lhe acqulslLlon and dlsLrlbuLlon of Lhe enLlre agrlculLural
landholdlngs of peLlLloner PLl under Lhe compulsory acqulslLlon scheme of Lhe CA8L79

Cn 02 !anuary 2006 peLlLloner PLl moved for a reconslderaLlon of Lhe A8C 8esoluLlon80
rlvaLe respondenLs Supervlsory Croup and AMA8ALA LogeLher wlLh Lhe unlLed LulslLa
Worker's unlon (uLWu) as lnLervenor consequenLly flled Lhelr opposlLlon Lo peLlLloner PLl's
moLlon for reconslderaLlon81

1he uA8 subsequenLly lssued several noLlces of coverage over Lhe lands ln Paclenda LulslLa ln
Lhe name of 1AuLCC/PLl

1able of Covered Lands of Paclenda LulslLa

LocaLlon asa[es MunlclpallLy of Concepclon82 San Mlguel LulslLa ungoL and
8anLog ln 1arlac83 uumarals Slerra Lapaz84
Crand 1oLal of Areas under Lhe 1lLles (ln hecLares) 19093363 27366949 12919437
Cancelled 987311 6901378 2368139
Canal/8oad 11736 68949 303083
Capable 18096118 2069642283 10246213
1he Paclenda LulslLa lands ln Lhese noLlces of coverage also embraced Lhe 300hecLare loL LhaL
was earller converLed by Lhe uA8 for lndusLrlal use and now LlLled ln Lhe name of LlCC
lncludlng Lhe Lwo LlLles Lransferred Lo 8C8C Lhrough a daclon en pago86 Powever Lhe uA8
moLu proplo deslsLed from lmplemenLlng Lhe order of compulsory coverage over Lhe sald lands
ln splLe of Lhe noLlces of coverage87

AcLlng on Lhe pendlng moLlon for reconslderaLlon Lhe A8C Lxcom valldaLlon CommlLLee
headed by undersecreLary LrnesLo lneda of Lhe ueparLmenL of !usLlce recommended Lhe
dlsmlssal of peLlLloner PLl's moLlon88 1hls recommendaLlon was adopLed ln LoLo by Lhe A8C
Councll89

1hereafLer 3364 lndlvlduals clalmlng Lo be bona flde lW8s slgned and flled wlLh Lhe uA8
hundreds of separaLe peLlLlons90 All of Lhem clalmed LhaL Lhey had freely enLered Lhe SuCA
wlLh peLlLloner PLl and prayed LhaL Lhe SuCA noL be cancelled by Lhe uA8


roceedlngs ln Lhe CourL

Cn 01 lebruary 2006 wlLhouL awalLlng Lhe resoluLlon of lLs pendlng moLlon for
reconslderaLlon peLlLloner PLl flled Lhe lnsLanL 8ule 63 eLlLlon Lo nulllfy Lhe quesLloned A8C
8esoluLlon91 eLlLloner PLl lncluded ln Lhe eLlLlon a prayer for a Lemporary resLralnlng order
Lo hold Lhe lmplemenLaLlon of Lhe quesLloned A8C 8esoluLlon and Lo prevenL compulsory
coverage of Lhe lands under Lhe CA8L uesplLe Lhe uA8's own order Lo cease and deslsL from
lmplemenLlng Lhe noLlces of Coverage peLlLloner PLl neverLheless alleges LhaL Lhe uA8 was
sLlll benL on lmplemenLlng Lhe quesLloned A8C 8esoluLlon92

Cn 14 !une 2006 Lhe CourL granLed peLlLloner PLl's prellmlnary prayer for a Lemporary
resLralnlng order and en[olned publlc respondenLs from lmplemenLlng Lhe quesLloned A8C
8esoluLlon93

Cn 13 !uly 2006 publlc respondenLs Lhrough Lhe Cfflce of Lhe SollclLor Ceneral flled Lhelr
CommenL94

Cn 03 uecember 2006 prlvaLe respondenL noel Mallarl flled a ManlfesLaLlon and MoLlon wlLh
CommenL ALLached93 rlvaLe respondenL Mallarl manlfesLed LhaL he and oLher members of
AM8ALA had lefL Lhe organlzaLlon and founded Lhe larmworkers Agrarlan 8eform MovemenL
lnc (lA8M) 8espondenL Mallarl was [olned and supporLed by some oLher lW8s who afflxed
Lhelr slgnaLures ln Lhe eLlLlon96 1hey prayed LhaL Lhe new organlzaLlon be allowed Lo enLer lLs
appearance and/or lnLervene ln Lhe lnsLanL case and LhaL Lhe lnsLanL eLlLlon be dlsmlssed
8espondenL Mallarl subsequenLly flled a supplemenL Lo Lhe earller commenL ralslng Lhereln as
a subsLanLlve lssue Lhe unconsLlLuLlonallLy of Lhe sLock dlsLrlbuLlon opLlon under SecLlon 31 of
Lhe CA8L97

Cn 22 uecember 2006 prlvaLe respondenLs Supervlsory Croup98 and AM8ALA (Calang
Croup)99 flled Lhelr own CommenL/CpposlLlon Lhrough Lhelr counsel ALLy ahllga of SLn18A
who had earller represenLed Lhem ln Lhe A8C proceedlngs below100

Cn 30 May 2007 peLlLloner PLl flled a ConsolldaLed 8eply101 Lo Lhe commenLs flled by Lhe Lwo
prlvaLe respondenLs102 and publlc respondenLs103 eLlLloner assalled Lhe facL LhaL prlvaLe
respondenLs dld noL acLually represenL bona flde lW8s as shown by Lhe numerous and
separaLe peLlLlons slgned by 3364 lW8s flled ln Lhe A8C who had expressed Lhelr deslre Lo
malnLaln Lhe SuCA104

Cn 30 CcLober 2007 peLlLlonerlnlnLervenLlon 8C8C moved Lo lnLervene ln Lhe lnsLanL case
conslderlng LhaL Lhe Lwo subdlvlded loLs of Paclenda LulslLa LhaL were Lransferred Lo lL by vlrLue
of Lhe daclon en pago were lncluded ln Lhe noLlces of coverage lssued under Lhe auLhorlLy of
Lhe quesLloned A8C 8esoluLlon103 Cn 27 november 2007 LlCC llkewlse moved Lo lnLervene
ln Lhe lnsLanL case conslderlng LhaL Lhe uA8's noLlces of coverage also lncluded Lhe balance of
113 hecLares of converLed lndusLrlal land under 1C1 no 310986 whlch remalned under lLs
name106

ubllc respondenLs flled Lhelr consolldaLed commenL Lo Lhe peLlLlonslnlnLervenLlon of 8C8C
and LlCC argulng lnLer alla LhaL Lhe Lwo lnLervenor corporaLlons were noL lnnocenL
purchasers of land and LhaL 1AuLCC and peLlLloner PLl reneged ln Lhls commlLmenL Lo keep
Paclenda LulslLa lnLacL and unfragmenLed107 ln conLrasL peLlLloner PLl ralsed no ob[ecLlon
Lo Lhe lnLervenLlon of 8C8C and LlCC 1hereafLer 8C8C and LlCC flled Lhelr respecLlve replles
Lo publlc respondenL's consolldaLed commenL108

1he CourL Lhen requlred (a) peLlLloner PLl Lo submlL cerLlfled Lrue coples of Lhe sLock and
Lransfer books submlLLed Lo Lhe SecurlLles and Lxchange Commlsslon showlng compllance wlLh
Lhe SuCA and (b) Lhe uA8 SecreLary Lo submlL Lhe llsL of quallfled lW8s ln Paclenda LulslLa aL
Lhe Llme Lhe SuCA was slgned on 11 May 1989109 ln compllance peLlLloner PLl submlLLed a
summary of sLock dlsLrlbuLlon Lo beneflclarles from 19891990 Lo 20032004 as follows110

Summary of Shares of SLock ulsLrlbuLlon
C? 19891990 Lo C? 20032004
SLaLus C18 ulsLrlbuLed Shares of SLock AcceleraLed Shares of SLock 1oLal Shares of SLock
lorLnlghLly 882 11309418 11309418 22618836
Weeklles 8397 47948819 47948819 93897638
1rash ro[ecL 2476 104374 104374 208748
1C1AL 11933111 39362611 39362611 118723222112
ubllc respondenLs llkewlse presenLed Lo Lhe CourL a llsL of quallfled lW8s who slgned Lhe
SuCA on 11 May 1989113

Cn 11 AugusL 2010 peLlLloner PLl and prlvaLe respondenLs AM8ALA (prlnclpally Lhrough one of
lLs facLlons Lhe Mallarl Croup)114 Lhe Supervlsory Croup113 and Lhe uLWu116 wlLh Lhe
concurrence of 1AuLCC submlLLed Lo Lhe CourL a proposed compromlse agreemenL for
approval117 under Lhe proposed compromlse agreemenL Lhe parLles would respecL Lhe
lndlvldual declslons of Lhe lW8s as Lo wheLher Lhey would sLay wlLh Lhe sLock dlsLrlbuLlon
conLalned ln Lhe SuCA or would proceed wlLh land dlsLrlbuLlon118 eLlLloner PLl
subsequenLly manlfesLed LhaL based on a census conducLed on 68 AugusL 2010 among Lhe
allegedly 10302 quallfled lW8s 7302 voLed for sLock dlsLrlbuLlon and 139 voLed for land
dlsLrlbuLlon119

Cn 11 AugusL 2010 Lhe Lhree groups LhaL slgned Lhe proposed compromlse agreemenL
namely AM8ALAMallarl Croup Lhe Supervlsory Croup and uLWu LermlnaLed Lhe servlces of
ALLy ahllga of SLn18A Cn 13 AugusL 2010 ALLy CarmellLo SanLoyo enLered hls appearance as
Lhe new counsel for Lhe Lhree groups

rlvaLe respondenL AM8ALA now represenLed by 8ene Calang (AM8ALACalang Croup)
Lhrough Lhe same ALLy ahllga of SLn18A submlLLed lLs opposlLlon Lo Lhe compromlse
agreemenL and argued LhaL lL was enLered lnLo wlLhouL auLhorlLy from Lhe lW8s and conLalned
sLlpulaLlons conLrary Lo law and publlc pollcy120 1hereafLer ALLy Capulong of Lhe ubllc
lnLeresL Law CenLer121 also enLered hls appearance as lead counsel for 8ene Calang and as
collaboraLlng Counsel for AM8ALACalang Croup122

SubsequenLly Lhe lA8M group Lhrough lLs counsel ALLy ChrlsLlan Monsod of Lhe 8lghLs
neLwork moved Lo lnLervene ln Lhe lnsLanL case and soughL permlsslon Lo flle Lhelr commenL
lnlnLervenLlon123 AlLhough lL parLlclpaLed Lhrough Lhe manlfesLaLlon and moLlon124
prevlously flled by noel Mallarl Lhe lA8M Croup's laLesL commenLlnlnLervenLlon was now
slgned by lLs offlcers and members led by 8enaLo Lallc123 and excluded Mallarl who had
apparenLly swlLched sldes back Lo Lhe AM8ALAMallarl Croup and [olned ln Lhe proposed
compromlse agreemenL wlLh peLlLloner PLl126 lA8M adopLed by reference Lhe earller
manlfesLaLlon flled on lLs behalf by Mallarl and prayed for Lhe dlsmlssal of Lhe lnsLanL
peLlLlon127 lL llkewlse asked LhaL SecLlon 31 of CA8L allowlng for sLock dlsLrlbuLlon Lo farmer
beneflclarles be declared unconsLlLuLlonal ln lLs 8esoluLlon daLed 17 AugusL 2010 Lhe CourL
deferred acLlon on Lhe lA8M Croup's laLesL requesL for lnLervenLlon

1he CourL heard Lhe parLles on oral argumenLs on 18128 and 24 AugusL 2010129

1he CourL also creaLed a Speclal CommlLLee Lo medlaLe beLween Lhe conLendlng parLles130
Powever Lhey falled Lo reach an accepLable seLLlemenL lL musL be emphaslzed LhaL Lhe
creaLlon of Lhls CommlLLee should noL serve as an lndlcaLor of any CourL pollcy on wheLher
medlaLlon can sLlll be ordered ln cases flled before lL or where oral argumenLs have already
been conducLed 1o clarlfy Lhe CourL has no exlsLlng pollcy on such maLLers

AfLer Lhe oral argumenLs Lhe CourL requlred parLles Lo submlL Lhelr respecLlve memoranda and
documenLs relaLlve LhereLo131 1he parLles flled Lhe followlng

a eLlLloner PLl's Memorandum daLed 23 SepLember 2010 praylng for Lhe reversal of Lhe
quesLloned A8C 8esoluLlon and declarlng Lhe noLlce of coverage null and vold132

b rlvaLe respondenLs AM8ALAMallarl Croup uLWu (Lldlfonso lngol) and Supervlsory Croup
(Zunlga and Andaya) Memorandum daLed 12 SepLember 2010 Lhrough ALLy SanLoyo whlch
prayed LhaL Lhe quesLloned A8C 8esoluLlon also be declared null and vold and seL aslde and
Lhe Compromlse AgreemenL daLed 06 AugusL 2010 be approved133

c rlvaLe respondenL AM8ALACalang Croup's Memorandum daLed 21 SepLember 2010
Lhrough ALLy ahllga of SLn18A praylng for Lhe afflrmance of Lhe quesLloned A8C 8esoluLlon
and orderlng Lhe acLual dlsLrlbuLlon of Lhe agrlculLural lands Lo Lhe lW8s134

d rlvaLe respondenL AM8ALACalang Croup's Memorandum Lo ulscuss re[udlclal lssues
daLed 23 SepLember 2010 Lhrough ALLy Capulong of Lhe ubllc lnLeresL Law CenLer praylng
LhaL Lhe CourL dlsregard Lhe compromlse agreemenL and/or referendum and order Lhe
dlsLrlbuLlon of Lhe land Lo Lhe quallfled beneflclarles133

e 8espondenLlnLervenor lA8M Croup's Memorandum daLed 24 SepLember 2010 Lhrough
ALLy Monsod of Lhe 8lghLs neLwork praylng for Lhe declaraLlon of SecLlon 31 of Lhe CA8L as
unconsLlLuLlonal and Lhe dlsmlssal of Lhe lnsLanL eLlLlon136

f ubllc respondenLs A8C and uA8 Memorandum daLed 23 SepLember 2010 Lhough Lhe
Cfflce of Lhe SollclLor Ceneral praylng for Lhe dlsmlssal of Lhe lnsLanL eLlLlon137

g eLlLlonerlnlnLervenLlon LlCC's Memorandum daLed 23 SepLember 2010 argulng LhaL lL ls
an lnnocenL purchaser for value of Lhe lands sub[ecL of compulsory coverage under Lhe CA8L
and LhaL lLs LlLle cannoL be collaLerally aLLacked138 and

h eLlLlonerlnlnLervenLlon 8C8C's Memorandum daLed 23 SepLember 2010 praylng for Lhe
reversal and seLLlng aslde of Lhe quesLloned A8C 8esoluLlon and excluslon of Lhelr lands from
Lhe noLlce of compulsory coverage under Lhe CA8L139

lssues

1aklng cognlzance of Lhe argumenLs espoused by all of Lhe parLles Lhe CourL has slmpllfled Lhe
varlous facLual and legal conLroversles ralsed and wlll llmlL lLs dlsposlLlon Lo Lhe followlng
maLLers

l WheLher Lhe parLles speclflcally prlvaLe respondenLs Supervlsory Croup AM8ALA lA8M and
uLWu have a real lnLeresL ln Lhe presenL conLroversy lnvolvlng Lhe coverage of Lhe Paclenda
LulslLa land

ll WheLher we may rule on Lhe consLlLuLlonal challenge agalnsL Lhe valldlLy of a sLock
dlsLrlbuLlon plan under SecLlon 31 of Lhe CA8L

lll WheLher Lhe A8C or Lhe SLC has [urlsdlcLlon over Lhe lssue of valldlLy of Lhe SuCA and
consequenLly Lhe auLhorlLy Lo afflrm or revoke Lhe same

lv WheLher Lhere ls a legal and facLual basls Lo revoke Lhe SuCA and

v WheLher Lhe purchasers or Lransferees of Lhe converLed lands ln Paclenda LulslLa are
quallfled Lo be lnnocenL purchasers for value

8ullng

l

rlvaLe respondenLs Supervlsory Croup AM8ALA lA8M and uLWu represenLlng quallfled farm
worker beneflclarles enLlLled Lo Lhe beneflLs under Lhe SuCA are real parLles ln lnLeresL ln Lhe
lnsLanL case

1o quallfy a person Lo be a real parLy ln lnLeresL ln whose name an acLlon musL be
prosecuLed140 he musL appear Lo be Lhe presenL real owner of Lhe rlghL soughL Lo be
enforced141 lnLeresL wlLhln Lhe meanlng of Lhe rule means maLerlal lnLeresL an lnLeresL ln
lssue and Lo be affecLed by Lhe decree as dlsLlngulshed from mere lnLeresL ln Lhe quesLlon
lnvolved or a mere lncldenLal lnLeresL142 lL ls dlsLlngulshed from a mere expecLancy or a
fuLure conLlngenL or subordlnaLe143

ln flllng Lhe eLlLlon/roLesL wlLh Lhe uA8 prlvaLe respondenL Supervlsory Croup prlmarlly
soughL Lhe renegoLlaLlon of Lhe SuCA wlLh peLlLloner PLl rlvaLe respondenL clalmed LhaL lLs
members were enLlLled Lo Lhe rlghLs and prlvlleges under Lhe SuCA buL were noL able Lo en[oy
mosL of Lhem144

WlLh respecL Lo Lhe Supervlsory Croup lL appears Lhe slxLyLwo (62) slgnaLorles of prlvaLe
respondenL Supervlsory Croup's eLlLlon/roLesL ln Lhe uA8 were awarded a LoLal of 1073369
shares as deLalled ln Lhe slgnaLure sheeL143 1he llsL submlLLed by peLlLloner PLl Lo Lhe CourL
conflrmed LhaL prlvaLe respondenL Supervlsory Croup's spokespersons !ose !ullo Zunlga and
Wlndsor Andaya were beneflclarles and reclplenLs of shares under Lhe SuCA from 1989
2004146 ubllc respondenLs' records even show LhaL Zunlga was one of Lhe lW8s who
orlglnally slgned Lhe SuCA ln 1989147 Pavlng been reclplenLs of Lhe shares of sLock and oLher
beneflLs under Lhe SuCA prlvaLe respondenL Supervlsory Croup and lLs members clearly have a
real lnLeresL ln Lhe valldlLy and/or lmplemenLaLlon of Lhe SuCA As real parLles ln lnLeresL under
Lhe 8ules Lhey have sLandlng Lo ralse quesLlons regardlng Lhe same and pursue an acLlon wlLh
Lhe proper auLhorlLy

WlLh respecL Lo AM8ALA (boLh Lhe Mallarl and Calang Croup) prlvaLe respondenL AM8ALA
flled Lhe eLlsyon ln Lhe uA8 as quallfled lW8s enLlLled Lo recelve beneflLs under Lhe SuCA
8ene Calang and noel Mallarl (resldenL and vlceresldenL of prlvaLe respondenL AM8ALA)
represenLed Lhemselves as leaders of quallfled lW8s 1hey demanded from peLlLloner PLl
among oLhers Lhe paymenL of Lhelr shares from Lhe sale of converLed lands and alLernaLlvely
Lhe dlsLrlbuLlon of Lhe Paclenda LulslLa lands under compulsory acqulslLlon ln Lhe CA8L Slmllar
Lo Mr Zunlga of prlvaLe respondenL Supervlsory Croup Mr Mallarl's sLandlng Lo quesLlon Lhe
SuCA arlses from hls sLaLus as one of Lhe orlglnal slgnaLorles LhereLo148 Clearly Lhelr
subsLanLlal and maLerlal lnLeresL derlves from Lhe facL LhaL Lhey were enLlLled Lo beneflLs under
Lhe SuCA whlch Lhey had prevlously agreed Lo and slgned

1he represenLaLlves of prlvaLe respondenL AM8ALA were also reclplenLs of shares of sLock
under Lhe SuCA149 Lven lf Calang as head of prlvaLe respondenL AM8ALA allegedly sLarLed
hls employmenL wlLh Lhe company only ln !une 1990 afLer Lhe SuCA was slgned130 he sLlll
possesses a real lnLeresL ln Lhe agreemenL because he was ldenLlfled as one of Lhe beneflclarles
of Lhe sLock dlsLrlbuLlon opLlon 1herefore any rullng on Lhe SuCA wlLh respecL Lo lLs valldlLy or
lmplemenLaLlon wlll lnvarlably affecL Lhelr rlghLs and LhaL of oLher members of prlvaLe
respondenL AM8ALA who have clalms under Lhe sald agreemenL

ln any case peLlLloner PLl has expressly acknowledged LhaL prlvaLe respondenLs AM8ALA and
Supervlsory Croup are real parLleslnlnLeresL wlLh respecL Lo flllng Lhe peLlLlon before Lhe
uA8131 eLlLloner PLl's acknowledgemenL of prlvaLe respondenLs' lnLeresL ln Lhe case may
have been preclplLaLed by Lhelr proposed compromlse agreemenL submlLLed for approval Lo
Lhe CourL132 8egardless of Lhe CourL's resoluLlon of Lhe proposed compromlse agreemenL
peLlLloner PLl's admlsslon foreclosed Lhe lssue as Lo prlvaLe respondenLs' lnLeresL and/or rlghLs
as quallfled lW8s ln Lhe presenL acLlon Lo quesLlon Lhe SuCA

1he members of Lhe AMA8ALA Calang Croup whlch opposed Lhe compromlse agreemenL wlLh
peLlLloner PLl llkewlse clalm rlghLs under Lhe SuCA as lW8s and hence also possess a real
lnLeresL ln Lhls case lL wlll be recalled LhaL Lhe group ls represenLed by 8ene Calang who was
Lhe resldenL of AM8ALA aL Lhe Llme Lhe complalnL before Lhe A8C proceedlngs was flled133
1hereafLer Lhe prlvaLe respondenL AM8ALA spllL lnLo Lwo facLlons (Mallarl Croup and Calang
Croup) presumably arlslng from Lhelr dlsagreemenL wlLh respecL Lo Lhe proposed compromlse
agreemenL and Lhe change of counsel 1he AM8ALA Mallarl Croup whlch was represenLed by
ALLy SanLoyo favored Lhe approval of Lhe compromlse agreemenL whlle Lhe AM8ALA Calang
Croup lnslsLed on land dlsLrlbuLlon and reLalned lLs prevlous counsel ALLy ahllga of
SLn18A134 ln any evenL 8ene Calang slmllar Lo noel Mallarl also recelved shares of sLocks
from peLlLloner PLl under Lhe SuCA133 and Lhus has a real lnLeresL ln Lhe ouLcome of Lhe
case

Cn Lhe oLher hand lA8M was Lhe breakaway group from AM8ALA whlch was headed by noel
Mallarl when lL flrsL enLered lLs appearance ln Lhe CourL's proceedlngs136 When Mallarl
reLurned Lo AM8ALA Lhe offlcers and members of Lhe lA8M conLlnued Lo lnLervene ln Lhe
proceedlngs headed by 8enaLo Lallc and were represenLed by ALLy Monsod of Lhe 8lghLs
neLwork Members of Lhe lA8M all clalm Lo have been longLerm occupanLs resldenLs of and
workers aL Lhe Paclenda LulslLa lands and LhaL Lhey also own shares of peLlLloner PLl and
homeloLs arlslng from Lhe SuCA137 As beneflclarles under Lhe SuCA members of lA8M are
also real parLles ln lnLeresL slnce Lhey wlll be dlrecLly affecLed by Lhe valldlLy or lnvalldlLy of Lhe
SuCA

llnally uLWu flrsL lnLervened ln Lhe proceedlng aL Lhe A8C level when lL [olned Lhe
Supervlsory Croup and AM8ALA ln opposlng peLlLloner PLl's moLlon for reconslderaLlon of Lhe
quesLloned A8C resoluLlon138 Powever uLWu LogeLher wlLh Lhe oLher Lwo groups [olned
peLlLloner PLl ln seeklng Lhe CourL's approval of Lhe proposed compromlse agreemenL 1here ls
no denylng LhaL uLWu also has sLandlng ln Lhe lnsLanL case slnce lL noL only recelved beneflLs
under Lhe SuCA buL also dealL wlLh peLlLloner PLl ln enLerlng lnLo a compromlse agreemenL

ulLlmaLely quallfled lW8s who orlglnally consenLed Lo Lhe SuCA or Lhose who are enLlLled Lo
and/or recelved beneflLs under Lhe sald agreemenL have a subsLanLlal lnLeresL ln Lhe
ad[udlcaLlon of Lhe sLaLus and leglLlmacy of Lhe SuCA

eLlLlonerslnlnLervenLlon 8C8C and LlCC are 8eal arLles ln lnLeresL

eLlLlonerslnlnLervenLlon 8C8C and LlCC have a legal and subsLanLlal lnLeresL as Lhe presenL
owners of Lhe converLed lands sub[ecL of compulsory coverage under Lhe quesLloned A8C
8esoluLlon139 1he rlghLs of peLlLlonerslnlnLervenLlon over Lhe converLed lands whlch were
Lransferred Lo Lhem by peLlLloner PLl and CenLennary Poldlngs wlll be affecLed by Lhe
revocaLlon of Lhe SuCA and Lhe subsequenL lncluslon of Lhe Lransferred properLles ln
compulsory acqulslLlon 1helr lnLeresL sLems from belng owners of land LhaL was lncluded ln Lhe
noLlce of compulsory coverage 1helr rlghLs over porLlons of Lhe Paclenda LulslLa lands
prevlously owned by peLlLloner PLl and converLed lnLo lndusLrlal lands by Lhe uA8 wlll be
dlrecLly affecLed lf Lhe uA8 ls permlLLed Lo exproprlaLe Lhe same for dlsLrlbuLlon Lo quallfled
lW8s under Lhe CA8L Pence Lhey have a subsLanLlal and maLerlal lnLeresL ln Lhe ouLcome of
Lhe quesLloned A8C 8esoluLlon lnsofar as lL may posslbly deprlve Lhem of Lhelr rlghLs over Lhe
lands Lhey purchased

ll

1he consLlLuLlonal valldlLy of Lhe sLock dlsLrlbuLlon opLlon under Lhe CA8L was noL Llmely ralsed
and ls noL Lhe lls moLa ln Lhls case

8espondenLlnLervenor lA8M quesLloned Lhe valldlLy of Lhe sLock dlsLrlbuLlon opLlon of a
corporaLe landowner under SecLlon 31 of Lhe CA8L on Lhe ground LhaL lL ls ln vlolaLlon of Lhe
consLlLuLlonal provlslon on agrarlan reform speclflcally Lhe dlsLrlbuLlon of land Lo Lhe
farmers160 8espondenLlnLervenor argued LhaL Lhe sLock dlsLrlbuLlon opLlon was noL one of
Lhe modes lnLended by Lhe agrarlan reform pollcy ln glvlng land Lo Lhe landless ln response
peLlLloner PLl counLered LhaL Lhe lssue of Lhe CA8L's consLlLuLlonallLy cannoL be collaLerally
aLLacked161

8efore Lhe CourL can exerclse lLs power Lo pass upon Lhe lssue of consLlLuLlonallLy Lhe
followlng requlslLes musL be presenL

1 1here musL be an acLual case or conLroversy calllng for Lhe exerclse of [udlclal power

2 1he person challenglng Lhe acL musL have Lhe sLandlng Lo quesLlon Lhe valldlLy of Lhe sub[ecL
acL or lssuance oLherwlse sLaLed he musL have a personal and subsLanLlal lnLeresL ln Lhe case
such LhaL he has susLalned or wlll susLaln dlrecL ln[ury as a resulL of lLs enforcemenL

3 1he quesLlon of consLlLuLlonallLy musL be ralsed aL Lhe earllesL opporLunlLy and

4 1he lssue of consLlLuLlonallLy musL be Lhe very lls moLa of Lhe case162

AlLhough Lhe flrsL Lwo requlslLes are presenL lA8M has noL shown compllance wlLh Lhe
remalnlng Lwo requlslLes

WlLh respecL Lo Lhe Llmellness of Lhe lssue respondenLlnLervenor lA8M dld noL ralse Lhe
consLlLuLlonal quesLlon aL Lhe earllesL posslble Llme 1he peLlLlons flled ln Lhe A8C whlch
preclplLaLed Lhe presenL case dld noL conLaln any consLlLuLlonal challenge agalnsL Lhe sLock
dlsLrlbuLlon opLlon under Lhe CA8L As prevlous members of prlvaLe respondenL AM8ALA
noLhlng prevenLed respondenLlnLervenor lA8M from argulng on Lhe purporLed consLlLuLlonal
lnflrmlLy of a sLock dlsLrlbuLlon opLlon as opposed Lo a dlrecL land Lransfer ln Lhe AM8ALA
eLlLlon ln Lhe A8C proceedlngs below

8espondenLlnLervenor lA8M would argue LhaL lL ralsed Lhe consLlLuLlonallLy lssue ln lLs
poslLlon paper aL Lhe level of Lhe A8C163 Powever Lhls ls a laLe aLLempL on lLs parL Lo remedy
Lhe slLuaLlon and comply wlLh Lhe foregolng requlslLe on Llmellness ln Lhe exerclse of [udlclal
revlew noLhlng ln Lhe lnlLlaLory peLlLlons of prlvaLe respondenLs Supervlsory Croup and
AM8ALA assalled Lhe lnherenL lnvalldlLy of sLock dlsLrlbuLlon opLlons as provlded ln SecLlon 31
of Lhe CA8L

8espondenLlnLervenor lA8M poslLs LhaL lL fully complled wlLh Lhe requlremenL of Llmellness
under Lhe docLrlne of [udlclal revlew slnce Lhe earllesL posslble opporLunlLy Lo ralse Lhe lssue
musL be wlLh a courL wlLh Lhe compeLence Lo resolve Lhe consLlLuLlonal quesLlon clLlng as basls
Serrano v CallanL MarlLlme Servlces lnc164 1hls case ls slgnlflcanLly dlfferenL from Serrano as
Lo render Lhe laLLer's legal concluslons lnappllcable Lo Lhe presenL slLuaLlon

ln Serrano Lhe quesLlon of Lhe valldlLy of Lhe money clalms clause of Lhe MlgranL Workers and
Cverseas llllplnos AcL of 1993163 was Llmely ralsed aL Lhe very flrsL lnsLance ln a compeLenL
courL namely ln AnLonlo Serrano's peLlLlon for cerLlorarl flled wlLh Lhe CourL of Appeals166 ln
sharp conLrasL Lhe quesLlon of Lhe consLlLuLlonallLy of Lhe CA8L ln Lhls case was belaLedly
lncluded ln respondenLlnLervenor lA8M's supplemenLal commenL167 afLer an earller
manlfesLaLlon and moLlon had already been flled 1hus respondenLlnLervenor's earllesL
opporLunlLy Lo ralse Lhe consLlLuLlonallLy of SecLlon 31 of Lhe CA8L was ln Lhe very flrsL pleadlng
lL flled ln Lhls CourL and noL ln a supplemenLal commenL

Lven assumlng arguendo LhaL Lhe rule requlrlng Lhe Llmellness of Lhe consLlLuLlonal quesLlon
can be relaxed Lhe CourL musL refraln from maklng a flnal deLermlnaLlon on Lhe consLlLuLlonal
valldlLy of a sLock dlsLrlbuLlon opLlon aL Lhls Llme because lL ls noL Lhe lls moLa of Lhe presenL
conLroversy and Lhe case can be dlsposed of on some oLher ground

1he CourL wlll noL Louch Lhe lssue of consLlLuLlonallLy unless lL ls Lruly unavoldable and ls Lhe
very lls moLa or crux of Lhe conLroversy168 ln Lhe semlnal case of Carcla v LxecuLlve SecreLary
Lhe CourL explalned Lhe concepL of lls moLa as a requlremenL of [udlclal revlew ln Lhls wlse

Lls moLa Lhe fourLh requlremenL Lo saLlsfy before Lhls CourL wlll underLake [udlclal revlew
means LhaL Lhe CourL wlll noL pass upon a quesLlon of unconsLlLuLlonallLy alLhough properly
presenLed lf Lhe case can be dlsposed of on some oLher ground such as Lhe appllcaLlon of Lhe
sLaLuLe or Lhe general law 1he peLlLloner musL be able Lo show LhaL Lhe case cannoL be legally
resolved unless Lhe consLlLuLlonal quesLlon ralsed ls deLermlned 1hls requlremenL ls based on
Lhe rule LhaL every law has ln lLs favor Lhe presumpLlon of consLlLuLlonallLy Lo [usLlfy lLs
nulllflcaLlon Lhere musL be a clear and unequlvocal breach of Lhe ConsLlLuLlon and noL one
LhaL ls doubLful speculaLlve or argumenLaLlve169

A courL should noL pass upon a consLlLuLlonal quesLlon and declde a law Lo be unconsLlLuLlonal
or lnvalld unless such quesLlon ls ralsed by Lhe parLles when ralsed lf Lhe record presenLs some
oLher ground upon whlch Lhe courL may resL lLs [udgmenL Lhe laLLer course wlll be adopLed and
Lhe consLlLuLlonal quesLlon wlll be lefL for conslderaLlon unLll a case arlses whereln a declslon
upon such quesLlon wlll be unavoldable170 1he CourL wlll noL shlrk lLs duLy of wleldlng Lhe
power of [udlclal revlew ln Lhe face of gross and blaLanL acLs commlLLed by oLher branches of
governmenL ln dlrecL vlolaLlon of Lhe ConsLlLuLlon buL nelLher wlll lL be overly eager Lo
brandlsh lL when Lhere are oLher avallable grounds LhaL would avold a consLlLuLlonal clash

lL wlll be recalled LhaL whaL Lhe quallfled beneflclarles assalled ln Lhe A8C proceedlngs was Lhe
fallure on Lhe parL of peLlLloner PLl Lo fulflll lLs obllgaLlons under Lhe SuCA and whaL Lhey
prayed for was for Lhe lands Lo be Lhe sub[ecL of dlrecL land Lransfer 1he quesLlon of
consLlLuLlonallLy of a sLock dlsLrlbuLlon opLlon can be avolded slmply by llmlLlng Lhe presenL
lnqulry on Lhe provlslons of Lhe SuCA and lLs lmplemenLaLlon WheLher Lhe A8C commlLLed
grave abuse of dlscreLlon ln recalllng or revoklng Lhe approval of Lhe SuCA need noL lnvolve a
declaraLlon of unconsLlLuLlonallLy of Lhe provlslons of Lhe CA8L on sLock dlsLrlbuLlon

1here ls no paramounL publlc lnLeresL LhaL compels Lhls CourL Lo rule on Lhe quesLlon of
consLlLuLlonallLy As a leglslaLlve acL Lhe CA8L en[oys Lhe presumpLlon of consLlLuLlonallLy171
AbsenL any glarlng consLlLuLlonal vlolaLlon or evldenL proof Lhereof Lhe CourL musL uphold Lhe
CA8L lndeed paramounL publlc lnLeresL ls beLLer served by precludlng a flndlng on Lhe CA8L aL
Lhls polnL slnce such flndlng could unfalrly lmpacL oLher corporaLe landowners and farmer
beneflclarles under a sLock dlsLrlbuLlon opLlon ln oLher parLs of Lhe counLry172 who are noL
parLles Lo Lhe lnsLanL case

Whlle we do noL rule on Lhe consLlLuLlonallLy of sLock dlsLrlbuLlon opLlon we also need Lo sLaLe
LhaL Lhere appears Lo be no clear and unequlvocal prohlblLlon under Lhe ConsLlLuLlon LhaL
expressly dlsallows sLock dlsLrlbuLlon opLlon under Lhe provlslons on agrarlan reform

1he SLaLe shall by law underLake an agrarlan reform program founded on Lhe rlghL of farmers
and regular farmworkers who are landless Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll or
ln Lhe case of oLher farmworkers Lo recelve a [usL share of Lhe frulLs Lhereof 1o Lhls end Lhe
SLaLe shall encourage and underLake Lhe [usL dlsLrlbuLlon of all agrlculLural lands sub[ecL Lo
such prlorlLles and reasonable reLenLlon llmlLs as Lhe Congress may prescrlbe Laklng lnLo
accounL ecologlcal developmenLal or equlLy conslderaLlons and sub[ecL Lo Lhe paymenL of [usL
compensaLlon ln deLermlnlng reLenLlon llmlLs Lhe SLaLe shall respecL Lhe rlghL of small
landowners 1he SLaLe shall furLher provlde lncenLlves for volunLary landsharlng173

1he prlmary consLlLuLlonal prlnclple ls Lo allow Lhe Llller Lo exerclse rlghLs of ownershlp over Lhe
lands buL lL does noL conflne Lhls rlghL Lo absoluLe dlrecL ownershlp larmworkers are even
allowed Lo slmply have a share ln Lhe frulLs of Lhe land Lhey Llll for as long as whaL Lhey recelve
ls [usL and falr 1he framers of Lhe ConsLlLuLlon esLabllshed Lhe rlghL of landless farmers and
regular farmworkers Lo own Lhe lands Lhey Llll dlrecLly or collecLlvely buL lefL Lhe ldenLlflcaLlon
of Lhe means of ownershlp Lo Congress 1hls was an lmporLanL declslon conslderlng LhaL
Congress has Lhe beLLer faclllLles and faculLles Lo ad[udge Lhe mosL approprlaLe and beneflclal
meLhods for Lhe exerclse of Lhe consLlLuLlonal rlghL ln cases where dlvldlng a small landholdlng
among a mulLlLude of quallfled lW8s would resulL ln parcellng ouL paLches of land noL vlable
for lndlvldual farmlng WheLher sLock dlsLrlbuLlon ls a valld meLhod ldenLlfled by Congress for
lands owned by a corporaLlon or wheLher lL ls a loophole ln Lhe CA8L Lo evade land
dlsLrlbuLlon ln conLravenLlon of Lhe lnLenL of Lhe ConsLlLuLlon ls a quesLlon LhaL need noL be
answered now

lll

1he A8C has [urlsdlcLlon over Lhe quesLlon of Lhe valldlLy of and/or compllance wlLh Lhe SuCA

eLlLloner PLl assalls Lhe [urlsdlcLlon of Lhe A8C Lo recall Lhe SuCA lL argues LhaL Lhe A8C's
auLhorlLy ls llmlLed Lo approval or dlsapproval of a sLock dlsLrlbuLlon proposal made by a
corporaLe landowner and quallfled lW8s purporLedly Lhls does noL lnclude a revocaLlon of Lhe
agreemenL especlally afLer lL has already been lmplemenLed lL Lheorlzes LhaL Lhe agreemenL
once approved by Lhe A8C ascends Lo Lhe level of an ordlnary clvll conLracL and Lhus any
acLlon Lo annul Lhe same musL be Lhrough Lhe regular courLs and noL Lhe A8C174

1he A8C was creaLed prlmarlly Lo coordlnaLe Lhe lmplemenLaLlon of Lhe comprehenslve
agrarlan reform program (CA8) and Lo ensure Lhe Llmely and effecLlve dellvery of Lhe
necessary supporL servlces173 lL was Lasked Lo formulaLe and/or lmplemenL Lhe pollcles rules
and regulaLlons necessary Lo lmplemenL each componenL of Lhe CA8 and may auLhorlze any
of lLs members Lo formulaLe rules and regulaLlons concernlng aspecLs of agrarlan reform falllng
wlLhln Lhelr area of responslblllLy176

WlLh respecL Lo Lhe sLock dlsLrlbuLlon opLlon under Lhe CA8L one of Lhe A8C's powers ls Lo
approve a sLock dlsLrlbuLlon plan of corporaLe land owners177 AfLer Lhe uA8 SecreLary
evaluaLes Lhe sLock dlsLrlbuLlon plan he shall forward lL LogeLher wlLh Lhe supporLlng
documenLs and hls recommendaLlons Lo Lhe A8C whlch shall declde wheLher or noL Lo
approve Lhe same178

eLlLloner's argumenL ls noL persuaslve slnce lL espouses a deprlvaLlon of Lhe A8C's auLhorlLy
Lo effecLlvely lmplemenL Lhe pollcles rules and regulaLlons of Lhe CA8L

under Lhe CA8L Lhe sLock dlsLrlbuLlon opLlon would ordlnarlly necesslLaLe an ouLrlghL dellvery
of Lhe shares Lo quallfled lW8s 1hls meLhod of dlsLrlbuLlng shares would be effecLed wlLhln a
shorL perlod ln much Lhe same speed as LhaL of lands Lransferred under Lhe flrsL opLlon ln a
sLock dlsLrlbuLlon scheme governmenL approval ls necessary ln Lwo lnsLances

1 Approvlng Lhe proposal for sLock dlsLrlbuLlon opLlon plan or agreemenL arrlved aL beLween
Lhe corporaLe landowner and quallfled lW8s (approval of Lhe agreemenL) and

2 Approvlng compllance by all Lhe concerned parLles of Lhe Lerms and condlLlons of Lhe plan or
agreemenL (approval of Lhe compllance)

1he flrsL lnvolves a concepLual and LheoreLlcal auLhorlzaLlon LhaL Lhe Lerms of Lhe sLock
dlsLrlbuLlon are ln accordance wlLh Lhe law and agrarlan reform pollcy 1he fallure Lo obLaln
approval of Lhe agreemenL does noL preclude Lhe parLles from renegoLlaLlng Lhe agreemenL and
submlLLlng lL agaln for approval especlally lf Lhe A8C ralses concerns regardlng some of Lhe
Lerms

1he second lnsLance deLermlnes wheLher Lhe parLles falLhfully lmplemenLed and complled wlLh
Lhelr obllgaLlons under Lhe approved agreemenL Pence Lhe fallure Lo obLaln approval of Lhe
compllance demonsLraLes a defecL ln Lhe fulflllmenL of Lhe parLles of Lhelr responslblllLles 1hls
slLuaLlon occurs lf for example afLer a few monLhs from Lhe approval of Lhe agreemenL noL a
slngle share has been recelved by any of Lhe quallfled lW8s or recorded ln Lhe books of Lhe
corporaLe landowner ln facL Lhe law expressly provldes LhaL should Lhe sLock Lransfer noL
maLerlallze Lhen Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall be sub[ecL
Lo compulsory coverage179

eLlLloner PLl does noL quesLlon Lhe auLhorlLy of Lhe A8C wlLh respecL Lo Lhe approval of Lhe
agreemenL180 buL lL ralses an lssue as Lo wheLher Lhe approval of Lhe compllance remalns
wlLhln Lhe auLhorlLy of Lhe A8C AlLhough Lhe CA8L ls sllenL on Lhe laLLer auLhorlLy lL ls more
loglcal and efflclenL for Lhls necessary power Lo remaln lodged wlLh Lhe A8C

!urlsdlcLlon over a sub[ecL maLLer ls conferred by law181 SecLlon 30 of Lhe CA8L and SecLlon 17
of LxecuLlve Crder no 229 vesLs ln Lhe uA8 Lhe prlmary and excluslve [urlsdlcLlon boLh orlglnal
and appellaLe Lo deLermlne and ad[udlcaLe all maLLers lnvolvlng Lhe lmplemenLaLlon of
agrarlan reform182 1he uA8's prlmary and excluslve [urlsdlcLlon lncludes auLhorlLy over
agrarlan dlspuLes whlch also covers dlspuLes on Lhe Lerms and condlLlons of Lhe Lransfer of
ownershlp from landowners Lo agrarlan reform beneflclarles183 Congress provldes Lhe
excluslve [urlsdlcLlon of Lhe uA8 ln agrarlan dlspuLes ln Lhls language

SLC1lCn 30A Lxcluslve !urlsdlcLlon on Agrarlan ulspuLe no courL or prosecuLors offlce
shall Lake cognlzance of cases perLalnlng Lo Lhe lmplemenLaLlon of Lhe CA8 excepL Lhose
provlded under SecLlon 37 of 8epubllc AcL no 6637 as amended lf Lhere ls an allegaLlon from
any of Lhe parLles LhaL Lhe case ls agrarlan ln naLure and one of Lhe parLles ls a farmer
farmworker or LenanL Lhe case shall be auLomaLlcally referred by Lhe [udge or Lhe prosecuLor
Lo Lhe uA8 whlch shall deLermlne and cerLlfy wlLhln flfLeen (13) days from referral wheLher an
agrarlan dlspuLe exlsLs rovlded 1haL from Lhe deLermlnaLlon of Lhe uA8 an aggrleved parLy
shall have [udlclal recourse ln cases referred by Lhe munlclpal Lrlal courL and Lhe prosecuLors
offlce Lhe appeal shall be wlLh Lhe proper reglonal Lrlal courL and ln cases referred by Lhe
reglonal Lrlal courL Lhe appeal shall be Lo Lhe CourL of Appeals 184 (Lmphasls supplled)

Slnce a sLock dlsLrlbuLlon opLlon ls an alLernaLlve meLhod of Lransferrlng ownershlp of
agrlculLural land Lo lW8s any conLroversy regardlng compllance wlLh Lhe approved Lerms and
condlLlons of such Lransfer ls necessarlly an agrarlan dlspuLe LhaL ls wlLhln Lhe prlmary and
excluslve [urlsdlcLlon of Lhe uA8 and necessarlly Lhe A8C 1he funcLlon of requlrlng approval
of Lhe compllance of Lhe SuCA ls preclsely Lo ensure compllance wlLh Lhe earller approval 1he
CA8L could noL have LoleraLed a slLuaLlon where quallfled lW8s would be wlLhouL any recourse
agalnsL a landowner who falled Lo llve up Lo lLs promlses under a sLock dlsLrlbuLlon agreemenL

Ceneral [urlsdlcLlon over agrarlan dlspuLes over sLock dlsLrlbuLlon agreemenLs necessarlly
lmplles a speclflc auLhorlLy Lo monlLor and enforce lmplemenLaLlon of Lhe same As
dlsLlngulshed from express powers lmplled powers are Lhose LhaL can be lnferred or are
lmpllclL ln Lhe wordlngs or conferred by necessary or falr lmpllcaLlon of Lhe enabllng acL183
ubllc respondenLs correcLly ldenLlfled Lhe explanaLlon of Chavez v naLlonal Pouslng
AuLhorlLy186 on Lhe docLrlne of necessary lmpllcaLlon ln admlnlsLraLlve law ln Lhls wlse

8aslc ln admlnlsLraLlve law ls Lhe docLrlne LhaL a governmenL agency or offlce has express and
lmplled powers based on lLs charLer and oLher perLlnenL sLaLuLes Lxpress powers are Lhose
powers granLed allocaLed and delegaLed Lo a governmenL agency or offlce by express
provlslons of law Cn Lhe oLher hand lmplled powers are Lhose LhaL can be lnferred or are
lmpllclL ln Lhe wordlngs of Lhe law or conferred by necessary or falr lmpllcaLlon ln Lhe enabllng
acL ln Angara v LlecLoral Commlsslon Lhe CourL clarlfled and sLressed LhaL when a general
granL of power ls conferred or duLy en[olned every parLlcular power necessary for Lhe exerclse
of Lhe one or Lhe performance of Lhe oLher ls also conferred by necessary lmpllcaLlon lL was
also expllcaLed LhaL when Lhe sLaLuLe does noL speclfy Lhe parLlcular meLhod Lo be followed or
used by a governmenL agency ln Lhe exerclse of Lhe power vesLed ln lL by law sald agency has
Lhe auLhorlLy Lo adopL any reasonable meLhod Lo carry ouL lLs funcLlons (Lmphasls supplled)

lL musL be clarlfled LhaL Lhe power Lo revoke or recall approval of Lhe agreemenL resldes only ln
Lhe A8C and does noL exLend Lo Lhe uA8 1he uA8 lLself recognlzed Lhe prlmacy of Lhe A8C's
evaluaLlon and assessmenL of a sLock dlsLrlbuLlon plan187 1he conLlnulng auLhorlLy of Lhe
A8C Lo monlLor and ensure proper lmplemenLaLlon of a sLock dlsLrlbuLlon opLlon ls conslsLenL
wlLh lLs power Lo order Lhe forfelLure of agrlculLural lands ln case of Lhe landowner's fallure Lo
dlsLrlbuLe Lhe sLocks 1he CA8L expressly provldes for Lhe compulsory coverage of Lhe
agrlculLural lands lf Lhere ls no dlsLrlbuLlon of Lhe sLocks Lo quallfled lW8s188 ln facL Lhe A8C
ls duLy bound Lo sub[ecL Lhe agrlculLural lands of Lhe landowner Lo compulsory coverage lf sLock
dlsLrlbuLlon does noL maLerlallze

ln Lhe lnsLanL case Lhe complalnLs of Lhe quallfled lW8s were properly lodged wlLh Lhe A8C
whlch had earller glven lLs approval of Lhe agreemenL buL has yeL Lo render approval of Lhe
compllance lL musL be noLed LhaL Lhe SuCA under quesLlon ls exLraordlnary slnce lL provlded a
longer perlod of LhlrLy years for Lhe dlsLrlbuLlon of Lhe shares Lo Lhe quallfled lW8s 8aLher
Lhan lmmedlaLely awardlng Lhe enLlre loL of shares of sLock peLlLloner PLl opLed Lo spread ouL
and prolong Lhe dlsLrlbuLlon 1he A8C was noL ln a poslLlon Lo lmmedlaLely render approval of
Lhe compllance slnce peLlLloner PLl sLlll had Lhree decades before lL could lmplemenL a
compleLe sLock dlsLrlbuLlon ln favor of Lhe quallfled lW8s

ulspuLes Cver Lhe SuCA Are lnherenLly Agrarlan ln naLure

AlLhough peLlLloner PLl wlll noL deny quallfled lW8s a remedy agalnsL any clalm of non
fulflllmenL of obllgaLlons under Lhe SuCA lL asserLs LhaL such remedy ls of a class of sulLs LhaL ls
noL wlLhln Lhe amblL of Lhe CA8L buL lnsLead falls under Lhe laws on clvll conLracLs189 or even
Lhe CorporaLlon Code190 eLlLloner PLl ls noL correcL

1he naLure of Lhe dlspuLe of Lhe peLlLlons flled ln Lhe A8C ls lnherenLly agrarlan ln naLure and
noL slmply conLracLual or corporaLe191 undenlably Lhe parLles were compelled Lo agree on an
accepLable mode of Lransfer of land ownershlp by Lhe pronouncemenLs of Lhe CA8L 1hls was
however noL an ordlnary clvll conLracL enLered lnLo beLween Lwo parLles sLandlng on equal
fooLlng as ln facL land dlsLrlbuLlon was consLlLuLlonally sancLloned Lo balance Lhe prevalllng
lnequlLy beLween rlch land owners and poor farmers

1he deLermlnaLlon of wheLher Lhe dlspuLe under a sLock dlsLrlbuLlon opLlon ls agrarlan clvll or
corporaLe ln naLure relles on Lhe allegaLlons of Lhe complalnL Lhe purporLed relaLlonshlp
beLween Lhe conLendlng parLles and Lhe rlghLs soughL Lo be enforced192 ln Lhls case
peLlLloner PLl and Lhe farm workers share mulLlple relaLlonshlps LhaL can be Lhe source of
rlghLs and obllgaLlons beLween Lhem rlmarlly peLlLloner PLl's relaLlonshlp wlLh Lhe farm
workers ls LhaL of a corporaLe landowner and quallfled beneflclary under Lhe CA8L 8uL Lhey
also share an employeremployee relaLlonshlp lnsofar as Lhe farm workers recelve salarles and
beneflLs from Lhe corporaLlon 1here ls llkewlse a LrlparLlLe clvll and conLracLual relaLlonshlp
arlslng from Lhe SuCA beLween peLlLloner PLl (Lhe splnoff corporaLlon) 1AuLCC (Lhe orlglnal
corporaLe landowner) and Lhe quallfled lW8s llnally Lhe farm workers are also sLockholders
of peLlLloner PLl havlng been awarded shares under Lhe SuCA lndeed Lhese varlous
relaLlonshlps glve rlse Lo dlsLlncL rlghLs and prescrlbe separaLe remedles under Lhe law

Powever Lhe overrldlng conslderaLlon for Lhe sLock dlsLrlbuLlon agreemenL under Lhe CA8L ls
Lhe relaLlonshlp of landownerfarm worker whlch was Lhe legal basls for Lhe parLles Lo have
enLered lnLo Lhe SuCA ln Lhe flrsL place eLlLloner PLl and 1AuLCC slgned Lhe SuCA preclsely
because Lhe farm workers who agreed LhereLo were ldenLlfled as quallfled lW8s enLlLled Lo Lhe
beneflLs under Lhe CA8L Slmllarly Lhe farm workers' acqulslLlon of Lhe addlLlonal sLaLus of
sLockholders of peLlLloner PLl arose ouL of Lhelr orlglnal sLaLus as quallfled lW8s Pence all
dlspuLes arlslng from Lhe sLock dlsLrlbuLlon musL be vlewed ln llghL of Lhls prlnclpal [urldlcal Lle
of corporaLe landowner and quallfled lW8s arLles cannoL lnvoke oLher lncldenLal
relaLlonshlps (clvll or corporaLe) Lo deprlve Lhe A8C of lLs prlmary and excluslve [urlsdlcLlon
over complalnLs flled by quallfled lW8s agalnsL a sLock dlsLrlbuLlon agreemenL whlch ls
lnvarlably an agrarlan dlspuLe

CranLlng Lhe A8C [urlsdlcLlon over dlspuLes lnvolvlng sLock dlsLrlbuLlon agreemenLs does noL
dlmlnlsh Lhe [urlsdlcLlon of regular or commerclal courLs or Lhe SLC lL ls merely a recognlLlon of
lLs speclal compeLence over Lhe maLLer of lmplemenLaLlon of Lhe CA8L especlally when lL
comes Lo sLock dlsLrlbuLlon agreemenLs wlLh lW8s lL ls absurd Lo deprlve Lhe A8C of
[urlsdlcLlon slmply because clvll or corporaLe causes of acLlon are lncluded and ln Lhls case
belaLedly by peLlLloner PLl

Conslderlng Lhe several capaclLles lnvolved under a sLock dlsLrlbuLlon opLlon beLween a
corporaLe landowner and quallfled lW8s Lhe beLLer rule now ls LhaL all dlspuLes arlslng from
Lhelr sLock dlsLrlbuLlon agreemenL and/or lLs lmplemenLaLlon shall be wlLhln Lhe [urlsdlcLlon of
Lhe A8C ln accordance wlLh lLs prlmary and excluslve [urlsdlcLlon under Lhe CA8L over agrarlan
dlspuLes193

lv

1here ls legal and facLual basls Lo recall/revoke Lhe approval of Lhe SuCA and order Lhe
compulsory coverage of Lhe agrlculLural lands of Paclenda LulslLa

roceedlng Lo Lhe subsLanLlal merlLs of Lhe case quesLloned A8C resoluLlon should be
afflrmed lnsofar as lL found facLual and legal basls Lo revoke/recall approval of Lhe SuCA
beLween peLlLloner PLl and Lhe quallfled lW8s

vlolaLlng Lhe lnLegrlLy of Lhe ool of Lhe quallfled lW8s varlablllLy ln Lhelr number of Shares

1he SuCA grossly vlolaLed Lhe provlslons of Lhe CA8L wlLh respecL Lo Lhe sLock dlsLrlbuLlon
opLlon when lLs basls for dlsLrlbuLlng Lhe shares was made on Lhe ground of lLs conLlnulng
deLermlnaLlon of Lhe manhours served by Lhe quallfled lW8s 1he rolllng pollcy of peLlLloner
PLl ls conLrary Lo Lhe lnLenL of sLock dlsLrlbuLlon opLlon under Lhe CA8L

1he CA8L provldes LhaL a corporaLe land owner may glve lLs quallfled beneflclarles Lhe rlghL Lo
purchase such proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL Lhe agrlculLural land
acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe companys LoLal asseLs194 ln
quallfylng Lhe raLlo of shares Lo be recelved by each of Lhe quallfled lW8s Lhe uA8 explalned
LhaL as a mlnlmum each of Lhe quallfled lW8s would recelve an equal number of shares of
sLock of Lhe same class and value wlLh Lhe same rlghLs and feaLures as all oLher shares193
AlLhough Lhe uA8 allowed shares of sLock Lo be dlsLrlbuLed based on oLher facLors such as
rank senlorlLy salary or poslLlon Lhls dlsLrlbuLlon ls ln addlLlon Lo Lhe mlnlmum raLlo earller
descrlbed whlch guaranLees a base number of shares for all Lypes of quallfled lW8s196 Pence
Lhe mlnlmum raLlo under a sLock dlsLrlbuLlon scheme ls a flxed value LhaL should be equally
recelved by all quallfled lW8s meanwhlle Lhe addlLlonal shares are varlable dependlng on an
agreed upon crlLerla

1he SuCA also provlded for a movlng dlsLrlbuLlon of shares of sLock based on Lhe number of
days worked by quallfled lW8s whlch ls undenlably a varlable crlLerlon ln vlolaLlon of Lhe
flxed mlnlmum raLlo197

1here ls no error ln ldenLlfylng Lhe quallfled lW8s based on Lhe payroll of peLlLloner PLl as of a
flxed polnL ln Llme under Lhe flxed mlnlmum raLlo ln a sLock dlsLrlbuLlon scheme persons
would be ldenLlfled as quallfled beneflclarles198 based on wheLher Lhey appear on Lhe
corporaLe landowner's payroll as farmworkers199 regardless of wheLher Lhey are regular or
seasonal or wheLher Lhey recelve compensaLlon ln a dally weekly monLhly or pakyaw basls
ln Lhls case Lhere were 6296 farmworkers as of 11 May 1989 who were quallfled as
beneflclarles aL Lhe Llme of Lhe slgnlng of Lhe SuCA 1hus each of Lhese farmworkers should
have recelved an equal number of Lhe LoLal shares dlsLrlbuLed by peLlLloner PLl200

Powever conLrary Lo abovemenLloned flxed mlnlmum raLlo peLlLloner PLl adopLed a wholly
varlable and moblle crlLerlon Lhe number of shares would be based on Lhe number of man
days each quallfled lW8 logged ln every year201 lnsLead of recelvlng an equal amounL
farmworkers under Lhe SuCA would recelve varylng number of shares dependlng on Lhe man
days rendered 202 1hus lf some of Lhe 6296 farmworkers served more mandays Lhan Lhe
oLhers Lhen Lhey would be enLlLled Lo more shares 1he scheme ls ln clear vlolaLlon of Lhe
pollcy of equal number of shares as a mlnlmum raLlo for all quallfled lW8s

Worse Lhe quallfled lW8s' enLlLlemenL Lo recelpL of shares was made on a rolllng basls aL Lhe
end of each year for Lhe nexL LhlrLy years 1he number of shares was noL only varlable
dependlng on Lhe number of mandays served buL also on Lhe Llme perlod when Lhese man
days were served under Lhe SuCA Lhere would be a yearly and parLlal dlsLrlbuLlon of shares Lo
Lhe quallfled lW8s based on Lhe annual number of mandays performed Pence quallfled
lW8s who worked ln a prevlous year buL falled Lo geL Lhe same number of mandays or falled
Lo work aL all ln Lhe succeedlng year would noL recelve an equlvalenL number of shares aL Lhe
end of Lhe year Moreover persons who were noL parL of Lhe orlglnal 6296 farmworkers buL
were subsequenLly employed by peLlLloner PLl would sLlll be enLlLled Lo annual proporLlonaLe
shares of sLock under Lhe SuCA203 1hus Lhe orlglnal lW8s were deprlved of Lhelr guaranLeed
equal shareholdlngs by Lhe proporLlonal allocaLlon of sLocks Lo farmworkers who were noL even
employed aL Lhe Llme of Lhe slgnlng of Lhe SuCA204 1he varlable deLermlnaLlon of Lhe number
of shares Lo whlch quallfled lW8s were enLlLled resulLed ln Lhe dlluLlon of Lhelr shares slnce
Lhe number of reclplenLs ballooned Lhrough Llme (10302 lW8s) buL Lhe number of sLocks Lo
be dlsLrlbuLed remalned Lhe same

ln facL Lhe pollcy of noworknoshareofsLock203 becomes paLenLly burdensome ln lLs
operaLlon slnce lL was found LhaL peLlLloner PLl had conLrol of Lhe number of mandays Lo be
glven Lo Lhe quallfled lW8s whlch ln Lurn deLermlned Lhe number of shares Lhey were Lo
recelve under Lhe SuCA ln lLs 1ermlnal 8eporL Lhe uA8 Speclal 1eam found LhaL

lCu/CCl flndlng LhaL Lhe number of shares of sLock Lo be recelved by Lhe lW8s depends on
Lhelr deslgnaLlon (le permanenL casual or seasonal) and on Lhe number of man days 8eLlred
and reLrenched workers are noL glven shares of sLocks and cease as share holders lndlspuLedly
(slc) Lhe seLup under Lhe MCA ls oneslded ln favor of PLl 1he work schedule upon whlch Lhe
exLenL of enLlLlemenL Lo be granLed shares of sLock ls wholly wlLhln Lhe prerogaLlve and
dlscreLlon of PLl managemenL LhaL a lW8 can sLlll be denled Lhereof by Lhe slmple expedlency
of noL glvlng hlm any worklng hours/days And Lhls ls made posslble by Lhe facL LhaL Lhere are
more farmers/farmworkers ln lLs employ Lhan whaL ls accordlng Lo PLl necessary Lo make lL
operaLlonal206

2 1he maLLer of lssuance/dlsLrlbuLlon of shares of sLocks ln lleu of acLual dlsLrlbuLlon of Lhe
agrlculLural land lnvolved was made LoLally dependenL on Lhe dlscreLlon/caprlce of PLl under
Lhe seLup Lhe agreemenL ls grossly onerous Lo Lhe lW8s as Lhelr man days of work cannoL
deparL from whaLever managemenL of PLl unllaLerally dlrecLs207

1hey can be denled Lhe opporLunlLy Lo be granLed a share of sLock by [usL noL allowlng Lhem Lo
work alLogeLher under Lhe gulse of roLaLlon Meanwhlle wlLhln Lhe 30year perlod of bondage
Lhey may already reach reLlremenL or worse geL reLrenched for any reason Lhen Lhey forever
lose whaLever beneflL he (slc) could have recelved as regular agrarlan beneflclary under Lhe
CA8 lf only Lhe Su of PLl were noL auLhorlzed and approved 208 (Lmphasls supplled)

eLlLloner PLl reLalned conLrol as Lo who would be granLed Lhe opporLunlLy Lo become
farmworkers ln any glven year and Lhe number of mandays Lhey would serve lL llkewlse had
Lhe dlscreLlon Lo deLermlne who would be granLed Lhe annual beneflL as well as Lhe number of
shares Lo be awarded Cuallfled lW8s were Lhus sub[ecL Lo Lhe dlscreLlon or caprlce of
peLlLloner PLl who could dlluLe or ouLrlghLly deny Lhelr enLlLlemenL Lo Lhe shares of sLocks209
lL could play favorlLes and award mandays only Lo quallfled lW8s who supporLed managemenL
whlle Lroublesome lW8s could be penallzed by noL allocaLlng any mandays Lhereby
mlnlmlzlng Lhelr enLlLlemenL Lo Lhe shares

eLlLloner PLl's lnLenL Lo reward Lhe servlces of Lhe farmworkers Lhrough Lhe dlsLrlbuLlon of
shares whlch ls also an lncenLlve sysLem Lo lncrease producLlon ls undersLandable Powever
Lhls scheme ls more approprlaLe ln Lhe dlsLrlbuLlon of varlable addlLlonal shares noL for Lhe
flxed mlnlmum raLlo necessary under a sLock dlsLrlbuLlon opLlon ulsLrlbuLlon of shares of sLock
based on Lhe mandays rendered by Lhe farmworker ls more akln Lo addlLlonal compensaLlon Lo
an employee for servlces rendered Powever Lhe CA8L speaks of sLock dlsLrlbuLlon as an
alLernaLlve meLhod Lo subsLlLuLe dlrecL land dlsLrlbuLlon and noL as an added beneflL Lo lLs
employees

1he deLermlnaLlon of quallfled lW8s' shares based on Lhe rolllng crlLerlon of mandays resulLed
ln an expanded llsL of beneflclarles Pad Lhe 6296 quallfled lW8s opLed for dlrecL land Lransfer
Lhey would noL have worrled abouL sharlng Lhelr LlLles Lo Lhe land wlLh oLher farm workers who
came Lo work ln Paclenda LulslLa afLer Lhe SuCA under Lhe land Lransfer opLlon Lhe flnlLe
parcel of land ls dlrecLly awarded Lo ldenLlfled lW8s wlLh LlLles and documenLs Lo evldence
Lhelr lndlvldual ownershlp Lo Lhe excluslon of oLhers ln conLrasL Lhe SuCA allowed Lhe number
of beneflclarles Lo balloon Lo 10302 sLockholderbeneflclarles (and growlng) for as long as Lhey
performed work ln Lhe farm 8egardless of wheLher Lhey were orlglnal resldenLs ln Lhe area or
mlgranLs from nearby provlnces subsequenL farm workers could be lncluded and Lhus expand
Lhe number of reclplenLs 1hls ln Lurn dlluLed Lhe rlghLs and beneflLs Lhe orlglnal lW8s should
have en[oyed under Lhe SuCA vlsvls Lhe newer sLockholders Cn Lhls ground alone Lhere ls
sufflclenL basls Lo recall and/or revoke Lhe SuCA slnce lL ls conLrary Lo Lhe lnLenL of a sLock
dlsLrlbuLlon Lo exlsLlng and quallfled lW8s

rolonged erlod of ulsLrlbuLlon

1he CA8L provldes ln SecLlon 31

lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe land or sLock Lransfer envlsloned
above ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe A8C
wlLhln Lhe same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall be
sub[ecL Lo Lhe compulsory coverage of Lhls AcL (Lmphasls supplled)

1he Lwo year perlod from Lhe approval of Lhe CA8L conLemplaLes Lhree slLuaLlonal deadllnes
wlLh respecL Lo Lhe agrlculLural landholdlngs of a corporaLe landowner (1) Lhe reallzaLlon of a
land Lransfer Lo quallfled lW8s (2) Lhe reallzaLlon of Lhe sLock Lransfer Lo quallfled lW8s and
(3) Lhe approval of Lhe A8C of Lhe sLock dlsLrlbuLlon 1he lnsLanL slLuaLlon falls under number
(3) above buL Lhe quesLlon LhaL was noL clearly answered by Lhe law ls how many years afLer
Lhe A8C's approval of Lhe sLock dlsLrlbuLlon should lL Lake before Lhe sLock Lransfer ls acLually
compleLed WhaLever Lhe Llmeframe may be Lhe LhlrLy year perlod for Lhe dlsLrlbuLlon of
sLocks ls paLenLly unreasonable and ls noL wlLhln Lhe lnLenL of a sLock dlsLrlbuLlon opLlon
provlded for by Lhe CA8L

1he plecemeal dlsLrlbuLlon of Lhe shares over LhlrLy years ls an oppresslve form of dlmlnlshlng
Lhe value of Lhe shares and ls pre[udlclal Lo Lhe lnLeresLs of Lhe lW8s ApporLlonlng Lhe number
of shares Lo Lhe lW8s over a prolonged perlod reduces Lhelr capaclLy Lo en[oy Lhelr rlghLs
compleLely and lmmedlaLely lor example lf peLlLloner PLl had declared cash dlvldends of
r100 per share ln Lhe flfLeenLh year of dlsLrlbuLlon Lhen quallfled lW8s would en[oy only half
of Lhe dlvldends owed Lhem slnce Lhey had yeL Lo recelve Lhe oLher half of Lhe shares alloLLed
Lo Lhem (assumlng of course LhaL Lhey were Lo recelve Lhe same number of shares each
year)210 8aLher Lhan en[oy Lhe full beneflL of Lhe shares of sLock due and owed Lhem Lhe
lW8s are made Lo walL for Lhree decades before Lhey can appreclaLe Lhe full beneflLs as a
sLockholderbeneflclary of peLlLloner PLl

1he lnequlLy of Lhe LhlrLyyear perlod ls hlghllghLed when lL ls compared Lo Lhe slLuaLlon of an
lmmedlaLe land Lransfer ln a land Lransfer a lW8 can lmmedlaLely feel Lhe full beneflL of land
redlsLrlbuLlon under Lhe CA8L upon Lhe award of an emanclpaLlon paLenL or cerLlflcaLe of land
ownershlp award and hls acLual physlcal possesslon of Lhe land211 ln sharp conLrasL Lo Lhe
SuCA Lhe quallfled lW8s were deprlved of full ownershlp of Lhe enLlre shareholdlngs due Lhem
under Lhe sLaggered sLock dlsLrlbuLlon scheme Cuallfled lW8s regardless of Lhelr age or
healLh condlLlons had Lo conLlnue worklng for peLlLloner PLl for a perlod of LhlrLy years lf Lhey
wanLed Lo reallze Lhe compleLe beneflLs of Lhe SuCA 1he proLracLed award of sLocks nurLured
a culLure of forced dependency upon peLlLloner PLl on Lhe parL of Lhe quallfled lW8s

no oLher concluslon can be drawn from Lhe Lwo year perlod provlded for ln Lhe land and sLock
Lransfer under Lhe CA8L excepL LhaL full Lransfer of beneflLs Lo Lhe landless farmers under Lhe
land reform program should be lmmedlaLe 1he shorLened perlod for dlsLrlbuLlon should
llkewlse apply ln cases of Lhe A8C approval of Lhe sLock dlsLrlbuLlon scheme lL would Lhus be
reasonable Lo expecL LhaL all Lhe shares of peLlLloner PLl allocaLed Lo Lhe quallfled lW8s would
have been compleLely and absoluLely dlsLrlbuLed Lo Lhem wlLhln Lwo years from Lhe A8C's
approval of Lhe SuCA or no laLer Lhan 14 november 1991 ln facL Lhe uA8 was more exacLlng
when lL requlred Lhe approved sLock dlsLrlbuLlon plan be lmplemenLed wlLhln Lhree monLhs
from recelpL of Lhe A8C approval212 lL was wrong for Lhe uA8 Speclal 1eam Lo allow
lmplemenLaLlon wlLhln Len years213 1he Lwoyear perlod ls reasonably sufflclenL Lo reallze Lhe
full Lransfer of shares and for quallfled lW8s Lo undersLand and famlllarlze Lhemselves wlLh
Lhelr rlghLs and prlvlleges as corporaLe sLockholders

AlLhough operaLlonal and pracLlcal conslderaLlons may posslbly permlL some lmpedlmenL Lo Lhe
auLomaLlc and compleLe Lransfer of shares Lhe gradual bulldup214 of shares of sLock for a
perlod of LhlrLy years ls slmply wrong and defeaLs Lhe ob[ecLlve of acLual redlsLrlbuLlon of land
ownershlp Lo Lhe farmers 1he CA8L never envlsloned Lhe unreasonable delay ln quallfled
lW8s' en[oymenL of Lhe beneflLs whlch would have prolonged Lhelr sufferlng as landless
farmers especlally when compared Lo Lhe prompLness of a land Lransfer opLlon 1haL peLlLloner
PLl suddenly acceleraLed Lhe dlsLrlbuLlon of Lhe shares on 22 Aprll 2003 more Lhan flfLeen
years afLer Lhe SuCA was slgned213 only shows LhaL no operaLlonal dlfflculLy could have
prevenLed Lhe prompL recelpL by Lhe quallfled lW8s of Lhelr shares 1haL Lhe acceleraLed
dlsLrlbuLlon was approved by peLlLloner PLl forLulLously almosL a year afLer prlvaLe respondenLs
flled Lhelr proLesLs wlLh Lhe A8C216 ralses Lhe susplclon LhaL lLs benevolence was LargeLed
preclsely Lo mlLlgaLe opposlLlon Lo Lhe SuCA217 forecloslng re[ecLlon of Lhe agreemenL due Lo
Lhe compleLlon of Lhe dlsLrlbuLlon of Lhe shares 218

1here ls no [usLlflcaLlon conLrary Lo whaL peLlLloner PLl proposes Lo compare Lhe LhlrLyyear
perlod for dlsLrlbuLlng Lhe sLocks Lo Lhe LhlrLy annual amorLlzaLlons Lo be pald Lo Lhe Landbank
of Lhe hlllpplnes (L8) Lhe land Lransfer requlred of Lhe lW8s219 1he LhlrLy annual
amorLlzaLlon paymenLs Lo be made by Lhe quallfled lW8s are beneflclal Lo Lhe farmers lnsofar
as Lhe L8 allows a prolonged perlod of Llme for Lhem Lo pay for Lhe lands Lransferred Lo Lhem
under preferable raLes ln Lhe case of amorLlzaLlon paymenLs Lhe longer Lhe perlod of
paymenL Lhe beLLer for Lhe farmer slnce Lhe obllgaLlon Lo pay ls broken down Lo manageable
lnsLallmenLs lL also allows Lhe farmers Lhe full and compleLe use of Lhe land ln order Lo
lmmedlaLely earn lncome from whlch Lo source hls amorLlzaLlon paymenLs Lo L8220 ln sharp
conLrasL Lhe LhlrLyyear perlod of dlsLrlbuLlng shares under Lhe SuCA ls deLrlmenLal Lo Lhe
quallfled lW8s Lhey are unable Lo en[oy Lhelr enLlLlemenL under a sLock dlsLrlbuLlon scheme
slnce Lhey have Lo walL several years before full Lransfer of all Lhe shares due and owlng Lo
Lhem221 Agrarlan reform and land dlsLrlbuLlon was made Lo beneflL Lhe farmer by allowlng
lmmedlaLe use of Lhe redlsLrlbuLed land or rlghLs Lhereunder whlle sLreLchlng Lhe flnanclal
obllgaLlons or commlLmenLs ouL over manageable perlods of Llme 1he SuCA achleves Lhe
compleLe opposlLe by delaylng Lhe lW8s' acqulslLlon of full rlghLs as sLockholders and Lhus
musL be sLruck down

valuaLlon of Lhe Land

1he ldenLlflcaLlon and valuaLlon of Lhe corporaLe asseLs of peLlLloner PLl as a splnoff
corporaLlon was noL sub[ecLed Lo verlflcaLlon and audlL examlnaLlon by Lhe uA8 and resulLed ln
Lhe undervaluaLlon of Lhe shares due Lo Lhe quallfled lW8s

1he value ascrlbed Lo Lhe asseLs of Lhe corporaLe landowner especlally Lhe agrlculLural lands ls
cruclal as lL deLermlnes Lhe number of shares Lo be dlsLrlbuLed Lo Lhe quallfled lW8s under a
sLock dlsLrlbuLlon opLlon Lhe quallfled lW8s are enLlLled Lo a proporLlon of Lhe shares ln
accordance wlLh Lhe value of Lhe agrlculLural lands acLually devoLed Lo agrlculLural acLlvlLles ln
relaLlon Lo Lhe companys LoLal asseLs222 1he deLermlnaLlon of Lhe number of shares each
quallfled lW8 should recelve can be reduced Lo Lhls maLhemaLlcal formula

value of AgrlculLural Lands x no of 1oLal CuLsLandlng Shares of SLock no of
shares of sLock for every quallfled lW8
value of Lhe Companys 1oLal AsseLs no of quallfled lW8s
lf Lhe valuaLlon glven Lo Lhe agrlculLural land ls decreased Lhe number of shares of each
quallfled lW8 decreases Moreover Lhe number of shares for each quallfled lW8 wlll decrease
lf Lhe value of Lhe company's LoLal asseLs lncreases wlLhouL a correspondlng lncrease ln Lhe
value of lLs agrlculLural lands Clven Lhe slgnlflcance of Lhe valuaLlon Lo Lhe dynamlcs of sLock
dlsLrlbuLlon Lhe uA8 requlred LhaL Lhe valuaLlon of Lhe corporaLe asseLs under Lhe sLock
dlsLrlbuLlon plan be sub[ecL Lo verlflcaLlon and audlL examlnaLlon by Lhe uA8 and based on Lhe
uA8's own valuaLlon guldellnes223

ln Lhls case Lhe values of Lhe agrlculLural land or peLlLloner PLl's asseLs were never sub[ecLed Lo
uA8 verlflcaLlon or audlL examlnaLlon When 1AuLCC Lransferred Lhe agrlculLural land LogeLher
wlLh oLher asseLs and llablllLles Lhere was only Lhe lmprlmaLur of Lhe SecurlLles and Lxchange
Commlsslon by reason of lLs approval of Lhe lncrease ln Lhe auLhorlzed caplLal sLock of
peLlLloner PLl224 eLlLloner PLl dld noL demonsLraLe LhaL Lhe values ascrlbed Lhereln
especlally Lo Lhe agrlculLural land were verlfled and audlLed by Lhe uA8 based on lLs own
guldellnes

1he absence of Lhe uA8 verlflcaLlon and audlL of Lhe values of Lhe agrlculLural lands and
peLlLloner PLl's LoLal asseLs creaLes susplclon on Lhe correcLness of Lhe number of shares
dlsLrlbuLed under Lhe SuCA Aslde from Lhe agrlculLural land peLlLloner PLl lncluded oLher non
land asseLs such as machlnerles land lmprovemenLs and long Lerm recelvables Lo lncrease Lhe
value of Lhe LoLal asseLs Powever lncluslon of Lhese oLher nonland asseLs served Lo dlmlnlsh
Lhe raLlo of Lhe agrlculLural land Lo Lhe LoLal asseLs and consequenLly decreased Lhe
proporLlonal share Lo whlch Lhe quallfled lW8s were enLlLled Lo

1he asseLs and llablllLles Lransferred by 1AuLCC Lo peLlLloner PLl are broken down as
follows223

ASSL1S 18AnSlL88Lu CAl1AL S1CCk Anu LlA8lLl1lLS
uescrlpLlon value ln r uescrlpLlon value ln r
1 AgrlculLural Lands (169 parcels of 49137466 has aL r40000 per hecLare) 196360000
3327CAl1AL S1CCk
(333131462 shares Lo peLlLloner PLl) 333131462 6014
2 Machlnery and LqulpmenL (Peavy equlpmenL farm LracLors and farm lmplemenLs
43932600 744 LlA8lLl1lLS
A noLes ayable 62334106 1036
3 CurrenL AsseLs (cash accounLs recelvables lnvenLorles growlng crops and prepald lnsurance)
162638993 27338 Accrued Lxpenses 11834347 201
4 Land lmprovemenLs (roads culverLs brldges lrrlgaLlon canals equlpmenL and appurLenanL
sLrucLures) 31886300 340 C AccounLs ayable 86873899 1471
3 unappralsed AsseLs (rallroad sysLem and equlpmenL furnlLure and flxLures communlcaLlon
and uLlllLy oLher equlpmenL and consLrucLlon ln progress) 8803910 149 u CurrenL
orLlon of L1u 9360000 162
6 Long 1erm noLes 8ecelvables 28063417 473 L lncome 1ax ayable
24126946 409
7 8esldenLlal Land (11 loLs of 1209234 has aL r300000 per hecLare) 60462000 1024
l uue Lo AfflllaLed Companles 4333260 077
8 Lands used for roads rallways canals lagoons parks eroded porLlon cemeLery and waLer
reservolr (187 loLs conslsLlng of 2637493 has) 38133000 983 C Long 1erm uebL
36140000 612
1C1AL AsseLs 390284220 100 1C1AL CaplLal SLock and LlablllLles 390284220 100
8ased on Lhe values of Lhe asseLs and llablllLles Lransferred peLlLloner PLl's agrlculLural land of
49137466 hecLares was only 333 of lLs LoLal asseLs whlch means LhaL Lhe quallfled lW8s
were enLlLled Lo Lhe same proporLlon wlLh respecL Lo Lhe LoLal caplLal sLocks or Lo
11839197683 shares only226

Powever as polnLed ouL by prlvaLe respondenL lA8M Lhere were oLher loLs ln Paclenda LulslLa
LhaL were noL lncluded ln Lhe sLock dlsLrlbuLlon scheme buL should have been covered under
Lhe CA8227 1AuLCC as Lhe prevlous agrlculLural landowner preempLed Lhe deLermlnaLlon of
Lhe lands Lo be covered under Lhe CA8 by selecLlng whlch of Lhe agrlculLural lands lL would
Lransfer Lo peLlLloner PLl and consequenLly sub[ecL Lo Lhe SuCA 1he uA8 never approved Lhe
excluslon of Lhe oLher lands LhaL 1AuLCC kepL for lLself lL seems lncongruous Lo Lhe lnLenLlon
of Lhe CA8 under a sLock dlsLrlbuLlon agreemenL Lo leL Lhe corporaLe landowner choose and
selecL whlch of lLs agrlculLural lands would be lncluded and whlch ones lL would reLaln for lLself
Serlous doubLs are enLerLalned wlLh respecL Lo Lhe process of lncluslon and excluslon of
agrlculLural lands for CA8 coverage employed by Lhe corporaLe landowner especlally slnce Lhe
excluded land area (1327 hecLares) lnvolves oneLhlrd Lhe slze of Lhe land 1AuLCC surrendered
for Lhe SuCA (4916 hecLares) 1he excluslon of a subsLanLlal amounL of land from Lhe SuCA ls
hlghly susplclous and deserves a revlew by Lhe uA8 WheLher Lhese lands were properly
excluded should have been sub[ecL Lo Lhe uA8's deLermlnaLlon and valldaLlon 1hus Lhe uA8 ls
Lasked Lo deLermlne Lhe breadLh and scope of Lhe porLlon of Lhe agrlculLural landholdlngs of
1AuLCC and peLlLloner PLl LhaL should have been Lhe sub[ecL of CA8 coverage aL Lhe Llme of
Lhe execuLlon of Lhe SuCA on 11 May 1989

rlvaLe respondenL also alleged LhaL Lhere was an undervaluaLlon of Lhe agrlculLural land and
clLed sources LhaL would ldenLlfy dlfferenL valuaLlons of Lhe lands ranglng from r33000 per
hecLare Lo r300000 per hecLare Assumlng LhaL Lhese clLed values were accuraLe Lhe clalmed
valuaLlon of Lhe agrlculLural land aL r40000 per hecLare ls very low and grossly
dlsproporLlonaLe Lo Lhe LoLal asseLs228 AlLhough no concluslve flndlngs on Lhe correcLness of
Lhe valuaLlons alleged ls made for Lhe mean Llme as Lhls ls properly a funcLlon of Lhe uA8 Lhe
excluslon of Lhe uA8 from Lhe process of valuaLlon of Lhe agrlculLural lands Lo deLermlne Lhe
quallfled lW8s' proporLlonal share ln peLlLloner PLl ls unaccepLable ln facL Lhe Speclal 1eam
noLed LhaL even Lhe lW8s dld noL parLlclpaLe ln Lhe valuaLlon of Lhe agrlculLural land229

lL ls doubLful LhaL Lhe quallfled lW8s had sufflclenL appreclaLlon of Lhe slgnlflcance of Lhe
poollng of Lhe agrlculLural lands and nonland asseLs Lransferred Lo peLlLloner PLl Lven
assumlng LhaL Lhe uA8 approves Lhe value of Lhe agrlculLural land asslgned by peLlLloner PLl
and 1AuLCC under Lhe SuCA arrangemenL Lhe reallLy ls LhaL oLher nonland asseLs were
lncluded ln Lhe mlx of corporaLe asseLs glven by 1AuLCC Lo peLlLloner PLl WheLher lnLenLlonal
or accldenLal Lhese addlLlonal nonland asseLs whlch were almosL Lwlce Lhe value of Lhe
agrlculLural lands affecLed ln all llkellhood waLered down Lhe proporLlonal share of Lhe
quallfled lW8s under Lhe SuCA Cuallfled lW8s were Lhus relegaLed Lo belng mlnorlLy
sLockholders ln peLlLloner PLl wlLhouL any real corporaLe sLrengLh Lo Lake effecLlve conLrol of
Lhe managemenL of Lhe corporaLlon ln effecL 1AuLCC obllglngly Lransferred Lhe agrlculLural
land ln paper Lo Lhe quallfled lW8s Lhrough Lhe proporLlonal dellvery of shares of sLock buL
succeeded ln reLalnlng domlnlon over Lhe real properLy by holdlng an almosL LwoLhlrds
ma[orlLy over peLlLloner PLl 1he SuCA's arrangemenL of relegaLlng Lhe quallfled lW8s Lo Lhe
sLaLus of mlnorlLy sLockholders ls slmply lrreconcllable wlLh Lhe ob[ecLlve of empowerlng Lhe
quallfled lW8s as sLockholders ln lleu of dlrecL land dlsLrlbuLlon as !usLlce resblLero velasco
!r lllusLraLed durlng Lhe oral argumenLs

!uS1lCL vLLASCC

l Lend Lo agree wlLh Lhe sLaLemenL made by !usLlce erez LhaL lL ls posslble LhaL lL ls Lhe
appllcaLlon of SecLlon 31 LhaL ls erroneous and LhaL lL should have been Lhe uA8 and A8C LhaL
should have applled lL correcLly WhaL l am Lrylng Lo polnL ouL ls Lhe facL LhaL ln Lhls SuCA of
PLl Lhe farmer beneflclarles were made only mlnorlLy sLockholders buL ln order Lo achleve Lhe
pollcy behlnd Lhe CA8L Lo dlsLrlbuLe lncome and wealLh Lo Lhe landless farmers Lhen lL musL be
a condlLlon for Lhe approval of Lhe SuCA LhaL Lhe farmer beneflclarles should be Lhe ma[orlLy
sLockholders or more lmporLanLly LhaL Lhey should be Lhe only sLockholders of Lhe
corporaLlon Meanlng Lo say Lhey have full conLrol over Lhe use of Lhe landholdlngs of Lhe
corporaLlon ln such a slLuaLlon lL ls as lf Lhe landholdlngs are belng owned and managed by a
cooperaLlve of farmer beneflclarles or a farmer organlzaLlon owns lL and ln such a slLuaLlon Lhe
pollcles goals behlnd Lhe CA8L can sLlll be achleved do you agree wlLh LhaL?230 (Lmphasls
supplled)

1o lllusLraLe corporaLe conLrol of peLlLloner PLl would have been dlfferenL lf only Lhe
agrlculLural lands were Lransferred by 1AuLCC ln LhaL case slnce Lhe agrlculLural lands
composed Lhe only asseLs of Lhe new corporaLe enLlLy (peLlLloner PLl) wlLhouL any llablllLles
Lhen Lhe enLlreLy of Lhe shares of sLocks would belong Lo Lhe quallfled lW8s231 1hus Lhe
landless farmer beneflclarles would have full absoluLe and collecLlve conLrol and managemenL
of Lhe corporaLlon and Lhus exerclse effecLlve ownerllke rlghLs over Lhe agrlculLural lands
slmllar Lo a land Lransfer opLlon buL under a dlfferenL scheme 1aklng Lhe lllusLraLlon a sLep
furLher a parLnershlp of equallLy beLween Lhe quallfled lW8s and Lhe corporaLe landowners
could have aL leasL been achleved lf Lhe value of Lhe oLher asseLs Lransferred were equal Lo or
less Lhan Lhe value of Lhe agrlculLural lands ln Lhls scenarlo Lhe former corporaLe land owner
and Lhe quallfled lW8s would have equal say on how peLlLloner PLl's buslness would be
managed such as wlLh regard Lo purchaslng properLles and machlnerles for lLs buslness
lnLroduclng lmprovemenLs on Lhe lands enLerlng lnLo loan agreemenLs morLgaglng Lhelr lands
as securlLy or even applylng for converslon of ldle lands

ln Lhls case however 1AuLCC was solely responslble for chooslng whlch asseLs and llablllLles lL
would Lransfer Lo peLlLloner PLl 1hus lL effecLlvely deslgnaLed how many shares quallfled
lW8s would recelve vlsvls Lhe raLlo of Lhe agrlculLural lands Lo Lhe value of Lhe LoLal asseLs
Lransferred 1hls arrangemenL creaLed opporLunlLles for 1AuLCC Lo dlluLe Lhe quallfled lW8s'
shareholdlngs by elLher undervalulng Lhe land asseLs or overvalulng Lhe nonland asseLs232 lL
bears sLresslng LhaL Lhe lncorporaLlon of peLlLloner PLl and Lhe subsequenL Lransfer of Lhe
agrlculLural lands and oLher asseLs were underLaken by 1AuLCC even before Lhe quallfled lW8s
had agreed Lo Lhe SuCA233 lurLhermore Lhe SuCA was slgned before Lhe uA8 had conducLed
a masslve lnformaLlon campalgn and conducLed a referendum among Lhe quallfled lW8s234
noL only was Lhere an lssue as Lo Lhe proprleLy of Lhe valuaLlons ascrlbed Lo Lhe conveyed
asseLs serlous doubLs are enLerLalned as Lo wheLher Lhe quallfled lW8s compleLely undersLood
Lhe effecL of lncreaslng Lhe asseL pool Lo Lhelr shareholdlngs much less LhaL Lhey were agreelng
Lo a dlmlnlshed or mlnorlLy role ln Lhe runnlng of peLlLloner PLl under Lhe SuCA233

Lven Lhe comblned and unlfled 33296 voLe of all quallfled lW8s would noL slgnlflcanLly sway
ma[or corporaLe declslons of peLlLloner PLl 8egardless of how Lhe mlnorlLy dlrecLors of Lhe
quallfled lW8s were Lo voLe Lhe ma[orlLy would be able Lo rallroad any corporaLe acL lL deems
flL 1he auLhorlLy Lhe quallfled lW8s would have over Lhe corporaLe affalrs of peLlLloner PLl236
would be a mere Loken represenLaLlon lacklng effecLlve conLrol ln deLermlnlng Lhe dlrecLlon of
Lhe corporaLe enLlLy havlng ownershlp and possesslon of Lhe agrlculLural land 1he lnequlLy ls
made more apparenL lf lL ls remembered LhaL Lhe maln asseL of Lhe corporaLlon Lhe
agrlculLural land could have been enLlrely under Lhe lW8s' names under a land dlsLrlbuLlon
scheme

Agrarlan reform was lnsLlLuLed under Lhe ConsLlLuLlon Lo llberaLe ordlnary farmers from Lhelr
dependency on Lhe landowners buL noL aL Lhe expense of exchanglng Lhelr bondages for
corporaLe serfdom237 under a meanlngless sLock dlsLrlbuLlon scheme ln Lhls case alLhough no
express pronouncemenL as Lo Lhe valldlLy of a sLock dlsLrlbuLlon scheme under Lhe CA8L ls
made Lhe sLock dlsLrlbuLlon arrangemenL ln Paclenda LulslLa ls faLally flawed on Lhe basls of
Lhe Lhree grounds dlscussed earller and musL be sLruck down

no vlolaLlon of uue rocess or Lhe nonlmpalrmenL Clause

eLlLloner PLl's broad lnvocaLlon of vlolaLlon of lLs rlghLs Lo due process and Lhe non
lmpalrmenL clause ls wlLhouL merlL238

llrsL peLlLloner PLl assalls Lhe fallure on Lhe parL of publlc respondenL A8C Lo afford lL an
opporLunlLy Lo submlL evldence Lo supporL lLs case Powever Lhe records show LhaL peLlLloner
PLl was able Lo presenL lLs opposlLlon Lo prlvaLe respondenLs' peLlLlons ln Lhe proceedlngs
below ubllc respondenL A8C even lssued an order requesLlng peLlLloner PLl Lo submlL
commenLs and/or opposlLlons Lo Lhe peLlLlons flled by prlvaLe respondenLs Supervlsory Croup
and AM8ALA and also furnlshlng lL coples of Lhe sald peLlLlons239 ln facL Lhe 1echnlcal
Worklng Croup even meL wlLh Lhe legal counsel of peLlLloner PLl Lo dlscuss Lhe exLenL of
peLlLloner PLl's compllance wlLh Lhe SuCA and Lo clarlfy some of Lhe SuCA's provlslons240

eLlLloner PLl llkewlse assalls Lhe fallure of Lhe quesLloned A8C 8esoluLlon Lo sLaLe Lhe facLs
and Lhe law on whlch Lhe rullng ls based241 1he quesLloned A8C 8esoluLlon adopLed Lhe
recommendaLlons of Lhe A8C LxecuLlve CommlLLee Lo revoke/recall Lhe approval of Lhe SuCA
and Lo cause Lhe agrlculLural lands ln Paclenda LulslLa Lo be sub[ecL Lo compulsory coverage lL
ls noL per se wrong for an admlnlsLraLlve agency such as Lhe A8C Lo adopL wholesale Lhe
reporLs of lLs represenLaLlves or deslgnaLed Leams whlch were speclflcally mandaLed Lo
conducL an lnvesLlgaLlon of Lhe maLLer and whlch possessed Lhe compeLence Lo perform Lhe
Lask ln Lhls case Lhe 1ermlnal 8eporL of Lhe uA8 Speclal 1eam ouLllned Lhe allegaLlons of Lhe
peLlLlons and peLlLloner PLl's defenses and clearly seL forLh lLs flndlngs wlLh respecL Lo lLs
recommendaLlon Lo recall/revoke Lhe SuCA unless Lhere ls a blaLanL facLual error or
mlsappllcaLlon of Lhe law or lLs rules noLhlng prevenLs Lhe admlnlsLraLlve agency from afflrmlng
Lhe delegaLed auLhorlLy's recommendaLlons ln LoLo

AlLhough publlc respondenL A8C falled Lo aLLach a copy of Lhe 1ermlnal 8eporL and
recommendaLlon of Lhe A8C LxecuLlve CommlLLee Lhls lapse ln procedure ls noL so grave as Lo
warranL absoluLe nulllflcaLlon of Lhe quesLloned A8C 8esoluLlon ln any case peLlLloner PLl
was subsequenLly furnlshed sald documenLs whlch were used as well ln furLherlng Lhe lnsLanL
peLlLlon before Lhe CourL

Second peLlLloner PLl's lnslsLence on Lhe nonlmpalrmenL clause ls mlsplaced as lL deals wlLh a
fundamenLal rlghL agalnsL Lhe exerclse of leglslaLlve power and noL of [udlclal or quasl[udlclal
power

ln Llm v SecreLary of AgrlculLure Lhe CourL explalned Lhe scope of Lhe nonlmpalrmenL clause
Lhus

lor lL ls wellseLLled LhaL a law wlLhln Lhe meanlng of Lhls consLlLuLlonal provlslon has reference
prlmarlly Lo sLaLuLes and ordlnances of munlclpal corporaLlons LxecuLlve orders lssued by Lhe
resldenL wheLher derlved from hls consLlLuLlonal power or valld sLaLuLes may llkewlse be
consldered as such lL does noL cover Lherefore Lhe exerclse of Lhe quasl[udlclal power of a
deparLmenL head even lf afflrmed by Lhe resldenL 1he admlnlsLraLlve process ln such a case
parLakes more of an ad[udlcaLory characLer lL ls berefL of any leglslaLlve slgnlflcance lL falls
ouLslde Lhe scope of Lhe nonlmpalrmenL clause242 (Lmphasls supplled)

ln Lhe lnsLanL case Lhe recall/revocaLlon of Lhe SuCA ls necessarlly an exerclse of Lhe A8C's
quasl[udlclal power ubllc respondenL A8C was made Lo declde confllcLlng clalms based on
peLlLloner PLl's purporLed vlolaLlons of Lhe provlslons of Lhe SuCA 1here was an ad[udlcaLlon
of Lhe respecLlve rlghLs of Lhe parLles Lo Lhe SuCA as well as Lhe valldlLy of Lhe SuCA 1he
quesLloned A8C resoluLlon was noL a leglslaLlve acL or an admlnlsLraLlve order LhaL prescrlbed
regulaLlons appllcable Lo all klnds of sLock dlsLrlbuLlon opLlons lL was a declslon on Lhe
compeLlng allegaLlons of nonperformance under Lhe SuCA whlch was soughL Lo be enforced
no less Lhan peLlLloner PLl's counsel concedes LhaL Lhe assalled acLs of publlc respondenL A8C
were noL leglslaLlve ln naLure for purposes of lnvoklng Lhe nonlmpalrmenL clause under Lhe
ConsLlLuLlon243

eLlLloner PLl also argues LhaL lL has subsLanLlally complled wlLh and performed Lhe obllgaLlons
under Lhe SuCA for Lhe pasL slxLeen (16) years Lhus publlc respondenL A8C ls precluded from
revlewlng Lhe agreemenL and orderlng lLs nulllflcaLlon As earller dlscussed Lhe SuCA was
sub[ecL Lo approval of compllance by publlc respondenL A8C ln order Lo ensure LhaL Lhe
obllgaLlons of Lhe corporaLe landowner would noL become hollow promlses WhaL ls
conLemplaLed ln Lhe CA8L ls confermenL on Lhe quallfled lW8s of Lhelr full rlghLs as
sLockholders ln Lhe same manner as LlLle and ownershlp of Lhe land are absoluLely Lransferred
Lo Lhe farmerbeneflclary ln a land Lransfer scheme ln facL no less Lhan Lhe SecLlon 31 of Lhe
CA8L allows for compulsory coverage of agrlculLural lands ln Lhe evenL LhaL Lhe sLock Lransfer ls
noL made or reallzed lecemeal and delayed dlsLrlbuLlon of shares should llkewlse resulL ln Lhe
same penalLy

ln argulng LhaL lL has subsLanLlally complled wlLh Lhe CA8L peLlLloner PLl would seek Lo
caplLallze on Lhe beneflLs lL exLended Lo Lhe quallfled lW8s ln Lerms of salarles wages frlnge
beneflLs free hosplLal and medlcal servlces vacaLlon and slck leaves amelloraLlon bonus
school bus allowances for dependenLs emergency rellef allowances maLernlLy beneflLs
flnanclal beneflLs due Lo old age/deaLh and varlous loans Powever Lhese beneflLs were
derlved from Lhe employeremployee relaLlonshlp beLween peLlLloner PLl and Lhe
farmworkers eLlLloner PLl gave farmworkers Lhelr salarles and exLended oLher employmenL
beneflLs for Lhe mandays LhaL Lhe laLLer rendered ln favor of Lhe company and noL because
Lhey were quallfled lW8s 1he obllgaLlons of Lhe corporaLe landowner Lo glve salarles and
beneflLs Lo farmworkers are founded on dlfferenL legal bases as opposed Lo lLs obllgaLlon Lo
provlde Lhe beneflLs of a genulne sLock dlsLrlbuLlon opLlon Lo quallfled lW8s lndeed Lhe CA8L
provldes LhaL noLhlng ln Lhe lmplemenLaLlon of Lhe sLock dlsLrlbuLlon scheme shall [usLlfy Lhe
reducLlon or dlmlnuLlon of Lhe beneflLs recelved or en[oyed by Lhe worker/beneflclarles244

eLlLloner PLl's enumeraLlon of Lhe beneflLs ls ouL of place ln Lhe presenL conLroversy
surroundlng Lhe sLock dlsLrlbuLlon opLlon slnce Lhese were granLed ln exchange for Lhe servlces
rendered by Lhe farmworkers Lo Lhe former eLlLloner PLl cannoL clalm magnanlmlLy ln
exLendlng Lhese beneflLs when lL recelved a falr day's labor from Lhe farmworkers

nelLher can peLlLloner PLl have Lhe peLlLlons dlsmlssed on Lhe ground of Lhe Lenyear
prescrlpLlve perlod for acLlons for speclflc performance or cancellaLlon of clvll conLracLs243
Allowlng Lhe dlsLrlbuLlon of Lhe shares Lo sLreLch for a perlod of LhlrLy years before Lhe SuCA
can be deemed compleLely lmplemenLed Lolls Lhe prescrlpLlve perlod for an acLlon Lo cancel lL
Pence Lhe mere lapse of 10 years should noL preclude quallfled lW8s from quesLlonlng Lhe 30
year SuCA especlally lf Lhe vlolaLlon was commlLLed or dlscovered ln Lhe elevenLh or
subsequenL years lL would be pre[udlclal Lo Lhe lnLeresLs of quallfled lW8s Lo deny Lhem a
remedy for Lhe conLlnued nonperformance of peLlLloner PLl's obllgaLlons when Lhese
obllgaLlons have noL yeL been compleLely saLlsfled and remaln Lo be conLlnulng obllgaLlons for
LhlrLy years

1PL WA? lC8WA8u

8everslon of Paclenda LulslLa Lands Lo Compulsory Coverage

Slnce Lhe SuCA was paLenLly vold and falled Lo properly dlsLrlbuLe Lhe shares of peLlLloner PLl
Lo Lhe 6296 orlglnal quallfled lW8s Lhe quesLloned A8C 8esoluLlons revoklng Lhe SuCA and
orderlng Lhe compulsory coverage of Lhe enLlre Paclenda LulslLa agrlculLural lands under Lhe
CA8L should be afflrmed

1he change of modallLy from Lhe alLernaLlve mode of sLock dlsLrlbuLlon opLlon Lo Lhe general
rule of dlrecL land redlsLrlbuLlon246 under compulsory coverage ls expllclLly sancLloned under
SecLlon 31 of Lhe CA8L

SecLlon 29 should also be recalled hereln

ln Lhe case of farms owned or operaLed by corporaLlons or oLher buslness assoclaLlons Lhe
followlng rules shall be observed by Lhe A8C

ln general lands shall be dlsLrlbuLed dlrecLly Lo Lhe lndlvldual workerbeneflclarles

ln case lL ls noL economlcally feaslble and sound Lo dlvlde Lhe land Lhen lL shall be owned
collecLlvely by Lhe workerbeneflclarles who shall form a workers cooperaLlve or assoclaLlon
whlch wlll deal wlLh Lhe corporaLlon or buslness assoclaLlon unLll a new agreemenL ls enLered
lnLo by and beLween Lhe workers cooperaLlve or assoclaLlon and Lhe corporaLlon or buslness
assoclaLlon any agreemenL exlsLlng aL Lhe Llme Lhls AcL Lakes effecL beLween Lhe former and
Lhe prevlous landowner shall be respecLed by boLh Lhe workers cooperaLlve or assoclaLlon and
Lhe corporaLlon or buslness assoclaLlon

ln exchange peLlLloner PLl as Lhe prevlous landowners ls enLlLled Lo Lhe paymenL of [usL
compensaLlon of Lhe value of Lhe land aL Lhe Llme of Lhe Laklng Slnce Lhe award of dlrecL land
Lransfer ls belng seLLled by Lhe CourL only now Lhen Lhe value of Lhe properLy should be
slmllarly pegged aL Lhls polnL 1he consLlLuLlonal llmlLaLlon of [usL compensaLlon ls consldered
Lo be Lhe sum equlvalenL Lo Lhe markeL value of Lhe properLy broadly descrlbed Lo be Lhe prlce
flxed by Lhe seller ln open markeL ln Lhe usual and ordlnary course of legal acLlon and
compeLlLlon or Lhe falr value of Lhe properLy as beLween one who recelves and one who
deslres Lo sell lf flxed aL Lhe Llme of Lhe acLual Laklng by Lhe governmenL247

lor purposes of [usL compensaLlon Lhe falr markeL value of an exproprlaLed properLy ls
deLermlned by lLs characLer and lLs prlce aL Lhe Llme of Laklng248 1herefore Lhe proper
reckonlng perlod Lo deLermlne Lhe value of Lhe lands of peLlLloner PLl and/or 1AuLCC ls aL Lhe
Llme of Lhe Laklng whlch approxlmaLes Lhe falr markeL value of Lhe properLles as Lhey sLand
now and noL as Lhey were Lwo decades ago 1he falr markeL value Lakes lnLo conslderaLlon Lhe
evolvlng naLure of Lhe land and lLs appreclaLed value arlslng from Lhe lmprovemenLs
lnLroduced by peLlLloner PLl lnLo Lhe area as well as Lhe developmenL ln nelghborlng lands

l dlffer from Lhe poslLlon of !usLlce 8rlon LhaL would reckon Lhe Laklng from Lhe Llme Lhe SuCA
was enLered lnLo on 11 May 1989 and yeL deprlve peLlLloner PLl of lnLeresL paymenLs ln Lhe
lnLerlm 1he proposal amounLs Lo undue hardshlp on Lhe parL of peLlLloner PLl as Lhe prevlous
landowner Whlle lL ls Lhe duLy of Lhe CourL Lo proLecL Lhe weak and Lhe underprlvlleged Lhls
duLy should noL be carrled ouL Lo such an exLenL as Lo deny [usLlce Lo Lhe landowner249

egglng Lhe value of Lhe properLy Lo Lhe Llme of Lhe execuLlon of Lhe SuCA almosL LwenLy years
prlor wlll undoubLedly affecL Lhe valuaLlon of Lhe properLy 1he lmprovemenLs Lhere and Lhe
developmenLs ln nelghborlng areas conLrlbuLed Lo Lhe lncrease ln Lhe land's value regardless of
wheLher Lhey were lnLroduced by peLlLloner PLl or noL 1he appreclaLlon of Lhe value wlll noL
be accounLed for lf Lhe prlce ls Lo be pegged aL 1989 1he lncreases ln value cannoL be lgnored
or Laken away from peLlLloner PLl lf compensaLlon Lo lL as a landowner ls Lo be consldered [usL
1he word '[usL' ls used Lo lnLenslfy Lhe meanlng of Lhe word 'compensaLlon' and Lo convey Lhe
ldea LhaL Lhe equlvalenL Lo be rendered for Lhe properLy Lo be Laken shall be real subsLanLlal
full and ample230 CompensaLlon cannoL be real subsLanLlal full and ample lf Lhe prlce pald
for Lhe properLy exproprlaLed under CA8L ls made Lo reLroacL Lhe value of Lhe land Lo more
Lhan Lwo decades prlor Lo Lhe acLual Laklng

1he paymenL of lnLeresL from Lhe execuLlon of Lhe SuCA up Lo full saLlsfacLlon of [usL
compensaLlon may have presumably approxlmaLed Lhe lmprovemenLs and Lhe appreclaLlon ln
Lhe land's value LhroughouL Lhe years CerLalnly Lhe compuLaLlon of Lhe amounL of lnLeresL
from 1989 would enLall addlLlonal lnconvenlence lf noL anoLher fuLure source of confllcL Lo Lhe
parLles and Lhe uA8 1here are dlfferences ln Lhe values of some of Lhe porLlons of Lhe land
and our [urlsprudence on enLlLlemenL Lo lnLeresL lnvolvlng governmenL paymenLs here have
been less Lhan clear and deflnlLlve ?eL Lhe proposal forwarded by !usLlce 8rlon would value
Lhe land aL lLs decreased level ln 1989 and aL Lhe same Llme deny lnLeresL from 1989 on Lhe
ground LhaL peLlLloner PLl never losL possesslon of Lhe lands because of Lhe SuCA Pence
peLlLloner PLl would be made Lo suffer Lwlce Lhe loss of lLs lands flrsL by paylng lLs properLles
aL Lhe 1989 levels and second by lgnorlng lmprovemenLs made on Lhe lands whlch have
appreclaLed lLs value

1he more equlLable and [usL opLlon under our [urlsprudence LhaL accounLs for peLlLloner PLl's
Lwln losses of land and lmprovemenLs ls Lo allow paymenL of Lhe falr markeL value of Lhe
properLy aL Lhe Llme of Lhe Laklng 8egardless of wheLher Lhe Paclenda LulslLa lands remaln
vlable as agrlculLural land or galn more subsLanLlal economlc value for nonagrlculLural
purposes peLlLloner PLl wlll be [usLly compensaLed for Lhe properLles Meanwhlle Lhe lW8s
wlll galn more from Lhe dlrecL Lransfer of valuable lands and Lhelr freedom as owners Lo
deLermlne for Lhemselves Lhe besL use for Lhe lands accordlng Lo Lhelr presenL naLure and
characLer AlLhough compensaLlon may cause cerLaln flnanclal hardshlp Lo Lhe governmenL
Lhere are varlous modes of paymenL of [usL compensaLlon under Lhe CA8L231 whlch lL can
explore ln order Lo glve whaL ls due Lo peLlLloner PLl for Lhe lands sub[ecL of dlrecL land
Lransfer As proposed here Lhe amounL of [usL compensaLlon owed Lo peLlLloner PLl may be
offseL by lLs llablllLles Lo Lhe governmenL and Lhe quallfled lW8s

l cannoL subscrlbe elLher Lo Lhe lmposlLlon of llablllLy upon peLlLloner PLl for Lhe paymenL of
renLals from 1989 as a form of damages ln favor of Lhe quallfled lW8s 1he renLal paymenLs
would connoLe LhaL peLlLloner PLl used Lhe land now belonglng Lo quallfled lW8s Lo Lhe
excluslon of Lhe owners Powever Lhe land dld noL yeL belong Lo Lhe quallfled lW8s aL Lhe Llme
Lhe properLy was belng used by peLlLloner PLl Lhus Lhey cannoL demand paymenL for Lhe use
of Lhe land LhaL Lhey dld noL yeL own aL LhaL Llme lL would be lnlqulLous Lo exLracL from
peLlLloner PLl reasonable compensaLlon for Lhe use of Lhe Paclenda LulslLa lands from Lhe
execuLlon of Lhe SuCA when Lhe properLles were properly under lLs name and wlLhouL any
cloud of doubL as Lo lLs LlLle LhereLo

1he CperaLlve lacLs uocLrlne lnappllcable

Cur sysLem of laws wlll be Lurned on lLs head by Lhe appllcaLlon of Lhe docLrlne of operaLlve
facLs ln Lhls case lL musL be remembered LhaL Lhls docLrlne ls Lhe excepLlon as an excepLlon lL
can only be applled sparlngly under Lhe rlghL seL of clrcumsLances

A very clear explanaLlon of Lhe docLrlne ls provlded by former Chlef !usLlce lernando ln hls
ponencla ln ue Agbayanl v hlllpplne naLlonal 8ank232 and hls Concurrlng Cplnlon ln
lernandez v Cuerva Co233 Pls analysls of Lhe docLrlne conslsLs of a LwosLep process

Pe flrsL lays down Lhe baslc proposlLlon

1he declslon now on appeal reflecLs Lhe orLhodox vlew LhaL an unconsLlLuLlonal acL for LhaL
maLLer an execuLlve order or a munlclpal ordlnance llkewlse sufferlng from LhaL lnflrmlLy
cannoL be Lhe source of any legal rlghLs or duLles nor can lL [usLlfy any offlclal acL Laken under
lL lLs repugnancy Lo Lhe fundamenLal law once [udlclally declared resulLs ln lLs belng Lo all
lnLenLs and purposes a mere scrap of paper As Lhe new Clvll Code puLs lL When Lhe courLs
declare a law Lo be lnconslsLenL wlLh Lhe ConsLlLuLlon Lhe former shall be vold and Lhe laLLer
shall govern AdmlnlsLraLlve or execuLlve acLs orders and regulaLlons shall be valld only when
Lhey are noL conLrary Lo Lhe laws of Lhe ConsLlLuLlon lL ls undersLandable why lL should be so
Lhe ConsLlLuLlon belng supreme and paramounL Any leglslaLlve or execuLlve acL conLrary Lo lLs
Lerms cannoL survlve234

1he orLhodox vlews flnds supporL ln Lhe wellseLLled docLrlne LhaL Lhe ConsLlLuLlon ls supreme
and provldes Lhe measure for Lhe valldlLy of leglslaLlve or execuLlve acLs Clearly Lhen nelLher
Lhe leglslaLlve nor Lhe execuLlve branch and for LhaL maLLer much less Lhls CourL has power
under Lhe ConsLlLuLlon Lo acL conLrary Lo lLs Lerm Any aLLempLed exerclse of power ln vlolaLlon
of lLs provlslons lf Lo LhaL exLenL unwarranLed and null233

1hen he recognlzes LhaL some effecLs of Lhe lnvalld acL may be recognlzed as an excepLlon Lo lLs
consequenL nulllLy buL always ln Lhe conLexL of Lhe parLlculars of a case and noL as a maLLer of
general appllcaLlon

1hls docLrlne admlLs of quallflcaLlons however As Lhe Amerlcan Supreme CourL sLaLed 1he
acLual exlsLence of a sLaLuLe prlor Lo such a deLermlnaLlon of consLlLuLlonallLy ls an operaLlve
facL and may have consequences whlch cannoL always be erased by a new [udlclal declaraLlon
1he effecL of Lhe subsequenL rullng as Lo lnvalldlLy may have Lo be consldered ln varlous
aspecLs wlLh respecL Lo parLlcular regulaLlons lndlvldual and corporaLe and parLlcular
conducL prlvaLe and offlclal236

Such excepLlons have for a very long Llme recognlzed only lnsLances when lnequlLy would
resulL from compleLely dlsregardlng Lhe good falLh compllance wlLh sLaLuLes before Lhey were
pronounced unconsLlLuLlonal

Manlla MoLor Co lnc v llores237 and ue Agbayanl v hlllpplne naLlonal 8ank238 clLed by
Lhe ponencla and 8epubllc v Perlda239 and 8epubllc v Cll260 clLed by !usLlce 8rlon all
lnvolve Lhe appllcaLlon of Lhe debL moraLorlum laws ln Lhose cases Lhe CourL held LhaL durlng
Lhe perlod from Lhe effecLlvlLy of Lhe debL moraLorlum laws unLll Lhey were sLruck down as
unconsLlLuLlonal ln 8uLLer v LsLeban261 Lhe parLles could noL be faulLed for relylng on Lhe
bellef LhaL Lhe paymenL of debLs was suspended by vlrLue of Lhe debL moraLorlum laws ln
lernandez v Cuerva Co262 anoLher case relled on by Lhe ponencla anoLher sLaLuLe Lhe
8eorganlzaLlon Law was Lhe lnvalld acL declared by Lhe CourL ln 8leLa v eople263 also
relled on by Lhe ponencla agaln anoLher sLaLuLe Ceneral Crder no 60 lssued by former
resldenL lerdlnand Marcos under hls marLlal law leglslaLlve power was lnvalldaLed

Whlle Lhe ponencla clalms LhaL Lhe appllcaLlon of Lhe docLrlne of operaLlve facLs Lo execuLlve
lssuances ls wellseLLled ln our [urlsprudence Lhe ponenLe relles on only Lwo cases Lo supporL
Lhls clalm ClLy CovernmenL of MakaLl v Clvll Servlce Commlsslon264 and Chavez v naLlonal
Pouslng AuLhorlLy 8ll 8ullders lnc eL al263 ln boLh lnsLances clear conslderaLlons of equlLy
were presenL

ln ClLy CovernmenL of MakaLl a clLy employee was arresLed wlLhouL warranL and lncarceraLed
for Lhree years unLll acqulLLed of Lhe crlme charged MeanLlme she was suspended on accounL
of Lhe arresL 8ecause she could noL reporL for work as she was ln [all she was dropped from
Lhe rolls for belng absenL wlLhouL leave for more Lhan a year AfLer her acqulLLal she requesLed
her relnsLaLemenL buL Lhls requesL was repeaLedly denled due Lo Lhe lack of an approved
leave Per case was broughL Lo Lhe Clvll Servlce Commlsslon and Lhe CourL of Appeals and boLh
susLalned her rlghL Lo be relnsLaLed 1he CourL deemed LhaL Lhe clLy governmenL's order of
suspenslon was equlvalenL Lo an approved leave of absence lnasmuch as lL was Lhe clLy lLself
LhaL placed her under suspenslon and Lhus excused her from furLher formallLles ln applylng for
slck leave Moreover Lhe arrangemenL bound Lhe clLy governmenL Lo allow prlvaLe respondenL
Lo reLurn Lo her work afLer Lhe LermlnaLlon of her case266

1he ClLy of MakaLl ralsed as an alLernaLlve defense Lhe Lheory LhaL Lhe order of suspenslon
could noL have creaLed Lhe above effecL as lL was vold conslderlng Lhere was no pendlng
admlnlsLraLlve charge agalnsL her Lhus Lhe employee was sLlll requlred Lo flle a leave
appllcaLlon 1he CourL held LhaL lL could noL go Lo Lhe exLenL of declarlng Lhe suspenslon order
vold as compeLence was presumed Lo reslde ln Lhe ClLy's personnel offlcer who lssued Lhe
suspenslon order lurLher even lf lL were vold (l)L would lndeed be ghasLly unfalr Lo prevenL
prlvaLe respondenL from relylng upon Lhe order of suspenslon ln lleu of a formal leave
appllcaLlon267

1he appllcaLlon of Lhe docLrlne of operaLlve facLs ln Chavez v nPA and 8ll 8ullders lnc as ln
ClLy of MakaLl was noL made ln a vacuum lL was applled conslderlng Lhe followlng

1he SMu8 agreemenLs have produced vesLed rlghLs ln favor of Lhe slum dwellers Lhe buyers
of reclalmed land who were lssued LlLles over sald land and Lhe agencles and lnvesLors who
made lnvesLmenLs ln Lhe pro[ecL or who boughL SMCs 1hese properLles and rlghLs cannoL be
dlsLurbed or quesLloned afLer Lhe passage of around Len (10) years from Lhe sLarL of Lhe SMu8
lmplemenLaLlon LvldenLly Lhe operaLlve facL prlnclple has seL ln 1he LlLles Lo Lhe lands ln Lhe
hands of Lhe buyers can no longer be lnvalldaLed

no slmllar demands of equlLy apply ln Lhls case ln facL equlLy cannoL apply ln Lhe clear
presence of law SecLlon 31 of Lhe CA8L clearly mandaLes Lhls CourL Lo order land dlsLrlbuLlon
1o recall

lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe land or sLock Lransfer envlsloned above
ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe A8C wlLhln Lhe
same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall be sub[ecL Lo
Lhe compulsory coverage of Lhls AcL

1haL Lhe docLrlne of operaLlve facLs musL be applled sLrlcLly only Lo lnsLances ln whlch Lhe law ls
sllenL and Lhe equlLy remedles of Lhls CourL are called for ls clear from Lwo ueclslons of Lhls
CourL

ln 8epubllc v CA Penrlco uvero eL al268 Lhe CourL held

A [udlclal declaraLlon of lnvalldlLy lL ls also Lrue may noL necessarlly obllLeraLe all Lhe effecLs
and consequences of a vold acL occurrlng prlor Lo such a declaraLlon 1hus ln our declslons on
Lhe moraLorlum laws we have been consLralned Lo recognlze Lhe lnLerlm effecLs of sald laws
prlor Lo Lhelr declaraLlon of unconsLlLuLlonallLy buL Lhere we have llkewlse been unable Lo
slmply lgnore sLrong conslderaLlons of equlLy and falr play So also even as a pracLlcal maLLer a
slLuaLlon LhaL may apLly be descrlbed as falL accompll may no longer be open for furLher
lnqulry leL alone Lo be unseLLled by a subsequenL declaraLlon of nulllLy of a governlng sLaLuLe

1he lnsLanL conLroversy however ls Loo far dlsLanL away from any of Lhe above excepLlonal
cases 1o Lhls day Lhe conLroversy beLween Lhe peLlLloner and Lhe prlvaLe respondenLs on Lhe
lssue of [usL compensaLlon ls sLlll unresolved parLly aLLrlbuLable Lo Lhe lnsLanL peLlLlon LhaL has
prevenLed Lhe flnallLy of Lhe declslon appealed from 1he facL of Lhe maLLer ls LhaL Lhe
exproprlaLlon cases lnvolved ln Lhls lnsLance were sLlll pendlng appeal when Lhe LZA rullng
was rendered and forLhwlLh lnvoked by sald parLles

ln lanLers roducLs v lerLlphll269 Lhe CourL summed up lLs vlew on Lhe appllcaLlon of Lhe
docLrlne Lhus

AL any raLe We flnd Lhe docLrlne lnappllcable 1he general rule ls LhaL an unconsLlLuLlonal law ls
vold lL produces no rlghLs lmposes no duLles and affords no proLecLlon lL has no legal effecL lL
ls ln legal conLemplaLlon lnoperaLlve as lf lL has noL been passed 8elng vold lerLlphll ls noL
requlred Lo pay Lhe levy All levles pald should be refunded ln accordance wlLh Lhe general clvll
code prlnclple agalnsL un[usL enrlchmenL 1he general rule ls supporLed by ArLlcle 7 of Lhe Clvll
Code whlch provldes

ArL 7 Laws are repealed only by subsequenL ones and Lhelr vlolaLlon or nonobservance shall
noL be excused by dlsuse or cusLom or pracLlce Lo Lhe conLrary When Lhe courLs declare a law
Lo be lnconslsLenL wlLh Lhe ConsLlLuLlon Lhe former shall be vold and Lhe laLLer shall govern

1he docLrlne of operaLlve facL as an excepLlon Lo Lhe general rule only applles as a maLLer of
equlLy and falr play lL nulllfles Lhe effecLs of an unconsLlLuLlonal law by recognlzlng LhaL Lhe
exlsLence of a sLaLuLe prlor Lo a deLermlnaLlon of unconsLlLuLlonallLy ls an operaLlve facL and
may have consequences whlch cannoL always be lgnored 1he pasL cannoL always be erased by
a new [udlclal declaraLlon

1he docLrlne ls appllcable when a declaraLlon of unconsLlLuLlonallLy wlll lmpose an undue
burden on Lhose who have relled on Lhe lnvalld law 1hus lL was applled Lo a crlmlnal case
when a declaraLlon of unconsLlLuLlonallLy would puL Lhe accused ln double [eopardy or would
puL ln llmbo Lhe acLs done by a munlclpallLy ln rellance upon a law creaLlng lL

Pere We do noL flnd anyLhlng lnlqulLous ln orderlng l Lo refund Lhe amounLs pald by lerLlphll
under LCl no 1463 lL unduly beneflLed from Lhe levy lL was proven durlng Lhe Lrlal LhaL Lhe
levles pald were remlLLed and deposlLed Lo lLs bank accounL CulLe Lhe reverse lL would be
lnequlLable and un[usL noL Lo order a refund 1o do so would un[usLly enrlch l aL Lhe expense
of lerLlphll ArLlcle 22 of Lhe Clvll Code expllclLly provldes LhaL every person who Lhrough an
acL of performance by anoLher comes lnLo possesslon of someLhlng aL Lhe expense of Lhe laLLer
wlLhouL [usL or legal ground shall reLurn Lhe same Lo hlm We cannoL allow l Lo proflL from
an unconsLlLuLlonal law !usLlce and equlLy dlcLaLe LhaL l musL refund Lhe amounLs pald by
lerLlphll

8epubllc v CA uvero denled Lhe appllcaLlon of Lhe docLrlne of operaLlve facLs 1he
governmenL had wanLed Lhe CourL Lo apply Lhe docLrlne Lo flx Lhe value of Lhe [usL
compensaLlon for Lhe exproprlaLed land of prlvaLe respondenLs aL Lhe raLe flxed by resldenLlal
uecree no 76 whlch was valld aL Lhe Llme of Lhe exproprlaLlon buL lnvalldaLed by Lhe Llme
uvero was declded 1he CourL held LhaL slnce Lhe [usL compensaLlon had never been
compleLely seLLled Lhe slLuaLlon was far from calllng for Lhe appllcaLlon of Lhe docLrlne

ln lanLers roducL Lhe CourL denled Lhe appllcaLlon of Lhe docLrlne of operaLlve facLs because
Lhere was noLhlng lnequlLable or lnlqulLous ln orderlng lanLers roducLs lnc from reLurnlng
Lo lerLlphll CorporaLlon all Lhe amounLs Lhe laLLer pald pursuanL Lo a leLLer of lnsLrucLlon (LCl)
resldenL Marcos had lssued Lo LhaL effecL 1hls LCl was found unconsLlLuLlonal by Lhe Lrlal
courL and Lhls flndlng was afflrmed by boLh Lhe CourL of Appeals and by Lhe Supreme CourL ln
facL Lhls CourL found LhaL whaL would be lnequlLable and un[usL ls for lanLers roducLs lnc
Lo reLaln Lhe amounLs held

Whlle subsLanLlal [usLlce ls Lhe underlylng alm of agrarlan reform lL ls equally Lrue LhaL equlLy
may only be applled where poslLlve law ls sllenL 1haL Lhe operaLlve facLs docLrlne ls one of
equlLy has been dlscussed by Lhe ma[orlLy ln Lhe same breaLh Lhe ma[orlLy falls Lo dellneaLe a
clearly enLrenched legal rule from an equlLable rule glosslng over Lhe facL LhaL equlLy cannoL
Lake Lhe place of poslLlve law ApLly descrlbed as a [usLlce ouLslde legallLy Lhls docLrlne ls
applled only ln Lhe absence of and never agalnsL sLaLuLory law AequeLas nunquam
conLravenlL legls270

lor all lLs conceded merlL equlLy ls Lhus only avallable ln Lhe absence of law and noL as lLs
replacemenL LqulLy has no appllcaLlon as Lo do so would be LanLamounL Lo overrullng or
supplanLlng Lhe express provlslons of law271

1he perLlnenL poslLlve rules belng presenL here Lhey should preempL and prevall over all
absLracL argumenLs based only on equlLy272 1o sLaLe oLherwlse would LoleraLe lmpunlLy ln
llLlgaLlon

ln Lhls case SecLlon 31 of Lhe CA8L ls clear Lhe lands musL be dlsLrlbuLed lf Lhe sLocks are noL
dlsLrlbuLed 1he valldlLy of boLh Lhe Su and Lhe SuCA ls ln quesLlon and unseLLled lL would be
un[usL and lnequlLable Lo wlLhhold from Lhe quallfled lW8s whaL ls due Lhem Lhelr
approprlaLe porLlons of Lhe land eLlLloner PLl can have lLs shares back from Lhe quallfled
lW8s and be pald [usL compensaLlon lL would noL suffer from any ln[usLlce by Lhe appllcaLlon
of Lhe law

Cn Lhe oLher hand lf we call Lhls a case ln whlch equlLy ls due peLlLloner PLl Lhen we
encourage lmpunlLy lmpunlLy ls when we reward Lhe vlolaLlon of Lhe Su by allowlng lLs
lmplemenLaLlon Lo be marred by Lhe lllegallLles LhaL we have found here ln all Lhe cases clLed
Lhe docLrlne ls never a reward for llllclL acLs as performed here WhaL Lhls CourL would slgnal ls
LhaL lL ls rewardlng a hollow promlse of compllance wlLh Lhe law ln order Lo obLaln an
admlnlsLraLlve permlL Lhen afLer Lhe permlL has been obLalned break Lhe law slnce Lhe
lawbreakers can have Lhls llllclL acL valldaLed by Lhe CourL 1hls musL absoluLely noL happen

1he docLrlne of operaLlve facLs cannoL apply elLher for Lwo lmporLanL reasons (1) lL wlll
leglLlmlze Lhe ln[usLlce commlLLed Lo Lhe lW8s when Lhelr collecLlve shares were arblLrarlly
reduced Lo only 33 of peLlLloner PLl Lhrough Lhe undervaluaLlon of Lhe Lransferred asseLs and
(2) lL wlll leglLlmlze a second lllegal reducLlon of Lhe shares of Lhe lW8s when more
sLockholders were added Lo Lhelr collecLlve group 1hls CourL cannoL allow Lhem Lo walve Lhe
rlghLs LhaL were granLed Lo Lhem under Lhe soclal [usLlce clause of Lhe ConsLlLuLlon

lL sLralns reason how quallfled lW8s can be allowed Lhe false cholce273 of agreelng Lo a
paLenLly lllegal SuC scheme especlally when Lhelr approval of Lhe SuCA wlll noL even lmprove
Lhelr sLandlng ln Lhe corporaLlon buL only allowed Lo conLlnue belng mlnorlLy sLockholders 1he
vulnerablllLy of quallfled lW8s under Lhe voLlng opLlon ls underscored by Lhelr currenL
economlc hardshlps and Lhelr desperaLe need for lmmedlaLe flnanclal asslsLance as explalned
by counsel for lA8M ALLy ChrlsLlan Monsod

A11? MCnSCu

8oLh of Lhem bad ?es ?our Ponor because Lhe farmers have oLher opLlons Lhan merely
accepLlng one Lhousand Lhree Pundred or one Lhousand four hundred square meLers where
Lhey puL ln Seven 1housand LlghL Pundred square meLers lnLo Lhe enLerprlse 1hey can have
Lhe land lf Lhey geL Lhe land Lhere are many modallLles Lhere are many ways by whlch Lhey can
be helped by governmenL by whlch Lhey can earn more from Lhe land and lf your read ?our
Ponor all Lhe answers of Lhe farmers on why Lhey goL Lhe money Lhere ls noL a slngle one l
read maybe you dld buL l dld noL read a slngle answer of Lhe farmers saylng lL was excellenL lL
was a good deal for us 1hey say we have no money we have no food beLLer Lhere ls cash
now you know l need lL how long wlll l have Lo walL for Lhe case lL has been four (4) years l
cannoL walL much longer aL leasL Lhere ls someLhlng here LhaL l am geLLlng and maybe 20
Mllllon maybe anoLher 30 Mllllon Lo do lL l have noL read any reply of Lhe farmer LhaL does noL
reflecL Lhe facL LhaL he ls ln a desperaLe no cholce slLuaLlon LhaL means Lhere ls someLhlng
wrong wlLh lL now for example ?our Ponor Lhere ls a porLlon Lhere LhaL says you wlll geL
LhaL measly one Lhousand Lhree hundred or one Lhousand four hundred square meLers because
of Lhe LhlrLy Lhree (33) Lhlng And sald lf you wanL Lo sell Paclenda LulslLa has a rlghL of flrsL
refusal lL ls Lhree hundred slxLy (360) days rlghL of flrsL refusal lf a farmer needs money very
badly Lhere ls a good offer from hls land and he needs lL he goes Lo Paclenda LulslLa and
Paclenda LulslLa wlll make hlm walL Lo Lhree hundred slxLy (360) days don'L you Lhlnk he wlll
accepL a much lower prlce because preclsely he ls on Lhe edge of survlval 1hls ls Lhe klnd of
opLlon LhaL has been glven Lo Lhe farmer uA8 was noL asked Lo parLlclpaLe ln Lhls process
when Lhey are asked why Lhe uA8 was noL parLlclpaLlng Lhey sald uA8 can say lLs oplnlon ln Lhe
Supreme CourL 8uL preclsely uA8 was needed ln order Lo make sure LhaL Lhe consenL of Lhe
famer was noL vlLlaLed LhaL Lhere was a reclproclLy of values whlch Lhere ls none here274
(Lmphasls supplled)

1he compulsory coverage of Lhe agrlculLural lands of peLlLloner PLl wlll noL necessarlly resulL ln
lLs auLomaLlc dlssoluLlon as a corporaLe enLlLy lL musL be remembered LhaL Lhe sale of Lhe
agrlculLural lands ln Lhls lnsLance ls noL Lhe ordlnary buslness Lransfer of corporaLe asseLs as
approved by peLlLloner PLl's sLockholders ln accordance wlLh Lhe CorporaLlon Code273 Lhe
Lransfer of Lhe agrlculLural land Lo quallfled lW8s ls ln Lhe exerclse of Lhe sLaLe's exproprlaLlon
powers Lo Lake properLy for a legal ob[ecLlve (agrarlan land reform) upon due paymenL of [usL
compensaLlon nelLher can Lhe Laklng of Lhe agrlculLural lands of peLlLloner PLl (whlch are only
33296 of lLs LoLal asseLs) be consldered as subsLanLlally all of lLs asseLs under Lhe CorporaLlon
Code276 slnce Lhe corporaLlon ls noL rendered lncapable of engaglng ln Lhe buslness of
planLlng culLlvaLlon producLlon purchase sale barLer or exchange of all agrlculLural
producLs277

ln facL afLer Lhe Lransfer of Lhe agrlculLural land ls Lransferred Lo Lhe quallfled lW8s noLhlng
prevenLs peLlLloner PLl from buylng or leaslng Lhe same lands from Lhem as a collecLlve enLlLy
and conLlnulng Lo conducL lLs prlmary buslness ln any evenL Lhe exproprlaLlon of Lhe
agrlculLural lands under Lhe CA8L wlll noL resulL ln Lhe dlsslpaLlon of Lhe asseLs of peLlLloner PLl
slnce lL wlll be compensaLed by Lhe governmenL for Lhe agrlculLural lands exproprlaLed
proceeds from whlch can be used Lo conLlnue wlLh Lhe buslness Lo fund Lhe lease of
agrlculLural lands or Lo pay for any debLs or llablllLles lncurred by peLlLloner PLl WheLher Lhe
sLockholders of peLlLloner PLl wlll agree Lo conLlnue wlLh Lhe buslness or lnlLlaLe Lhe process of
dlssoluLlon ls a maLLer LhaL wlll have Lo be addressed ln anoLher forum and noL before Lhe
CourL aL Lhls Llme

WlLh respecL Lo Lhe SC1Lx lands peLlLloner PLl has noL denled recelpL of Lhe r80000000 from
Lhe governmenL as [usL compensaLlon 1he [usL compensaLlon pald for Lhe exproprlaLed lands
properly belongs Lo Lhe quallfled lW8s as Lhey should now be consldered as Lhe rlghLful land
owners under Lhe dlrecL land Lransfer opLlon Pavlng been sub[ecLed Lo exproprlaLlon by Lhe
governmenL Lhe SC1Lx land ls now lnvarlably ouLslde Lhe scope of CA8 coverage Powever
slnce Lhe quallfled lW8s became Lhe valld landowners before Lhe sald exproprlaLlon Lhe [usL
compensaLlon should accrue Lo Lhem WhaL Lhey seek and lndeed whaL should be conveyed
Lo Lhem ls noL only Lhe landholdlngs per se buL also all paymenLs LhaL had rlghLfully accrued
Lo Lhem as landowners by vlrLue of Lhe noLlce of coverage 1hls amounL lncludes Lhe LoLal of
r80000000 recelved by peLlLloner PLl as [usL compensaLlon and noL [usL Lhe 3 PLl clalms lL
pald AlLhough lL asserLs havlng dlsLrlbuLed 3 of Lhe proceeds or r2400000 no evldence on
Lhe record supporLs lLs bare asserLlon 1he amounL glven ls lmporLanL as lL may decrease
peLlLloner PLl's llablllLy Lo Lhe quallfled lW8s 8e LhaL as lL may Lhls facL does noL deLracL from
Lhe quallfled lW8s' enLlLlemenL Lo Lhe [usL compensaLlon pald by Lhe governmenL for lands
properly belonglng Lo Lhem

1he dlvlslon of Paclenda LulslLa lands may lndeed resulL ln lnefflclenL economles of scale
whereln 6296 quallfled lW8s wlll recelve only a small porLlon of Lhe land LhaL was clalmed by
peLlLloner PLl Lo be lnadequaLe Lo slgnlflcanLly lmprove Lhelr economlc condlLlons278
neverLheless noLhlng prevenLs Lhe farmworker beneflclarles from organlzlng Lhemselves lnLo a
cooperaLlve Lo manage Lhe agrlculLural lands or Lo deal wlLh peLlLloner PLl as suggesLed by Lhe
uA8279 conslderlng LhaL even CA8L makes provlslons for such alLernaLlves for farms operaLed
by corporaLlons or assoclaLlons280

ln addlLlon conslderlng Lhe lapse of Lhe prohlblLlve perlod for Lhe Lransfer of agrlculLural lands
noLhlng prevenLs Lhe lW8s as dlrecL ownerbeneflclarles of Lhe Paclenda LulslLa lands from
selllng Lhelr ownershlp lnLeresL back Lo peLlLloner PLl or Lo any oLher lnLeresLed LhlrdparLy
such as buL noL llmlLed Lo Lhe governmenL L8 or oLher quallfled beneflclarles among oLhers
Conslderlng LhaL Lhe Paclenda LulslLa lands were placed under CA8 coverage Lhrough Lhe
SuCA scheme of peLlLloner PLl on 11 May 1989 and Lhe lapse of Lhe Lwoyear perlod for Lhe
approval of lLs compllance Lhe perlod prohlblLlng Lhe Lransfer of awarded lands under CA8L281
has undenlably lapsed As landownerbeneflclarles Lhe quallfled lW8s are now free Lo LransacL
wlLh Lhlrd parLles wlLh respecL Lo Lhelr land lnLeresLs regardless of wheLher Lhey have fully pald
for Lhe lands or noL

1o make Lhe quallfled lW8s of Paclenda LulslLa walL anoLher 10 years from Lhe lssuance of Lhe
CerLlflcaLe of Land Cwnershlp Award (CLCA) or LmanclpaLlon aLenL (L) before belng allowed
Lo Lransfer Lhe land282 ls unduly prohlblLlve ln Lhe lnsLanL case 1he prohlblLlve perlod under
Lhe CA8L was meanL Lo provlde CA8 beneflclarles sufflclenL Llme Lo proflL from Lhe awarded
lands ln order Lo susLaln Lhelr dally llvlng pay off Lhe yearly amorLlzaLlon and earn modesL
savlngs for oLher needs 1hls perlod proLecLed Lhem from belng lnfluenced by dlre necesslLy
and shorLslghLedness and consequenLly selllng Lhelr awarded lands Lo a wllllng buyer
(ofLenLlmes Lhe prevlous landowner) ln exchange for qulck money 1hls reasonlng ordlnarlly
may have been avalllng durlng Lhe flrsL few years of Lhe CA8L buL becomes an unreasonable
obsLrucLlon for Lhe quallfled lW8s of Paclenda LulslLa who have been made Lo endure a null
and vold SuCA for more Lhan 20 years

undenlably some of Lhe lands under compulsory coverage have become more vlable for non
agrlculLural purposes as seen from Lhe converLed lands of LlCC and 8C8C ln facL Lhe Lhen
MunlclpallLy of 1arlac had unanlmously approved Lhe LulslLa Land use lan coverlng 3290
hecLares of agrlculLural lands ln Paclenda LulslLa owned by among oLhers peLlLloner PLl283
and reclasslfylng Lhem for resldenLlal commerclal lndusLrlal or lnsLlLuLlonal use284 1he
developmenL of Lhese klnds of land ln Paclenda LulslLa would beLLer serve Lhe local
communlLles Lhrough Lhe lncrease ln economlc acLlvlLles ln Lhe area and Lhe creaLlon of more
domesLlc employmenL

Slmllarly quallfled lW8s should be afforded Lhe same freedom Lo have Lhe lands awarded Lo
Lhem Lransferred dlsposed of or sold lf found Lo have subsLanLlally greaLer economlc value as
reclasslfled lands 1he proceeds from Lhe sale of reclasslfled lands ln a free compeLlLlve markeL
may glve Lhe quallfled lW8s greaLer opLlons Lo lmprove Lhelr llves 1he funds sourced from Lhe
sale may open up greaLer and more dlverse enLrepreneurlal opporLunlLles for Lhem as opposed
Lo slmply Lylng Lhem Lo Lhe awarded lands Severely resLrlcLlng Lhe opLlons avallable Lo Lhem
wlLh respecL Lo Lhe use or dlsposlLlon of Lhe awarded lands wlll only prolong Lhelr bondage Lo
Lhe land lnsLead of freelng Lhem from economlc wanL Pence ln Lhe lnLeresL of equlLy Lhe Len
year prohlblLlve perlod for Lhe Lransfer of Lhe Paclenda LulslLa lands covered under Lhe CA8L
shall be deemed Lo have been llfLed and noLhlng shall prevenL quallfled lW8s from negoLlaLlng
Lhe sale of Lhe lands Lransferred Lo Lhem

1he deLermlnaLlon of Lhe besL feaslble way Lo manage Lhe lands ls besL lefL Lo Lhe quallfled
lW8s Lhemselves283 Lo be asslsLed by publlc respondenL uA8 ubllc respondenL ls now called
upon Lo puL lnLo acLlon lLs assurances Lo Lhe CourL LhaL lL ls fully prepared Lo enforce
compulsory coverage and Lo exLend supporL Lo Lhe lW8s Lo make an economlc success of
dlrecL land dlsLrlbuLlon

SLC8L1A8? uLLCS 8L?LS

1he governmenL ls prepared Lo exLend supporL based on 8A 9700 We are mandaLed Lo
exLend credlL supporL Lo Lhe farmer beneflclarles noL only ln Paclenda LulslLa buL also ln Lhe
oLher areas LhaL we are acqulrlng land

!uS1lCL A8Au

no buL we have Lo be reallsLlc l'm saylng ls LhaL lf we do Lhls now ln Lhls parLlcular case do
you have enough supporL for Lhe farmers? And can you guaranLee LhaL Lhey wlll be able Lo farm
Lhelr hecLare land?

SLC8L1A8? uLLCS 8L?LS

?es ?our Ponor

!uS1lCL A8Au

So you belleve LhaL Lhls can be done ln Paclenda LulslLa?

SLC8L1A8? uLLCS 8L?LS

?es ?our Ponor

!uS1lCL A8Au

?ou gave me comforL LhaL lf we annul Lhls SuCA aL leasL Lhe governmenL wlll answer for Lhe
resulL?

SLC8L1A8? uLLCS 8L?LS

?es ?our Ponor286

!uS1lCL SL8LnC

8ecause LhaL ls baslcally Lhe opLlon of land dlsLrlbuLlon ls LhaL Lhe farmers musL learn Lo be
an enLrepreneur now Lo whaL exLenL are you prepared Lo creaLe a program for Lhls
LransformaLlon of Lhe farmer? As an enLrepreneur of course you have ouLllned Lhe sLeps and
Lhen a farmer lnLo a sLockholder because lf you are saylng LhaL Lhere are abouL Len (10) or
eleven (11) SuCs and many of Lhem are belng quesLloned Lhen we mlghL flnd ourselves wlLh a
posslblllLy LhaL even Lhls excepLlon ls noL really vlable under LhaL concepL So ls Lhe uA8 ready
Lo Lry Lo glve lessons ln corporaLe clLlzenshlp ln belng a sLockholder Lo hls farmer beneflclarles?

SLC8L1A8? uLLCS 8L?LS

?es ?our Ponor ln Lhe same way LhaL we are prepared Lo Lransform Lhe farmers lnLo
enLrepreneurs We are prepared Lo underLake Lhe Lask287 (Lmphasls supplled)

lor lndeed agrarlan reform ls broader Lhan [usL glvlng farmworkers land Lo Llll288 8aLher lL ls
mulLldlmenslonal ln scope and lncludes exLendlng useful publlc servlces Lo lncrease
agrlculLural producLlvlLy and Lo ensure lndependence and economlc securlLy for Lhemselves
and Lhelr famllles289

Agrarlan 8eform ls ln effecL qulLe a dlsLlncL Lhlng more complex and more profound from Lhls
slmple aspecL of Lhe dlsLrlbuLlon of land concelved of aL Llmes by an already decreplL
revoluLlonlsm Also lL ls more Lhan Lhe convenlence of glvlng up ownershlp of Lhe land Lo Lhe
campenslno so as Lo Lle hlm Lo Lhe soll and lncrease producLlon because he lnvesLs more as
some Lhlnk Agrarlan reform ls much more Lhan Lhls lL ls based on Lhe rlghL of man who Lllls Lhe
soll LhaL Lhls shall be useful for hls welfare and lndependence so LhaL Lhe concepL musL lnclude
ln addlLlon Lo Lhe land problem lLself LhaL of credlL Lo enable hlm Lo work Lhe soll and LhaL of
securlLy of markeLs Lo make lL Lruly producLlve290

v

eLlLlonerslnlnLervenLlon 8C8C and LlCC are lnnocenL purchasers for value and subsequenL
evenLs preclude Lhe legal and physlcal lmposslblllLy of Lhe reLurn of Lhe converLed lands

1he lands ln Paclenda LulslLa LhaL were converLed lnLo lndusLrlal lands and sold Lo peLlLloners
lnlnLervenLlon can no longer be Lhe sub[ecL of compulsory coverage especlally slnce Lhese
were Lransferred Lo lnnocenL purchasers for value ln any evenL compulsory coverage and
Lransfer of Lhe land ls no longer feaslble conslderlng Lhe supervenlng evenLs aLLendanL ln Lhe
lnsLanL case

1o begln wlLh Lhe rules do noL prohlblL Lhe sale or Lransfer of lands whlch have already been
converLed lnLo commerclal or lndusLrlal lands under uA8 AdmlnlsLraLlve Crder no 1088 Lhe
mlnlmum crlLerla for keeplng Lhe lands lnLacL and unfragmenLed are llmlLed Lo vlable
agrlculLural lands and wlLh poLenLlal for growLh and lncreased proflLablllLy291 Pence Lhe
obllgaLlon of Lhe corporaLe landowner under a sLock dlsLrlbuLlon agreemenL was Lo prevenL Lhe
mallclous sale or Lransfer of agrlculLural lands Lo deprlve sLockholderfarmerbeneflclarles of
Lhelr llvellhood

Powever noLhlng prevenLs a landowner from applylng for Lhe converslon of agrlculLural lands
lnLo commerclal or lndusLrlal lands LhaL would evenLually be Lransferred or sold Lo Lhlrd parLles
as provlded for under CA8L292 lL ls noL denled LhaL aL Llmes converLlng agrlculLural lands Lo
oLher uses may be more economlcal or proflLable raLher Lhan malnLalnlng Lhem ln Lhelr
presenL naLure lL would be folly Lo lnslsL on malnLalnlng agrlculLural lands LhaL are no longer
proflLable ln Lhelr presenL sLaLe and deprlve Lhe landowners of Lhe buslness opporLunlLy Lo
maxlmlze avallable resources Landowners shall be free Lo Lransfer or sell agrlculLural lands
converLed lnLo oLher uses for as long as Lhe appllcaLlons for converslon comply wlLh Lhe
guldellnes seL by law and duly approved by Lhe uA8293 ln Lhe lnsLanL case noLhlng prevenLed
peLlLloner PLl from applylng for Lhe converslon of Lhe 300 hecLares of Lhe reclasslfled
agrlculLural lands lnLo commerclal and lndusLrlal lands and evenLually Lransferrlng Lhese Lo
peLlLlonerslnlnLervenLlon

lL wlll be recalled LhaL Lhe 300hecLare land was flrsL reclasslfled from agrlculLural Lo
commerclal lndusLrlal and resldenLlal purposes by Lhe Sanggunlang 8ayan of 1arlac294 ln Lhe
general zonlng map of Lhe Lhen MunlclpallLy of 1arlac 1hereafLer Lhe uA8 approved Lhe
appllcaLlon for converslon lnLo lndusLrlal use293 1hus when peLlLloner PLl parLlLloned and
Lransferred Lhe properLy Lo LulslLa 8ealLy lnc (200 hecLares) and CenLennary Poldlngs (300
hecLares) Lhere was no lmpedlmenL LhereLo

Slnce Lhe converslon of Lhe 300hecLare reclasslfled lands ln Paclenda LulslLa was ln compllance
wlLh Lhe guldellnes seL by Lhe law and duly approved by Lhe uA8 Lhen peLlLlonersln
lnLervenLlon 8C8C and LlCC as subsequenL purchasers for falr value of a porLlon of Lhe
properLy and holders of LlLles LhereLo cannoL now be defeaLed ln Lhelr rlghLs

An lnnocenL purchaser for value and ln good falLh ls one who buys Lhe properLy of anoLher
wlLhouL noLlce LhaL some oLher person has a rlghL Lo or lnLeresL ln Lhe properLy and who pays
Lhe full and falr prlce for lL aL Lhe Llme of Lhe purchase or before Lhey geL noLlce of some oLher
persons' clalm of lnLeresL ln Lhe properLy296 A person deallng wlLh reglsLered land has a rlghL
Lo rely on Lhe 1orrens cerLlflcaLe of LlLle and Lo dlspense wlLh Lhe need for lnqulrlng furLher
excepL when Lhe parLy has acLual knowledge of Lhe facLs and clrcumsLances LhaL would lmpel a
reasonably cauLlous man Lo make such lnqulry or when Lhe purchaser has knowledge of a
defecL or Lhe lack of LlLle of Lhe vender or of sufflclenL facLs Lo lnduce a reasonably prudenL man
Lo lnqulre lnLo Lhe sLaLus of Lhe LlLle of Lhe properLy ln llLlgaLlon297

ln vencllao v CourL of Appeals Lhe CourL explalned

As a general rule where Lhe cerLlflcaLe of LlLle ls ln Lhe name of Lhe vendor when Lhe land ls
sold Lhe vendee for value has Lhe rlghL Lo rely on whaL appears on Lhe face of Lhe LlLle Pe ls
under no obllgaLlon Lo look beyond Lhe cerLlflcaLe and lnvesLlgaLe Lhe LlLle of Lhe vendor
appearlng on Lhe face of Lhe cerLlflcaLe 8y way of excepLlon Lhe vendee ls requlred Lo make
Lhe necessary lnqulrles lf Lhere ls anyLhlng ln Lhe cerLlflcaLe of LlLle whlch lndlcaLes any cloud or
vlce ln Lhe ownershlp of Lhe properLy CLherwlse hls mere refusal Lo belleve LhaL such defecL
exlsLs or hls wlllful closlng of hls eyes Lo Lhe posslblllLy of Lhe exlsLence of a defecL ln hls
vendors LlLle wlll noL make hlm an lnnocenL purchaser for value lf lL afLerwards develops LhaL
Lhe LlLle was ln facL defecLlve and lL appears LhaL he had such noLlce of Lhe defecL as would
have led Lo lLs dlscovery had he acLed wlLh LhaL measure of precauLlon whlch may reasonably
be requlred of a prudenL man ln a llke slLuaLlon298

AL Lhe Llme peLlLlonerslnlnLervenLlon boughL Lhe converLed properLles Lhere was noLhlng ln
Lhe LlLles LhereLo LhaL would alerL Lhem Lo any clalm or defecL

1he 300hecLare converLed land was parLlLloned and Lransferred Lo LulslLa 8ealLy lnc and
CenLennary Poldlngs LulslLa 8ealLy pald peLlLloner PLl Lhe amounL of r300000000 for Lhe 200
hecLare land and Lwo LlLles coverlng 100 hecLares each were lssued ln Lhe former's name
Meanwhlle CenLennary Poldlngs recelved Lhe 300hecLare land ln exchange for Lhe lssuance of
12000000 shares of sLock ln favor of peLlLloner PLl a LlLle Lo whlch was llkewlse lssued 1he
same 300hecLare land was evenLually sold Lo peLlLlonerlnlnLervenLlon LlCC for
r730000000 and LlLle was Lransferred Lo lL When peLlLlonerlnlnLervenLlon LlCC falled Lo
pay lLs loan from peLlLlonerlnlnLervenLlon 8C8C lL enLered lnLo a daclon en pago agreemenL
wlLh 8C8C whereln porLlons of Lhe 300hecLare land were Lransferred ln exchange for wrlLlng
off Lhe loan Lhen amounLlng Lo r43169373210 8oLh LlCC and 8C8C were lssued separaLe
LlLles over Lhe same 300hecLare converLed land

rlor Lo acqulrlng Lhe properLy CenLennary Poldlngs Lhe only resLrlcLlons appearlng ln Lhe LlLle
of Lhe 300hecLare properLy were Lhe SecreLary's CerLlflcaLe ln favor of 1ereslLa Lopa and
ShlnLaro Mural299 AfLer LlCC purchased Lhe properLy and before a porLlon was Lransferred Lo
peLlLlonerlnlnLervenLlon 8C8C Lhrough Lhe daclon en pago Lhe only resLrlcLlons appearlng on
Lhe face of LlCC's LlLle300 Lo Lhe properLy were Lhe followlng (1) ueed of 8esLrlcLlons (2)
SecreLary's CerLlflcaLe ln favor of ko[l komal and kyosuke norl and (3) Lhe 8eal LsLaLe
MorLgage ln favor of 8C8C for r300000000 Pence Lhere was noLhlng ln Lhe LlLles Lo Lhe
properLles LhaL would have alerLed peLlLlonerslnlnLervenLlon of any defecL aL Lhe Llme Lhese
properLles were sold Lo Lhem no adverse clalm or pendlng llLlgaLlon was annoLaLed ln Lhe LlLle
LhaL would defeaL or supersede Lhe clalms of peLlLlonerslnlnLervenLlon as purchasers of Lhe
properLy

ln facL Lhe ueed of 8esLrlcLlons ln LlCC's LlLle speclflcally consLralned Lhe use and occupancy
of Lhe properLy solely as an lndusLrlal esLaLe for nonpolluLlng general lndusLrlal and
manufacLurlng acLlvlLles and requlred prlor wrlLLen consenL of peLlLloner PLl before Lhe
properLy could be used as a vegeLable/frulL planLaLlon301 1hus LlCC and 8C8C had no
lnkllng LhaL Lhe 300hecLare properLy would be used for anyLhlng buL for lndusLrlal and
manufacLurlng acLlvlLles 1he acLlons of boLh LlCC and 8C8C ln deallng wlLh Lhe properLy were
ln conformlLy wlLh Lhe use and purpose of Lhe land as an lndusLrlal esLaLe 1hey had every
reason Lo belleve ln good falLh LhaL Lhe properLy was avallable for lndusLrlal purposes and free
from any defecL wlLh respecL Lo CA8 coverage

1haL Lhe properLy was prevlously agrlculLural land LhaL was sub[ecL Lo converslon ls noL
sufflclenL noLlce Lo deny Lhe rlghLs of peLlLlonerslnlnLervenLlon as lnnocenL purchasers for
value AL Lhe Llme LlCC purchased Lhe properLy for purposes of esLabllshlng an lndusLrlal
esLaLe on 30 !uly 1998 Lhe land had already been converLed from an agrlculLural lnLo lndusLrlal
land wlLh Lhe lmprlmaLur of Lhe uA8 no less lf aL all Lhe uA8's converslon order was preclsely
whaL assured LlCC LhaL Lhe properLy was approved for sale and noL sub[ecL Lo CA8 coverage
ln facL prlvaLe respondenLs' peLlLlons were flled afLer Lhe 300hecLare properLy had already
been converLed and Lransferred by peLlLloner PLl Lo CenLennary Poldlngs and LhereafLer sold Lo
LlCC

1haL Lhe land was covered by a reclasslflcaLlon ordlnance of Lhe local governmenL and by Lhe
uA8 Converslon Crder only bolsLered Lhelr good falLh bellef ln Lhe valldlLy of Lhe sellers' LlLles
Lo Lhe properLy ln addlLlon Lhe Pouslng and Land use 8egulaLory 8oard (PLu88) even
reglsLered Lhe 300hecLare land of LlCC and granLed Lhe owner Lhereof Lhe llcense Lo sell Lhe
land302

nelLher can lL be denled LhaL a full and falr conslderaLlon was glven ln exchange for Lhe sald
lands LlCC pald Lhe LoLal amounL of r730000000 Lo CenLennary Poldlngs ln exchange for Lhe
300hecLare land303 whlle 8C8C wroLe off a porLlon of LlCC's debL amounLlng Lo
r43169373210 when lL recelved Lhe Lwo LlLles Lo Lhe subdlvlded 300hecLare lands304

WlLh respecL Lo peLlLlonerlnlnLervenLlon 8C8C Lhe CourL has prevlously exacLed more Lhan
[usL ordlnary dlllgence from banks and oLher flnanclal lnsLlLuLlons ln Lhe conducL of Lhelr
flnanclal deallngs wlLh real properLles 1he sLandard requlred of banks and oLher flnanclal
lnsLlLuLlons however does noL deprlve Lhem of Lhe proLecLlons afforded lnnocenL purchasers
for value once Lhey have shown LhaL Lhey have exerclsed Lhe level of dlllgence requlred 1hus
Lhe CourL ruled

Whlle we agree wlLh peLlLloners LhaL CSlS as a flnanclal lnsLlLuLlon ls bound Lo exerclse more
Lhan [usL ordlnary dlllgence ln Lhe conducL of lLs flnanclal deallngs we neverLheless flnd no law
or [urlsprudence supporLlng peLlLloners' clalm LhaL flnanclal lnsLlLuLlons are noL proLecLed when
Lhey are lnnocenL purchasers for value When flnanclal lnsLlLuLlons exerclse exLraordlnary
dlllgence ln deLermlnlng Lhe valldlLy of Lhe cerLlflcaLes of LlLle Lo properLles belng sold or
morLgaged Lo Lhem and sLlll fall Lo flnd any defecL or encumbrance upon Lhe sub[ecL properLles
afLer sald lnqulry such flnanclal lnsLlLuLlons should be proLecLed llke any oLher lnnocenL
purchaser for value lf Lhey pald a full and falr prlce aL Lhe Llme of Lhe purchase or before havlng
noLlce of some oLher persons clalm on or lnLeresL ln Lhe properLy303

ln Lhe lnsLanL case peLlLlonerlnlnLervenLlon 8C8C has dlsplayed an observance of
exLraordlnary degree of dlllgence ln acqulrlng Lhe properLy from LlCC eLlLlonerln
lnLervenLlon conducLed ocular lnspecLlons and lnvesLlgaLlons of Lhe properLles Lo be Lhe
sub[ecLed Lo daclon en pago ln accordance wlLh lLs credlL pollcles lL llkewlse conflrmed LhaL
LlCC had possesslon over Lhe lands and LhaL Lhere was no oLher possessor or occupanL
Lhereof lL even conflrmed Lhe ownershlp and possesslon of LlCC wlLh Lhe resldenLs ln Lhe
vlclnlLy endorslng Lhe laLLer's plans Lo creaLe an lndusLrlal esLaLe306

1o allow Lhe converLed land Lo be lncluded ln Lhe compulsory coverage of Lhe CA8L would noL
only overLurn Lhe flnallLy of Lhe converslon order properly lssued by Lhe uA8 buL also deprlve
peLlLlonerslnlnLervenLlon of properLy wlLhouL due process of law


ln Spouses vlllorenLe v Aplaya Lalya CorporaLlon Lhe CourL ln no uncerLaln Lerms upheld Lhe
flnallLy of a converslon order

lndublLably Lhe Converslon Crder of Lhe uA8 was a flnal order because lL resolved Lhe lssue of
wheLher Lhe sub[ecL properLy may be converLed Lo nonagrlculLural use 1he flnallLy of such
Converslon Crder ls noL dependenL upon Lhe subsequenL deLermlnaLlon elLher by agreemenL
of Lhe parLles or by Lhe uA8 of Lhe compensaLlon due Lo Lhe LenanLs/occupanLs of Lhe properLy
caused by lLs converslon Lo nonagrlculLural use Cnce flnal and execuLory Lhe Converslon
Crder can no longer be quesLloned307

ln Lhls case Lhe uA8's converslon order has already aLLalned flnallLy and can no longer be
quesLloned especlally by a collaLeral aLLack on Lhe SuCA LhaL lncludes Lhe converLed lands noL
only has Lhe converslon order been lssued ln accordance wlLh law and Lhe rules lL has also
been execuLed wlLh Lhe subsequenL Lransfers of LlLles Lo Lhe lands Lo Lhe presenL owners
LulslLa 8ealLy lnc LlCC and 8C8C 1o reverse Lhe flnal converslon order Lhrough Lhe
nulllflcaLlon of Lhe SuCA would work ln[usLlce Lo LlCC and 8C8C who were noL even parLles Lo
Lhe A8C proceedlngs below Moreover Lhe lndefeaslblllLy of LlLles under Lhe 1orrens
sysLem308 would be puL ln perll lf Lhe quesLloned A8C 8esoluLlon would be allowed Lo nulllfy
a clalm of ownershlp Lhrough a collaLeral proceedlng Lspeclally ln Lhls case LlCC and 8C8C
were noL noLlfled of Lhe proceedlngs below nor dld Lhey parLlclpaLe Lhereln ?eL Lhelr
reglsLered LlLles would be lmpugned by an lndlrecL aLLack309 1he Llme ls rlpe for Lhls CourL Lo
seLLle llngerlng doubLs as Lo Lhe flnallLy of converslon orders of Lhe uA8 ln order Lo secure Lhe
rlghLs and beneflLs Lo whlch farmworkers are enLlLled and Lo shore up lnvesLor's confldence ln
Lhe rellablllLy of LlLles Lo Lhe converLed lands LhaL Lhey have obLalned and developed310

neverLheless Lhe CourL noLes LhaL LulslLa 8ealLy whlch recelved Lhe 200hecLare porLlon of
converLed land from peLlLloner PLl falled Lo lnLervene ln Lhe lnsLanL case uesplLe Lhe noLlce of
coverage lssued under Lhe quesLloned A8C resoluLlon whlch lncluded Lhe converLed lands lL
purchased LulslLa 8ealLy dld noL seek Lo defend lLs clalms of ownershlp ln Lhe lnsLanL case
unllke peLlLlonerslnlnLervenLlon LlCC and 8C8C AlLhough Lhe rlghL Lo due process dlsallows
declslons of Lhe courL Lo blnd Lhose who are noL parLles Lo Lhe case311 lL ls deemed Lo have
walved lLs rlghL Lo be heard lurLhermore LulslLa 8ealLy derlves lLs rlghL of ownershlp over Lhe
converLed land from peLlLloner PLl who ls a parLy Lo Lhe lnsLanL case lf peLlLloner PLl's
ownershlp of Lhe 200hecLare converLed land ls assalled LulslLa 8ealLy cannoL clalm a greaLer
rlghL Lhan LhaL of lLs predecessor Slnce all of peLlLloner PLl's agrlculLural lands ln Paclenda
LulslLa are now sub[ecL Lo dlrecL land Lransfer Lhose Lransferred by peLlLloner PLl Lo LulslLa
8ealLy are necessarlly covered unllke peLlLlonerslnlnLervenLlon LlCC and 8C8C who Llmely
ralsed and defended Lhelr clalms as lnnocenL purchasers for value before Lhe CourL LulslLa
8ealLy kepL lLs sllence and dld noL boLher Lo esLabllsh lLs rlghLs over Lhe converLed lands ln Lhe
proceedlngs before Lhe CourL AbsenL any proof of LulslLa 8ealLy's sLaLus as an lnnocenL
purchaser for value Lhe 200hecLare converLed lands lL recelved from peLlLloner PLl shall
llkewlse be sub[ecL Lo dlrecL land Lransfer wlLhouL pre[udlce Lo lLs rlghL Lo clalm [usL
compensaLlon under Lhe law and Lhe rules

ln any case Lhe supervenlng evenLs have furLher esLabllshed LhaL Lhe areas so converLed are no
longer economlcally feaslble and sound for agrlculLural purposes 1he subsequenL developmenL
of and parLlal lmprovemenLs312 on Lhe converLed lands of peLlLlonerslnlnLervenLlon 8C8C and
LlCC only afflrm Lhelr vlablllLy and feaslblllLy for lndusLrlal and commerclal purposes and noL
for agrlculLural use

1haL Lhese converLed lands were declared as a Speclal Lconomlc Zone by Lhen resldenL 8amos
(LulslLa lndusLrlal ark ll) only emphaslzes Lhe deslrablllLy and economy of uslng Lhem as
lndusLrlal lands 8efore Lhey may be used for oLher purposes reclasslfled agrlculLural lands
musL undergo Lhe process of converslon313 Lhe uA8's approval of Lhe converslon of
agrlculLural land lnLo an lndusLrlal esLaLe ls a condlLlon precedenL for lLs converslon lnLo an
ecozone314 A proposed ecozone cannoL be consldered for presldenLlal proclamaLlon unless
Lhe landowner flrsL submlLs Lo LZA a landuse converslon clearance cerLlflcaLe from Lhe
uA8313

rlor Lo Lhe resldenL's approval of Lhe LulslLa lndusLrlal ark ll as a speclal economlc zone on
22 Aprll 1998316 Lhe uA8 had already approved Lhe converslon of Lhe land Lo an lndusLrlal
zone on 14 AugusL 1996317 lL can be deduced LhaL Lhe presldenLlal proclamaLlon of Lhe
converLed land as a speclal economlc zone was a loglcal progresslon arlslng from Lhe earller
lnLenLlon Lo use Lhe land for lndusLrlal purposes 1hls lnLenLlon was Lhe reason why Lhe uA8
allowed Lhe converslon ln Lhe flrsL place 1hus agrlculLural land LhaL has been approved for
converslon by Lhe uA8 for commerclal or lndusLrlal purposes and subsequenLly proclalmed as a
speclal economlc zone by Lhe resldenL can no longer be sub[ecL Lo coverage under Lhe CA8

1o order LhaL Lhese lands now reverL Lo agrlculLural use for Lhe planLlng of sugar would be more
cosLly and dlsadvanLageous slnce lL lnvolves undolng Lhese lmprovemenLs and rehablllLaLlng
Lhe land Lo become vlable for planLlng lf Lhe uA8 were Lo order Lhe exproprlaLlon of Lhe 300
hecLare converLed lands Lhen paymenL of [usL compensaLlon musL be made Lo peLlLlonersln
lnLervenLlon as lawful and LlLled owners aL Lhe Llme of Lhe Laklng Such a scenarlo wlll noL bode
well for Lhe cashsLrapped agrarlan reform program slnce Lhe presenL markeL value of Lhe
lands has vasLly lncreased due Lo Lhe parLlal lmprovemenLs and developmenLs lnLroduced
Lhereln eLlLlonerlnlnLervenLlon LlCC even clalms Lo have pald uS$1478293630 for Lhe
clvll works and power supply sysLem bullL on Lhe converLed land by lLs conLracLor Pazama
hlllpplnes lnc318 Worse addlLlonal resources would be needed Lo remove Lhese
lmprovemenLs and rehablllLaLe Lhe lndusLrlal esLaLe for agrlculLural farmlng As found by Lhe
uA8 Lhe converLed lands were noL lrrlgaLed and were ln need of new lrrlgaLlon faclllLles Lo
make Lhem vlable for agrlculLure319

8e LhaL as lL may Lhe CourL should noL however Lurn a bllnd eye Lo Lhe facL LhaL Lhe proper
reclplenLs of Lhe purchase prlce for Lhe Lransferred and converLed lands are Lhe lW8s under
Lhe compulsory coverage scenarlo Pad Lhe quallfled lW8s opLed for dlrecL land Lransfer of Lhe
enLlre Paclenda LulslLa lands Lhen CenLennary Poldlngs LlCC and 8C8C would have all been
deallng dlrecLly wlLh Lhem for Lhe Lransfer and purchase of Lhe 300hecLare lands lnsLead Lhe
sLock dlsLrlbuLlon opLlon placed Lhe proceeds of Lhe sale of Lhese converLed lands unLo Lhe
hands of peLlLloner PLl as Lhe corporaLe landowner Conslderlng LhaL Lhe land ls Lo be
redlsLrlbuLed Lo Lhe quallfled lW8s and LhaL Lhe 300hecLare converLed lands are no longer
feaslble as agrlculLural lands lL ls Lo Lhe besL lnLeresL of [usLlce and equlLy LhaL peLlLloner PLl
should reLurn Lhe amounLs recelved from Lhe sale and/or Lransfer of Lhe converLed lands neL of
Lhe Laxes and oLher leglLlmaLe expenses acLually lncurred ln Lhe sale of Lhe land 1hls ls wlLhouL
pre[udlce Lo Lhe reasonable offseL of Lhe amounLs owed by Lhe quallfled lW8s Lo peLlLloner PLl
from Lhe beneflLs Lhey recelved as sLockholders under Lhe SuCA

llnal noLe

lL ls noL denled LhaL 1AuLCC and peLlLloner PLl have aLLempLed Lo glve llfe Lo Lhe
pronouncemenL of agrarlan reform Lhrough Lhe dlsLrlbuLlon of

shares of sLock Lo Lhe lW8s320 Sadly Lhe mechanlsm Lhey resorLed Lo was faLally flawed and
un[usL ln lLs lmplemenLaLlon Slmply puL Lhe SuCA has falled as an alLernaLlve Lo land
redlsLrlbuLlon scheme ln empowerlng Lhe landless farmworkers of Paclenda LulslLa An agrarlan
sysLem LhaL perpeLuaLes excesslve dependence on Lhe few landed by Lhe many landless carrles
wlLhln lLself Lhe seed of lLs own dlslnLegraLlon321

l voLe Lo afflrm Lhe A8C's presenL resorL Lo compulsory coverage of Lhe agrlculLural lands
whlch ls requlred under CA8L ln order Lo uphold Lhe consLlLuLlonal goal of land redlsLrlbuLlon
Agrarlan reform was almed aL placlng Lhe poor farmers on a parlLy wlLh Lhe landowner As an
alLernaLlve Lo dlrecL land dlsLrlbuLlon Lhe sLock dlsLrlbuLlon opLlon under CA8L was lnLended Lo
hand conLrol of Lhe lands lndlrecLly Lo Lhe farmer by deslgnaLlng Lhem as sLockholders of Lhe
corporaLe landowner Powever lnsLead of ensurlng Lhelr freedom wlLh Lhe promlse of
corporaLe conLrol Lhe peLlLloner PLl's SuCA made Lhem subservlenL and mlnorlLy sLockholders
who conLlnue Lo be beholden Lo Lhe good graces of Lhe ma[orlLy corporaLe landowner

under Lhe SuCA quallfled lW8s were awarded lnLanglble paper asseLs LhaL became
worLhless as Lhe forLunes of peLlLloner PLl wenL souLh lnsLead of recelvlng real and lncome
generaLlng asseLs whlch offered a mulLlLude of posslblllLles for Lhelr use uesplLe Lhe good
lnLenLlon of comlng up wlLh an alLernaLlve opLlon under Lhe agrarlan land reform program Lhe
fallure of Lhe SuCA Lo fulflll Lhe promlses of agrarlan soclal [usLlce ln Paclenda LulslLa leaves no
oLher legal opLlon Lhan Lo order Lhe uncondlLlonal and compleLe Lransfer of Lhe agrlculLural
lands Lo Lhe quallfled lW8s noL ln Lhe nexL generaLlon buL now ln orderlng Lhe lmmedlaLe
redlsLrlbuLlon of Lhe Paclenda LulslLa agrlculLural lands whaL ls soughL ls Lhe relnvlgoraLlon of
Lhe consLlLuLlonal mandaLe for agrarlan reform and Lhe empowermenL of Lhe farmworker
beneflclarles by glvlng Lhem Lhe means Lo deLermlne Lhelr own desLlny322

ulSCSl1lvL C81lCn

ln vlLW Cl 1PL lC8LCClnC l voLe Lo Alll8M Wl1P MCulllCA1lCnS A8C 8esoluLlon no
20033201 daLed 22 uecember 2003 and 8esoluLlon no 20063401 daLed 03 May 2006 l
dlssenL from Lhe ma[orlLy's poslLlon wlLh respecL Lo how Lhey modlfled Lhe quesLloned A8C
8esoluLlons l would dlrecL Lhe modlflcaLlons of Lhe A8C 8esoluLlons ln Lhe followlng manner

1he agrlculLural lands of 1AuLCC and peLlLloner PLl are hereby ordered Lo be sub[ecL Lo
compulsory coverage by Lhe uA8 1he prevlous approval of Lhe SuCA ls hereby 8LvCkLu and
Lhe parLles LhereLo are hereby ordered resLored Lo Lhelr prevlous sLaLes sub[ecL Lo Lhe
followlng condlLlons

1 AgrlculLural lands covered by CA8L and prevlously held by 1AuLCC lncludlng Lhose
Lransferred Lo peLlLloner PLl shall be sub[ecL Lo compulsory coverage and lmmedlaLely
dlsLrlbuLed Lo Lhe 6296 orlglnal quallfled lW8s who slgned Lhe SuCA or lf deceased Lhelr
helrs sub[ecL Lo Lhe dlsposlLlon of Lhe converLed lands expressed ln Lhe paragraph afLer Lhe
nexL buL shall necessarlly exclude only Lhe followlng

a 300 ouL of Lhe 300 hecLares of converLed lands now ln Lhe name of LlCC and 8C8C

b 80hecLares of SC1Lx lands and

c homeloLs already awarded Lo Lhe quallfled lW8s

2 eLlLloner PLl and LulslLa 8ealLy lnc shall be enLlLled Lo Lhe paymenL of [usL compensaLlon
for Lhe agrlculLural lands and Lhe 200hecLare converLed lands respecLlvely aL Lhe Llme of Lhe
acLual Laklng aL falr markeL value whlch shall be deLermlned by Lhe uA8 peLlLloner PLl shall
noL be held llable for Lhe paymenL of renLals for Lhe use of Lhe properLy

3 All shares of sLock of peLlLloner PLl lssued Lo Lhe quallfled lW8s as beneflclarles of Lhe dlrecL
land Lransfer are nulllfled and all such shares are resLored Lo Lhe name of 1AuLCC lnsofar as lL
Lransferred asseLs and llablllLles Lo peLlLloner PLl as Lhe splnoff corporaLlon buL Lhe shares
lssued Lo nonquallfled lW8s shall be consldered as addlLlonal and varlable employee beneflLs
and shall remaln ln Lhelr names

4 eLlLloner PLl shall have no clalm over all salarles wages and beneflLs glven Lo farmworkers
and nelLher shall Lhe farmworkers quallfled or noL be requlred Lo reLurn Lhe same havlng
recelved Lhem for servlces rendered ln an employeremployee relaLlonshlp

3 eLlLloner PLl shall be llable Lo Lhe quallfled lW8s for Lhe value recelved for Lhe sale or
Lransfer of Lhe 300 ouL of Lhe 300 hecLares of converLed lands speclflcally Lhe equlvalenL value
of 12000000 shares of CenLennary Poldlngs for Lhe 300hecLare land asslgned buL noL less
Lhan r730000000 and Lhe money recelved from Lhe sale of Lhe SC1Lx land less Laxes and
oLher leglLlmaLe expenses normally assoclaLed wlLh Lhe sale of land

6 eLlLloner PLl's llablllLy shall be offseL by paymenLs acLually recelved by quallfled lW8s under
Lhe SuCA namely

a 1hree percenL (3) LoLal gross sales from Lhe producLlon of Lhe agrlculLural lands323

b homeloLs awarded Lo quallfled lW8s

c any dlvldend glven Lo quallfled lW8s and

d proceeds of Lhe sale of Lhe 300hecLare converLed land and SC1Lx land lf any dlsLrlbuLed Lo
Lhe lW8s324

1he uA8 ls ul8LC1Lu Lo deLermlne Lhe scope of 1AuLCC's and/or peLlLloner PLl's agrlculLural
lands LhaL should have been lncluded under Lhe compulsory coverage of CA8L aL Lhe Llme Lhe
SuCA was execuLed on 11 May 1989 buL excludlng Lhe lands menLloned above 1he lands of
1AuLCC noL covered by Lhe SuCA should be covered by Lhls rullng afLer approprlaLe
deLermlnaLlon by uA8 conslderlng LhaL Lhey were covered by CA8L buL operaLlonally excluded
Lherefrom when 1AuLCC unllaLerally asslgned Lo Lhe splnoff PLl only 4916 hecLares of Lhe
6443 hecLares lL owned 1he uA8 ls also C8uL8Lu Lo monlLor Lhe land dlsLrlbuLlon and exLend
supporL servlces LhaL Lhe quallfled farmworkerbeneflclarles may need ln chooslng Lhe mosL
approprlaLe and economlcally vlable opLlon for land dlsLrlbuLlon and ls furLher 8LCul8Lu Lo
render a compllance reporL on Lhls maLLer onehundred elghLy (180) days afLer recelpL of Lhls
Crder 1he compllance reporL shall lnclude a deLermlnaLlon of Lhe exacL land area of Paclenda
LulslLa LhaL shall be sub[ecL Lo compulsory coverage ln accordance wlLh Lhe ueclslon

eLlLloner PLl ls 8LCul8Lu Lo render a compleLe accounLlng and submlL evldenLlary proof of all
Lhe beneflLs glven and exLended Lo Lhe quallfled lW8s under Lhe vold SuCA lncludlng buL noL
llmlLed Lo Lhe dlvldends recelved homeloLs awarded and proceeds of Lhe sales of Lhe lands
whlch shall serve as bases for Lhe offseL of lLs llablllLles Lo Lhe quallfled lW8s and lLs
accounLlng shall be sub[ecL Lo conflrmaLlon and verlflcaLlon by Lhe uA8

All LlLles lssued over Lhe 300hecLare converLed land lncludlng Lhose under Lhe names of
peLlLlonerslnlnLervenLlon 8lzal Commerclal 8anklng CorporaLlon and LulslLa lndusLrlal ark
CorporaLlons and Lhose awarded as homeloLs are hereby Alll8MLu and LxCLuuLu from Lhe
noLlce of compulsory coverage 1he 200hecLare converLed lands Lransferred Lo LulslLa 8ealLy
lnc by peLlLloner Paclenda LulslLa lnc ls deemed covered by Lhe dlrecL land Lransfer under
Lhe CA8 ln favor of Lhe quallfled lW8s sub[ecL Lo Lhe paymenL of [usL compensaLlon

1he 1emporary 8esLralnlng Crder lssued on 14 !une 2006 en[olnlng Lhe lmplemenLaLlon of Lhe
quesLloned A8C 8esoluLlon and noLlces of Coverage ls hereby Lll1Lu

MA8lA LCu8uLS A SL8LnC
AssoclaLe !usLlce


looLnoLes

1 naLalla 8ealLy v uA8 C8 no 103302 12 AugusL 1993 223 SC8A 278

2 Land 8ank of Lhe hlllpplnes v ue Abello eL al C8 no 168631 07 Aprll 2009 384 SC8A
342

3 Pelrs of Aurello 8eyes v Carllao C 8 no 136466 23 november 2009 603 SC8A 294

4 !effrey M 8ledlnger Agrarlan 8eform ln Lhe hlllpplnes (SLanford unlverslLy ress 1993) aL
117

3 CA8L Sec 29 and 31

6 CA8L Sec 4

7 eLlLloner PLl's Memorandum daLed 23 SepLember 2010 aL 2 clLlng 1he lacLual 8ackdrop
of Lhe Paclenda LulslLa Case conLalned ln Lhe memorandum flled by SollclLor Ceneral lranclsco
Chavez ln Lhe CourL of Appeals 8epubllc of Lhe hlllpplnes v 1arlac uevelopmenL CorporaLlon
eL al CAC8 no 08634 (rollo vol 3 aL 3644) See also rlvaLe 8espondenL lA8M's
Memorandum daLed 24 SepLember 2010 aL 3336 rollo vol 3 aL 38393860

8 1ermlnal 8eporL daLed 22 SepLember 2003 rollo vol 1 aL 386

9 ubllc 8espondenL A8C CommenL aL 3 rollo vol 1 aL 336

10 WPL8LAS Lo faclllLaLe sLock acqulslLlon by Lhe farmworkers and aL Lhe same Llme glve
Lhem greaLer beneflLs Lhan lf Lhe agrlculLural land were Lo be dlvlded among Lhem lnsLead Lhe
ll8S1 A81? caused Lhe lncorporaLlon and organlzaLlon of Lhe SLCCnu A81? as Lhe splnoff
corporaLlon Lo whom lL has Lransferred and conveyed Lhe agrlculLural porLlons of Paclenda
LulslLa and oLher farmrelaLed properLles ln exchange for shares of sLock of Lhe laLLer
(SuCA Whereas Clause rollo vol1 aL 148)

11 ld

12 Cn 23 AugusL 1988 peLlLloner PLl was reglsLered wlLh Lhe SecurlLles and Lxchange
Commlsslon (2008 Ceneral lnformaLlon SheeL of PLl rollo vol 2 aL 22002207)

13 Amended ArLlcle of lncorporaLlon of peLlLloner PLl rollo vol 3 aL 37623776

14 WPL8LAS ln vlew of Lhe facL LhaL Lhe parL of Paclenda LulslLa devoLed Lo agrlculLure
conslsLlng approxlmaLely 491373 hecLares lf dlvlded and dlsLrlbuLed among more or less
7000 farmworkers as poLenLlal beneflclarles would noL be adequaLe Lo glve Lhe sald
farmworkers a decenL means of llvellhood Lhe ll8S1 A81? and Lhe 1Pl8u A81? agreed Lo
resorL Lo dlsLrlbuLlon of shares of sLock Lo Lhe beneflclarles Lhe beLLer and more equlLable
mode of compllance wlLh Lhe CA8 (SuCA Whereas Clause rollo vol1 aL 148)

13 WPL8LAS Lhe ll8S1 A81? has Lransferred and conveyed Lo Lhe SLCCnu A81? Lhe sald
agrlculLural land of Paclenda LulslLa and oLher properLles necessary for lLs operaLlon aL an
appralsed valuaLlon of 39033422000 Lhe value of Lhe agrlculLural land belng
19663000000 and Lhe oLher asseLs 39392422000 whlch valuaLlons have been appralsed
and approved ln prlnclple by Lhe SecurlLles and Lxchange Commlsslon (SuCA Whereas
Clause rollo vol1 aL 148 See ubllc 8espondenL A8C CommenL aL 3 rollo vol 1 aL 336)

16 SuCA daLed 11 May 1989 rollo vol 1 aL 147130

17 1he value of peLlLloner PLl's agrlculLural land was pegged aL r196630000 lf compared Lo
Lhe clalmed LoLal asseLs worLh r390334220 Lhen Lhe agrlculLural land ls 33296 of peLlLloner
PLl's asseLs

18 (333331462 LoLal shares of sLock) x (3329 proporLlonal share of lW8s) 11839197683
shares

19 Mandays refer Lo Lhe number of days LhaL a farmworker beneflclary has worked ln relaLlon
Lo Lhelr enLlLlemenL Lo shares of sLock under Lhe SuCA Some of Lhe parLles ln Lhe case
employed Lhe Lerm mandays (eLlLloner PLl's ConsolldaLed 8eply 29 May 2007 aL 3336) buL
we use lLs more readable form mandays ln Lhls Cplnlon

20 lnLerAgency CommlLLee on Paclenda LulslLa lnc PlghllghLs of ConsulLaLlve MeeLlng rollo
vol 3 aL 40134016

21 MlnuLes of lnformaLlon Campalgn ConducLed rollo vol 3 aL 40174024

22 eLlLlon par 2 aL 21 (rollo vol 1 aL 30) see also 1ermlnal 8eporL daLed 22 SepLember
2003 aL 2 (rollo vol 1 aL 387)

23 eLlLlon par 3 aL 22 (rollo vol 1 aL 31) Compllance daLed 23 AugusL 2009 (rollo vol 2 aL
22132492)

24 roposal for SLock ulsLrlbuLlon under CA8 (May 1989) rollo vol 3 aL 37303748

23 A8C LeLLer daLed 06 november 1989 rollo vol 1 aL 13081309

26 LeLLer daLed 14 november 1989 rollo vol 1 aL 13101313

27 A8C 8esoluLlon no 89122 and A8C LeLLer daLed 12 uecember 1989 rollo vol 1 aL 131
132

28 eLlLlon par 3 aL 2223 rollo vol 1 aL 3132

29 Cn 22 Aprll 2003 peLlLloner PLl compleLed Lhe dlsLrlbuLlon of 3433167 shares of sLock
correspondlng Lo Crop ?ear 20032004 Lo all lLs exlsLlng sLockholders of record as of !une 2004
(eLlLloner PLl LeLLer daLed 09 !une 2003 rollo vol 1 aL 193)


30 CuL of Lhese lW8s 2362 have allegedly recelved LlLles Lo Lhelr loLs from Lhe 8eglsLer of
ueeds (eLlLlon aL par 3(e) 23 rollo vol 1 aL 32)

31 CLher beneflLs lnclude free hosplLal and medlcal servlces for lW8s and Lhelr spouses
chlldren and parenLs vacaLlon and slck leaves amelloraLlon bonus school bus allowance for
dependenLs emergency rellef allowance maLernlLy beneflLs flnanclal beneflLs due Lo old
age/deaLh unused slck leave converslon and varlous loans

32 1he lands applled for converslon were covered under Crlglnal CerLlflcaLe of 1lLle/1ransfer
CerLlflcaLe of 1lLle nos 238719 240197 and 236741 wlLh an area of 1497733 hecLares 87763
hecLares and 13942008 hecLares respecLlvely (rollo vol 1 aL 647630 see also eLlLlon aL
par 3(f) 23 rollo vol 1 aL 32 and 1C1 nos 240197 238719 and 236741 rollo vol 2 aL
14231468)

33 1he proposed converslon has Lhe supporL or concurrence of Lhe affecLed lW8s as verlfled
by Lhe Lu1C A8C Land use 1echnlcal CommlLLee lnspecLlon 1eam (uA8 Converslon Crder
no 030601707476493 Serles of 1996 aL 911 rollo vol 1 aL 639661 see also 8C8C
eLlLlonlnlnLervenLlon daLed 18 CcLober 2007 par 41 aL 13 rollo vol 2 aL 1372 and
ManlpesLo ng agsuporLa rollo vol 1 aL 13271328)

34 1he eleven (11) dlrecLors lncludlng Lhe four dlrecLors (represenLlng Lhe farmer
beneflclarles namely LrnesLo Sangll !ose Cabllangan lellmon Salas !r and !ose 8uneo
navarro) approved PLl's plan Lo converL 300 hecLares lnLo an lndusLrlal esLaLe (300 hecLares)
and medlum Lo lowcosL resldenLlal area (200 hecLares) (uA8 Converslon Crder no
030601707476493 Serles of 1996 aL 3 rollo vol 1 aL 633 see also 8C8C eLlLlonln
lnLervenLlon daLed 18 CcLober 2007 par 42 aL 13 rollo vol 2 aL 1372)

33 Sanggunlang 8ayan 8esoluLlon no 280 daLed 01 SepLember 1993 (rollo vol 3 aL 3394
3393) Supervlsory Croup and AM8ALA CommenL/CpposlLlon daLed 17 uecember 2006 par
71 aL 16 (rollo vol 1 aL 343) 8C8C eLlLlonlnlnLervenLlon daLed 18 CcLober 2007 par 3 aL
13 (rollo vol 2 aL 1372)

36 uA8CC Converslon Crder no 030601074764(93) Serles of 1996 rollo vol 1 aL 631664

37 8C8C eLlLlonlnlnLervenLlon daLed 18 CcLober 2007 aL 3 rollo vol 2 aL 1362

38 1he flrsL 100 hecLares covered under 1C1 no 287909 were sold on 24 !une 1997 for
230000000 and Lhe remalnlng 100 hecLares under Lhe same LlLle were sold on 27 !une 1997
also for 230000000 (ueeds of AbsoluLe Sale rollo vol 3 aL 37333736)

39 1C1 nos 236741 238718 238719 and 240197 were cancelled and 1C1 no 287910 was
lssued (8ollo vol 2 aL 14831484)

40 1hls Lhree hundred hecLare porLlon of land was covered under 1ransfer CerLlflcaLe of 1lLle
no 287910

41 ueed of Conveyance and Lxchange daLed 13 uecember 1996 rollo vol 2 aL 14831487

42 1C1 no 292091 rollo vol 2 aL 14921493

43 1hese corporaLe enLlLles lnclude Lwo domesLlc corporaLlons (8lzal Commerclal 8anklng
CorporaLlon and Agulla Poldlngs lnc) and a !apanese corporaLlon (lLochu CorporaLlon)

44 !olnL venLure AgreemenL daLed 14 CcLober 1996 rollo vol 3 aL 43134342

43 Memorandum of AgreemenL daLed 12 november 1997 rollo vol 2 aL 14941498

46 ueed of AbsoluLe Sale daLed 30 !uly 1998 (rollo vol 2 aL 14991309) and SupplemenLal Lo
ueed of AbsoluLe Sale daLed 01 lebruary 2000 (rollo vol 2 aL 13101313)

47 SLLLL8's WarranLles 1he SLLLL8 warranLs Lo Lhe 8u?L8 Lhe followlng xxx (b) 1here are no
Lhlrd parLles wlLh any rlghL or clalm whaLsoever over Lhe roperLy (ueed of AbsoluLe Sale
daLed 30 !uly 1998 aL 3 rollo vol 2 aL 1301)

48 (d) AL Lhe Llme of Lhe execuLlon of Lhls AgreemenL Lhe SLLLL8 has duly obLalned a valld
ueparLmenL of Agrarlan 8eform Converslon CerLlflcaLe LhaL Lhe roperLy ls classlfled for us as
an lndusLrlal esLaLe xxx (ueed of AbsoluLe Sale daLed 30 !uly 1998 aL 4 rollo vol 2 aL 1302)

49 LlCC eLlLlonlnlnLervenLlon daLed 22 november 2007 par 10 aL 14 rollo vol 2 aL 1338

30 1C1 no 310986 rollo vol 2 aL 13141318

31 1C1 no 363800 coverlng one hundred elghLy (180) hecLares (rollo vol 2 aL 13191320) and
1C1 no 363801 coverlng four hecLares (rollo vol 1 aL 13211322)

32 LlCC's eLlLlon for lnLervenLlon daLed 22 november 2007 par 122 aL 13 rollo vol 2 aL
1339

33 8eal LsLaLe MorLgage (rollo vol 3 aL 34203423) 8C8C's MoLlon for Leave Lo lnLervene
daLed 18 CcLober 2007 par 34 aL 3 (rollo vol 2 aL 1332) 8C8C's eLlLlonlnlnLervenLlon
daLed 18 CcLober 2007 par 91 aL 17 (rollo vol 2 aL 1376)

34 upon Lhe recommendaLlon of Lhe hlllpplne Lconomlc Zone AuLhorlLy and pursuanL Lo Lhe
powers vesLed ln me by law l lluLL v 8AMCS resldenL of Lhe 8epubllc of Lhe hlllpplnes
and by vlrLue of Lhe Speclal Lconomlc Zone AcL of 1993 do hereby deslgnaLe Lhe followlng
parcels of prlvaLe lands ln 8arangay San Mlguel MunlclpallLy of 1arlac rovlnce of 1arlac as
LulslLa lndusLrlal ark ll conslsLlng of 1P8LL Punu8Lu (300) PLC1A8LS more or less as
deflned by Lhe hereln Lechnlcal descrlpLlon (resldenLlal roclamaLlon no 1207 daLed 22
Aprll 1998 rollo vol 3 aL 34003402 see also CerLlflcaLe of 8eglsLraLlon no LZ9803 rollo
vol 3 aL 3403)

33 Sanggunlang 8ayan 8esoluLlon no 392 daLed 16 uecember 1996 rollo vol 3 aL 4333

36 eLlLlonerlnlnLervenLlon LlCC's Memorandum daLed 23 SepLember 2010 par 17 aL 7
see also Annex xserles of Lhe Memorandum

37 eLlLlonerlnlnLervenLlon LlCC's Memorandum daLed 23 SepLember 2010 par 731 aL 41

38 ueed of AbsoluLe AsslgnmenL rollo vol 2 aL 13231327

39 1C1 nos 363800 and 363801 ln Lhe name of LlCC were cancelled and new LlLles (1C1 nos
391031 and 391032) were lssued ln Lhe name of 8C8C (8ollo vol 2 aL 13281333)

60 8C8C's MoLlon for Leave Lo lnLervene daLe 18 CcLober 2007 par 39 aL 4 (rollo vol 2 aL
1333) 8C8C's eLlLlonlnlnLervenLlon daLed 18 CcLober 2007 par 16 aL 21 (rollo vol 2 aL
1380)

61 eLlLlon daLed 30 !anuary 2006 rollo vol 1 aL 39 See also SC1Lx pro[ecL cosL escalaLlon
land valuaLlon quesLloned
hLLp//wwwcongressgovph/commlLLees/commnews/commnews_deLphp?newsld1231 as
clLed ln fooLnoLe 161 of Lhe ueclslon aL 78

62 ld

63 ALLached as Annex C of peLlLloner's Memorandum

64 repared by Lhe flnance manager capLloned as Paclenda LulslLa lnc Salarles 8eneflLs and
CredlL rlvlleges (ln 1housand pesos) Slnce Lhe SLock CpLlon was Approved by A8C/CA8
rollo vol 3 aL 3676

63 1 1o have a renegoLlaLlons of Lhe Memorandum of AgreemenL Lhe soonesL posslble Llme ln
order Lo cope up wlLh Lhe demands of Llme whereln our rlghLs musL be properly recognlzed by
dellverlng Lo us whaL ls due Lo us whlch musL be sLrlcLly followed by PLl

6 We wlll be movlng for Lhe lmmedlaLe lmplemenLaLlon of Lhe law Lo have Lhe porLlons so far
covered under Lhe CA8 be flnally dlsLrlbuLed Lo Lhe PLl farmers ln general lf only Lo proLecL
our long awalLed dreams Lo come lnLo reallLy (8ollo vol 1 aL 133136)

66 8ollo vol 1 aL 137138

67 8ollo vol 1 aL 139174

68 PLl would llke Lo relLeraLe lLs poslLlon LhaL lLs SLock ulsLrlbuLlon CpLlon (SuC) ls
lmpervlous Lo any nulllflcaLlon LermlnaLlon abrogaLlon renegoLlaLlon or any appellaLlon lLs
deLracLors may wanL Lo chrlsLen Lhelr move lor how could Lhey ask for Lhe cancellaLlon of an
SuC (and lLs CerLlflcaLe of Compllance) LhaL has sLrlcLly complled wlLh Lhe provlslons of boLh
8ep AcL no 6637 and lLs lmplemenLlng rules under AdmlnlsLraLlve Crder no 10 on sLock
dlsLrlbuLlon? (ld aL 172)

69 eLlsyon (ara sa agpapawalang 8lsa sa SLock ulsLrlbuLlon CpLlon SuC agpapaLlgll sa
agpapallL CamlL ng Lupa aL amamahagl ng Lupalng napapaloob sa Paclenda LulslLa lnc)
rollo vol 1 aL 369373

70 8ollo vol 1 aL 379

71 CpposlLlon daLed 21 !anuary 2003 rollo vol 1 aL 184192

72 uA8 Speclal Crder no 789 Serles of 2004 rollo vol 1 aL 679680

73 8ollo vol 1 aL 386403

74 1ermlnal 8eporL aL 1419 rollo vol 1 aL 399404

73 A8C 8esoluLlon no 2003S01

76 8espondenLlnLervenor lA8M's Memorandum daLed 24 SepLember 2010 aL 11 rollo vol 3
aL 3816

77 rlvaLe respondenLs Supervlsory Croup and AM8ALA Memorandum daLed 23 november
2003 rollo vol 1 aL 711729

78 A8C 8esoluLlon no 20033201 rollo vol 1 aL 100101

79 ursuanL Lo Lhe declslon of Lhe resldenLlal Agrarlan 8eform (A8C) as conLalned ln Lhe
A8C 8esoluLlon no 033201 S2003 revoklng/recalllng Lhe SLock ulsLrlbuLlon Scheme granLed
Lo Paclenda LulslLa lnc you are hereby dlrecLed Lo lmmedlaLely lnlLlaLe approprlaLe acLlon Lo
acqulre and dlsLrlbuLe Lhe enLlre Paclenda LulslLa agrlculLural landholdlng under Lhe
Compulsory AcqulslLlon Scheme of Lhe Comprehenslve Agrarlan 8eform rogram sub[ecL Lo Lhe
reLenLlon llmlLs prescrlbed under 8A 6637 as amended (8espondenL angandaman's uA8
Memorandum daLed 23 uecember 2003 rollo vol 1 aL 213 see also Memorandum daLed 27
uecember 2003 of undersecreLary narclso nleLo rollo vol 1 aL 214)

80 8ollo vol 1 aL 107143

81 CpposlLlon Lo MoLlon for 8econslderaLlon and MoLlon for lmmedlaLe and LxpedlLlous
LxecuLlon of A8C 8esoluLlon daLed 16 !anuary 2006 flled by ALLy !oberL ahllga of SLn18A
and ALLy 8omeo Capulong of Lhe ubllc lnLeresL Law CenLer (8ollo vol 1 aL 771781)

82 noLlce of Coverage daLed 02 !anuary 2006 rollo vol 2 aL 14071409

83 noLlce of Coverage daLed 02 !anuary 2006 rollo vol 2 aL 14101414

84 noLlce of Coverage daLed 02 !anuary 2006 rollo vol 1 aL 103106 and rollo vol 2 aL 1413
1418

83 1hls noLlce of Coverage ldenLlfled 1C1 no 236741 ln Lhe name of peLlLloner PLl a porLlon of
whlch (3414307 hecLares) was ordered converLed by Lhe uA8 for lndusLrlal use (1C1 no
236741 rollo vol 2 aL 14271468 uA8 Converslon Crder no 030601707476493 Serles of
1996 rollo vol 1 aL 631664) lL llkewlse covered several loLs under 1C1 no 310986 ln Lhe
name of LlCC whlch were also converLed Lo lndusLrlal lands (1C1 no 310986 rollo vol 2 aL
17131717 LlCC eLlLlonlnlnLervenLlon daLed 22 november 2007 par 33 aL 1719 rollo
vol 2 aL 13611363)

86 8C8C's eLlLlonlnlnLervenLlon daLed 18 CcLober 2007 par 21 aL 24 rollo vol 2 aL 1383

87 ln Lhe lnLeresL of subsLanLlal [usLlce and orderly proceedlngs wlLhln Lhe conLexL of
procedural due process Lhe dlrecLlve Lo Lemporarlly cease and deslsL from lmplemenLlng Lhe
coverage ls hereby relLeraLed and Lhe same Lo remaln effecLlve unLll Lhe maLLer ls resolved
(uA8 Memorandum daLed 07 lebruary 2006 rollo vol 1 aL 227)

88 LxCom valldaLlon CommlLLee 8esoluLlon daLed 24 March 2006 rollo vol 1 aL 408423

89 A8C Councll 8esoluLlon no 20063401 daLed 03 May 2006 rollo vol 1 aL 407424

90 A eLlLlon Lo MalnLaln SLock ulsLrlbuLlon CpLlon AgreemenL and Lhree hundred Len separaLe
peLlLlons enLlLled eLlsyon sa kagawaran ng 8epormang ansakahan flled by 3364 lW8s
(rollo vol 1 aL 9871307)

91 eLlLlon rollo vol 1 aL 3193

92 eLlLloner PLl ManlfesLaLlon and urgenL MoLlon for lssuance of 1emporary 8esLralnlng
Crder daLed 18 May 2006 rollo vol 1 aL 233234

93 8esoluLlon rollo vol 1 aL 237239

94 8ollo vol 1 aL 334428

93 8ollo vol 1 aL 436319

96 8ollo vol 1 aL 460317

97 SecLlon 31 of Lhe Comprehenslve Agrarlan 8eform Law ls unconsLlLuLlonal ln so far as lL falls
Lo effecL agrarlan land reform LhaL covers a redlsLrlbuLlon of boLh wealLh and power
(SupplemenLal CommenL Lhrough collaboraLlng counsel Mary Ann dela ena of Lhe LACL
loundaLlon lnc rollo vol 1 aL 822837)

98 1he Supervlsory Croup was Lhen represenLed by Wlndsor Andaya and !ose !ullo Zunlga

99 AMA8ALA was Lhen represenLed by 8ene Calang

100 8ollo vol 1 aL 330770

101 8ollo vol 1 aL 836979

102 (a) rlvaLe respondenLs Supervlsory Croup and AM8ALA and (b) prlvaLe respondenLs
Mallarl and lA8M

103 ubllc respondenLs A8C and uA8 SecreLary

104 ConsolldaLed 8eply aL 717 rollo vol 1 aL 862872

103 8ollo vol 2 aL 13301333

106 8ollo vol 2 aL 13331734

107 8ollo vol 2 aL 17671793

108 LlCC 8eply daLed 06 CcLober 2008 (rollo vol 2 aL 18001829) 8C8C 8eply daLed 12
SepLember 2008 (rollo vol 2 aL 18331871)

109 8esoluLlon daLed 01 !une 2009 rollo vol 2 aL 18801881

110 eLlLloner PLl's Compllance daLed 07 !uly 2009 rollo vol 2 aL 19032208

111 1he 11933 reclplenLs of Lhe shares were laLer on sanlLlzed by peLlLloner PLl and cerLlfled
Lo be only 10302 lW8s whlch ls 1433 less Lhan Lhe orlglnal number (CerLlflcaLlon daLed 03
AugusL 2010 rollo vol 3 aL 2612)

112 under Lhe SuCA Lhe quallfled lW8s were enLlLled only Lo 11839197683 shares based on
Lhe proporLlonal value of Lhe agrlculLural land Lo Lhe LoLal value of all of peLlLloner PLl's asseLs

113 ubllc 8espondenLs Compllance daLed 23 AugusL 2009 rollo vol 2 aL 22132492

114 rlvaLe respondenL AM8ALA was hereln represenLed by noel Mallarl who was prevlously
ldenLlfled ln Lhe eLlLlon flled by hlm ln Lhe name of lA8M

113 rlvaLe respondenL Supervlsory Croup was represenLed by !ullo Zunlga and Wlndsor
Andaya

116 uLWu was represenLed by Lldlfonso lngol

117 !olnL Submlsslon and MoLlon for Approval of ALLached Compromlse AgreemenL daLed 10
AugusL 2010 rollo vol 3 aL 28982913

118 ld

119 eLlLloner PLl's ManlfesLaLlon and MoLlon daLed 13 AugusL 2010 rollo vol 3 aL 2917

120 rlvaLe 8espondenL AM8ALA's CommenL/CpposlLlon daLed 16 AugusL 2010 rollo vol 3 aL
29382987

121 ALLy Capulong of Lhe ubllc lnLeresL Law CenLer prevlously represenLed AM8ALA Lhe
Supervlsory Croup and uLWu ln Lhelr consolldaLed opposlLlon Lo Lhe moLlon for
reconslderaLlon of peLlLloner PLl LhaL was flled ln Lhe A8C

122 LnLry of Appearance daLed14 SepLember 2010 rollo vol 3 aL 3138

123 Lallc Croup's MoLlon for Leave Lo lnLervene wlLh CommenLlnlnLervenLlon daLed 16 AugusL
2010 rollo vol 3 aL 29883009

124 ManlfesLaLlon and MoLlon wlLh CommenL ALLached rollo vol 1 aL 436319

123 1here were 28 slgnaLorles Lo Lhe lA8M's CommenLlnlnLervenLlon (rollo vol 3 3003
3006)

126 lA8M's MoLlon for Leave Lo lnLervene wlLh CommenLlnlnLervenLlon daLed 16 AugusL
2010 par 4 aL 2 rollo vol 3 aL 2989

127 lA8M's CommenLlnlnLervenLlon daLed 16 AugusL 2010 par 23 aL 73 rollo vol 3 aL
29972998

128 8esoluLlon daLed 27 !uly 2010 rollo vol 3 aL 23382239

129 8esoluLlon daLed 18 AugusL 2010 rollo vol 3 aL 30243027

130 8esoluLlon daLed 31 AugusL 2010 rollo vol 3 aL 30603062

131 8esoluLlon daLed 24 AugusL 2010 rollo vol 3 aL 30333037

132 8ollo vol 3 aL 36333803

133 8ollo vol 3 aL 32133230

134 8ollo vol 3 aL 32313279

133 8ollo vol 3 aL 41734217

136 8ollo vol 3 aL 38063931

137 8ollo vol 3 aL 39324024

138 8ollo vol 3 aL 32803634

139 8ollo vol 3 aL 42194473

140 A real parLy ln lnLeresL ls Lhe parLy who sLands Lo be beneflLed or ln[ured by Lhe [udgmenL
ln Lhe sulL or Lhe parLy enLlLled Lo Lhe avalls of Lhe sulL unless oLherwlse auLhorlzed by law or
Lhese 8ules every acLlon musL be prosecuLed or defended ln Lhe name of Lhe real parLy ln
lnLeresL (8ules of CourL 8ule 3 Sec 2)

141 naLlonal Pouslng AuLhorlLy v MagaL C8 no 164244 30 !uly 2009 394 SC8A 336 clLlng
Shlpslde lnc v CourL of Appeals 404 hll 981 998 (2001) and loneer lnsurance SureLy
CorporaLlon v CourL of Appeals C8 no 84197 28 !uly 1989 173 SC8A 668

142 Sumalo Pomeowners AssoclaLlon of Permosa 8aLaan v LlLLon eL al C8 no 146061 31
AugusL 2006 300 SC8A 383 clLlng vSC Commerclal LnLerprlses v CourL of Appeals C8 no
121139 16 uecember 2002 394 SC8A 74 79

143 ld

144 1 1haL whlle we adhere Lo Lhe law we equally make manlfesLaLlon LhaL we do noL now
en[oy mosL of Lhe rlghLs and prlvlleges LhaL we are supposed Lo en[oy as provlded ln our
Memorandum of AgreemenL (SuCA) wlLh Lhe Paclenda LulslLa lnc as such buL noL llmlLed Lo
Lhe 1 per cenL share from Lhe PLl whlch represenLs our shares as supervlsors durlng Lhe
LranslLlon perlod (Supervlsory Croup's eLlLlon/roLesL par1 aL 1 rollo vol 1 aL 133)

143 8ollo vol 1 aL 137138

146 As lndlcaLed ln Lhe slgnaLure sheeL of Lhe eLlLlon/roLesL Lhe llsL submlLLed conflrmed
LhaL Zunlga and Andaya boLh recelved 13633 and 19363 shares from Lhe years 1989 Lo 2004
AfLer Lhe eLlLlon/roLesL was flled ln Lhe uA8 Lhey agaln recelved an equlvalenL number of
shares (acceleraLed shares) and Lhus doubllng Lhelr lndlvldual shareholdlngs Lo 31266 shares
(Zunlga) and 39130 shares (Andaya) (Annex A of peLlLloner PLl's Compllance daLed 07 !uly
2009 rollo vol 2 aL 1913 and 1932)

147 uA8 CerLlflcaLlon daLed 24 AugusL 2009 rollo vol 2 aL 2329

148 uA8 CerLlflcaLlon daLed 24 AugusL 2009 rollo vol 2 aL 2413

149 Annex A of peLlLloner PLl's Compllance daLed 07 !uly 2009 rollo vol 2 aL 1920 2032
2103

130 eLlLloner PLl's ConsolldaLed 8eply daLed 29 May 2007 para 221 (a) aL 14 rollo vol 1 aL
869

131 1he peLlLloners before Lhe uA8/A8C are real parLleslnlnLeresL namely prlvaLe
respondenLs 8LnL CALAnC and nCLL MALLA8l who slgned Lhe 'peLlsyon' of Lhe Alyansa ng
mga Manggawang 8ukld ng Paclenda LulslLa (AM8ALA) flled wlLh Lhe ueparLmenL of Agrarlan
8eform (uA8) and Lhe slxLyLwo (62) farmworkers who slgned Lhe 'peLlLlon/proLesL' flled wlLh
Lhe uA8 on CcLober 14 2003 led by prlvaLe respondenLs !CSL !uLlC SunlCA and WlnuSC8
AnuA?A (eLlLloner PLl's Memorandum daLed 23 SepLember 2010 par 61 aL 73 rollo vol
3 aL 3713)

132 !olnL Submlsslon and MoLlon for Approval of ALLached Compromlse AgreemenL daLed 10
AugusL 2010 rollo vol 3 aL 28982913

133 eLlsyon (ara sa agpapawalang 8lsa sa SLock ulsLrlbuLlon CpLlon SuC agpapaLlgll sa
agpapallL CamlL ng Lupa aL amamahagl ng Lupalng napapaloob sa Paclenda LulslLa lnc)
rollo vol 1 aL 369373

134 8ene Calang was represenLed ln hls lndlvldual capaclLy by ALLy Capulong of Lhe ubllc
lnLeresL Law CenLer 8uL ALLy Capulong was also Lhe collaboraLlng counsel represenLlng Lhe
AM8ALA Calang Croup (LnLry of Appearance daLed14 SepLember 2010 rollo vol 3 aL 3138)

133 8ene Calang recelved 47216 shares from peLlLloner PLl (8ollo vol 2 aL 1920)

136 8ollo vol 1 aL 436319

137 lA8M's Memorandum daLed 24 SepLember 2010 aL 111112 rollo vol 3 aL 39133916

138 CpposlLlon Lo MoLlon for 8econslderaLlon and MoLlon for lmmedlaLe and LxpedlLlous
LxecuLlon of A8C 8esoluLlon daLed 16 !anuary 2006 flled by ALLy !oberL ahllga of SLn18A
and ALLy 8omeo Capulong of Lhe ubllc lnLeresL Law CenLer (8ollo vol 1 aL 771781)

139 1he CourL had earller granLed Lhe peLlLlonlnlnLervenLlon of 8C8C and noLed Lhe peLlLlon
lnlnLervenLlon of LlCC (8esoluLlon daLed 10 uecember 2007)

160 8espondenLlnLervenor lA8M's Memorandum daLed 24 SepLember 2010 aL 1443 rollo
vol 3 aL 38193830

161 eLlLloner PLl's Memorandum daLed 23 SepLember 2010 aL 7680 rollo vol 3 aL 3718
3722

162 8lraogo v hlllpplne 1ruLh Commlsslon C8 no 192933 193036 07 uecember 2010
clLlng SenaLe of Lhe hlllpplnes v LrmlLa C8 no 169777 20 Aprll 2006 488 SC8A 1 33 and
lranclsco v Pouse of 8epresenLaLlves 460 hll 830 842 (2003)

163 As regards Lhe Lhlrd requlslLe of Llmellness of ralslng Lhe consLlLuLlonallLy lssue
8espondenLslnLervenors have already ralsed Lhe consLlLuLlonal lssue ln Lhelr poslLlon paper aL
Lhe level of Lhe resldenLlal 8eform Councll (A8C) (8espondenLlnLervenor lA8M's
Memorandum daLed 24 SepLember 2010 aL 42 rollo vol 3 aL 3847)

164 C8 no 167614 24 March 2009 382 SC8A 234

163 Sec 10 Money Clalms ln case of LermlnaLlon of overseas employmenL wlLhouL [usL
valld or auLhorlzed cause as deflned by law or conLracL Lhe workers shall be enLlLled Lo Lhe full
relmbursemenL of hls placemenL fee wlLh lnLeresL of Lwelve percenL (12) per annum plus hls
salarles for Lhe unexplred porLlon of hls employmenL conLracL or for Lhree (3) monLhs for every
year of Lhe unexplred Lerm whlchever ls less (8epubllc AcL no 8042 Sec 10)

166 eLlLloner (Serrano) flled a MoLlon for arLlal 8econslderaLlon (wlLh Lhe nL8C) buL Lhls
Llme he quesLloned Lhe consLlLuLlonallLy of Lhe sub[ecL clause 1he nL8C denled Lhe moLlon

eLlLloner flled a eLlLlon for CerLlorarl wlLh Lhe CA relLeraLlng Lhe consLlLuLlonal challenge
agalnsL Lhe sub[ecL clause AfLer lnlLlally dlsmlsslng Lhe peLlLlon on a LechnlcallLy Lhe CA
evenLually gave due course Lo lL as dlrecLed by Lhls CourL ln lLs 8esoluLlon daLed AugusL 7 2003
whlch granLed Lhe peLlLlon for cerLlorarl dockeLed as C8 no 131833 flled by peLlLloner
(Serrano v CallanL MarlLlme Servlces supra noLe 164)

167 SecLlon 31 of Lhe Comprehenslve Agrarlan 8eform Law ls unconsLlLuLlonal ln so far as lL
falls Lo effecL agrarlan land reform LhaL covers a redlsLrlbuLlon of boLh wealLh and power
(SupplemenLal CommenL Lhrough collaboraLlng counsel Mary Ann dela ena of Lhe LACL
loundaLlon lnc rollo vol 1 aL 822837)

168 lranclsco v Pouse of 8epresenLaLlves C 8 no 160261 160262 160263 160277 160292
160293 160310 160318 160342 160343 and 160360 10 november 2003 413 SC8A 44

169 Carcla v LxecuLlve SecreLary C8 no 137384 02 Aprll 2009 383 SC8A 119

170 SoLLo v Commlsslon on LlecLlons 76 hll 316 (1946)

171 Any law duly enacLed by Congress carrles wlLh lL Lhe presumpLlon of consLlLuLlonallLy
8efore a law may be declared unconsLlLuLlonal by Lhls CourL Lhere musL be a clear showlng LhaL
a speclflc provlslon of Lhe fundamenLal law has been vlolaLed or Lransgressed When Lhere ls
nelLher a vlolaLlon of a speclflc provlslon of Lhe ConsLlLuLlon nor any proof showlng LhaL Lhere ls
such a vlolaLlon Lhe presumpLlon of consLlLuLlonallLy wlll prevall and Lhe law musL be upheld
1o doubL ls Lo susLaln (Aqulno v CCMLLLC C 8 no 189793 07 Aprll 2010 617 SC8A 623)

172 As of 26 !anuary 2006 Lhere were LhlrLeen (13) corporaLe landowners wlLh approved sLock
dlsLrlbuLlon opLlon plans for monlLorlng by Lhe uA8 coverlng 7703 hecLares of prlvaLe
agrlculLural lands (uA8 AdmlnlsLraLlve Crder no 012006)

173 ConsLlLuLlon ArL xlll Sec 4

174 Powever when Lhe corporaLe landowner and Lhe farmworkers have enLered lnLo an slc
SLock ulsLrlbuLlon AgreemenL (SuCA) as ln Lhls case whlch Lhe A8C approved Lhe SuCA has
ascended Lo Lhe level of a clvll conLracL where Lhe parLles are governed by Lhe law on conLracLs
under clvll law (eLlLloner PLl's Memorandum par 471 aL 43 rollo vol 3 aL 3683)

173 LxecuLlve Crder no 229 Sec 1

176 1he pollcles rules and regulaLlons for formulaLlon by Lhe A8C lncluded followlng (a)
8ecommended small farm economy areas whlch shall be speclflc by crop and based on
Lhorough Lechnlcal sLudy and evaluaLlon (b) 1he schedule of acqulslLlon and redlsLrlbuLlon of
speclflc agrarlan reform areas provlded LhaL such acqulslLlon shall noL be lmplemenLed unLll all
Lhe requlremenLs are compleLed lncludlng Lhe flrsL paymenL Lo Lhe landowners concerned and
(c) ConLrol mechanlsms for evaluaLlng Lhe owners declaraLlon of currenL falr markeL value ln
order Lo esLabllsh Lhe governmenLs compensaLlon offer Laklng lnLo accounL currenL land
LransacLlons ln Lhe locallLy Lhe landowners annual lncome from hls land and oLher facLors
(LxecuLlve Crder no 229 Sec 1)

177 lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe land or sLock Lransfer envlsloned
above ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe A8C
wlLhln Lhe same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall be
sub[ecL Lo Lhe compulsory coverage of Lhls AcL (CA8L Sec 31 lasL paragraph)

178 AfLer Lhe evaluaLlon of Lhe sLock dlsLrlbuLlon plan submlLLed by Lhe corporaLe landowner
appllcanL Lo Lhe SecreLary of Agrarlan 8eform he shall forward Lhe same wlLh all Lhe supporLlng
documenLs Lo Lhe resldenLlal Agrarlan 8eform Councll (A8C) Lhrough lLs LxecuLlve
CommlLLee wlLh hls recommendaLlon for flnal acLlon (Culdellnes and rocedures for
CorporaLe Landowners ueslrlng Lo Avall 1hemselves of Lhe SLock ulsLrlbuLlon CpLlon under Sec
31 of 8A 6637 uA8 AdmlnlsLraLlve Crder no 1088 Sec 10)

179 CA8L Sec 31 lasL paragraph

180 1here ls no quesLlon LhaL Lhe A8C has [urlsdlcLlon Lo approve or dlsapprove Lhe
appllcaLlon of corporaLe landowners Lo avall of sLock dlsLrlbuLlon under Sec 31 as an
alLernaLlve arrangemenL under Sec 3 of 8A 6637 Lo land redlsLrlbuLlon (eLlLloner PLl's
Memorandum par 471 aL 43 rollo vol 3 aL 3683)

181 Lakevlew Colf and CounLry Club lnc v Luzvlmln Samahang nayon C 8 no 171233 16
Aprll 2009 383 SC8A 368

182 Lakevlew Colf and CounLry Club lnc v Luzvlmln Samahang nayon ld

183Agrarlan dlspuLe lncludes any conLroversy relaLlng Lo compensaLlon of lands acqulred
under Lhls AcL and oLher Lerms and condlLlons of Lransfer of ownershlp from landowners Lo
farmworkers LenanLs and oLher agrarlan reform beneflclarles wheLher Lhe dlspuLanLs sLand ln
Lhe proxlmaLe relaLlon of farm operaLor and beneflclary landowner and LenanL or lessor and
lessee (CA8L Sec 3d)

184 8epubllc AcL no 9700 Sec 19

183 Sorlano v Laguardla C 8 no 164783 and 163636 29 Aprll 2009 387 SC8A 79

186 C8 no 164327 13 AugusL 2007 330 SC8A 233 clLlng Angara v LlecLoral Commlsslon 63
hll 139 177 (1936)

187 8eservaLlon Clause noLhlng hereln shall be consLrued as precludlng Lhe A8C from
maklng lLs own lndependenL evaluaLlon and assessmenL of Lhe sLock dlsLrlbuLlon plan of Lhe
corporaLe landownerappllcanL and ln prescrlblng oLher requlremenLs (uA8 AdmlnlsLraLlve
Crder no 1088 Sec 12)

188 CA8L Sec 31 lasL par

189 eLlLloner PLl's Memorandum aL 3146 rollo vol 3 aL 36733688

190 ld aL 73 rollo vol 3 aL 3717

191 Agrarlan dlspuLe lncludes any conLroversy relaLlng Lo compensaLlon of lands acqulred and
oLher Lerms and condlLlons of Lransfer of ownershlp from landowners Lo farmworkers LenanLs
and oLher agrarlan reform beneflclarles wheLher Lhe dlspuLanLs sLand ln Lhe proxlmaLe relaLlon
of farm operaLor and beneflclary landowner and LenanL or lessor and lessee (CA8L Sec 3 d)

192 1he baslc rule ls LhaL [urlsdlcLlon over Lhe sub[ecL maLLer ls deLermlned by Lhe allegaLlons
ln Lhe complalnL !urlsdlcLlon ls noL affecLed by Lhe pleas or Lhe Lheorles seL up by Lhe
defendanL ln an answer or a moLlon Lo dlsmlss CLherwlse [urlsdlcLlon would become
dependenL almosL enLlrely upon Lhe whlms of Lhe defendanL (Arzaga v Coplas C8 no
132404 28 March 2003 400 SC8A 148)

193 As amended by 8epubllc AcL no 9700 Sec 19

194 CA8L Sec 31

193 1he sLock dlsLrlbuLlon plan submlLLed by Lhe corporaLe landownerappllcanL shall provlde
for Lhe dlsLrlbuLlon of an equal number of shares of sLock of Lhe same class and value wlLh Lhe
same rlghLs and feaLures as all oLher shares Lo each of Lhe quallfled beneflclarles 1hls
dlsLrlbuLlon plan ln all cases shall be aL leasL Lhe mlnlmum raLlo for purposes of compllance wlLh
SecLlon 31 of 8A 6637 (uA8 AdmlnlsLraLlve Crder no 1088 Sec 4 1sL par)

196 Cn Lop of Lhe mlnlmum raLlo provlded under SecLlon 3 of Lhls lmplemenLlng Culdellne
corporaLe landownerappllcanL may adopL addlLlonal sLock dlsLrlbuLlon schemes Laklng lnLo
accounL facLors such as rank senlorlLy salary poslLlon and oLher clrcumsLances whlch may be
deemed deslrable as a maLLer of sound company pollcy (uA8 AdmlnlsLraLlve Crder no 1088
Sec 4 1sL par)

197 2 1he quallfled beneflclarles of Lhe sLock dlsLrlbuLlon plan shall be Lhe farmworkers who
appear ln Lhe annual payroll lncluslve of Lhe permanenL and seasonal employees who are
regularly or perlodlcally employed by Lhe SLCCnu A81? (eLlLloner PLl)

3 AL Lhe end of each flscal year for a perlod of 30 years Lhe SLCCnu A81? shall arrange wlLh
Lhe ll8S1 A81? (1AuLuCC) Lhe acqulslLlon and dlsLrlbuLlon Lo Lhe 1Pl8u A81? (quallfled
lW8s) on Lhe basls of number of days worked and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of
118391397683 shares of sLock of Lhe caplLal sLock of Lhe SLCCnu A81? LhaL are presenLly
owned and held by Lhe ll8S1 A81? unLll such Llme as Lhe enLlre block of 118391397683
shares shall have been compleLely acqulred and dlsLrlbuLed Lo Lhe 1Pl8u A81? (SuCA aL p 3
rollo vol 1 aL 149 emphasls supplled)

198 1he lands covered by Lhe CA8 shall be dlsLrlbuLed as much as posslble Lo landless
resldenLs of Lhe same barangay or ln Lhe absence Lhereof landless resldenLs of Lhe same
munlclpallLy ln Lhe followlng order of prlorlLy (a) agrlculLural lessees and share LenanLs (b)
regular farmworkers (c) seasonal farmworkers (d) oLher farmworkers (e) acLual Llllers or
occupanLs of publlc lands (f) collecLlves or cooperaLlves of Lhe above beneflclarles and (g)
oLhers dlrecLly worklng on Lhe land (CA8L Sec 22)

199 larmworker ls a naLural person who renders servlces for value as an employee or laborer
ln an agrlculLural enLerprlse or farm regardless of wheLher hls compensaLlon ls pald on a dally
weekly monLhly or 'pakyaw' basls (CA8L Sec 3 g)

200 Assumlng arguendo LhaL Lhere were 11839197683 shares Lo be dlsLrlbuLed Lo Lhe 6296
farmworkers who slgned Lhe SuCA Lhen each of Lhem should have been enLlLled Lo a mlnlmum
raLlo of 1880432 shares ln peLlLloner PLl

201 Conslderlng LhaL Lhe llsL of quallfled workerbeneflclarles ls a moblle one LhaL changes
from Llme Lo Llme and wlll depend on Lhe number of days LhaL Lhey have worked durlng Lhe
year Lhere ls no flxed number of shares due each quallfled workerbeneflclary Lo speak of and
Lhe muchfeared dlluLlon of hls shares cannoL Lherefore posslbly Lake place (LeLLer daLed 14
november 1989 aL 2 rollo vol 1 aL 1311 emphasls supplled)

202 !uS1lCL vLLASCC ?our sLock dlsLrlbuLlon opLlon agreemenL ls unlque ln Lhe sense LhaL
Lhese workers or farmer beneflclarles wlll geL Lhe sLocks only when Lhey work for Lhe company
Meanlng Lo say lL wlll be dependenL on Lhe work Lo be performed by Lhese workers or farmer
beneflclarles?

A11? ASunClCn 1haL ls correcL ?our Ponor Lhey call lL man days (1Sn daLed 18 AugusL 2010
aL 3838)

203 4 As more new workers are hlred LhroughouL Lhe suspended perlod of 30 years Lhe
lesser be Lhe enLlLlemenL of Lhe orlglnal farmer beneflclarles conslderlng Lhe pollcy of PLl under
lLs Su LhaL Lhe share ls deLermlned by Lhe acLual day's work proporLlonaLely compuLed
(A8C Councll 8esoluLlon no 20063401 daLed 03 May 2006 aL 16 rollo vol 1 aL 422)

204 Assumlng LhaL as clalmed by peLlLloner PLl LhaL 118391976 shares of sLock have all been
compleLed dlsLrlbuLed Lo Lhe 10302 sLockholders of record (eLlLloner PLl's LeLLer daLed 09
!une 2003 rollo vol 2 aL 2208 CerLlflcaLlon daLed 03 AugusL 2010 rollo vol 3 aL 2612) and
assumlng furLher LhaL each of Lhem recelved an equal number of shares Lhen each of Lhem
would have recelved 1127328 shares whlch ls 3993 of 1880432 shares LhaL were
supposed Lo be recelved by Lhe orlglnal 6296 farmworkers

203 eLlLloner PLl's Memorandum par 32 (a) aL 31 rollo vol 3 aL 3693

206 1ermlnal 8eporL daLed 22 SepLember 2003 aL 12 rollo vol 1 aL 397

207 1ermlnal 8eporL daLed 22 SepLember 2003 aL 18 rollo vol 1 aL 403

208 ld

209 1he orlglnal farmers under Lhe mandays scheme of sLock dlsLrlbuLlon can sLlll be denled
enLlLlemenL Lo a share of sLock by [usL noL allowlng hlm Lo work ln effecL Lhe maLLer of
dlsLrlbuLlon of shares of sLock was made LoLally dependenL on Lhe dlscreLlon of PLl
managemenL for by Lhe slmple expedlency of denylng employmenL one wlll never quallfy Lo
recelve a share lrrespecLlve of wheLher or noL he ls an orlglnal regular and/or permanenL
worker (A8C Councll 8esoluLlon no 20063401 daLed 03 May 2006 aL 1617 rollo vol 1 aL
422423)

210 eLlLloner PLl's proposal for Lhe sLock dlsLrlbuLlon even clarlfles LhaL Lhe quallfled lW8s wlll
be enLlLled only Lo recelve dlvldends wheLher cash or ln sLock on Lhe shares already dlsLrlbuLed
Lo Lhem 1hls necessarlly excludes Lhelr recelpL of Lhe announced dlvldends on Lhe oLher shares
Lo whlch Lhey are enLlLled Lo buL have yeL Lo recelve wlLhln Lhe LhlrLy year perlod (8ollo vol 3
aL 3144)

211 1he rlghLs and responslblllLles of Lhe beneflclarles shall commence from Lhelr recelpL of a
duly reglsLered emanclpaLlon paLenL or cerLlflcaLe of land ownershlp award and Lhelr acLual
physlcal possesslon of Lhe awarded land Such award shall be compleLed ln noL more Lhan one
hundred elghLy (180) days from Lhe daLe of reglsLraLlon of Lhe LlLle ln Lhe name of Lhe 8epubllc
of Lhe hlllpplnes rovlded 1haL Lhe emanclpaLlon paLenLs Lhe cerLlflcaLes of land ownershlp
award and oLher LlLles lssued under any agrarlan reform program shall be lndefeaslble and
lmprescrlpLlble afLer one (1) year from lLs reglsLraLlon wlLh Lhe Cfflce of Lhe 8eglsLry of ueeds
sub[ecL Lo Lhe condlLlons llmlLaLlons and quallflcaLlons of Lhls AcL Lhe properLy reglsLraLlon
decree and oLher perLlnenL laws 1he emanclpaLlon paLenLs or Lhe cerLlflcaLes of land
ownershlp award belng LlLles broughL under Lhe operaLlon of Lhe Lorrens sysLem are conferred
wlLh Lhe same lndefeaslblllLy and securlLy afforded Lo all LlLles under Lhe sald sysLem as
provlded for by resldenLlal uecree no 1329 as amended by 8epubllc AcL no 6732

lL ls Lhe mlnlsLerlal duLy of Lhe 8eglsLry of ueeds Lo reglsLer Lhe LlLle of Lhe land ln Lhe name of
Lhe 8epubllc of Lhe hlllpplnes afLer Lhe Land 8ank of Lhe hlllpplnes (L8) has cerLlfled LhaL
Lhe necessary deposlL ln Lhe name of Lhe landowner consLlLuLlng full paymenL ln cash or ln
bond wlLh due noLlce Lo Lhe landowner and Lhe reglsLraLlon of Lhe cerLlflcaLe of land ownershlp
award lssued Lo Lhe beneflclarles and Lo cancel prevlous LlLles perLalnlng LhereLo (CA8L Sec
24)

212 1he approved sLock dlsLrlbuLlon plan shall be lmplemenLed wlLhln Lhree (3) monLhs from
recelpL by Lhe corporaLe landownerappllcanL of Lhe approval Lhereof by Lhe A8C and Lhe
Lransfer of Lhe shares of sLocks ln Lhe names of quallfled beneflclarles shall be recorded ln Lhe
sLock and Lransfer books and submlLLed Lo Lhe SecurlLles and Lxchange Commlsslon (SLC)
wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon of Lhe sLock dlsLrlbuLlon plan (uA8
AdmlnlsLraLlve Crder no 1088 Sec 11)

213 2 Whlle Lhe SuC/Su ls an alLernaLlve arrangemenL Lo Lhe physlcal dlsLrlbuLlon of lands
pursuanL Lo SecLlon 31 of 8A 6637 loglc and reason dlcLaLe LhaL such agreemenL musL
maLerlallze wlLhln a speclflc perlod durlng Lhe llfeLlme of Lhe CA8 sLaLlng clearly Lhereln when
such arrangemenL musL end 1he aforemenLloned provlslon (CA8L Sec 3) may be consldered
as Lhe provlslon of Lhe law on 'suspended coverage' parallel Lo Lhe provlslons on SecLlon 11 on
Commerclal larmlng where coverage of CA8 ls deferred for Len (10) years afLer Lhe effecLlvlLy
of 8epubllc AcL no 6637 SLaLed slmply owners of commerclal farms are glven a chance Lo
recoup Lhelr lnvesLmenL for Len (10) years before same ls flnally sub[ecLed Lo coverage under
Lhe CA8 (1ermlnal 8eporL daLed 22 SepLember 2003 aL 14 rollo vol 1 aL 399)

214 Cn Lhe maLLer of Lhe need Lo proLecL Lhe workerbeneflclarles' parLlclpaLlon ln Lhe caplLal
sLock of Lhe Company from dlluLlon we hereby guaranLee LhaL happen whaL may durlng Lhe
Llme span of 30 years Lhe Company wlll have dlsLrlbuLed Lo Lhe workerbeneflclarles 33296
of lLs ouLsLandlng caplLal sLock aL Lhe end of Lhe sald perlod and LhaL whlle Lhe lnLeresL of Lhe
workerbeneflclarles ln Lhe Company gradually bullds up Lhrough Lhe years unLll lL reaches
33296 Lhelr represenLaLlon ln Lhe 8oard of ulrecLors of Lhe Company every year or aL any
glven Llme wlll always be aL Lhe level of 33296 or oneLhlrd (1/3) of Lhe LoLal number of seaLs
ln Lhe sald 8oard (LeLLer daLed 14 november 1989 rollo vol 1 aL 1311 emphasls supplled)

213 Cn 22 Aprll 2003 peLlLloner PLl compleLed Lhe dlsLrlbuLlon of 3433167 shares of sLock
correspondlng Lo Crop ?ear 20032004 Lo all lLs exlsLlng sLockholders of record as of !une 2004
(eLlLloner PLl LeLLer daLed 09 !une 2003 rollo vol 1 aL 193)

216 rlvaLe respondenLs Supervlsory Croup and AM8ALA flled Lhelr proLesLs wlLh Lhe A8C on
14 CcLober 2003 and 04 uecember 2003 respecLlvely

217 lL ls our poslLlon LhaL slnce Paclenda LulslLa lnc owner of Lhe agrlculLural porLlons of Lhe
properLy known as Paclenda LulslLa has acceleraLed afLer 13 years Lhe dlsLrlbuLlon Lo lLs
farmworkerbeneflclarles of Lhe enLlre 118396000 shares of sLock LhaL were orlglnally
scheduled Lo allocaLed over a perlod of 30 years under lLs SLock ulsLrlbuLlon CpLlon (Su) such
acL has compleLed Lhe lmplemenLaLlon of Lhe sald SLock ulsLrlbuLlon opLlon (SuC) as a vehlcle
of land reform and has as a consequence Laken ouL of Lhe amblL of agrarlan reform Paclenda
LulslLa lnc Lo whlch Lhe agrlculLural land belongs (CommenLs daLed 18 november 2003 aL 7
rollo vol 1 aL 709)

218 Secondly Lhe allegaLlon LhaL all of Lhe shares of sLock have already been dlsLrlbuLed Lo Lhe
farmers by way of acceleraLlon was only Lrlggered by Lhe flllng of proLesLs/complalnLs by Lhe
dlslllusloned farmers agalnsL Lhe Su of 1uC/PLl (A8C Councll 8esoluLlon no 20063401
daLed 03 May 2006 aL 8 rollo vol 1 aL 414)

219 Lands awarded pursuanL Lo Lhls AcL shall be pald for by Lhe beneflclarles Lo Lhe L8 ln
LhlrLy (30) annual amorLlzaLlons aL slx percenL (6) lnLeresL per annum 1he annual
amorLlzaLlon shall sLarL one (1) year from Lhe daLe of Lhe cerLlflcaLe of land ownershlp award
reglsLraLlon Powever lf Lhe occupancy Look place afLer Lhe cerLlflcaLe of land ownershlp award
reglsLraLlon Lhe amorLlzaLlon shall sLarL one (1) year from acLual occupancy 1he paymenLs for
Lhe flrsL Lhree (3) years afLer Lhe award shall be aL reduced amounLs as esLabllshed by Lhe
A8C rovlded 1haL Lhe flrsL flve (3) annual paymenLs may noL be more Lhan flve percenL (3)
of Lhe value of Lhe annual gross producLlon as esLabllshed by Lhe uA8 Should Lhe scheduled
annual paymenLs afLer Lhe flfLh (3Lh) year exceed Len percenL (10) of Lhe annual gross
producLlon and Lhe fallure Lo produce accordlngly ls noL due Lo Lhe beneflclarys faulL Lhe L8
shall reduce Lhe lnLeresL raLe and/or reduce Lhe prlnclpal obllgaLlon Lo make Lhe repaymenL
affordable (CA8L Sec 26)

220 1he rlghLs and responslblllLles of Lhe beneflclarles shall commence from Lhelr recelpL of a
duly reglsLered emanclpaLlon paLenL or cerLlflcaLe of land ownershlp award and Lhelr acLual
physlcal possesslon of Lhe awarded land (CA8L Sec 24)

221 !uS1lCL 88lCn l see your polnL My quesLlon ls abouL Lhe LhlrLy (30) years Where dld
Lhese LhlrLy years (30) years come from? 1hen l would llke Lo suggesL Lo you counsel LhaL you
look aL Lhe land dlsLrlbuLlon scheme where Lhere ls Lhe LhlrLy (30) year perlod under Lhe land
dlsLrlbuLlon scheme Lhe Lransfer of Lhe land would be lmmedlaLe buL Lhe paymenL should be
over a perlod of LhlrLy (30) years And now whaL we are seelng here ls a Lransfer of shares of
sLock conLemplaLed Lo be for a perlod of LhlrLy (30) years buL Lhe Lransfer ls noL lmmedlaLe buL
supposedly Lhere ls no paymenL So lL seems Lo me LhaL

SCL CLn CAulZ lL ls Lhe reverse ?our Ponor ln facL LhlrLy (30) years Lo pay now lL ls LhlrLy
(30) years Lo acqulre (1Sn daLed 24 AugusL 2010 aL 46)

222 CA8L Sec 31

223 1he valuaLlon of corporaLe asseLs submlLLed by Lhe corporaLe landownerappllcanL ln Lhls
proposal shall be sub[ecL Lo Lhe verlflcaLlon and audlL examlnaLlon by uA8 1he deLermlnaLlon
of Lhe value of Lhe agrlculLural land shall be based on Lhe land valuaLlon guldellnes promulgaLed
by Lhe uA8 (uA8 AdmlnlsLraLlve Crder no 1088 Sec 6)

224 1he above valuaLlons of boLh asseLs and llablllLles have been glven Lhe lmprlmaLur of Lhe
SecurlLles and Lxchange Commlsslon by reason of lLs approval of Lhe lncrease ln Lhe auLhorlzed
caplLal sLock of Paclenda LulslLa lnc Lhe subscrlpLlon Lo such lncrease of 1arlac uevelopmenL
CorporaLlon and Lhe paymenL by 1arlac uevelopmenL CorporaLlon of lLs subscrlpLlon Lhru
Lransfer of asseLs and llablllLles (roposal for SLock ulsLrlbuLlon CpLlon under Lhe CA8 aL 9
rollo vol 3 aL 3739)

223 roposal for SLock ulsLrlbuLlon CpLlon under Lhe CA8 aL 69 rollo vol 3 aL 3736739

226 r196360000 (value of agrlculLural land) r390334220 (LoLal value of company's asseLs)
333131462 shares (caplLal sLock) 11839197683 shares

227 1able of Lxcluded Lands (rlvaLe 8espondenL lA8M's Memorandum daLed 24 SepLember
2010 aL 3336 rollo vol 3 aL 38393860)

uescrlpLlon Land Area
(ln PecLares)
1oLal Land Area 6443
Less
1 Sugar Mlll Land 66
2 Lands unflL for agrlculLure 263
3 8oads and Creeks 266
4 AgroloresL Land 139
3 8esldenLlal LoLs for 8eneflclarles 121
6 8eserve for AddlLlonal PomeloLs 632
1oLal Lxcluslons 1327
LCuALS Land sub[ecL of SuCA 4916
228 Accordlng Lo PLl Lhe farmer's 4916 hecLares were valued aL 1966 mllllon whlch
amounLs Lo 4 per square meLer or 40000 per hecLare 1he 121 hecLares conLrlbuLed for
homeloLs by 1AuLCC was valued aL 603 mllllon or 300000 per hecLare Accordlng Lo
uLzel all Lhe lands were valued aL 33000/hecLare ln Lhe books of 1AuLCC ln 1988 and LhaL
Lhe land for Lhe homeloLs and land lmprovemenLs were valued aL 67 mllllon and 36 mllllon
respecLlvely (1he SLC says LhaL Lhe records of 1AuLCC's books are no longer avallable)
(8espondenL lA8M's Memorandum aL 37 rollo vol 3 aL 3861)

229 lncldenLally Lhe lW8s dld noL have parLlclpaLlon ln Lhe valuaLlon of Lhe agrlculLural land
for Lhe purpose of deLermlnlng lLs proporLlonaLe equlLy ln relaLlon Lo Lhe LoLal asseLs of Lhe
corporaLlon ApparenLly Lhe sugarland are undervalued (1ermlnal 8eporL daLed 22
SepLember 2003 aL 18 rollo vol 1 403)

230 1Sn daLed 24 AugusL 2010 aL 230231

231 1here are a varleLy of means by whlch boLh Lo meeL Lhe consLlLuLlonal requlremenL LhaL
regular farmworkers recelve dlrecL or collecLlve ownershlp of Lhe land Lhey Llll and permlL Lhe
conLlnued operaLlon of such corporaLe farms as are proven Lo be efflclenL ln Lhelr presenL scale
of operaLlon lor example separaLe corporaLe enLlLles could be esLabllshed wlLh one
corporaLlon havlng ownershlp of all land asseLs coupled wlLh Lhe dlsLrlbuLlon of all Lhe sLock of
LhaL corporaLlon Lo Lhe worker beneflclarles Assumlng exlsLlng operaLlons were malnLalned
exlsLlng managemenL reLalned or comparable managemenL hlred and wage and beneflLs
levels remalned consLanL farm proflLablllLy would noL dlffer slgnlflcanLly from prevlously levels
Powever Lhe landrelaLed porLlon of Lhls proflLs would now beneflL Lhe farmworkers
(8ledlnger supra noLe 4 aL 160 emphasls supplled)

232 1he provlslon creaLed obvlous lncenLlves Lo dlluLe Lhe value of Lhe workers' shares by
elLher undervalulng Lhe land asseLs or overvalulng Lhe nonland asseLs (8ledlnger supra noLe
4 aL 139)

233 eLlLloner PLl was reglsLered ln Lhe SLC only on 23 AugusL 1988 and recelved Lhe asslgned
agrlculLural lands and oLher asseLs from 1AuLCC on 22 March 1989 Powever Lhe SuCA was
slgned by 1AuLCC peLlLloner PLl and Lhe lW8s only on 11 May 1989

234 lL was only afLer Lhe SuCA was slgned on 11 May 1989 LhaL Lhe uA8 lssued a masslve
lnformaLlon campalgn on 14 CcLober 1989 and conducLed a referendum (eLlLloner PLl's
Memorandum daLed 23 SepLember 2010 aL 11 rollo vol 3 aL 3643)

233 1he problem was noL really LhaL Lhe farmworkers on Lhe haclenda were denled Lhe
freedom of expresslon or Lhe rlghL Lo choose as one peasanL organlzaLlon charged lL was
raLher LhaL farmworkers LenanLs and Lhe landless rural poor conLlnued Lo be denled an
envlronmenL LhaL would allow Lhem Lo ldenLlfy whaL Lhelr cholces were (!ames uLzel A
CapLlve Land 1he ollLlcs of Agrarlan 8eform ln Lhe hlllpplnes ALeneo de Manlla unlverslLy
ress 1992 aL 333)

236 1he sLock dlsLrlbuLlon arrangemenL conLemplaLes of allowlng Lhe farmerbeneflclarles
from Lhe very sLarL Lo occupy such number of seaLs ln Lhe board of dlrecLors of Lhe corporaLe
landowner as Lhe whole number of shares of sLock seL aslde for dlsLrlbuLlon may enLlLle Lhem
so LhaL Lhey could have a say ln forglng Lhelr desLlny (roposal for SLock ulsLrlbuLlon under
CA8 (May 1989) aL 17 rollo vol 3 aL 3747)

237 8espondenL lA8M's Memorandum aL 60 rollo vol 3 aL 3864

238 eLlLloner PLl's Memorandum aL 4748 rollo vol 3 aL 36893690

239 uA8 Crder daLed 06 uecember 2004 rollo vol 3 aL 3730

240 1he 1echnlcal Worklng Croup had a meeLlng wlLh ALLy !un dela Merced PLl Legal
Counsel where Lhe exLenL of PLl's compllance and some clarlflcaLlon on Lhe MCA enLered lnLo
by and beLween Lhe corporaLlon and Lhe lW8s were dlscussed (1ermlnal 8eporL daLed 22
SepLember 2003 aL 7 rollo vol 1 aL 392)

241 no declslon shall be rendered by any courL wlLhouL expresslng Lhereln clearly and
dlsLlncLly Lhe facLs and Lhe law on whlch lL ls based (ConsLlLuLlon ArL vlll Sec 14)

242 34 SC8A 731 764 (1970)

243 !uS1lCL MC8ALLS So my quesLlon now ls agaln l sound llke a broken record are Lhe
assalled acLs of A8C consldered leglslaLlve for you Lo lnvoke Lhe ConsLlLuLlonal non lmpalrmenL
clause?

A11? ASunClCn My answer ls no your Ponor please (1Sn 18 AugusL 2010 aL 66)

244 ln no case shall Lhe compensaLlon recelved by Lhe workers aL Lhe Llme Lhe shares of sLocks
are dlsLrlbuLed be reduced (CA8L Sec 31)

243 Clvll Code ArL 1144

246 Cnly a programme LhaL makes land redlsLrlbuLlon cenLral Lo Lhe loglc of reform can help Lo
break boLh Lhe economlc and pollLlcal Lles of dependence and subordlnaLlon beLween Lhe rural
poor and Lhelr paLrons (uLzel supra noLe 233 aL 3334)

247 L8 v 8lvera C 8 no 182431 17 november 2010 clLlng 8epubllc v CourL of Appeals 433
hll 106 (2002)

248 L8 v Llvloco C 8 no 170683 22 SepLember 2010 clLlng Pelrs of lranclsco 8 1anLoco
Sr v CourL of Appeals C8 no 149621 03 May 2006 489 SC8A 390 613

249 Landbank of Lhe hlllpplnes v Pelrs of uomlngo C 8 no 168333 04 lebruary 2008 343
SC8A 627 clLlng Landbank of Lhe hlllpplnes v CourL of Appeals 319 hll 246 249 (1993)

230 nACCC8 v ulaLo8ernal C 8 no 180979 13 uecember 2010 clLlng 8epubllc v Llbunao
394 SC8A 363 376 (2009)

231 CA8L Sec 18

232 C 8 no L23127 29 Aprll 1971 38 SC8A 429

233 C 8 no L21114 28 november 1967

234 ue Agbayanl v hlllpplne naLlonal 8ank supra

233 Concurrlng Cplnlon lernandez v Cuerva Co supra

236 ld clLlng ChlcoL CounLry uralnage ulsL vs 8axLer SLaLes 8ank 308 uS 371 (1940)

237 C 8 no L9396 16 AugusL 1936 99 hll 738

238 C 8 no L23127 29 Aprll 1971 38 SC8A 429

239 C 8 no L34486 27 uecember 1982 119 SC8A 411

260 C 8 no L29723 27 !anuary 1983 120 SC8A 134

261 C8 no L3708 18 May 1933 93 hll 68 (1933)

262 C 8 no L21114 28 november 1967

263 C 8 no 147817 12 AugusL 2004 436 SC8A 273

264 C 8 no 131392 06 lebruary 2002 376 SC8A 248

263 C 8 no 164327 13 AugusL 2007 330 SC8A 233

266 1hls pledge sufflclenLly served as leglLlmaLe reason for her Lo alLogeLher dlspense wlLh Lhe
formal appllcaLlon for leave Lhere was no reason Lo as ln facL lL was noL requlred slnce she
was for all pracLlcal purposes lncapaclLaLed or dlsabled Lo do so (ClLy CovernmenL of MakaLl v
Clvll Servlce Commlsslon supra)

267 ClLy CovernmenL of MakaLl v Clvll Servlce Commlsslon ld

268 C8 no 79732 08 november 1993 227 SC8A 309

269 C 8 no 166006 14 March 2008 348 SC8A 483

270 ZabaL v CourL of Appeals no L36938 10 !uly 1986 142 SC8A 38

271 1A v SL MaLLew ChrlsLlan Academy C8 no 176318 2 March 2010 614 SC8A 41

272 Causapln v CourL of Appeals C8 nC 107432 4 !uly 1997 233 SC8A 613 623

273 A11? MCnSCu 1he compromlse agreemenL presenLs Lhe farmers wlLh Lwo (2) false
cholces (1Sn daLed 24 AugusL 2010 aL 218)

274 1Sn daLed 24 AugusL 2010 aL 219220

273 Sub[ecL Lo Lhe provlslons of exlsLlng laws on lllegal comblnaLlons and monopolles a
corporaLlon may by a ma[orlLy voLe of lLs board of dlrecLors or LrusLees sell lease exchange
morLgage pledge or oLherwlse dlspose of all or subsLanLlally all of lLs properLy and asseLs
lncludlng lLs goodwlll upon such Lerms and condlLlons and for such conslderaLlon whlch may
be money sLocks bonds or oLher lnsLrumenLs for Lhe paymenL of money or oLher properLy or
conslderaLlon as lLs board of dlrecLors or LrusLees may deem expedlenL when auLhorlzed by
Lhe voLe of Lhe sLockholders represenLlng aL leasL LwoLhlrds (2/3) of Lhe ouLsLandlng caplLal
sLock or ln case of nonsLock corporaLlon by Lhe voLe of aL leasL Lo LwoLhlrds (2/3) of Lhe
members ln a sLockholders or members meeLlng duly called for Lhe purpose WrlLLen noLlce of
Lhe proposed acLlon and of Lhe Llme and place of Lhe meeLlng shall be addressed Lo each
sLockholder or member aL hls place of resldence as shown on Lhe books of Lhe corporaLlon and
deposlLed Lo Lhe addressee ln Lhe posL offlce wlLh posLage prepald or served personally
rovlded 1haL any dlssenLlng sLockholder may exerclse hls appralsal rlghL under Lhe condlLlons
provlded ln Lhls Code (8aLas ambansa 8lg 68 Sec 40)

276 A sale or oLher dlsposlLlon shall be deemed Lo cover subsLanLlally all Lhe corporaLe
properLy and asseLs lf Lhereby Lhe corporaLlon would be rendered lncapable of conLlnulng Lhe
buslness or accompllshlng Lhe purpose for whlch lL was lncorporaLed (8aLas ambansa 8lg 68
Sec 40)

277 Amended ArLlcle of lncorporaLlon of peLlLloner PLl rollo vol 3 aL 37623776

278 Powever !effrey 8ledlnger presenLed conLrary clalms LhaL LhaL small sugar cane farms
were more efflclenL ln Lerms of LoLal facLor producLlvlLy and LhaL hlllpplne sugarcane ylelds
were on average llLLle more Lhan onehalf of Lhose of Lhe small (1 Lo 2 hecLare) owner
operaLed farms of 1alwan and only onequarLer ylelds obLalned on small owneroperaLed
farms ln MaharashLra sLaLe ln wesLern lndla (8ledlnger supra noLe 4 aL 8083) 8ledlnger
even asserLed LhaL analysls suggesLs LhaL Lhe workers would be no worse off lndeed mlghL
be subsLanLlally beLLer off lf Lhey were Lo purchase Lhe land asseLs of Paclenda LulslLa under
Lhe Lerms of Lhe reform law raLher Lhan accepL Lhe proposed 'no cosL' sLock dlsLrlbuLlon (ld
aL 130)

279 uA8 has esLabllshed guldellnes on Lhe maLLer of such allocaLlons and no problem has been
encounLered ln lLs lmplemenLaLlon of Lhe CA8 8y and large for a whole scale culLlvaLlon and
producLlon formaLlon of cooperaLlves has proven Lo be an effecLlve mechanlsm Lo address Lhe
problem (1ermlnal 8eporL daLed 22 SepLember 2003 aL 13 rollo vol 1 aL 398)

280 ln case lL ls noL economlcally feaslble and sound Lo dlvlde Lhe land Lhen lL shall be owned
collecLlvely by Lhe workerbeneflclarles who shall form a workers cooperaLlve or assoclaLlon
whlch wlll deal wlLh Lhe corporaLlon or buslness assoclaLlon (CA8L Sec 29 2nd par)

281 1ransferablllLy of Awarded Lands Lands acqulred by beneflclarles under Lhls AcL or
oLher agrarlan reform laws shall noL be sold Lransferred or conveyed excepL Lhrough heredlLary
successlon or Lo Lhe governmenL or Lo Lhe L8 or Lo oLher quallfled beneflclarles Lhrough Lhe
uA8 for a perlod of Len (10) years rovlded however 1haL Lhe chlldren or Lhe spouse of Lhe
Lransferor shall have a rlghL Lo repurchase Lhe land from Lhe governmenL or L8 wlLhln a perlod
of Lwo (2) years uue noLlce of Lhe avallablllLy of Lhe land shall be glven by Lhe L8 Lo Lhe 8A8C
of Lhe barangay where Lhe land ls slLuaLed 1he A8CCCM as hereln provlded shall ln Lurn be
glven due noLlce Lhereof by Lhe 8A8C

lf Lhe land has noL yeL been fully pald by Lhe beneflclary Lhe rlghLs Lo Lhe land may be
Lransferred or conveyed wlLh prlor approval of Lhe uA8 Lo any helr of Lhe beneflclary or Lo any
oLher beneflclary who as a condlLlon for such Lransfer or conveyance shall culLlvaLe Lhe land
hlmself/herself lalllng compllance herewlLh Lhe land shall be Lransferred Lo Lhe L8 whlch
shall glve due noLlce of Lhe avallablllLy of Lhe land ln Lhe manner speclfled ln Lhe lmmedlaLely
precedlng paragraph

ln Lhe evenL of such Lransfer Lo Lhe L8 Lhe laLLer shall compensaLe Lhe beneflclary ln one
lump sum for Lhe amounLs Lhe laLLer has already pald LogeLher wlLh Lhe value of lmprovemenLs
he/she has made on Lhe land (CA8L Sec 27 as amended emphasls supplled)

282 Lands awarded Lo A88s under Lhls AcL may noL be sold Lransferred or conveyed excepL
Lhrough heredlLary successlon or Lo Lhe CovernmenL or Lo Lhe L8 or Lo oLher quallfled
beneflclarles wlLhln a perlod of Len (10) years rovlded however LhaL Lhe chlldren or Lhe
spouse of Lhe Lransferor shall have a rlghL Lo repurchase Lhe land from Lhe governmenL or Lhe
L8 wlLhln a perlod of Lwo (2) years from Lhe daLe of Lransfer (uA8 AdmlnlsLraLlve Crder no
022009 arL l 102)

283 1he Sanggunlang 8ayan of 1arlac 1arlac hereby approves Lhe LulslLa Land use lan
submlLLed by Lhe LulslLa 8ealLy CorporaLlon coverlng Lhe lands owned by Paclenda LulslLa lnc
CenLral Azucarera de 1arlac 1arlac uevelopmenL CorporaLlon LulslLa Colf and CounLry Club
lnc LulslLa 8ealLy CorporaLlon llleglble ln Lhe LulslLa lndusLrlal ark and oLhers coverlng over
1hree 1housand 1wo Pundred nlneLy (3290) hecLares as enumeraLed ln Lhe llsL of Lransfer
cerLlflcaLes of LlLles whlch llsL lncludlng phoLocoples of Lhe LlLles referred Lo ln Lhe llsL ls
hereLo aLLached as Annex '8' (herelnafLer referred Lo as Lhe 'LulslLa lands') whlch ls hereby
approved for lnLegraLlon/lncluslon ln Lhe general zonlng map of Lhe MunlclpallLy
(Sanggunlang 8ayan 8esoluLlon no 280 daLed 01 SepLember 1993 Sec 1 rollo vol 3 aL 3394
3393)

284 1he LulslLa Lands lncluded ln Lhe LulslLa Land use lan whose presenL classlflcaLlon ls
agrlculLural are hereby reclasslfled Lo resldenLlal commerclal lndusLrlal or lnsLlLuLlonal use as
Lhe case may be ln accordance wlLh Lhe LulslLa Land use lan as sald LulslLa Lands have been
found Lo have subsLanLlally greaLer economlc value for resldenLlal commerclal or lndusLrlal
purposes lurLhermore Lhe LulslLa Lands lncluded ln Lhe LulslLa Land use lan whose presenL
classlflcaLlon as per lLs Lax declaraLlon or oLher offlclal governmenL documenL ls non
agrlculLural ls hereby conflrmed as nonagrlculLural and shall remaln as nonagrlculLural ln
accordance wlLh Lhe LulslLa Land use lan (ld Sec 2 emphasls supplled)

283 !uS1lCL 8L8SAMln All rlghL Lhe lasL quesLlon LhaL l would llke you Lo answer ls Lhls ls
Lhls land lf lL were Lo be dlsLrlbuLed among your members lncluded among Lhe farmers your
members lncluded would you go back Lo sugar producLlon or sugar cane producLlon or
planLlng?

A11? A!lLuA lL ls a maLLer noL yeL dlscussed by Lhe group buL our conLenLlon ?our Ponor ls
LhaL lf Lhe whole of Lhe agrlculLural land of LulslLa should be awarded Lo Lhe farmworkers lL
should noL be parcellzed and glven Lo Lhem lndlvldually buL lL should be owned or under Lhe
conLrol or managemenL of Lhe farmers cooperaLlve where Lhls cooperaLlve wlll be Lhe one Lo
run Lhe buslness of Lhe organlzaLlon ?our Ponor

!uS1lCL 8L8SAMln So you would fall back on SecLlon 29?

A11? A!lLuA ?es ?our Ponor (1Sn daLed 24 AugusL 2010 aL 186187)

286 1Sn daLed 24 AugusL 2010 aL 104108

287 1Sn daLed 24 AugusL 2010 aL 120121

288 lor many years land reform has been consldered an end ln lLself a devlce Lo promoLe
soclal [usLlce 1oday lL ls regarded noL only as a Lool of soclal [usLlce buL as a deflnlLe parL of
agrlculLural developmenL Land ownershlp glves !uan Cruz Lhe prlde of possesslon buL Lhls ls
meanlngless unless Cruz geLs every klnd of asslsLance Lo draw Lhe mosL ouL of hls ploL Mere
landownershlp ls llke gold Lurned Lo sand lf land reform ls lndeed parL of agrlculLural
developmenL Lhen lncreased and efflclenL producLlon ls lLs goal (Marlano n Cuerol Land
8eform ln Asla Solldarldad ubllshlng Pouse 1974 aL 23)

289 Agrarlan reform lnvolves boLh redlsLrlbuLlon of landownershlp (land reform) and Lhe
developmenL of complemenLary credlL exLenslon lnfrasLrucLure prlclng and research
programs (8ledlnger supra noLe 4 aL 2)

290 Lynn SmlLh 1homas Agrarlan 8eform ln LaLln Amerlca (1963) as clLed ln Mllagros A
Cerman 1he Agrarlan Law ln Lhe new SocleLy (u Law CenLer 1980) aL 7376

291 uA8 AdmlnlsLraLlve Crder no 1088 Sec 3 (a)

292 AfLer Lhe lapse of flve (3) years from lLs award when Lhe land ceases Lo be economlcally
feaslble and sound for agrlculLural purposes or Lhe locallLy has become urbanlzed and Lhe land
wlll have a greaLer economlc value for resldenLlal commerclal or lndusLrlal purposes Lhe uA8
upon appllcaLlon of Lhe beneflclary or Lhe landowner wlLh respecL only Lo hls/her reLalned area
whlch ls LenanLed wlLh due noLlce Lo Lhe affecLed parLles and sub[ecL Lo exlsLlng laws may
auLhorlze Lhe reclasslflcaLlon or converslon of Lhe land and lLs dlsposlLlon rovlded 1haL lf Lhe
appllcanL ls a beneflclary under agrarlan laws and Lhe land soughL Lo be converLed ls Lhe land
awarded Lo hlm/her or any porLlon Lhereof Lhe appllcanL afLer Lhe converslon ls granLed shall
lnvesL aL leasL Len percenL (10) of Lhe proceeds comlng from Lhe converslon ln governmenL
securlLles rovlded furLher 1haL Lhe appllcanL upon converslon shall fully pay Lhe prlce of Lhe
land rovlded furLhermore 1haL lrrlgaLed and lrrlgable lands shall noL be sub[ecL Lo
converslon rovlded flnally 1haL Lhe naLlonal lrrlgaLlon AdmlnlsLraLlon shall submlL a
consolldaLed daLa on Lhe locaLlon naLlonwlde of all lrrlgable lands wlLhln one (1) year from Lhe
effecLlvlLy of Lhls AcL (CA8L Sec 63)

293 8eclasslfled agrlculLural lands musL undergo Lhe process of converslon ln Lhe uA8 before
Lhey may be used for oLher purposes (8os v uA8 C 8 no 132477 31 AugusL 2003 468 SC8A
471 uA8 v olo CoconuL lanLaLlon Co lnc C 8 no 168787 and 169271 03 SepLember
2008 364 SC8A 78)

294 Sanggunlang 8ayan 8esoluLlon no 280 daLed 01 SepLember 1993 (rollo vol 3 aL 3394
3393) Supervlsory Croup and AM8ALA CommenL/CpposlLlon daLed 17 uecember 2006 par
71 aL 16 (rollo vol 1 aL 343) 8C8C eLlLlonlnlnLervenLlon daLed 18 CcLober 2007 par 3 aL
13 (rollo vol 2 aL 1372)

293 uA8CC Converslon Crder no 030601074764(93) Serles of 1996 rollo vol 1 aL 631664

296 CoasLal aclflc 1radlng lnc v SouLhern 8olllng Mllls Co lnc C8 no 118692 28 !uly
2006 497 SC8A 11

297 8ufloe v 8urgos C 8 no 143373 30 !anuary 2009 377 SC8A 264

298 C8 no 123713 01 Aprll 1998 288 SC8A 374

299 1C1 no 292091 rollo vol 2 aL 14921493

300 1C1 no 310983 rollo vol 2 aL 13141318

301 1C1 no 310983 ld aL 1313

302 PLu88 CerLlflcaLe of 8eglsLraLlon no 00794 and PLu88 Llcense Lo Sell no 00776 boLh
daLed 26 uecember 1997 rollo vol 3 aL 43994400

303 8ollo vol 2 aL 14991313

304 8ollo vol 2 aL 13231327

303 1y v Cueen's 8ow Subdlvlslon C 8 no 173138 04 uecember 2009 607 SC8A 324

306 8ollo vol 3 aL 43374362

307 C 8 no 143013 31 March 2003 434 SC8A 493

308 A 1orrens LlLle ls evldence of lndefeaslble LlLle Lo properLy ln favor of Lhe person ln
whose name Lhe LlLle appears lL ls concluslve evldence wlLh respecL Lo Lhe ownershlp of Lhe
land descrlbed Lhereln (vda ue Agullar v Spouses Alfaro C 8 no 164402 03 !uly 2010
clLlng 8aloloy v Pular 481 hll 398 410 2004 and Carva[al v CourL of Appeals 343 hll 382
394 1997)

309 lndeed a cerLlflcaLe of LlLle once reglsLered should noL LhereafLer be lmpugned alLered
changed modlfled enlarged or dlmlnlshed excepL ln a dlrecL proceedlng permlLLed by law
CLherwlse rellance on reglsLered LlLles would be losL (ugale v Corospe C 8 no 149316 11
SepLember 2006 301 SC8A 376)

310 WhaL Lhe hlllpplne governmenL musL do ls Lo clarlfy exlsLlng rules and regulaLlons
concernlng land use and land converslons ln order Lo avold dlspuLes LhaL have Lhe poLenLlal of
encouraglng domesLlc unresL and dlscourslng forelgn lnvesLmenL parLlcularly ln lndusLrlal and
real esLaLe developmenL lorelgn lnvesLors need Lo know LhaL Lhe land Lhey acqulre for
developmenL wlll noL be sub[ecL Lo laLer dlspuLes whlle farmerbeneflclarles need Lo be sure
LhaL Lhey sLlll obLaln Lhe land Lhey are enLlLled Lo under Lhe CA8 (!aneLh San edro Agrarlan
8eform's ConsLralnL on Land AcqulslLlon and uevelopmenL for nonAgrlculLural use ln Lhe
hlllpplnes 12 1ransnaL'l Law 319 1999 aL 331)

311 Lagulnllla v velasco C 8 no 169276 16 !une 2009 389 SC8A 224 clLlng Aron v 8ealon
C8 no 139136 !anuary 31 2003 430 SC8A 372 389

312 eLlLlonerlnlnLervenLlon 8C8C has clalmed LhaL Lhe properLy has been parLlally developed
lnLo an lndusLrlal esLaLe wlLh a maln road fully paved wlLh proper dralnage and equlpped wlLh a
power conLrol house deep well and waLer Lanks dralnage reservolr and S1 concreLe
perlmeLer securlLy fence and securlLy gaLe house (eLlLlonerlnlnLervenLlon 8C8C's
Memorandum daLed 23 SepLember 2010 aL 83) Cn Lhe oLher hand peLlLlonerlnlnLervenLlon
LlCC clalms 62 compleLlon of lLs 113779 hecLare properLy where concreLe roads a power
conLrol house an elevaLed waLer Lank Lwo maln gaLes a dralnage reservolr wlLh a release gaLe
a drylng Lower and an aceraLlon Lank ls already puL ln place (eLlLlonerlnlnLervenLlon LlCC's
Memorandum daLed 23 SepLember 2010 aL 41)

313 8os v uA8 C8 no 132477 31 AugusL 2003 468 SC8A 471

314 uA8 v olo CoconuL lanLaLlon Co lnc C 8 no 168787 and 169271 03 SepLember
2008 364 SC8A 78 clLlng 8epubllc AcL no 7916 Sec 3 and uA8 AdmlnlsLraLlve Crder no 1 s
1999 Sec 6(e)

313 uA8 v olo CoconuL lanLaLlon Co lnc ld clLlng 8ules and 8egulaLlon Lo lmplemenL 8A
7916 arL lll 8ule lv Sec 3

316 resldenLlal roclamaLlon no 1207 daLed 22 Aprll 1998 rollo vol 3 aL 34003402

317 uA8CC Converslon Crder no 030601074764(93) Serles of 1996 rollo vol 1 aL 631664

318 eLlLlonerlnlnLervenLlon LlCC's Memorandum daLed 23 SepLember 2010 par 731 aL
41

319 4 Accordlngly LhoughL Lhe sub[ecL area ls lncluded ln Lhe nlA servlce are Lhe PLl has
been uslng Lhe nlA lrrlgaLlon faclllLles because of Lhe complalnL of Lhe farmworkers
downsLream (ouLslde Lhe PLl) LhaL Lhey are noL geLLlng enough waLer lf PLl Lapped lL 1o make
maLLers worse Lhe erupLlon of ML lnaLubo has caused Lhe lahar sllLaLlon Lo close Lhe
C'uonnel 8lver whlch ls Lhe maln source of Lhe lrrlgaLlon waLer of 1arlac WlLhouL oLher source
Lo lLs lrrlgaLlon waLer requlremenL Lhe PLl heavlly depends on ground waLer pumplng aL 30
feeL deep (uA8 Converslon Crder no 0306017074764(93) s of 1996 aL 67 rollo vol 2 aL
147473)

320 1hls AgreemenL ls enLered lnLo by Lhe parLles hereln ln Lhe splrlL of Lhe Comprehenslve
Agrarlan 8eform rogram (CA8) of Lhe governmenL and wlLh Lhe supervlslon of Lhe
ueparLmenL of Agrarlan 8eform wlLh Lhe end ln vlew of lmprovlng Lhe loL of Lhe quallfled
beneflclarles of Lhe sLock dlsLrlbuLlon plan and obLalnlng for Lhem greaLer beneflLs (SuCA
daLed 11 May 1989 aL 4 rollo vol 1 aL 130 emphasls supplled)

321 !esus M MonLemayor 1he Lconomlc Soclal and ollLlcal 8aLlonale of Agrarlan 8eform
Agrarlan 8eform Land Law (u Law CenLer 1973) aL 210

322 Mr resldenL no one wlll argue wlLh Lhe producLlve poLenLlal lnherenL ln people who
own Lhe land Lhey Llll 1o own land ls Lo hold one's desLlny ln hls own hands 1hls ls why rural
developmenL musL be anchored on land reform (Sen Peherson Alvarez Sponsorshlp Speech
of Lhe CA8L ln 8ufus 8 8odrlguez Comprehenslve Agrarlan 8eform Law AnnoLaLed 2004 aL
173)

323 8ased on lLs own records peLlLloner PLl dlsLrlbuLed Lhe 3 producLlon share Lo quallfled
lW8s amounLlng Lo r131386000 from 19892003 (8eporL on Salarles 8eneflLs and CredlL
rlvlleges rollo vol 3 aL 37393761)

324 rlvaLe respondenLs Supervlsory Croup and AM8ALA admlL LhaL r37300000 was
dlsLrlbuLed Lo Lhe lW8s as parL of Lhe sales of Lhe proceeds of Lhe converLed 300 hecLare lands
(Memorandum daLed 23 november 2003 flled ln Lhe A8C par 46 aL 19 rollo vol 1 aL 728
see also peLlLloner PLl's MoLlon for 8econslderaLlon daLed 02 !anuary 2006 aL 20 rollo vol 1
aL 732)


1he Lawphll ro[ecL Arellano Law loundaLlon

SLA8A1L CCnCu88lnC Anu ulSSLn1lnC ClnlCn

88lCn !

Cn uecember 22 2003 Lhe publlc respondenL resldenLlal Agrarlan 8eform Councll (A8C)
lssued 8esoluLlon no 20033201 1hls 8esoluLlon revoked Lhe SLock ulsLrlbuLlon lan (Su)
LhaL 1arlac uevelopmenL CorporaLlon (1adeco) execuLed wlLh lLs splnoff corporaLlon Paclenda
LulslLa lnc (PLl) and lLs quallfled farmworkersbeneflclarles (lW8s) and placed Lhe Paclenda
LulslLa under Lhe compulsory coverage of Lhe Comprehenslve Agrarlan 8eform rogram (CA8)
1hls 8esoluLlon seL ln moLlon a serles of evenLs LhaL led Lo Lhe presenL conLroversy

1he CourL ls malnly called upon Lo declde Lhe legallLy of Lhe PLl's Su An underlylng lssue ls
wheLher Lhe A8C has Lhe power and auLhorlLy Lo revoke Lhe Su LhaL lL prevlously approved lf
so wheLher Lhere ls legal basls Lo revoke lL and place Lhe Paclenda LulslLa under compulsory
coverage of Lhe CA8 1he CourL has Lo resolve Loo wheLher Lhe peLlLlonerslnLervenors LulslLa
lndusLrlal ark CorporaLlon (LlCC) and 8lzal Commerclal 8anklng CorporaLlon (8C8C) legally
acqulred Lhe converLed parcels of land (acqulred lands) from PLl

lAC1uAL An1LCLuLn1S

AcqulslLlon of Paclenda LulslLa

1o puL Lhls case ln lLs proper conLexL l begln wlLh a revlew of PLl's hlsLory and Lhe slgnlflcanL
evenLs LhaL ulLlmaLely led Lo Lhe presenL case

1he Paclenda LulslLa ls a 6443 hecLare parcel of land orlglnally owned by Lhe Companla
Ceneral de 1abacos de llllplnas (1abacalera)1 ln 1937 Lhe Spanlsh owners of 1abacalera
declded Lo sell Lhls land and lLs sugar mlll CenLral Azucarera de 1arlac !ose Co[uangco Sr Look
lnLeresL and requesLed asslsLance from Lhe hlllpplne governmenL ln ralslng Lhe necessary
funds Lhrough (a) Lhe CenLral 8ank Lo obLaln a dollar loan from Lhe ManufacLurer's 1rusL
Company (M1C) ln new ?ork for Lhe purchase of Lhe sugar mlll and (b) Lhe CovernmenL Servlce
lnsurance SysLem (CSlS) Lo obLaln a peso loan for Lhe purchase of Lhe Paclenda 1he CenLral
8ank used a porLlon of Lhe counLry's dollar reserves as securlLy for Co[uangco's loan wlLh Lhe
M1C on Lhe condlLlon LhaL Co[uangco would acqulre Paclenda LulslLa for dlsLrlbuLlon Lo farmers
wlLhln 10 years from lLs acqulslLlon2 1he CSlS also approved !ose Co[uangco Sr's loan for 39
mllllon under 8esoluLlon no 3203 (november 23 1937) whlch sLaLed ln parL

12 1haL Lhe loLs comprlslng Lhe Paclenda LulslLa shall be subdlvlded by Lhe appllcanL
corporaLlon among Lhe LenanLs who shall pay Lhe cosL Lhereof under reasonable Lerms and
condlLlons3

AL Lhe urglng of !ose Co[uangco Sr CSlS lssued 8esoluLlon no 336 (lebruary 3 1938)
amendlng 8esoluLlon no 3203 ln Lhe followlng manner

1haL Lhe loLs comprlslng Lhe Paclenda LulslLa shall be subdlvlded by Lhe appllcanLcorporaLlon
and sold aL cosL Lo Lhe LenanLs should Lhere be any and whenever condlLlons should exlsL
warranLlng such acLlon under Lhe provlslons of Lhe Land 1enure AcL4

1hus on Aprll 8 1938 !ose Co[uangco Sr Lhrough 1adeco acqulred Paclenda LulslLa and
CenLral Azucarera de 1arlac3

1en (10) years afLer Lhe acqulslLlon of Paclenda LulslLa Lhe land remalned undlsLrlbuLed
conLrary Lo Lhe condlLlons sLaLed ln Lhe loan/securlLy agreemenLs ClLlng CSlS' 8esoluLlon no
336 Lhe Co[uangcos reasoned ouL LhaL Lhere were no LenanLs ln Lhe Paclenda Lhus Lhere was
no one Lo dlsLrlbuLe Lhe land Lo6

Cn May 7 1980 Lhe Marcos governmenL flled a case before Lhe Manlla 8eglonal 1rlal CourL
(81C) Lo compel 1adeco Lo surrender Paclenda LulslLa Lo Lhe MlnlsLry of Agrarlan 8eform so
LhaL Lhe land could be dlsLrlbuLed Lo Lhe farmers Cn uecember 2 1983 Lhe Manlla 81C
ordered 1adeco Lo surrender Lhe land Lo Lhe MlnlsLry of Agrarlan 8eform 1he Co[uangcos
appealed Lhls declslon Lo Lhe CourL of Appeals (CA)7

1he SLock ulsLrlbuLlon CpLlon AgreemenL

Whlle Lhe case was pendlng wlLh Lhe CA Corazon Aqulno became resldenL of Lhe hlllpplnes
Cn !uly 22 1987 resldenL Aqulno lssued resldenLlal roclamaLlon no 131 and LxecuLlve
Crder (LC) no 229 whlch ouLllned her agrarlan reform program LC no 229 lncluded a
provlslon for Lhe SLock ulsLrlbuLlon CpLlon (SuC) a mode of complylng wlLh Lhe land reform
law LhaL dld noL requlre acLual Lransfer of Lhe land Lo Lhe Llller8

ln vlew of Lhese developmenLs Lhe governmenL wlLhdrew lLs case agalnsL Lhe Co[uangcos on
March 17 1988 1he ueparLmenL of Agrarlan 8eform (uA8) CSlS and Lhe CenLral 8ank dld noL
ob[ecL Lo Lhe moLlon Lo dlsmlss Lhe case on Lhe assumpLlon LhaL Paclenda LulslLa would be
dlsLrlbuLed Lhrough Lhe governmenL's CA8 Cn May 18 1988 Lhe CA dlsmlssed Lhe case Lhe
Marcos governmenL flled agalnsL 1adeco9

Cn !une 10 1988 resldenL Aqulno slgned lnLo law 8epubllc AcL no 6637 or Lhe
Comprehenslve Agrarlan 8eform Law (CA8L) 1he CA8L lncluded a provlslon LhaL auLhorlzed
sLock dlsLrlbuLlon as a mode of compllance Lhe SuC allowed a corporaLe landowner Lo glve lLs
farmers and farmworkers shares of lLs sLocks ln lleu of acLually dlsLrlbuLlng Lhe land Lo Lhem10
PLl was lncorporaLed on AugusL 23 1988 presumably Lo avall of Lhe SuC under Lhe CA8L11

Cn May 11 1989 PLl 1adeco and Lhe Paclenda LulslLa farmworkers execuLed a SLock
ulsLrlbuLlon CpLlon AgreemenL (SuCA) 1he SuCA was slgned by 929 of Lhe farmworkers or
by 3498 ouL of a LoLal of 6296 farmworkers12

Cn CcLober 14 1989 Lhe uA8 conducLed a referendum among Lhe farmworkers CuL of Lhe
3313 lW8s who parLlclpaLed 3117 voLed ln favor of Lhe SuCA As a resulL Lhe A8C
unanlmously approved PLl's Su whlch was based on Lhe SuCA Lhrough 8esoluLlon no 89
122 daLed november 21 1989 1hls was Lhe flrsL Su LhaL A8C approved13

Land Converslon and Sale Lo 1hlrd arLles

Cn AugusL 10 1993 PLl flled an appllcaLlon for Lhe converslon of 300 hecLares of Paclenda
LulslLa from agrlculLural Lo lndusLrlal use14 none of Lhe parLles Lo Lhe presenL case dlspuLes
LhaL PLl's appllcaLlon had Lhe supporL of 3000 or so lW8s lncludlng respondenL 8ene Calang
and !ose !ullo Sunlga who slgned and submlLLed a ManlfesLaLlon of SupporL Lo Lhe uA813 A
year laLer or AugusL 14 1996 Lhen uA8 SecreLary LrnesLo Carllao lssued a converslon order
granLlng PLl's appllcaLlon Lo converL Lhe 300 hecLares of PLl land from agrlculLural Lo lndusLrlal
use 1he converslon order was granLed because Lhe area applled for converslon ls no longer
economlcally feaslble and sound for agrlculLural purposes16

1hereafLer on CcLober 14 1996 Lhe PLl enLered lnLo a [olnL venLure agreemenL wlLh 8C8C
Aglla Poldlngs lnc and lLochu CorporaLlon Lo form LlCC whose maln ob[ecLlve was Lo handle
Lhe acqulslLlon developmenL and operaLlon of an lndusLrlal park on Lhe converLed porLlon of
Lhe Paclenda17 LlCC reglsLered wlLh Lhe 8oard of lnvesLmenLs on uecember 20 1996 Cn
!une 27 1997 Lhe hlllpplne Lconomlc Zone AuLhorlLy (LZA) approved LlCC's appllcaLlon Lo
be declared a mlxed ecozone lL furLher proclalmed Lhe 300 hecLare area as a Speclal Lconomlc
Zone known as LulslLa lndusLrlal ark 2

Cn uecember 11 1996 Lhe Sanggunlang 8ayan ng 1arlac 1arlac (whlch earller reclasslfled
3290 hecLares of Paclenda LulslLa from agrlculLural Lo commerclal/lndusLrlal/resldenLlal
land18) lssued a resoluLlon endorslng and recognlzlng LlCC's plan Lo esLabllsh an lndusLrlal
esLaLe

Cn uecember 13 1996 PLl Lransferred 300 hecLares of lndusLrlal land Lo CenLennary Poldlngs
lnc (CenLennary) ln exchange for 12000000 shares of sLock of CenLennary Lhrough a ueed of
Conveyance and AsslgnmenL19 CenLennary Lhen sold Lhe land Lo LlCC Lhrough Lhelr
november 12 1997 Memorandum of AgreemenL so LhaL LlCC can develop lL lnLo a flrsLclass
lndusLrlal esLaLe20 1o flnance Lhe pro[ecL LlCC obLalned a 300 mllllon loan from 8C8C
secured by a real esLaLe morLgage over Lhe land21

Cn Aprll 22 1998 Lhen resldenL lldel v 8amos declared Lhe 300 hecLare properLy as a Speclal
Lconomlc Zone under roclamaLlon no 120722 lollowlng Lhls proclamaLlon Lhe LZA lssued
CerLlflcaLe of 8eglsLraLlon no LZ9803 on May 7 1998 cerLlfylng LhaL LlCC ls Lhe duly
reglsLered ecozone developer/operaLor of LulslLa lndusLrlal ark 223

When LlCC could noL pay lLs ouLsLandlng loan Lo 8C8C lL enLered a daclon en pago Lo seLLle
Lhe loan whlch had ballooned Lo 43203 mllllon by november 200224 Cn november 23 2004
LlCC and 8C8C enLered lnLo a ueed of AbsoluLe AsslgnmenL Lhrough whlch LlCC conveyed
Lwo parcels of land (wlLh a LoLal area of 18422 hecLares) Lo 8C8C leavlng LlCC wlLh 113779
hecLares of land23

PLl also sold Lhe remalnlng 200 hecLares of lndusLrlal land Lo LulslLa 8ealLy CorporaLlon (LulslLa
8ealLy) 100 hecLares ln 1997 for 230 mllllon and anoLher 100 hecLares ln 1998 for anoLher
230 mllllon26 (ueLalls of Lhls sale are noL clear from Lhe records of Lhe presenL case as LulslLa
8ealLy ls noL an acLlve parLy Lo Lhe case)

1he eLlLlons before A8C

Clalmlng LhaL Lhe PLl dld noL dellver on lLs promlses under Lhe SuCA/Su Lhe Supervlsory
Croup of workers of PLl flled a peLlLlon wlLh Lhe uA8 on CcLober 14 2003 seeklng Lo
renegoLlaLe Lhe SuCA/Su27 Slmllarly on uecember 4 2003 Lhe uA8 recelved anoLher
peLlLlon from Lhe Alyansa ng mga Manggagawang 8ukld ng Paclenda LulslLa (AM8ALA) a group
composed of PLl farmers and farmworkers praylng for Lhe revocaLlon of Lhe SuCA/Su28

Cn november 22 2004 Lhen uA8 SecreLary 8ene C vllla lssued Speclal Crder no 789 serles of
2004 whlch creaLed Lhe Speclal 1ask lorce on Paclenda LulslLa lnc SLock ulsLrlbuLlon CpLlon
lan29 1hls Lask force was convened prlmarlly Lo revlew Lhe Su and evaluaLe PLl's compllance
wlLh lLs Lerms and condlLlons

8ased on Lhe parLles' pleadlngs and Lhe ocular lnspecLlon conducLed Lhe Speclal 1ask lorce
lssued a 1ermlnal 8eporL on SepLember 22 2003 whlch found LhaL Lhe PLl dld noL comply wlLh
lLs obllgaLlons under Lhe law ln lmplemenLlng Lhe Su30 1he perLlnenL porLlons of Lhe 1ermlnal
8eporL are quoLed below

vl llnulnCS AnAL?SlS Anu 8LCCMMLnuA1lCn

1 rovldlng for Lhe qulnLessence and splrlL of Lhe agrarlan reform program 8epubllc AcL no
6637 expllclLly provldes

SLC1lCn 2 ueclaraLlon of rlnclples and ollcles lL ls Lhe pollcy of Lhe SLaLe Lo pursue a
Comprehenslve Agrarlan 8eform rogram (CA8) 1he welfare of Lhe landless farmers and
farmworkers wlll recelve Lhe hlghesL conslderaLlon Lo promoLe soclal [usLlce and Lo move Lhe
naLlon Loward sound rural developmenL and lndusLrlallzaLlon and Lhe esLabllshmenL of owner
culLlvaLorshlp of economlcslze farms as Lhe basls of hlllpplne agrlculLure

1o Lhls end a more equlLable dlsLrlbuLlon and ownershlp of land wlLh due regard Lo Lhe rlghLs
of landowners Lo [usL compensaLlon and Lo Lhe ecologlcal needs of Lhe naLlon shall be
underLaken Lo provlde farmers and farmworkers wlLh Lhe opporLunlLy Lo enhance Lhelr dlgnlLy
and lmprove Lhe quallLy of Lhelr llves Lhrough greaLer producLlvlLy of agrlculLural lands
(underscorlng added)

WlLhln Lhe conLexL of Lhe foregolng pollcy/ob[ecLlve Lhe farmer/farmworker beneflclarles
(lW8s) ln agrlculLural land owned and operaLed by corporaLlons may be granLed Lhe opLlon by
Lhe laLLer wlLh Lhe lnLervenLlon and prlor cerLlflcaLlon of uA8 xxx Lhe rlghL Lo purchase such
porLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL Lhe agrlculLural land acLually devoLed Lo
agrlculLural acLlvlLles bears ln relaLlon Lo Lhe company's LoLal asseL xxx (Sec 31 8ep AcL no
6637) 1oward Lhls end uA8 lssued AdmlnlsLraLlve Crder no 10 serles of 1988 copy of whlch
ls aLLached as Annex k and made an lnLegral parL hereof whlch requlres LhaL Lhe sLock
dlsLrlbuLlon opLlon (SuC) shall meeL Lhe followlng crlLerla readlng lnLer alla

a LhaL Lhe conLlnued operaLlon of Lhe corporaLlon wlLh lLs agrlculLural land lnLacL and
unfragmenLed ls vlable wlLh poLenLlal for growLh and lncreased proflLablllLy

b LhaL Lhe plan for Lhe sLock dlsLrlbuLlon Lo quallfled beneflclarles would resulL ln lncreased
lncome and greaLer beneflLs Lo Lhem Lhan lf Lhe lands were dlvlded and dlsLrlbuLed Lo Lhem
lndlvldually

xxxx

And Lo ensure effecLlve and falr lmplemenLaLlon of Lhe conLemplaLed SLock ulsLrlbuLlon lan
(Su) Lhe sald AC also provldes

SLC 12 8evocaLlon of CerLlflcaLe of Compllance noncompllance wlLh any of Lhe
requlremenLs of Sec 31 of 8A 6637 as lmplemenLed by Lhese lmplemenLlng Culdellnes shall be
grounds for Lhe revocaLlon of Lhe CerLlflcaLe of Compllance lssued Lo Lhe corporaLe landowner
appllcanL

SLC 13 8eservaLlon Clause noLhlng hereln shall be consLrued as precludlng Lhe A8C from
maklng lLs own lndependenL evaluaLlon and assessmenL of Lhe sLock dlsLrlbuLlon plan of Lhe
corporaLe landownerappllcanL and from prescrlblng oLher requlremenLs

Pereln however Lhere ls yeL no CerLlflcaLe of Compllance lssued

1he reason ls slmple uesplLe Lhe lapse of slxLeen (16) years from Lhe Llme Lhe Su was
approved ln november 1989 by resoluLlon of Lhe resldenLlal Agrarlan 8eform Councll (A8C)
Lhe ob[ecLlve and pollcy of CA8 le acqulslLlon and dlsLrlbuLlon (hereln under Lhe SLock
ulsLrlbuLlon lan only shares of sLocks) ls yeL Lo be fully compleLed Lhe lW8s lnsLead of Lhe
promlsed/envlsloned beLLer llfe under Lhe CA8 (hereln as corporaLe owner) do sLlll llve ln
wanL ln ab[ecL poverLy hlghllghLed by Lhe resulLlng loss of llves ln Lhelr valn/fuLlle aLLempL Lo
be flnanclally resLored aL leasL Lo where Lhey were before Lhe CA8(Su) was lmplemenLed
Whlle Lhey were Lhen able Lo make boLh ends meeL wlLh Lhe Su Lhelr llves became
mlserable

2 lor Lhe foregolng conslderaLlons as furLher dramaLlzed by Lhe followlng
vlolaLlons/noncompllance wlLh Lhe guldellnes prescrlbed whlch are legally presumed as
lnLegraLed ln Lhe agreemenLs/accords/sLlpulaLlons arrlved aL Lhereunder llke Lhe PLl Su
namely

21 noncompllance wlLh SecLlon 11 of AdmlnlsLraLlve Crder no 10 Serles of 1988 whlch
provldes

1he approved sLock dlsLrlbuLlon plan shall be lmplemenLed wlLhln Lhree (3) monLhs from
recelpL by Lhe corporaLe landownerappllcanL of Lhe approval Lhereof by Lhe A8C and Lhe
Lransfer of Lhe shares of sLocks ln Lhe names of Lhe quallfled beneflclarles shall be recorded ln
Lhe sLock and Lransfer books and submlLLed Lo Lhe SecurlLles and Lxchange Commlsslon (SLC)
wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon plan

1he SLock ulsLrlbuLlon lan however submlLLed a 30year lmplemenLaLlon perlod ln Lerms of
Lhe Lransfer of shares of sLocks Lo Lhe farmworkers beneflclarles (lW8s) 1he MCA provldes

AL Lhe end of each flscal year for a perlod of 30 years SLCCnu A81? shall arrange wlLh Lhe
ll8S1 A81? Lhe acqulslLlon and dlsLrlbuLlon Lo Lhe 1Pl8u A81? on Lhe basls of Lhe number of
days worked and aL no cosL Lo Lhem of oneLhlrLleLh (1/30) of

lalnly pendlng Lhe lssuance of Lhe correspondlng shares of sLocks Lhe lW8s remaln ordlnary
farmers and/or farmworkers and Lhe land remaln under Lhe full ownershlp and conLrol of Lhe
orlglnal owner Lhe PLl/1AuLCC

1o daLe Lhe lssuance and Lransfer of Lhe shares of sLocks LogeLher wlLh Lhe recordlng of Lhe
Lransfer are yeL Lo be complled wlLh

22 noncompllance wlLh Lhe represenLaLlons/warranLles made under secLlon 3(a) and (b) of
sald AdmlnlsLraLlve Crder no 10

As clalmed by PLl lLself Lhe corporaLe acLlvlLy has already sLopped so LhaL Lhe conLemplaLed
proflLablllLy lncreased lncome and greaLer beneflLs enumeraLed ln Lhe Su have remalned
mere llluslons

23 1he agrlculLural land lnvolved was noL malnLalned unfragmenLed AL leasL 300 hecLares
hereof have been carved ouL afLer lLs land use has been converLed Lo nonagrlculLural uses

1he recall of sald Su/SuC of PLl ls recommended More so slnce

1 lL ls conLrary Lo ubllc ollcy

SecLlon 2 of 8epubllc AcL 6637 provldes LhaL Lhe welfare of Lhe landless farmworkers wlll
recelve Lhe hlghesL conslderaLlon Lo promoLe soclal [usLlce As such Lhe SLaLe underLake a more
equlLable dlsLrlbuLlon and ownershlp of land LhaL shall provlde farmworkers wlLh Lhe
opporLunlLy Lo enhance Lhelr dlgnlLy and lmprove Lhe quallLy of Lhelr llves Lhrough greaLer
producLlvlLy of agrlculLural lands

ln Lhe case of Paclenda LulslLa Lhe farmworkers alleged LhaL Lhe quallLy of Lhelr llves has noL
lmproved ln facL lL even deLerloraLed especlally wlLh Lhe PLl ManagemenL declaraLlon LhaL Lhe
company has noL galned proflLs ln Lhe lasL 13 years LhaL Lhere could be no declaraLlon and
dlsLrlbuLlon of dlvldends

2 1he maLLer of lssuance/dlsLrlbuLlon shares of sLocks ln lleu of acLual dlsLrlbuLlon of Lhe
agrlculLural land lnvolved was made LoLally dependenL on Lhe dlscreLlon/caprlce of PLl under
Lhe seLup Lhe agreemenL ls grossly onerous Lo Lhe lW8s as Lhelr man days of work cannoL
deparL from whaLever managemenL PLl unllaLerally dlrecLs

1hey can be denled Lhe opporLunlLy Lo be granLed a share of sLock by [usL noL allowlng Lhem Lo
work alLogeLher under Lhe gulse of roLaLlon Meanwhlle wlLhln Lhe 30year perlod of bondage
Lhey may already reach reLlremenL or worse geL reLrenched for any reason Lhen Lhey forever
lose whaLever beneflL he could have recelved as regular agrarlan beneflclary under Lhe CA8 lf
only Lhe Su of PLl were noL auLhorlzed or approved

lncldenLally Lhe lW8s dld noL have parLlclpaLlon ln Lhe valuaLlon of Lhe agrlculLural land for Lhe
purpose of deLermlnlng lLs proporLlonaLe equlLy ln relaLlon Lo Lhe LoLal asseLs of Lhe
corporaLlon ApparenLly Lhe sugarlands were undervalued

3 1he lW8s were mlsled lnLo bellevlng by Lhe PLl Lhrough lLs carefully worded roposal LhaL
xxx Lhe sLock dlsLrlbuLlon plan envlsaged by 1arlac uevelopmenL CorporaLlon ln effecL
assured of

A ulsLrlbuLlng Lhe shares of sLock over a number of years among Lhe quallfled beneflclarles aL
no cosL Lo Lhem

8 Allowlng Lhe farmworker Lo conLlnue Lo work on Lhe land as such and recelve Lhe wages and
oLher beneflLs provlded for by hls collecLlve bargalnlng agreemenL wlLh Lhe corporaLe
landowner

C LnLlLllng hlm Lo recelve dlvldends wheLher ln cash or ln sLock on Lhe shares already
dlsLrlbuLed Lo hlm and beneflL from whaLever appreclaLlon ln value LhaL Lhe sald shares may
galn as Lhe corporaLlon becomes proflLable

u Cuallfylng hlm Lo become Lhe reclplenL of whaLever lncomeaugmenLlng and beneflL
lmprovlng schemes LhaL Lhe splnoff corporaLlon may esLabllsh such as Lhe paymenL of Lhe
guaranLeed Lhree (3) percenL of gross sales every year and Lhe free resldenLlal or homeloLs Lo
be alloLLed Lo famlly beneflclarles of Lhe plan and

L keeplng Lhe agrlculLural land lnLacL and unfragmenLed Lo malnLaln Lhe vlablllLy of Lhe sugar
operaLlon lnvolvlng Lhe farm as a slngle unlL and Lhus warranL Lo Lhe acknowledged
farmworkerbeneflclarles handlnhand wlLh Lhelr acqulslLlon of Lhe shares of Lhe caplLal sLock
of Lhe corporaLlon ownlng Lhe land a conLlnulng and sLable source of lncome (Annex A
supra)

AL Lhe expense of belng repeLlLlve Lhe sugarcoaLed assurances were more Lhan enough Lo
made Lhem fall for Lhe SuC as Lhey made Lhem feel rlch as sLock holder of a rlch and famous
corporaLlon desplLe Lhe dlrL ln Lhelr hands and Lhe LaLLers Lhey use glven Lhe feellng of
securlLy of Lenure ln Lhelr work when Lhere ls none expecLaLlon Lo recelve dlvldends when Lhe
corporaLlon has already suspended operaLlons allegedly due Lo losses and a sLable sugar
producLlon by malnLalnlng Lhe agrlculLural lands when a subsLanLlal porLlon Lhereof almosL 1/8
of Lhe LoLal area has already been converLed Lo nonagrlculLural uses

8ased on Lhe 1ermlnal 8eporL Lhe uA8 lssued a Memorandum daLed SepLember 30 2003
recommendlng Lo Lhe A8C LxecuLlve CommlLLee Lhe revocaLlon of Lhe PLl Su LhaL Lhe A8C
lnlLlally approved under 8esoluLlon no 89122 daLed november 21 1989 Accordlng Lo Lhe
SepLember 30 2003 Memorandum

1he uA8 Speclal Legal 1eam creaLed by Lhe underslgned Lo make a follow Lhrough on Lhe work
sLarLed by Lhe Paclenda LulslLa 1ask lorce durlng Lhe Llme of former SecreLary 8ene C vllla for
Lhe purpose of revlewlng Lhe lmplemenLaLlon of sub[ecL Su has conducLed a Lhorough revlew
of Paclenda LulslLa's operaLlon ln relaLlon Lo lLs lmplemenLaLlon and conslsLenL wlLh Lhe
provlslons of Lhe relevanL A8C resoluLlon and Lhe subsequenL Memorandum of AgreemenL
(MCA) execuLed by and beLween Lhe PLl ManagemenL and Lhe concerned larm Workers
8eneflclarles (lW8s) has recommend (slc) for Lhe scrapplng and/or revocaLlon of sald Su on
Lhe followlng grounds Lo wlL

1 1haL desplLe Lhe lapse of slxLeen (16) years Lhe llves of Lhe concerned larm Workers
8eneflclarles (lW8s) became even more mlserable conLrary Lo whaL has been envlsloned by
Lhe sald Su 1hls reallLy clearly undermlnes SecLlon 2 of 8A 6637 whlch provldes LhaL Lhe
welfare of landless farm workers wlll recelve Lhe hlghesL conslderaLlon Lo promoLe soclal
[usLlce under whlch conLexL Lhe SLaLe shall underLake a more equlLable dlsLrlbuLlon and
ownershlp of land LhaL shall provlde farm workers wlLh Lhe opporLunlLy Lo enhance Lhelr dlgnlLy
and lmprove Lhe quallLy of Lhelr llves Lhrough greaLer producLlvlLy of agrlculLural lands

2 noncompllance on Lhe parL of PLl Lo relevanL provlslons of AdmlnlsLraLlve Crder no 10
Serles of 1988 speclflcally SecLlons 3(a) and 3(b) and SecLlon 11 Lhereof ln relaLlon Lo Lhe
lmplemenLaLlon of sald Su

SecLlon 3 (a) and (b) provldes

SecLlon 3 CrlLerla for LvaluaLlon roposal 1he sLock dlsLrlbuLlon plan submlLLed by Lhe
corporaLe landownerappllcanL shall meeL Lhe followlng mlnlmum crlLerla

a 1haL Lhe conLlnued operaLlon of Lhe corporaLlon wlLh lLs agrlculLural land lnLacL and
unfragmenLed ls vlable wlLh poLenLlal for growLh and lncreased proflLablllLy

b 1haL Lhe plan for sLock dlsLrlbuLlon Lo quallfled beneflclarles would resulL ln lncreased
lncome and greaLer beneflLs Lo Lhem Lhan lf Lhelr lands were dlvlded and dlsLrlbuLed Lo Lhem
lndlvldually xxx

1he followlng are Lhe vlolaLlons commlLLed ln Lhe aboveclLed provlslons Lo wlL

1he PLl ManagemenL declared LhaL Lhe company has noL galned proflLs ln Lhe lasL 13 years
Pence Lhe lW8s of PLl do noL recelve flnanclal reLurn le Len percenL (10) dlvldend Lhree
percenL (3) gross producLlon share (parLlal) and Lhree percenL (3) ouL of LhlrLy Lhree
percenL represenLlng equlLy shares from Lhe proceeds of Lhe sale of Lhe converLed land from
PLl (parLlal)

ln Lhe locused Croup ulscusslon (lCC) and Ccular lnspecLlon (CCl) lL was found LhaL Lhe
number of shares of sLocks Lo be recelved by Lhe lW8s depends on Lhelr deslgnaLlons (le
permanenL casual or seasonal) and Lhe number of man days 8eLlred and reLrenched workers
are noL glven shares of sLocks and cease Lo be sLockholders 1hls seLup ls grossly onerous Lo Lhe
lW8s and oneslded ln favour of PLl

noL all lW8s were glven homeloLs and

1he sub[ecL agrlculLural land was noL malnLalned unfragmenLed More Lhan 1/8 of Lhe LoLal
area or 300 hecLares has already been converLed Lo nonagrlculLural use

SecLlon 11 provldes

SecLlon 11 lmplemenLaLlon MonlLorlng of Lhe lan Lhe approved sLock dlsLrlbuLlon plan
shall be lmplemenLed wlLhln Lhe Lhree (3) monLhs from recelpL by Lhe corporaLe landowner
appllcanL of Lhe approval Lhereof by Lhe A8C and Lhe Lransfer of Lhe shares of sLocks ln Lhe
names of Lhe quallfled beneflclarles shall be recorded on Lhe sLock and Lransfer books and
submlLLed Lo Lhe SecurlLles and Lxchange Commlsslon (SLC) wlLhln slxLy (60) days from Lhe sald
lmplemenLaLlon of Lhe sLock dlsLrlbuLlon plan

upon compleLlon Lhe corporaLe landownerappllcanL shall be lssued a CerLlflcaLe of
Compllance 1he SecreLary of Agrarlan 8eform or hls deslgnaLed represenLaLlves shall sLrlcLly
monlLor Lhe lmplemenLaLlon Lo deLermlne wheLher or noL Lhere has been compllance wlLh Lhe
approved sLock dlsLrlbuLlon plan as well as Lhe requlremenLs of Lhe CA8 lor Lhls purpose Lhe
corporaLe landownerappllcanL shall make avallable lLs premlses for ocular lnspecLlon lLs
personnel for lnLervlew and lLs records for examlnaLlon aL normal buslness hours

Clearly Lhere ls no CerLlflcaLe of Compllance lssued up Lo Lhls daLe or afLer slxLeen (16) years
from Lhe Llme of approval of sald Su by Lhe resldenLlal Agrarlan 8eform Councll 1hls could
be Lraced Lo one of Lhe onerous provlslons of Lhe MCA beLween PLl and Lhe lW8s whlch
sLlpulaLes a 30year perlod of lmplemenLaLlon Lo compleLe Lhe requlred dlsLrlbuLlon of shares
of sLocks a clear vlolaLlon of Lhe expllclL provlslon of SecLlon 11 of AdmlnlsLraLlve Crder no 10
Serles of 1988 mandaLlng a 3monLh perlod of lmplemenLaLlon for such purposes31

Cn CcLober 13 2003 Lhe A8C LxecuLlve CommlLLee creaLed Lhe A8C LxeCom valldaLlon
CommlLLee vla 8esoluLlon no 2003S01 Lo revlew Lhe recommendaLlons of Lhe uA8
SecreLary AfLer meeLlng wlLh all Lhe parLles lnvolved Lhe A8C LxeCom valldaLlon CommlLLee
conflrmed Lhe uA8's recommendaLlon Lo revoke Lhe Su Cn uecember 13 2003 A8C lssued
8esoluLlon no 20033201 revoklng Lhe Su and placlng PLl lands under compulsory CA8
coverage32 PLl moved for Lhe reconslderaLlon of Lhls A8C resoluLlon on !anuary 2 200633
Cn Lhe same day Lhe uA8 lssued a noLlce of Coverage Lo PLl 1hls noLlce of Coverage lncluded
Lhe parcels of land already Lransferred Lo LlCC and 8C8C34

1he resenL Case

Whlle lLs moLlon for reconslderaLlon was sLlll pendlng wlLh Lhe uA8 PLl flled Lhe presenL
peLlLlon for cerLlorarl wlLh Lhls CourL assalllng A8C 8esoluLlon no 20033201 and Lhe noLlce
of Coverage Cn May 3 2006 A8C subsequenLly lssued 8esoluLlon no 20063401 denylng
PLl's moLlon for reconslderaLlon33

Cn !uly 13 2006 Lhe Cfflce of Lhe SollclLor Ceneral (CSC) represenLlng A8C and Lhe uA8 flled
lLs CommenL Lo PLl's peLlLlon

Cn uecember 2 2006 noel Mallarl Lhe SecreLary Ceneral of AM8ALA flled a ManlfesLaLlon
and MoLlon wlLh CommenL wlLh Lhls CourL explalnlng LhaL he had already broken away from
AM8ALA and had formed Lhe larmworkers Agrarlan 8eform MovemenL lnc (lA8M) now
respondenLlnLervenor wlLh oLher former members of AM8ALA36 noel Mallarl subsequenLly
lefL lA8M and reLurned Lo AM8ALA 8enaLo Lallc and Lhe oLher members of lA8M conLlnued as
respondenLlnLervenors ln Lhese proceedlngs

Cn CcLober 30 2007 8C8C moved Lo lnLervene ln Lhe proceedlngs as a peLlLloner
lnLervenor37 LlCC slmllarly lnLervened38 ln essence Lhese Lwo peLlLlonerslnlnLervenLlon
assalled Lhe noLlce of Coverage for lncludlng Lhe parcels of land LhaL Lhey clalm Lo have
purchased ln good falLh from PLl

1he CourL conducLed oral argumenLs on AugusL 18 2010 and AugusL 24 2010

Cn AugusL 31 2010 Lhe CourL lssued a 8esoluLlon creaLlng a medlaLlon panel39 Lo explore Lhe
posslblllLy of Lhe parLles comlng Lo a compromlse agreemenL When Lhe parLles could noL come
Lo a sulLable agreemenL wlLhln Lhe glven perlod of Llme Lhe medlaLlon panel suspended furLher
proceedlngs

1PL lSSuLS

PLl holds Lhe vlew LhaL Lhe A8C has no auLhorlLy Lo nulllfy revoke or resclnd Lhe A8C
approved Su lL furLher dlspuLes Lhe prlvaLe respondenL farmer groups' clalm LhaL Lhe Su ls
vold for belng lllegal PLl sLresses ln Lhls regard LhaL Lhe Su auLhorlzed Lhe dlsLrlbuLlon of Lhe
followlng beneflLs Lo Lhe lW8s

a 39 mllllon shares of sLock dlsLrlbuLed for free lncludlng frlnge beneflLs

b 3 bllllon ln salarles wages and oLher beneflLs

c 130 mllllon represenLlng 3 of Lhe gross sales of Lhe producLlon of Lhe agrlculLural lands

d 373 mllllon represenLlng 3 of Lhe proceeds from Lhe sale of Lhe 300 hecLares of
agrlculLural land

e 24 mllllon represenLlng 3 of Lhe proceeds from Lhe sale of Lhe 80 hecLares for Lhe Sublc
Clark1arlac Lxpressway (SC1Lx) and

f 240 sqm homeloLs Lo each of Lhe 3274 famllles of Lhe lW8s dlsLrlbuLed for free40

1he lW8s represenLed by Lhe Supervlsory Croup Alyansa ng mga AM8ALA and lA8M
conLradlcL Lhls PLl poslLlon wlLh Lhe clalm LhaL ln Lhe 16 years LhaL Lhe PLl was operaLlonal
Lhelr llves grew progresslvely worse due malnly Lo PLl's fallure Lo comply wlLh lLs promlses and
obllgaLlons under Lhe Su

1aklng Lhls argumenL furLher lA8M oplnes LhaL Lhe second paragraph of SecLlon 31 (provldlng
for Lhe sLock dlsLrlbuLlon opLlon as a mode of agrarlan reform) ls unconsLlLuLlonal as lL vlolaLes
Lhe lnLenL of SecLlon 4 ArLlcle xlll of Lhe ConsLlLuLlon whlch recognlzes Lhe rlghL of farmers and
farmworkers Lo own dlrecLly or collecLlvely Lhe lands Lhey Llll lA8M also clalms LhaL Lhls
provlslon conLalns a suspecL classlflcaLlon lnvolvlng a vulnerable secLor proLecLed by Lhe
ConsLlLuLlon as lL dlscrlmlnaLes agalnsL farmers worklng on corporaLe farms/haclendas

lrom Lhe varlous submlLLed pleadlngs41 Lhe parLles call upon Lhe CourL Lo resolve Lhe
followlng lssues

l WheLher Lhe prlvaLe respondenLs are Lhe real parLleslnlnLeresL and have Lhe legal
personallLy Lo flle Lhelr peLlLlons before Lhe ueparLmenL of Agrarlan 8eform (uA8)

ll WheLher SecLlon 31 of Lhe CA8L provldlng for Lhe sLock dlsLrlbuLlon opLlon ls consLlLuLlonal

lll WheLher Lhe A8C has [urlsdlcLlon Lo recall or revoke Lhe PLl's Su LhaL lL earller approved

lv WheLher Lhere ls legal or facLual basls Lo revoke Lhe Su and

v WheLher LlCC and 8C8C are Lransferees ln good falLh

l submlL Lhls SeparaLe Cplnlon Lo concur wlLh some of Lhe poslLlons ln Lhe ponencla and ln Lhe
oLher oplnlons and Lo express my own poslLlons parLlcularly on Lhe consequences of Lhe
lllegallLy of Lhe Su

1PL SLA8A1L ClnlCn

l 1he prlvaLe respondenL farmer groups are real parLleslnlnLeresL

PLl concedes LhaL Lhe prlvaLe respondenL farmer groups whose members slgned and flled Lhe
peLlLlons before Lhe uA8 are real parLleslnlnLeresL42 1hese groups are Lhe Supervlsory
Croup (represenLed by !ullo Zunlga and Wlndsor Andaya) and AM8ALA (represenLed by 8ene
Calang and noel Mallarl) lA8M (represenLed by 8enaLo Lallc) a newlyformed organlzaLlon of
former AM8ALA members soughL Lo lnLervene ln Lhe proceedlngs before Lhe CourL Lo assall
Lhe consLlLuLlonallLy of SecLlon 31 of Lhe CA8L

AL Lhe same Llme PLl cauLlons LhaL Lhelr lnLeresL ln Lhls case does noL necessarlly characLerlze
Lhem as farmers and regular farmworkers who are enLlLled Lo landownershlp under Lhe
CA8L43 PLl argues LhaL Lhe farmers and regular farmworkers enLlLled Lo own Lhe lands Lhey
Llll exclude seasonal farmworkers as Lhe CourL ruled ln Carlos C lorLlch eL al v 8enaLo C
Corona eL al44 1hus lL poslLs LhaL Lhe prlvaLe respondenLs who are noL among lLs 337
permanenL farmworkers43 cannoL be consldered as beneflclarles under SecLlon 22 of Lhe
CA8L46

1he requlremenL of sLandlng lnvolves a parLy's rlghL Lo presenL hls case and Lo parLlclpaLe ln Lhe
proceedlngs before Lhe courL 1o have sLandlng a parLy musL sLand Lo be beneflLLed or ln[ured
by Lhe [udgmenL ln Lhe sulL or Lo be enLlLled Lo Lhe avalls of Lhe sulL47 he musL have susLalned
or wlll susLaln dlrecL ln[ury as a resulL of lLs enforcemenL48 Slnce Lhe cenLral quesLlon ln Lhls
case lnvolves Lhe valldlLy of Lhe SuCA/Su Lhose who sLand Lo be beneflLed or ln[ured by Lhe
CourL's [udgmenL on Lhls quesLlon are necessarlly real parLleslnlnLeresL

1he real parLleslnlnLeresL as reflecLed ln Lhe pleadlngs are Lhe followlng (1) Lhose who are
slgnaLorles of Lhe May 11 1989 SuCA and (2) Lhose who are noL slgnaLorles Lo Lhe May 11
1989 SuCA buL by lLs Lerms are neverLheless enLlLled Lo lLs beneflLs 1he SuCA lncluded as lLs
quallfled beneflclarles Lhose farmworkers who appear ln Lhe annual payroll lncluslve of
permanenL and seasonal employees who are regularly or perlodlcally hlred by Lhe SLCCnu
A81? PLl49 lL made no dlsLlncLlon beLween regular and seasonal farmworkers and
beLween regular and supervlsory farmworkers All LhaL Lhe SuCA requlred for lncluslon as a
beneflclary ls LhaL Lhe farmworker appear ln PLl's annual payroll regardless of when he or she
began worklng for PLl

1hus 8ene Calang who sLarLed hls employmenL wlLh PLl ln 1990 afLer Lhe SuCA was execuLed
also possesses sLandlng Lo parLlclpaLe ln Lhls case slnce he ls consldered a quallfled beneflclary
even lf he was noL an SuCA slgnaLory llke !ullo Zunlga Wlndsor Andaya and noel Mallarl
AlLhough lA8M ls an organlzaLlon creaLed only afLer Lhe presenL peLlLlon was flled wlLh Lhe
CourL lLs members are quallfled beneflclarles of Lhe SuCA and llke 8ene Calang are also
cloLhed wlLh Lhe requlslLe sLandlng

1he CourL cannoL LesL a parLy's sLandlng based on who should be consldered quallfled
beneflclarles under SecLlon 22 of Lhe CA8L whlch as PLl argued on Lhe basls of our rullng ln
lorLlch30 excludes seasonal workers SecLlon 22 of Lhe CA8L ln relaLlon Lo Lhe lorLlch rullng
wlll flnd appllcaLlon only lf Lhe CourL rules LhaL Lhe SuCA/Su ls lllegal and conflrms Lhe
compulsory coverage and dlsLrlbuLlon of Paclenda LulslLa under Lhe CA8L 8efore any such
rullng ls made Lhe appllcaLlon of a SecLlon 22/lorLlchbased sLandard of sLandlng wlll noL only
be premaLure lL wlll also deny due process Lo Lhose who quallfy as beneflclarles under Lhe
SuCA/Su buL who may noL quallfy as such under Lhe lorLlch sLandard 1hus PLl's argumenLs
on Lhls maLLer are lrrelevanL Lo Lhe quesLlon of sLandlng

8C8C and LlCC's lnLervenLlon ls permlsslble based on Lhe sLandards provlded under SecLlon 1
8ule 19 of Lhe 8ules of CourL

SecLlon 1 Who may lnLervene A person who has a legal lnLeresL ln Lhe maLLer ln llLlgaLlon or
ln Lhe success of elLher of Lhe parLles or an lnLeresL agalnsL boLh or ls so slLuaLed as Lo be
adversely affecLed by a dlsLrlbuLlon or oLher dlsposlLlon of properLy ln Lhe cusLody of Lhe courL
or of an offlcer Lhereof may wlLh leave of courL be allowed Lo lnLervene ln Lhe acLlon 1he
courL shall conslder wheLher or noL Lhe lnLervenLlon wlll unduly delay or pre[udlce Lhe
ad[udlcaLlon of Lhe rlghLs of Lhe orlglnal parLles and wheLher or noL Lhe lnLervenor's rlghLs may
be fully proLecLed ln a separaLe proceedlng Lmphasls ours

1helr lnLeresL ln Lhls case sLems from belng Lhe purchasers of 300 hecLares of PLl land whlch
Lhe A8C lncluded ln lLs noLlce of Compulsory Coverage 1hus Lhe CourL's resoluLlon of Lhls
case wlll dlrecLly affecL Lhelr rlghL Lo Lhe purchased lands as Lhey sLand Lo be sLrlpped of Lhelr
ownershlp and possesslon of Lhese lands

ll ConsLlLuLlonallLy of sLock dlsLrlbuLlon opLlon under Lhe CA8L

ln Lhe exerclse of Lhe power of [udlclal revlew over a leglslaLlve acL alleged Lo be
unconsLlLuLlonal Lhe CourL musL ensure LhaL Lhe consLlLuLlonal lssue meeLs Lhe followlng
essenLlal requlremenLs

(1) Lhere ls an acLual case or conLroversy

(2) Lhe consLlLuLlonal quesLlon ls ralsed aL Lhe earllesL posslble opporLunlLy by a proper parLy or
one wlLh locus sLandl and

(3) Lhe lssue of consLlLuLlonallLy musL be Lhe very lls moLa of Lhe case31

l agree LhaL Lhe consLlLuLlonal lssue ln Lhe presenL case falls Lo comply wlLh Lhe lls moLa
requlremenL 1he seLLled rule ls LhaL courLs wlll refraln from rullng on Lhe lssue of
consLlLuLlonallLy unless lL ls Lruly unavoldable and Lhe lssue lles aL Lhe core of or ls Lhe core of
Lhe dlspuLe ln Lhe case32 ln oLher words Lhe case cannoL be resolved unless Lhe consLlLuLlonal
quesLlon ls passed upon33 Lqually seLLled ls Lhe presumpLlon of consLlLuLlonallLy LhaL every
law carrles Lo [usLlfy lLs nulllflcaLlon Lhere musL be a clear and unequlvocal breach of Lhe
ConsLlLuLlon noL one LhaL ls doubLful speculaLlve or argumenLaLlve34

1he presenL dlspuLe ls prlnclpally anchored on Lhe alleged grave abuse of dlscreLlon LhaL Lhe
A8C commlLLed when lL revoked PLl's Su All Lhe oLher lssues ralsed such as Lhe exLenL of
Lhe A8C's [urlsdlcLlon Lhe legallLy of Lhe SuCA and LlCC's and 8C8C's rlghLs as Lransferees of
porLlons of PLl's lands orlglnaLe from Lhls deLermlnaLlon ln my vlew (and as !usLlces velasco
and Sereno also poslL) Lhe CourL can resolve Lhese lssues wlLhouL havlng Lo delve lnLo Lhe
consLlLuLlonallLy of Lhe sLock dlsLrlbuLlon opLlon embodled ln SecLlon 31 of CA8L ConLrary
Lherefore Lo Lhe SeparaLe Cplnlon of Chlef !usLlce 8enaLo C Corona l see no compelllng reason
for Lhls CourL Lo conslder Lhe consLlLuLlonal lssue 1hls lssue ls llkewlse besL lefL unresolved
glven LhaL Lhe CA8L has now been superseded by 8A 970033 and Lhe sLock dlsLrlbuLlon opLlon
ls no longer allowed by law noL only ls a consLlLuLlonal pronouncemenL noL necessary as
dlscussed above buL such pronouncemenL may even unseLLle whaL Lo daLe are sLable sLock
dlsLrlbuLlon relaLlonshlps under Lhls superseded law

lll 1he A8C's power Lo revoke lLs prevlous approval of Lhe Su

l also malnLaln LhaL Lhe A8C's power and auLhorlLy Lo approve Lhe Su under SecLlon 31 of Lhe
CA8L lncludes by lmpllcaLlon Lhe power Lo revoke Lhls approval

1he A8C was creaLed vla LxecuLlve Crder (LC) no 229 whlch provldes

SecLlon 18 1he resldenLlal Agrarlan 8eform Councll (A8C) 1o coordlnaLe Lhe lmplemenLaLlon
of Lhe CA8 and Lo ensure Lhe Llmely and effecLlve dellvery of Lhe necessary supporL servlces
Lhere ls hereby creaLed Lhe resldenLlal Agrarlan 8eform Councll composed of Lhe resldenL as
Chalrman and Lhe SecreLarles or Peads of Lhe followlng agencles as follows

ueparLmenL of Agrarlan 8eform vlce Chalrman
ueparLmenL of AgrlculLure vlce Chalrman
ueparLmenL of LnvlronmenL and naLural 8esources vlce Chalrman
LxecuLlve SecreLary Member
ueparLmenL of 8udgeL and ManagemenL Member
ueparLmenL of llnance Member
ueparLmenL of !usLlce Member
ueparLmenL of Labor and LmploymenL Member
ueparLmenL of Local CovernmenL Member
ueparLmenL of ubllc Works and Plghways Member
ueparLmenL of 1rade and lndusLry Member
ueparLmenL of 1ransporLaLlon and CommunlcaLlons Member
naLlonal Lconomlc and uevelopmenL AuLhorlLy Member
Land 8ank of Lhe hlllpplnes Member
resldenLlal Commlsslon on Cood CovernmenL Member
1he resldenL shall appolnL represenLaLlves of agrarlan reform beneflclarles and affecLed
landowners as members of A8C

1he uA8 shall provlde Lhe SecreLarlaL for Lhe A8C and Lhe SecreLary of Agrarlan 8eform shall
be Lhe ulrecLorCeneral Lhereof

1he A8C shall formulaLe and/or lmplemenL Lhe pollcles rules and regulaLlons necessary Lo
lmplemenL each componenL of Lhe CA8 and may auLhorlze any of lLs members Lo formulaLe
rules and regulaLlons concernlng aspecLs of agrarlan reform falllng wlLhln Lhelr area of
responslblllLy

Clven Lhls composlLlon and asslgned mlsslon wlLh Lhe resldenL of Lhe hlllpplnes as lLs
Chalrperson and Lhe varlous ueparLmenL SecreLarles as lLs vlceChalrpersons Lhe A8C ls
undoubLedly an admlnlsLraLlve body whose level of auLhorlLy and power ls hlgher Lhan LhaL of
Lhe uA8 SecreLary

1he A8C's auLhorlLy Lo approve Lhe Su ls expressed ln SecLlon 10 of LC no 229 whlch
provldes

SecLlon 10 CorporaLe Landowners CorporaLe landowners may glve Lhelr workers and oLher
quallfled beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe
corporaLlon LhaL Lhe land asseLs bear ln relaLlon Lo Lhe corporaLlons LoLal asseLs and granL
addlLlonal compensaLlon whlch may be used for Lhls Lhese purposes 1he approval by Lhe
A8C of a plan for such sLock dlsLrlbuLlon and lLs lnlLlal lmplemenLaLlon shall be deemed
compllance wlLh Lhe land dlsLrlbuLlon requlremenLs of Lhe CA8

1he CA8L preserved Lhe A8C's auLhorlLy Lo approve Lhe Su ln lLs SecLlon 31 whlch sLaLes

SecLlon 31 CorporaLe Landowners CorporaLe landowners may volunLarlly Lransfer ownershlp
over Lhelr agrlculLural landholdlngs Lo Lhe 8epubllc of Lhe hlllpplnes pursuanL Lo SecLlon 20
hereof or Lo quallfled beneflclarles under such Lerms and condlLlons conslsLenL wlLh Lhls AcL as
Lhey may agree upon sub[ecL Lo conflrmaLlon by Lhe uA8

upon cerLlflcaLlon by Lhe uA8 corporaLlons ownlng agrlculLural lands may glve Lhelr quallfled
beneflclarles Lhe rlghL Lo purchase such proporLlon of Lhe caplLal sLock of Lhe corporaLlon LhaL
Lhe agrlculLural land acLually devoLed Lo agrlculLural acLlvlLles bears ln relaLlon Lo Lhe
companys LoLal asseLs under such Lerms and condlLlons as may be agreed upon by Lhem ln no
case shall Lhe compensaLlon recelved by Lhe workers aL Lhe Llme Lhe shares of sLocks are
dlsLrlbuLed be reduced 1he same prlnclple shall be applled Lo assoclaLlons wlLh respecL Lo
Lhelr equlLy or parLlclpaLlon

CorporaLlons or assoclaLlons whlch volunLarlly dlvesL a proporLlon of Lhelr caplLal sLock equlLy
or parLlclpaLlon ln favor of Lhelr workers or oLher quallfled beneflclarles under Lhls secLlon shall
be deemed Lo have complled wlLh Lhe provlslons of Lhls AcL rovlded 1haL Lhe followlng
condlLlon are complled wlLh

(a) ln order Lo safeguard Lhe rlghL of beneflclarles who own shares of sLocks Lo dlvldends and
oLher flnanclal beneflLs Lhe books of Lhe corporaLlon or assoclaLlon shall be sub[ecL Lo perlodlc
audlL by cerLlfled publlc accounLanLs chosen by Lhe beneflclarles

(b) lrrespecLlve of Lhe value of Lhelr equlLy ln Lhe corporaLlon or assoclaLlon Lhe beneflclarles
shall be assured of aL leasL one (1) represenLaLlve ln Lhe board of dlrecLors or ln a managemenL
or execuLlve commlLLee lf one exlsLs of Lhe corporaLlon or assoclaLlon

(c) Any shares acqulred by such workers and beneflclarles shall have Lhe same rlghLs and
feaLures as all oLher shares and

(d) Any Lransfer of shares of sLocks by Lhe orlglnal beneflclarles shall be vold ab lnlLlo unless
sald LransacLlon ls ln favor of a quallfled and reglsLered beneflclary wlLhln Lhe same
corporaLlon

lf wlLhln Lwo (2) years from Lhe approval of Lhls AcL Lhe land or sLock Lransfer envlsloned above
ls noL made or reallzed or Lhe plan for such sLock dlsLrlbuLlon approved by Lhe A8C wlLhln Lhe
same perlod Lhe agrlculLural land of Lhe corporaLe owners or corporaLlon shall be sub[ecL Lo
Lhe compulsory coverage of Lhls AcL

As Lhe A8C has Lhe power and auLhorlLy Lo approve Lhe Su lL also has by lmpllcaLlon Lhe
power Lo revoke Lhe approval of Lhe plan unless Lhls lmplled power ls expressly or by a
conLrary lmpllcaLlon wlLhheld from lL by law 1hls concluslon ls conslsLenL wlLh Lhe CourL's
rullng ln lranclsco l Chavez v naLlonal Pouslng AuLhorlLy eL al36

8aslc ln admlnlsLraLlve law ls Lhe docLrlne LhaL a governmenL agency or offlce has express and
lmplled powers based on lLs charLer and oLher perLlnenL sLaLuLes Lxpress powers are Lhose
powers granLed allocaLed and delegaLed Lo a governmenL agency or offlce by express
provlslons of law Cn Lhe oLher hand lmplled powers are Lhose LhaL can be lnferred or are
lmpllclL ln Lhe wordlngs of Lhe law or conferred by necessary or falr lmpllcaLlon ln Lhe enabllng
acL ln Angara v LlecLoral Commlsslon Lhe CourL clarlfled and sLressed LhaL when a general
granL of power ls conferred or duLy en[olned every parLlcular power necessary for Lhe exerclse
of Lhe one or Lhe performance of Lhe oLher ls also conferred by necessary lmpllcaLlon lL was
also expllcaLed LhaL when Lhe sLaLuLe does noL speclfy Lhe parLlcular meLhod Lo be followed or
used by a governmenL agency ln Lhe exerclse of Lhe power vesLed ln lL by law sald agency has
Lhe auLhorlLy Lo adopL any reasonable meLhod Lo carry ouL lLs funcLlons

Whlle Lhe provlslon does noL speclfy who has Lhe auLhorlLy Lo revoke Lhe approval of Lhe sLock
dlsLrlbuLlon plan loglc dlcLaLes LhaL Lhe A8C be Lhe proper body Lo exerclse Lhls auLhorlLy lf
Lhe approval was aL Lhe hlghesL level (le aL Lhe level of Lhe A8C) revocaLlon cannoL be aL any
oLher level oLherwlse Lhe absurd slLuaLlon of a lower level of auLhorlLy revoklng Lhe acLlon of a
hlgher level wlll resulL

ln llne wlLh Lhe power granLed Lo Lhe A8C and Lhe uA8 Lo lssue rules and regulaLlons Lo carry
ouL Lhe ob[ecLlves of Lhe CA8L37 Lhe uA8 lssued AdmlnlsLraLlve Crder (AC) no 101988 or Lhe
Culdellnes and rocedures for CorporaLe Landowners ueslrlng Lo Avall 1hemselves of Lhe
SLock ulsLrlbuLlon lan under SecLlon 31 of 8A 6637 and Supersedlng ueparLmenL of Agrarlan
8eform AdmlnlsLraLlve Crder no 41987 1he perLlnenL provlslons of Lhe guldellnes provlde

SecLlon 10 ulsposlLlon of roposal AfLer Lhe evaluaLlon of Lhe sLock dlsLrlbuLlon plan
submlLLed by Lhe corporaLe landownerappllcanL Lo Lhe SecreLary of Agrarlan 8eform he shall
forward Lhe same wlLh all Lhe supporLlng documenLs Lo Lhe resldenLlal Agrarlan 8eform
Councll (A8C) Lhrough lLs LxecuLlve CommlLLee wlLh hls recommendaLlon for flnal acLlon

SecLlon 11 lmplemenLaLlon MonlLorlng of lan 1he approved sLock dlsLrlbuLlon plan shall
be lmplemenLed wlLhln Lhree (3) monLhs from recelpL by Lhe corporaLe landownerappllcanL of
Lhe approval Lhereof by Lhe A8C and Lhe Lransfer of Lhe shares of sLocks ln Lhe names of Lhe
quallfled beneflclarles shall be recorded ln Lhe sLock and Lransfer books and submlLLed Lo Lhe
SecurlLles and Lxchange Commlsslon (SLC) wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon
of Lhe sLock dlsLrlbuLlon plan

upon compleLlon Lhe corporaLe landownerappllcanL shall be lssued a CerLlflcaLe of
Compllance 1he SecreLary of Agrarlan 8eform or hls deslgnaLed represenLaLlves shall sLrlcLly
monlLor Lhe lmplemenLaLlon Lo deLermlne wheLher or noL Lhere has been compllance wlLh Lhe
approved sLock dlsLrlbuLlon plan as well as Lhe requlremenLs of Lhe CA8 lor Lhls purpose Lhe
corporaLe landownerappllcanL shall make avallable lLs premlses for ocular lnspecLlon lLs
personnel for lnLervlew and lLs records for examlnaLlon aL normal buslness hours

SecLlon 12 8evocaLlon of CerLlflcaLe of Compllance noncompllance wlLh any of Lhe
requlremenLs of SecLlon 31 of 8A 6637 as lmplemenLed by Lhls lmplemenLlng Culdellnes shall
be grounds for Lhe revocaLlon of Lhe CerLlflcaLe of Compllance lssued Lo Lhe corporaLe
landownerappllcanL

SecLlon 13 8eservaLlon Clause noLhlng hereln shall be consLrued as precludlng Lhe A8C from
maklng lLs own lndependenL evaluaLlon and assessmenL of Lhe sLock dlsLrlbuLlon plan of Lhe
corporaLe landownerappllcanL and ln prescrlblng oLher requlremenLs

1hus Lhe corporaLe landowner ls obllged under SecLlon 11 of Lhls AC Lo lmplemenL Lhe Su
wlLhln Lhree monLhs afLer Lhe plan ls approved by Lhe A8C A CerLlflcaLe of Compllance follows
Lhe execuLlon of Lhe Su Lo conflrm lLs compllance wlLh sLaLuLory and regulaLory requlremenLs
Compllance however ls noL a oneLlme deLermlnaLlon even afLer Lhe approval of Lhe Su Lhe
SecreLary of Agrarlan 8eform or hls deslgnaLed represenLaLlves ls under Lhe obllgaLlon Lo
sLrlcLly monlLor Lhe lmplemenLaLlon of Lhe Su Lo ensure conLlnulng compllance wlLh Lhe
sLaLuLory (Lhe CA8L) and regulaLory (Lhe AC) requlremenLs

SecLlon 12 of Lhe AC conflrms LhaL Lhe CerLlflcaLe of Compllance can sLlll be revoked even afLer
lLs lssuance lf Lhe corporaLe landowner ls found vlolaLlng Lhe requlremenLs of SecLlon 31 of Lhe
CA8L lf Lhls auLhorlLy ls granLed afLer Lhe corporaLe landowner has been lssued a CerLlflcaLe of
Compllance wlLh more reason should Lhe approval of Lhe Su be sub[ecL Lo revocaLlon prlor Lo
Lhe lssuance of a CerLlflcaLe of Compllance AL LhaL prlor polnL Lhe A8C has noL even accepLed
and approved compllance wlLh Lhe Su as legally saLlsfacLory Whlle Lhe rules do noL expressly
deslgnaLe Lhe A8C as Lhe enLlLy wlLh Lhe auLhorlLy Lo revoke Lhe A8C neverLheless ls granLed
Lhe conLlnulng auLhorlLy under SecLlon 18 of LC no 229 Lo lmplemenL Lhe pollcles rules and
regulaLlons necessary Lo lmplemenL each componenL of Lhe CA8 1hls granL ls a caLchall
auLhorlLy lnLended Lo cover all Lhe lmpllclL powers LhaL Lhe express granLs do noL speclflcally
sLaLe and musL necessarlly lnclude Lhe power of revocaLlon

lv 1he Su ls null and vold for belng conLrary Lo law

Along wlLh my colleagues l conslder PLl's Su/SuCA Lo be null and vold because lLs Lerms are
conLrary Lo law l speclflcally refer Lo Lwo maln polnLs of lnvalldlLy llrsL ls Lhe man days
meLhod Lhe Su/SuCA adopLed ln compuLlng Lhe number of shares each lW8 ls enLlLled Lo geL
and second ls Lhe exLended perlod granLed Lo PLl Lo compleLe Lhe dlsLrlbuLlon of Lhe
11839197683 shares whlch vlolaLes Lhe compllance perlods provlded under SecLlon 11 of AC
no 101988

under Lhe SuCA/Su Lhe quallfled lW8s wlll recelve aL Lhe end of every flscal year PLl shares
based on Lhe number of days LhaL Lhey worked for PLl durlng Lhe year 1hls scheme runs
counLer Lo SecLlon 4 of Lhe uA8 AC no 101988 whlch sLaLes

SecLlon 4 SLock ulsLrlbuLlon lan 1he sLock dlsLrlbuLlon plan submlLLed by Lhe corporaLe
landowner appllcanL shall provlde for Lhe dlsLrlbuLlon of an equal number of shares of sLock of
Lhe same class and value wlLh Lhe same rlghLs and feaLures as all oLher shares Lo each of Lhe
quallfled beneflclarles 1hls dlsLrlbuLlon plan ln all cases shall be aL leasL Lhe mlnlmum raLlon
for purposes of compllance wlLh SecLlon 31 of 8A 6637

Cn Lop of Lhe mlnlmum raLlon provlded under SecLlon 3 of Lhls lmplemenLlng Culdellne
corporaLe landownerappllcanL may adopL addlLlonal sLock dlsLrlbuLlon schemes Laklng lnLo
accounL facLors such as rank senlorlLy salary poslLlon and oLher clrcumsLances whlch may be
deemed deslrable as a maLLer of sound company pollcy

1he man days meLhod of deLermlnlng Lhe shares Lo be dlsLrlbuLed Lo each lW8 ls conLrary Lo
Lhe mandaLe Lo dlsLrlbuLe equal number of shares Lo each lW8 and ls noL saved by Lhe
prerogaLlve of Lhe landowner Lo adopL dlsLrlbuLlon schemes based on facLors deslrable as a
maLLer of sound company pollcy 1he man days meLhod leaves lL enLlrely Lo Lhe unregulaLed
wlll of PLl as Lhe employer Lo deLermlne Lhe number of workers and Lhelr worklng hours LhaL
ln Lurn becomes Lhe basls ln compuLlng Lhe shares Lo be dlsLrlbuLed Lo each worker 1he
workers earn shares dependlng on wheLher Lhey were called Lo work under an uncerLaln work
schedule LhaL PLl wholly deLermlnes under Lhls seLup lnLervenlng evenLs LhaL lnLerrupL work
and LhaL are wholly dlcLaLed by PLl effecLlvely lessen Lhe shares of sLocks LhaL a worker earns
1hls ls far from Lhe parLownershlp of Lhe company aL a glven polnL ln Llme LhaL Lhe CA8L and
lLs lmplemenLlng rules envlsloned

1he 30year dlsLrlbuLlon perlod on Lhe oLher hand vlolaLes Lhe Lhree monLh perlod LhaL
SecLlon 11 of AC no 101988 prescrlbes ln Lhe lmplemenLaLlon of Lhe dlsLrlbuLlon scheme

SecLlon 11 lmplemenLaLlon MonlLorlng of lan 1he approved sLock dlsLrlbuLlon plan shall be
lmplemenLed wlLhln Lhree (3) monLhs from recelpL by Lhe corporaLe landownerappllcanL of Lhe
approval Lhereof by Lhe A8C and Lhe Lransfer of Lhe shares of sLocks ln Lhe names of Lhe
quallfled beneflclarles shall be recorded ln Lhe sLock and Lransfer books and submlLLed Lo Lhe
SecurlLles and Lxchange Commlsslon (SLC) wlLhln slxLy (60) days from Lhe sald lmplemenLaLlon
of Lhe sLock dlsLrlbuLlon plan

ConLrary Lo Lhls provlslon Lhe PLl's Su/SuCA auLhorlzed a slow lncremenLal dlsLrlbuLlon of
shares over a 30year perlod 1hus lW8 parLlclpaLlon parLlcularly over Lhe early years was
mlnlmal and Lhe unearned and undlsLrlbuLed shares remalned wlLh PLl 1hls scheme LoLally
runs counLer Lo Lhe concepL of maklng Lhe lW8s parLowners Lhrough Lhelr sLock parLlclpaLlon
wlLhln Lhe Llme LhaL SecLlon 11 requlres for Lhe lmplemenLaLlon of Lhe sLock dlsLrlbuLlon
scheme SLaLed more blunLly Lhe lW8s largely remalned farmers whlle Lhe land supposedly
sub[ecL Lo land reform remalned wlLh PLl

1hese Su provlslons among oLhers pre[udlced Lhe lW8s and denled Lhem of Lhelr rlghLs
under Lhe law ConsequenLly A8C 8esoluLlon no 20033201 ls legally correcL ln revoklng Lhe
Su of PLl38

1he recall/revocaLlon of Lhe Su carrled wlLh lL Lhe revocaLlon of Lhe SuCA slnce Lhe Lwo are
essenLlally Lhe same 1he SuCA ls Lhe conLracL beLween Lhe lW8s and Lhe landowners
(PLl/1adeco) LhaL was embodled and made Lhe very core of Lhe Su Lhe proposal submlLLed
by PLl for Lhe A8C's approval as compllance wlLh Lhe CA8L 1he lllegallLy LhaL permeaLes Lhe
Su (leadlng Lo A8C's declslon Lo revoke lL) Lherefore also exLends Lo Lhe SuCA lf we
recognlze LhaL Lhe Su ls dlfferenL from Lhe SuCA as Lhe ponencla suggesLs lnconslsLency and
absurdlLy would resulL

a Consequnces of Lhe 8evocaLlon of Su/SuCA

1he revocaLlon of Lhe Su/SuCA carrles Lwo slgnlflcanL consequences

1he flrsL ls Lhe compulsory coverage of PLl agrlculLural lands by Lhe CA8 as Lhe A8C ordered
Lhrough lLs noLlce of Coverage 1hls coverage should cover Lhe whole 491373 hecLares of land
sub[ecL of Lhe SuCA lncludlng Lhe 300 hecLares laLer sold Lo LlCC 8C8C and Lhe L8C and Lhe
80 hecLares purchased by Lhe governmenL as parL of Lhe SC1Lx As dlscussed below Lhe
lmplemenLaLlon of Lhls coverage should be sub[ecL Lo Lhe valldlLy of Lhe subsequenL deallngs
lnvolvlng speclflc parcels of Lhe covered land

1he second ls Lhe lnvalldlLy from Lhe very beglnnlng of Lhe Su/SuCA boLh ln lLs Lerms and ln
lLs lmplemenLaLlon 1hus muLual resLlLuLlon should Lake place le Lhe parLles are bound Lo
reLurn Lo each oLher whaL Lhey recelved on accounL of Lhe nulllfled Su/SuCA lL ls on Lhls
laLLer polnL LhaL l dlverge from Lhe ma[orlLy's rullng on Lhe effecLs of Lhe nulllflcaLlon of Lhe
Su/SuCA

1hese consequences are separaLely dlscussed below

b 1he compulsory CA8 coverage and exLenL of noLlce of Coverage

b 1 8asls of Lhe compulsory CA8 coverage

SecLlon 31 ls clear and caLegorlcal on Lhe consequence of Lhe revocaLlon Lhe agrlculLural land
of Lhe corporaLe owners or corporaLlon shall be sub[ecL Lo compulsory coverage under Lhe
CA8L 1he uA8 AC no 101988 effecLlvely deflnes Lhe corporaLe land covered Lhe land
acLually devoLed Lo agrlculLure as Lhls ls Lhe basls for Lhe allocaLlon of shares Lo lW8s 1hus
as dlscussed below compulsory coverage upon Lhe fallure of Lhe sLock dlsLrlbuLlon plan shall
exLend Lo Lhe whole of PLl's agrlculLural lands sub[ecL only Lo excepLlonal excluslons LhaL may
be recognlzed

b2 Lxcluslon from noLlce of Coverage based on lnLervenlng developmenLs

A seemlng problem ln llghL of Lhe lnLervenlng converslon Lo lndusLrlal use and Lhe sale of 300
hecLares of converLed land Lo Lhlrd parLles ls Lhe exLenL of acLual lmplemenLaLlon of A8C's
noLlce of Coverage

As narraLed above PLl applled for Lhe converslon Lo lndusLrlal use of 300 hecLares of Lhe
orlglnal 491373 LhaL Lhe SuCA covered SlgnlflcanLly Lhe appllcaLlon was made wlLh Lhe
consenL and approval of Lhe lW8s as expressed ln Lhelr ManlfesLaLlon of SupporL39 1haL Lhe
landowner and/or Lhe lW8s can requesL for converslon ls a posslblllLy LhaL Lhe law made
allowance for SecLlon 63 of Lhe CA8L ln Lhls regard sLaLes

SecLlon 63 Converslon of Lands AfLer Lhe lapse of flve (3) years from lLs award when Lhe
land ceases Lo be economlcally feaslble and sound agrlculLural purposes or Lhe locallLy has
become urbanlzed and Lhe land wlll have a greaLer economlc value for resldenLlal commerclal
or lndusLrlal purposes Lhe uA8 upon appllcaLlon of Lhe beneflclary or Lhe landowner wlLh due
noLlce Lo Lhe affecLed parLles and sub[ecL Lo exlsLlng laws may auLhorlze Lhe reclasslflcaLlon or
converslon of Lhe land and lLs dlsposlLlon provlded LhaL Lhe beneflclary shall have fully pald lLs
obllgaLlon

1he facL of converslon ln Lhe presenL case however ls noL a dlvlslve lssue beLween PLl and Lhe
lW8s as Lhe laLLer consenLed Lo and accepLed Lhe converslon Lhey only quesLlon Lhelr share ln
Lhe proceeds afLer Lhe converLed lands were sold Lo Lhlrd parLles lf aL all converslon as an
lssue rears lLs head beLween Lhe A8C and PLl because of Lhe lnLervenlng sale of Lhe converLed
lands and Lhe A8C's noLlce of Coverage LhaL glven Lhe lnvalldlLy of Lhe SuCA/Su should be
effecLlve on May 11 1989 as dlscussed below Lven Lhe A8C however ls noL ln Lhe poslLlon Lo
quesLlon Lhe facL of converslon as Lhe A8C lLself approved Lhe converslon afLer full compllance
wlLh Lhe CA8L and Lhe uA8's appllcable regulaLlons60 Lhe A8C's quesLlon arlses only because
of lLs apparenL vlew LhaL compulsory CA8 coverage has prlmacy over all deallngs lnvolvlng PLl
agrlculLural lands

ln Lhese llghLs Lhe valldlLy of Lhe Lransfer of Lhe converLed lands Lo LlCC 8C8C L8C (Lhrough
CenLennary) and SC1Lx depends on Lhe valldlLy of Lhe Lransfers made and on how Lhey are
affecLed by Lhe agrarlan characLer and Lhe lW8 ownershlp of Lhe Lransferred lands Lhe valldlLy
of Lhe converslon ls a glven or ls aL leasL a nonmaLerlal conslderaLlon

As Lhe undlspuLed facLs show Lhe converLed lands are LlLled properLles LhaL Lhe purchasers
LlCC 8C8C and Lhe governmenL acqulred ln a serles of documenLed and fully examlned
LransacLlons ln Lhese deallngs a slgnlflcanL conslderaLlon ls Lhe good falLh of Lhe purchasers
who ln Lhe usual course can rely on Lhe presenLed cerLlflcaLe of LlLle sub[ecL only Lo Lhe
requlremenLs of good falLh61

A purchaser ln good falLh ls one who buys Lhe properLy of anoLher wlLhouL noLlce LhaL some
oLher person has a rlghL Lo or an lnLeresL ln such properLy and pays a full and falr prlce for Lhe
properLy aL Lhe Llme of purchase or before he has noLlce of some oLher person's clalm or
lnLeresL ln Lhe properLy62 1he law requlres on Lhe parL of Lhe buyer lack of noLlce of a defecL
ln Lhe LlLle of Lhe seller and paymenL ln full of Lhe falr prlce aL Lhe Llme of Lhe sale or prlor Lo
havlng noLlce of any defecL ln Lhe seller's LlLle63

Lvery reglsLered owner and every subsequenL purchaser for value ln good falLh holds Lhe LlLle
Lo Lhe properLy free from all encumbrances excepL Lhose noLed ln Lhe cerLlflcaLe Pence a
purchaser ls noL requlred Lo explore furLher Lhan whaL Lhe 1orrens LlLle on lLs face lndlcaLes ln
lLs lnqulry for hldden defecLs or lnchoaLe rlghLs LhaL may defeaL hls rlghL Lo Lhe properLy64
Lvery person deallng wlLh reglsLered land may safely rely on Lhe correcLness of Lhe cerLlflcaLe of
LlLle lssued and Lhe law does noL obllge hlm Lo go behlnd Lhe cerLlflcaLe Lo deLermlne Lhe
condlLlon of Lhe properLy63

1o deLermlne wheLher LlCC was a purchaser ln good falLh l examlned Lhe cerLlflcaLe of LlLle of
CenLennary Poldlngs lnc aL Lhe Llme of LlCC's purchase66 noLably Lhe only annoLaLlons
and/or resLrlcLlons ln Lhe LlLle were (a) Lhe SecreLary's CerLlflcaLe ln favor of 1ereslLa Lopa and
ShlnLaro Mural67 (b) Lhe sale ln favor of LlCC for 730 mllllon68 and (c) Lhe converslon of Lhe
properLy from agrlculLural Lo lndusLrlal and resldenLlal use69 none of Lhese annoLaLlons
suggesLs any defecL ln CenLennary's LlLle nor do Lhey place poLenLlal buyers on noLlce LhaL
some oLher person had a clalm or lnLeresL ln Lhe properLy

Whlle LlCC may have known LhaL Lhe properLy lL was purchaslng was covered by an SuCA
beLween PLl and lLs lW8s Lhe coverage by lLself ls noL enough Lo consLlLuLe bad falLh on
LlCC's parL 1he properLy LlCC purchased was covered by a valldly lssued uA8 Converslon
Crder whlch served Lo assure LlCC LhaL Lhe properLy lL was purchaslng had already been
approved for sale and lndusLrlal developmenL and Lhus already lles ouLslde CA8 coverage
8ellance on Lhe Converslon Crder ls sLrengLhened by Lhe numerous governmenL lssuances
whlch all classlfled Lhese lands as lndusLrlal land Lo be developed as a Speclal Lconomlc Zone70

ln Lhe case of 8C8C LlCC's cerLlflcaLes71 coverlng Lhe parcels Lransferred Lo 8C8C Lhrough a
daclon en pago conLalned Lhe followlng annoLaLlons (a) Lhe ueed of 8esLrlcLlons72 (b) Lhe
SecreLary's CerLlflcaLe ln favor of ko[l komal and kyosuke norl73 and (c) Lhe 8eal LsLaLe
MorLgage ln favor of 8C8C for 300 mllllon74 Agaln noLhlng ln Lhese annoLaLlons would lead
posslble buyers or Lransferees llke 8C8C Lo quesLlon LlCC's rlghL as owner Lo Lransfer Lhese
properLles

l llkewlse flnd LhaL 8C8C sufflclenLly demonsLraLed exLraordlnary dlllgence ln purchaslng parL of
Lhe acqulred lands from LlCC 8efore lL acqulred Lhese lands 8C8C revlewed and lnspecLed
LlCC's cerLlflcaLes of LlLle and oLher relevanL documenLs Lo Lrace Lhe orlgln of LlCC's LlLles Lo
ascerLaln Lhe naLure of Lhe properLy73 lL llkewlse conducLed ocular lnspecLlons on Lhe
properLy and conflrmed LhaL Lhe properLy was noL only ln LlCC's possesslon more Lhan Lhls
nobody was occupylng Lhe properLy76 As wlLh LlCC Lhe facL LhaL Lhe properLy had already
been converLed by Lhe uA8 assured 8C8C LhaL Lhe properLy lL was purchaslng was no longer
agrlculLural land and was Lherefore ouLslde CA8 coverage

Aslde from Lhe good falLh boLh LlCC and 8C8C demonsLraLed Lhey pald Lhe full and falr prlce
for Lhelr purchases LlCC pald CenLennary Lhe LoLal amounL of 730 mllllon for Lhe 300
hecLares of land77 Llkewlse 8C8C recelved approxlmaLely 184 hecLares of land from LlCC ln
exchange for LlCC's debL amounLlng Lo 4317 mllllon78

A crlLlcal polnL ln Lhese Lransfers ln llghL of Lhe lnvalldlLy of Lhe SuCA/Su ls Lhe consenL of Lhe
real owners of Lhe Lransferred properLles Lhe respondenL lW8s ln Lhe presenL case As
prevlously menLloned Lhelr maln ob[ecLlon does noL relaLe Lo Lhe converslon of Lhe 300
hecLares Lo lndusLrlal use nelLher ls lL on Lhe Lransfer of Lhe properLy Lo LlCC and 8C8C 1he
LhrusLs of Lhelr ob[ecLlons are clear from a survey of Lhe pleadlngs WhaL Lhe prlvaLe
respondenLs sLrongly ob[ecL Lo ls Lhe share Lhey recelved from Lhe Lransfers Lhey argue LhaL
Lhey are enLlLled Lo more Lhan Lhe Lrlfllng 3 of Lhe proceeds of Lhe sale LhaL PLl gave Lhem
1hus Lhe respondenL lW8s as Lhe owners of Lhe converLed lands aL Lhe Llme of Lhelr Lransfers
because of Lhe lnvalldlLy of Lhe SuCA/Su and Lhe compulsory CA8 coverage of Lhe lands
Lhese lnsLrumenLs cover aL Lhe very leasL gave Lhelr consenL and raLlfled Lhe Lransfers made
AL Lhls polnL Lhey only have Lo recelve Lhe prlce due Lhem on Lhe LransacLlons so LhaL all Lhe
elemenLs of Lhe sale vlewed as a conLracL can be compleLe

noL Lo be forgoLLen as an lmporLanL slde conslderaLlon ln examlnlng Lhe Lransfers Lo LlCC and
8C8C from Lhe polnL of vlew of agrarlan reform ls Lhe acqulred lands' presenL sLaLe of
developmenL Lhey have already been parLlally developed lnLo an lndusLrlal esLaLe slgnlflcanL
porLlons have been covered by cemenLed roads and permanenL sLrucLures have been
erecLed79 As 8C8C convlnclngly argued lL would noL be pracLlcable Lo raze down Lhese
permanenL sLrucLure and rehablllLaLe parLlally developed nonagrlculLural land so LhaL lL can be
used for agrlculLural purposes As a colleague observed Lhe uA8 Converslon Crder80 lLself
noLes LhaL Lhe converLed lands have no source of lrrlgaLlon and no new lrrlgaLlon faclllLles and
would have Lo be developed ln Lhese regards ln order Lo be vlable for farmlng

1hus l LoLally dlsagree wlLh Lhe A8C's rullng LhaL Lhe porLlons sold Lo 8C8C and LlCC should
conLlnue Lo be lncluded ln Lhe CA8's compulsory coverage and should slmply be Lurned over
Lo Lhe quallfled beneflclarles AlLhough Lhese lands fell under compulsory CA8 coverage even
before Lhelr sale Lo 8C8C and LlCC Lhe lnLervenlng evenLs LhaL gave rlse Lo legally valld
LransacLlons cannoL be dlsregarded ln Lhe name of agrarlan reform WhaLever remalnlng
ob[ecLlons Lhere may now be (ln Lhls case Lhe sharlng of Lhe proceeds of Lhe sales) are slmply
dlspuLes LhaL do noL affecL Lhe valldlLy of Lhe underlylng LransacLlons and can be resolved as
lssues ln Lhe presenL case

1he land Lransferred Lo Lhe governmenL for use as parL of Lhe SC1Lx has noL aL all been
dlscussed ln Lhe proceedlngs of Lhe case81 and does noL appear Lo have been covered by any
converslon order resumably however Lhe Lransfer was pursuanL Lo Lhe governmenL's
exerclse of Lhe power of emlnenL domaln an overrldlng acL of governmenL LhaL carrles Lhe
presumpLlon of regularlLy unless oLherwlse proven l menLlon Lhls aspecL of Lhe PLl properLles
because of lLs poLenLlal maLerlallLy ln Lhe exerclse of Lhe power of emlnenL domaln Lhe
governmenL musL necessarlly pay [usL compensaLlon Lo Lhe owner 1he lW8s as owners aL Lhe
Llme of Lhe exproprlaLlon because of Lhe land's prlor compulsory coverage under Lhe CA8
should recelve Lhe full amounL LhaL Lhe governmenL pald

1he remalnlng 200 hecLares (of Lhe orlglnal 300 hecLares converLed from agrlculLural Lo
lndusLrlal use wlLh Lhe uA8's approval) appear Lo be a blg gaplng black hole ln Lhe aLLendanL
facLs of Lhls case 1hey appear Lo have been sold by PLl Lo LulslLa 8ealLy82 1he laLLer however
dld noL lnLervene ln Lhls case and llkewlse dld noL assall A8C 8esoluLlon no 20033201 or Lhe
uA8's noLlce of Coverage order Cn Lhe one hand Lhls sllence and omlsslon may be argued Lo
mean acqulescence wlLh Lhe A8C declslon Lo place Lhe land under Lhe compulsory CA8
coverage Cn Lhe oLher hand Lhe sale Lo LulslLa 8ealLy ls parL and parcel of Lhe serles of
LransacLlons LhaL for Lhe reasons glven above cannoL and should noL now be quesLloned lf
LulslLa 8ealLy ls slmllarly slLuaLed as LlCC and 8C8C

l opL for Lhe laLLer vlew and for glvlng L8C Lhe full opporLunlLy Lo presenL lLs case before Lhe
uA8 aL Lhe lmplemenLaLlon sLage of Lhls ueclslon l reason ouL LhaL Lhe fallure of LulslLa 8ealLy
Lo acLlvely lnLervene aL Lhe A8C level and before Lhls CourL does noL really affecL Lhe lnLrlnslc
valldlLy of Lhe Lransfer made ln lLs favor lf lndeed lL ls slmllarly slLuaLed as LlCC and 8C8C
Accordlngly a deflnlLlve rullng on Lhe Lransfer of Lhe 200 hecLares Lo LulslLa 8ealLy ls now
premaLure Lo make and should be referred Lo Lhe uA8 for lLs deLermlnaLlon

b3 PLl ls enLlLled Lo [usL compensaLlon based on Lhe covered land's 1989 value

Slnce Lhe land ls sub[ecL Lo compulsory coverage under Lhe CA8L PLl ls enLlLled Lo [usL
compensaLlon lor purposes of [usL compensaLlon Lhe Laklng should be reckoned noL from Lhe
CourL or Lhe A8C's declaraLlon of nulllLy of Lhe Su buL from May 11 1989 when Lhe lnvalld
SuCA/Su was execuLed for purposes of compllance wlLh Lhe CA8L's requlremenLs

1o repeaL May 11 1989 ls Lhe polnL ln Llme when PLl complled wlLh lLs obllgaLlon under Lhe
CA8L as a corporaLe landowner Lhrough Lhe sLock dlsLrlbuLlon mode of compllance83 1hls ls
Lhe polnL Loo when Lhe parLles Lhemselves deLermlned albelL under a conLracL LhaL ls null
and vold buL wlLhln Lhe perlod of coverage LhaL Lhe CA8L requlred and pursuanL Lo Lhe Lerms
of whaL Lhls law allowed LhaL compllance wlLh Lhe CA8L should Lake place lrom Lhe emlnenL
domaln perspecLlve Lhls ls Lhe polnL when Lhe deemed Laklng of Lhe land for agrarlan reform
purposes should have Laken place lf Lhe compulsory coverage and dlrecL dlsLrlbuLlon of lands
had been Lhe compllance rouLe Laken As Lhe chosen mode of compllance was declared a
nulllLy Lhe alLernaLlve compulsory coverage (LhaL Lhe SuCA was lnLended Lo replace) and Lhe
accompanylng Laklng should Lhus be reckoned from May 11 1989

1he lW8s should Lherefore be consldered as enLlLled Lo Lhe ownershlp of Lhe land beglnnlng
May 11 1989 alLhough PLl's possesslon and conLrol as an undlspuLed reallLy lndependenLly of
Lhe SuCA conLlnue up Lo Lhe Llme of Lhe A8C declslon (whlch we hereby afflrm wlLh
modlflcaLlon) ls lmplemenLed 1he uA8 as Lhe lmplemenLlng agency on agrarlan reform cases
shall deLermlne Lhe amounL of [usL compensaLlon due PLl compuLed from May 11 1989 and
shall llkewlse be Lasked wlLh Lhe ad[usLmenL of Lhe parLles' flnanclal relaLlonshlps flowlng from
Lhelr agrarlan relaLlons and from Lhe lnLervenlng evenLs LhaL followed Lhe volded SuCA ln Lhe
process of ad[usLlng and seLLllng Lhese clalms Lhe parLles are encouraged Lo employ medlaLlon
and conclllaLlon Lechnlques wlLh uA8 faclllLaLlng Lhe proceedlngs

ln deLermlnlng [usL compensaLlon Lhe uA8 should flnd guldance from SecLlon 17 of Lhe CA8L
whlch sLaLes

SecLlon 17 ueLermlnaLlon of !usL CompensaLlon ln deLermlnlng [usL compensaLlon Lhe cosL
of acqulslLlon of Lhe land Lhe currenL value of llke properLles lLs naLure acLual use and lncome
Lhe sworn valuaLlon by Lhe owner Lhe Lax declaraLlons and Lhe assessmenL made by
governmenL assessors shall be consldered 1he soclal and economlc beneflLs conLrlbuLed by Lhe
farmers and Lhe farmworkers and by Lhe CovernmenL Lo Lhe properLy as well as Lhe non
paymenL of Laxes or loans secured from any governmenL flnanclng lnsLlLuLlon on Lhe sald land
shall be consldered as addlLlonal facLors Lo deLermlne lLs valuaLlon

LesL Lhe maLLer of lnLeresL on Lhe compensaLlon due be a delaylng feaLure of Lhe
lmplemenLaLlon l malnLaln LhaL alLhough PLl ls enLlLled Lo [usL compensaLlon based on Lhe
land's value ln 1989 lL cannoL be awarded any lnLeresL

!urlsprudence holds LhaL when properLy ls Laken for publlc use before compensaLlon ls
deposlLed wlLh Lhe courL havlng [urlsdlcLlon over Lhe case Lhe flnal compensaLlon musL lnclude
lnLeresLs on lLs [usL value Lo be compuLed from Lhe Llme Lhe properLy ls Laken up Lo Lhe Llme
compensaLlon ls acLually pald or deposlLed wlLh Lhe courL84

ln Lhe presenL case PLl never losL possesslon and conLrol of Lhe land under Lhe Lerms of Lhe
SuCA 1hls ls an acLual and corporaLe reallLy (noL slmply a consequence of Lhe vold SuCA) LhaL
Lhe CourL cannoL lgnore lL ls only upon Lhe lmplemenLaLlon of Lhls CourL's declslon parLlally
afflrmlng A8C 8esoluLlon no 20033201 (placlng PLl lands under compulsory coverage of Lhe
land acqulslLlon scheme of Lhe CA8L) LhaL PLl wlll be deprlved of lLs possesslon 1hus no
lnLeresL can be due from Lhe [usL compensaLlon LhaL Lhe uA8 shall deLermlne Cn Lhe conLrary
and as dlscussed below PLl should pay renLals Lo Lhe lW8s for lLs conLlnued possesslon and
conLrol of Lhe land from May 11 1989 unLll lLs Lurn over

b4 1he quallfled lW8s are enLlLled Lo acLual possesslon of land excepL Lhe lands legally
Lransferred Lo LlCC 8C8C and Lhe governmenL

1he land sub[ecL Lo agrarlan reform coverage under Lhe Lerms of Lhe CA8L as ordered by Lhe
uA8 and conflrmed by Lhe A8C covers Lhe enLlre 491373 hecLares of agrlculLural land sub[ecL
of Lhe SuCA lncludlng Lhe 300 hecLares laLer sold Lo LlCC and 8C8C Lhe 200 hecLares sold Lo
LulslLa 8ealLy and Lhe 80 hecLares purchased by Lhe governmenL Lo form parL of Lhe SC1Lx
Powever Lhe lW8 ownershlp based on agrarlan reform coverage should yleld Lo Lhe sale and
Lransfer of Lhe acqulred lands Lhe 380 hecLares sold slnce Lhese were valldly acqulred by
LlCC 8C8C and SC1Lx as dlscussed above83

Slnce Lhe sale and Lransfer of Lhese acqulred lands came afLer compulsory CA8 coverage had
Laken place Lhe lW8s are enLlLled Lo be pald for Lhe 300 hecLares of land Lransferred Lo LlCC
based on lLs value ln 1989 noL on Lhe 730 mllllon selllng prlce pald by LlCC Lo PLl as
proposed by Lhe ponencla 1hls ouLcome recognlzes Lhe reallLy LhaL Lhe value of Lhese lands
lncreased due Lo Lhe lmprovemenLs lnLroduced by PLl speclflcally PLl's move Lo have Lhese
porLlons reclasslfled as lndusLrlal land whlle Lhey were under lLs possesslon86 1hus unless lL ls
proven LhaL Lhe 730 mllllon ls equlvalenL Lo Lhe value of Lhe land as of May 11 1989 and
excludes Lhe value of any lmprovemenLs LhaL may have been lnLroduced by PLl l malnLaln LhaL
Lhe land's 1989 value as deLermlned by Lhe uA8 should be Lhe prlce pald Lo Lhe lW8s for Lhe
lands Lransferred Lo LlCC and 8C8C

Cn Lhe oLher hand Lhe lW8s are enLlLled Lo be pald Lhe full amounL of [usL compensaLlon LhaL
PLl recelved from Lhe governmenL for Lhe 80 hecLares of exproprlaLed land formlng Lhe SC1Lx
hlghway WhaL was Lransferred ln Lhls case was a porLlon of Lhe PLl properLy LhaL was noL
covered by any converslon order 1he Lransfer Loo came afLer compulsory CA8 coverage had
Laken place and wlLhouL any slgnlflcanL lnLervenLlon from PLl 1hus Lhe whole of Lhe [usL
compensaLlon pald by Lhe governmenL should accrue solely Lo Lhe lW8s as owners

l noLe LhaL compllcaLlons may arlse ln ad[usLlng Lhe parLles' relaLlonshlps wlLh respecL Lo Lhe
sale of Lhe acqulred lands as anoLher parLy Lhe Land 8ank of Lhe hlllpplnes enLers Lhe
plcLure as Lhe enLlLy LhaL advances Lhe paymenL of lands dlsLrlbuLed Lo lW8s under land
reform87 1he uA8 as Lhe agency Lasked wlLh Lhe valuaLlon of Lhe CA8Lcovered lands and Lhe
general lmplemenLaLlon of land reform musL Lake Lhe lnLeresLs of Lhree parLles lnLo
conslderaLlon lor purposes of Lhls ad[usLmenL Lhe uA8 should apply Lhe prlnclples of seLoff or
compensaLlon whenever appllcable88 based on Lhe rullngs guldellnes and parameLers of Lhe
CourL's declslon

b3 PLl musL pay Lhe quallfled lW8s yearly renL for Lhe use of Lhe land from 1989

Slnce land reform coverage and Lhe rlghL Lo Lhe Lransfer of Lhe CA8Lcovered lands accrued Lo
Lhe lW8s as of May 11 1989 PLl whlch conLlnued Lo possess and Lo conLrol Lhe covered land
should pay Lhe quallfled lW8s yearly renLal for Lhe use and possesslon of Lhe covered land up
Lo Lhe Llme PLl surrenders possesslon and conLrol over Lhese lands89 As a deLall of land reform
lmplemenLaLlon Lhe auLhorlLy Lo deLermlne Lhe approprlaLe renLals belongs Lo Lhe uA8 uslng
esLabllshed norms and sLandards for Lhe purpose roper ad[usLmenL of course should be
made for Lhe sale of Lhe acqulred lands Lo LlCC and Lo Lhe governmenL as no renLals can be
due for Lhese porLlons afLer Lhelr sale

1he ponencla ob[ecLs Lo Lhe lmposlLlon of renLal fee on PLl

1he lncome earned by Lhe corporaLlon from lLs possesslon and use of Lhe land ulLlmaLely
redounded Lo Lhe beneflL of Lhe lW8s based on lLs buslness operaLlons ln Lhe form of salarles
beneflLs volunLarlly granLed by PLl and oLher frlnge beneflLs under Lhe C8A 1here would be
double compensaLlon lf PLl ls sLlll requlred Lo pay renL for Lhe use of Lhe land ln quesLlon90

1he ob[ecLlon's loglc unforLunaLely ls flawed 1haL Lhe lW8s as owners of Lhe land are
enLlLled Lo renL for PLl's possesslon and use does noL preclude Lhem from recelvlng salarles and
beneflLs for work Lhey performed on Lhe land for PLl 1o puL lL slmply Lhe lW8s are enLlLled Lo
Lhe renL as owners of Lhe land and Lo Lhe salarles and beneflLs as employees of PLl whlch had
conLrol and possesslon of Lhe land and whlch conducLed buslness operaLlons based on Lhe
conLrol and possesslon lL en[oyed

arenLheLlcally and conslderlng Lhe lapse of more Lhan 10 years from Lhe Laklng of Lhe
Paclenda LulslLa l brlng Lo Lhe parLles' aLLenLlon SecLlon 27 of Lhe CA8L whlch auLhorlzes Lhe
lW8s Lo sell Lhe lands acqulred by Lhem under Lhe CA8

SLC 27 1ransferablllLy of Awarded Lands Lands acqulred by beneflclarles under Lhls AcL may
noL be sold Lransferred or conveyed excepL Lhrough heredlLary successlon or Lo Lhe
governmenL or Lo Lhe L8 or Lo oLher quallfled beneflclarles for a perlod of Len (10) years
rovlded however 1haL Lhe chlldren or Lhe spouse of Lhe Lransferor shall have a rlghL Lo
repurchase Lhe land from Lhe governmenL or L8 wlLhln a perlod of Lwo (2) years uue noLlce of
Lhe avallablllLy of Lhe land shall be glven by Lhe L8 Lo Lhe 8arangay Agrarlan 8eform
CommlLLee (8A8C) of Lhe barangay where Lhe land ls slLuaLed 1he rovlnclal Agrarlan
CoordlnaLlng CommlLLee (A8CCCM) as hereln provlded shall ln Lurn be glven due noLlce
Lhereof by Lhe 8A8C

lf Lhe land has noL yeL been fully pald by Lhe beneflclary Lhe rlghL Lo Lhe land may be
Lransferred or conveyed wlLh prlor approval of Lhe uA8 Lo any helr of Lhe beneflclary or Lo any
oLher beneflclary who as a condlLlon for such Lransfer or conveyance shall culLlvaLe Lhe land
hlmself lalllng compllance herewlLh Lhe land shall be Lransferred Lo Lhe L8 whlch shall glve
due noLlce of Lhe avallablllLy of Lhe land ln Lhe manner speclfled ln Lhe lmmedlaLely precedlng
paragraph

ln Lhe evenL of such Lransfer Lo Lhe L8 Lhe laLLer shall compensaLe Lhe beneflclary ln one lump
sum for Lhe amounLs Lhe laLLer has already pald LogeLher wlLh Lhe value of lmprovemenLs he
has made on Lhe land

under Lhls provlslon Lhe quallfled lW8s who are no longer lnLeresLed ln ownlng Lhelr
proporLlonaLe share of Lhe land may opL Lo sell lL Lo L8 who ln Lurn can sell lL Lo PLl and L8C
ln order noL Lo dlsrupL Lhelr exlsLlng operaLlons 1he CourL leaves lL Lo Lhe parLles Lo avall of
SecLlon 27 ln Lhe process of ad[usLlng and seLLllng Lhelr clalms

b6 1he uA8 musL ldenLlfy Lhe quallfled lW8s

As a lasL polnL on compulsory CA8 coverage Lhe beneflclarles who deserve Lo parLlclpaLe ln
Lhe dlsLrlbuLlon of PLl land should be Lhose quallfled as of May 11 1989 under Lhe sLandards
speclfled by SecLlon 22 of Lhe CA8L whlch provldes

Cuallfled 8eneflclarles 1he lands covered by Lhe CA8 shall be dlsLrlbuLed as much as
posslble Lo landless resldenLs of Lhe same barangay or ln Lhe absence Lhereof landless
resldenLs of Lhe same munlclpallLy ln Lhe followlng order of prlorlLy

(a) agrlculLural lessees and share LenanLs

(b) regular farm workers

(c) seasonal farm workers

(d) oLher farm workers

(e) acLual Llllers or occupanLs of publlc lands

(f) collecLlves or cooperaLlves of Lhe above beneflclarles and

(g) oLhers dlrecLly worklng on Lhe land

1hls quesLlon ls for Lhe uA8 Lo resolve and ls wlLhouL pre[udlce Lo agreemenLs Lhe PLl and Lhe
lW8s may arrlve aL before Lhe uA8 As a sLarLlng polnL Lhe uA8 should use Lhe llsL of quallfled
lW8s LhaL 1adeco applled ln 1989 when lL soughL Lhe approval of lLs Su

c Consequences of SuCA/Su lnvalldlLy

c1 1he CperaLlve lacL uocLrlne ls noL appllcable

Whlle Lhe ponencla afflrms Lhe revocaLlon of Lhe Su lL declares LhaL lL cannoL close lLs eyes
Lo cerLaln 'operaLlve facLs' LhaL had occurred ln Lhe lnLerlm Lhe perlod beLween A8C's
approval of Lhe Su up Lo lLs revocaLlon x x x Lhe revocaLlon musL however glve way Lo Lhe
rlghL of Lhe orlglnal 6296 quallfled lW8s Lo choose wheLher Lhey wanL Lo remaln as PLl
sLockholders or noL 1he CourL cannoL Lurn a bllnd eye Lo Lhe facL LhaL ln 1989 93 of Lhe lW8s
agreed Lo Lhe SuCA (also sLyled as Lhe MCA) whlch became Lhe basls of Lhe Su approved by
A8C x x x 1he ponencla [usLlfles Lhe appllcaLlon of Lhe operaLlve facL docLrlne slnce Lhe
operaLlve facL prlnclple applles Lo a law or an execuLlve acLlon Lhe appllcaLlon of Lhe docLrlne
Lo Lhe nulllflcaLlon of A8C 8esoluLlon no 89122 whlch ls an execuLlve acLlon ls correcL91

1he ponencla's vlew proceeds from a mlslnLerpreLaLlon of Lhe Lerm execuLlve acLlon Lo whlch
Lhe operaLlve facL docLrlne may be applled92

1he operaLlve facL docLrlne applles ln conslderlng Lhe effecLs of a declaraLlon of
unconsLlLuLlonallLy of a sLaLuLe or a rule lssued by Lhe LxecuLlve ueparLmenL LhaL ls accorded
Lhe same sLaLus as a sLaLuLe 1he execuLlve acLlon ln shorL refers Lo Lhose lssuances
promulgaLed by Lhe LxecuLlve ueparLmenL pursuanL Lo Lhelr quaslleglslaLlve or rulemaklng
powers lLs meanlng cannoL be expanded Lo cover [usL abouL any acL performed by Lhe
LxecuLlve ueparLmenL as LhaL would be Lo negaLe Lhe raLlonale behlnd Lhe docLrlne

Aslde from belng a prlnclple of equlLy Lhe CourL ls also keenly aware LhaL an underlylng reason
for Lhe appllcaLlon of Lhe operaLlve facL docLrlne ls Lhe presumpLlon of consLlLuLlonallLy LhaL
sLaLuLes carry 8ules and regulaLlons promulgaLed ln pursuance of Lhe auLhorlLy conferred upon
Lhe admlnlsLraLlve agency by law parLake of Lhe naLure of a sLaLuLe and slmllarly en[oy Lhe
presumpLlon of consLlLuLlonallLy93 1hus lL ls only Lo Lhls klnd of execuLlve acLlon LhaL Lhe
operaLlve facL docLrlne can apply94

1he SuCA/Su ls nelLher a sLaLuLe nor an execuLlve lssuance buL as menLloned ls a conLracL
beLween Lhe lW8s and Lhe landowners A conLracL sLands on a dlfferenL plane Lhan a sLaLuLe or
an execuLlve lssuance When a conLracL ls conLrary Lo law lL ls deemed vold ab lnlLlo lL
produces no legal effecLs whaLsoever ln accordance wlLh Lhe prlnclple quo nullum esL nullum
produclL effecLum93 ConLracLs do noL carry any presumpLlon of consLlLuLlonallLy or legallLy
LhaL Lhose observlng Lhe law rely upon lor Lhls reason Lhe operaLlve facL docLrlne applles only
Lo a declaraLlon of unconsLlLuLlonallLy of a sLaLuLe or an execuLlve rulemaklng lssuance
conferrlng leglLlmacy upon pasL acLs or omlsslons done ln rellance Lhereof prlor Lo Lhe
declaraLlon of lLs lnvalldlLy96 Lhe sLaLuLe or Lhe execuLlve lssuance before lLs lnvalldlLy was an
operaLlve facL Lo whlch legal consequences aLLached

1o exLend Lhls same prlnclple Lo an unconsLlLuLlonal or lllegal conLracL would be Lo lnvlLe chaos
lnLo our legal sysLem lL wlll make Lhe parLles a law unLo Lhemselves allowlng Lhem Lo enLer
lnLo conLracLs whose effecLs wlll anyway be recognlzed as legal even lf Lhe conLracLs are
subsequenLly volded by Lhe courLs lrom Lhls perspecLlve Lhe operaLlve facL docLrlne LhaL
applles Lo unconsLlLuLlonal sLaLuLes ls clearly noL relevanL Lo Lhe presenL case

lurLhermore l see no reason Lo allow Lhe lW8s Lo remaln as sLockholders of PLl malnLalnlng
LhaL sLock ownershlp goes agalnsL Lhe CA8L's declared pollcy of maklng Lhe welfare of Lhe
farmers and Lhe farmworker Lhe hlghesL conslderaLlon noL Lo menLlon LhaL Lhe dlrecL
consLlLuLlonal mandaLe ls land ownershlp by farmersLlllers noL sLock ownershlp ln a
landownlng corporaLlon 1o remaln as sLockholders of an almosLbankrupL corporaLlon cerLalnly
wlll noL afford Lhe lW8s Lhe opporLunlLy Lo enhance Lhelr dlgnlLy and lmprove Lhe quallLy of
Lhelr llves97 8y Lhe PLl's own admlsslon lL shuL down lLs operaLlons ln 2004 lLs audlLed
flnanclal sLaLemenLs as of uecember 31 2007 and uecember 31 2008 reflecL a caplLal
deflclency of 11 bllllon and 163 bllllon respecLlvely

c2 lW8s musL reLurn Lo PLl Lhe beneflLs Lhey acLually recelved by vlrLue of Lhe SuCA

1he nulllLy of a conLracL goes lnLo lLs very exlsLence and Lhe parLles Lo lL musL generally reverL
back Lo Lhelr respecLlve slLuaLlons prlor Lo lLs execuLlon resLlLuLlon ls Lherefore ln order WlLh
Lhe Su belng vold and wlLhouL effecL Lhe lW8s should reLurn everyLhlng Lhey are proven Lo
have recelved pursuanL Lo Lhe Lerms of Lhe SuCA/Su and Lhese lnclude

1 Lhe 39 mllllon shares of sLock of PLl dlsLrlbuLed for free

2 Lhe 130 mllllon represenLlng 3 of Lhe gross sales of Lhe producLlon of Lhe agrlculLural
lands

3 Lhe 373 mllllon represenLlng 3 of Lhe proceeds from Lhe sale of Lhe 300 hecLares of
agrlculLural land (lncludlng whaL may have been recelved from Lhe exproprlaLlon by
governmenL of Lhe land used for SC1Lx) and

4 Lhe 240 sqm homeloLs dlsLrlbuLed for free Lo each of Lhe 3274 famllles of lW8s98

l observe LhaL Lhese are granLs LhaL PLl clalmed buL have noL proven Lo have been fully
recelved by Lhe granLees Lhe evldence on record falls Lo show LhaL all Lhe lW8s under Lhe
SuCA equally recelved Lhelr alloLLed shares

uurlng Lhe oral argumenLs on AugusL 18 2010 Lhe CourL lnsLrucLed ALLy Cener Asunclon of PLl
Lo submlL proof LhaL (a) PLl gave Lhe 3 share ln PLl's LoLal gross sales of Lhe producLs of Lhe
land LhaL Lhe lW8s were enLlLled Lo from 1989 up Lo 2004 when PLl ceased operaLlons and
(b) PLl dlsLrlbuLed Lhe home loLs Lo Lhe lW8s 1he records do noL show any compllance wlLh
Lhe CourL's dlrecLlve as PLl falled Lo submlL any documenL provlng compllance AL mosL Lhe
records only conLaln Lhe Paclenda LulslLa lnc Salarles 8eneflLs and CredlL rlvlleges (ln
1housand esos) Slnce Lhe SLock CpLlon was Approved by A8C/CA899 whlch provlded LhaL
PLl gave Lhe lW8s a LoLal of 130 mllllon as Lhe 3 producLlon share from 1989 Lo 2003

Welghlng Lhe flndlngs ln Lhe uA8 Memorandum daLed SepLember 30 2003 (as afflrmed by Lhe
A8C) LhaL PLl only parLlally complled wlLh lLs obllgaLlon Lo provlde Lhe lW8s wlLh Lhe 3
producLlon share agalnsL PLl's selfservlng allegaLlon LhaL lL fully complled wlLh Lhls obllgaLlon
l flnd lnsufflclenL basls Lo conclude (as Lhe ponencla does) LhaL PLl had complled subsLanLlally
wlLh Lhls SuCA underLaklng and Lhe converslon order100

no subsLanLlal proof llkewlse exlsLs LhaL Lhe lW8s who quallfled under Lhe SuCA recelved Lhe
home loLs LhaL PLl clalms lL dlsLrlbuLed ln Lhe same manner alLhough PLl alleged LhaL lL also
dlsLrlbuLed 3 of Lhe 80 mllllon pald for Lhe 80 hecLares of land used by Lhe SC1Lx complex
no evldence ln Lhe records supporLs Lhls asserLlon

All Lhese are aspecLs of lmplemenLaLlon LhaL are up Lo Lhe uA8 Lo ascerLaln lf Lhe CourL wlll
declde on sLarLlng wlLh a clean slaLe reckoned from 1989 by decreelng LhaL compulsory CA8
coverage should sLarL aL LhaL polnL ln Llme and proceedlng Lo ad[usL Lhe relaLlons of Lhe parLles
wlLh due regard Lo Lhe evenLs LhaL lnLervened A conslderaLlon sLarLlng from a clean slaLe
requlres Lhe accounLlng and resLlLuLlon of whaL Lhe parLles recelved or are due Lo recelve from
one anoLher

l polnL ouL Lhe above deflclencles as Lhey lnvolve facLual quesLlons LhaL wlll be maLerlal ln Lhe
clean slaLe approach l menLloned above l polnL ouL however LhaL whaLever resLlLuLlons may
have Lo be made ln a clean slaLe approach Lhe lW8s who worked for PLl should reLaln Lhe 3
bllllon glven Lo Lhem as salarles and wages and any oLher beneflL Lhey may have recelved as
employees of PLl 1hey recelved Lhese sums as wages and compensaLlon earned for servlces
rendered and Lhese are no longer sub[ecL Lo quesLlon

v Concluslon

lor Lhe foregolng reasons l voLe Lo uLn? Lhe peLlLloner Paclenda LulslLa lnc's peLlLlon and
Alll8M publlc respondenL A8C's 8esoluLlon no 20033201 revoklng Lhe Su as well as lLs
8esoluLlon no 20063401 denylng Lhe peLlLloner's moLlon for reconslderaLlon

1he declslon Lo sub[ecL Lhe land Lo compulsory agrarlan reform coverage should be Alll8MLu
wlLh Lhe MCulllCA1lCn LhaL whlle Lhe acqulred lands were lncluded by Lhe publlc respondenL
ueparLmenL of Agrarlan 8eform ln lLs noLlce of Compulsory Coverage Lhe purchase by Lhe
peLlLlonerslnLervenors as well as Lhe porLlon of land acqulred for Lhe SC1Lx complex should
be recognlzed as valld and effecLlve l make no concluslon wlLh respecL Lo Lhe Lransfer of 200
hecLares Lo LulslLa 8ealLy lnc buL l recognlze LhaL Lhe valldlLy of Lhe Lransfer can sLlll be
proven lf LulslLa 8ealLy lnc so deslres before Lhe uA8 CLherwlse Lhe 200 hecLares should be
sub[ecL Lo compulsory CA8 coverage

vl C8uL8S Anu ul8LC1lvLS

l 1C 1PL uLA81MLn1 Cl AC8A8lAn 8LlC8M

1he publlc respondenL ueparLmenL of Agrarlan 8eform ls hereby C8uL8Lu Lo lmplemenL Lhe
noLlce of Compulsory Coverage as soon as posslble and Lo monlLor Lhe land dlsLrlbuLlon Lo
ensure Lhe equlLable dlsLrlbuLlon of Lhe land Lo Lhe quallfled farmworkersbeneflclarles ln Lhls
regard lL ls C8uL8Lu Lo

a) deLermlne Lhe amounL of [usL compensaLlon LhaL Lhe peLlLloner Paclenda LulslLa lnc ls
enLlLled Lo for Lhe 491373 hecLares of Paclenda LulslLa based on lLs value on May 11 1989

b) deLermlne Lhe amounL of yearly renLals LhaL peLlLloner Paclenda LulslLa lnc musL pay Lhe
quallfled farmworkersbeneflclarles for Lhe use and possesslon of Lhe land from 1989 unLll
possesslon ls offlclally Lurned over Lo Lhe ueparLmenL of Agrarlan 8eform for dlsLrlbuLlon (wlLh
due ad[usLmenL for Lhe porLlons sold Lo LulslLa lndusLrlal ark CorporaLlon 8lzal Commerclal
8anklng CorporaLlon and Lhe governmenL for Lhe SublcClark1arlac Lxpressway)

c) ldenLlfy Lhe farmworkersbeneflclarles who are quallfled Lo recelve land under Lhe
compulsory CA8 coverage of Lhe agrlculLural land of Paclenda LulslLa lnc and Lhe beneflLs
and awards under Lhls ueclslon

d) deLermlne Lhe beneflLs under Lhe vold SLock ulsLrlbuLlon CpLlon AgreemenL/SLock
ulsLrlbuLlon lan LhaL Lhe quallfled farmworkersbeneflclarles acLually recelved from Paclenda
LulslLa lnc

e) seLLle Lhe dlsLrlbuLlon of Lhe proceeds of Lhe sale of Lhe parcels of land sold Lo Lhe LulslLa
lndusLrlal ark CorporaLlon and 8lzal Commerclal 8anklng CorporaLlon wlLh Lhe quallfled
farmworkersbeneflclarles parLlclpaLlng Lo Lhe exLenL of Lhe value of Lhese parcels of land as of
May 11 1989

f) seLLle Lhe dlsLrlbuLlon of Lhe proceeds of Lhe sale of Lhe exproprlaLed land Lo Lhe governmenL
for Lhe SublcClark1arlac Lxpressway wlLh Lhe quallfled farmworkersbeneflclarles enLlLled Lo
all Lhe proceeds LhaL Paclenda LulslLa lnc recelved for Lhls LransacLlon

g) seLLle Lhe clalms and obllgaLlons arlslng from Lhe CourL's ueclslon Laklng lnLo accounL LhaL
Lhe Land 8ank of Lhe hlllpplnes ls Lhe parLy mandaLed by law Lo advance Lhe paymenL of Lhe
land Laken for agrarlan reform purposes and

h) provlde Lhe LulslLa 8ealLy lnc Lhe opporLunlLy Lo presenL evldence wlLh noLlce Lo all Lhe
parLles Lo Lhls case Lo prove Lhe valldlLy of Lhe Lransfer of 200 hecLares of converLed land by
Paclenda LulslLa lnc

ln ad[usLlng Lhe parLles' rlghLs clalms and obllgaLlons Lo one anoLher based on Lhe rullngs
guldellnes and parameLers of Lhls CourL's ueclslon Lhe ueparLmenL of Agrarlan 8eform shall
Lake advanLage of Lhe prlnclple of seLoff or compensaLlon under Lhe Clvll Code of Lhe
hlllpplnes whenever appllcable shall employ medlaLlon and conclllaLlon Lechnlques
whenever posslble shall apply SecLlon 27 of Lhe CA8L lf posslble and shall cause Lhe leasL
dlsLurbance Lo Lhe sLaLus quo parLlcularly ln Lhe resLlLuLlon of Lhe home loLs prevlously
dlsLrlbuLed under Lhe nulllfled SLock ulsLrlbuLlon CpLlon AgreemenL/SLock ulsLrlbuLlon lan

1he ueparLmenL of Agrarlan 8eform shall submlL quarLerly reporLs of lLs lmplemenLaLlon efforLs
Lo Lhls CourL sLarLlng aL Lhe end of Lhe second quarLer afLer Lhe flnallLy of Lhe CourL's ueclslon
unLll Lhe case ls consldered fully closed and LermlnaLed

ll 1C 1PL CuALlllLu lW8s unuL8 1PL vCluLu SuCA

1hose who quallfled as farmworkersbeneflclarles under Lhe nulllfled SLock ulsLrlbuLlon CpLlon
AgreemenL/SLock ulsLrlbuLlon lan and who accordlngly recelved shares of sLocks and beneflLs
under Lhls AgreemenL/lan are C8uL8Lu Lo reLurn Lhe followlng for purposes of accounLlng
compensaLlon or offseLLlng wlLh amounLs due from PLl ln accordance wlLh Lhe uA8's flnal
lmplemenLaLlon resoluLlon

a) Lhe 39 mllllon shares of sLock of Lhe peLlLloner Paclenda LulslLa lnc oLherwlse Lhese shares
of sLocks can slmply be consldered cancelled or reverLed back Lo Paclenda LulslLa lnc

b) Lhe 130 mllllon represenLlng 3 of Lhe gross sales of Lhe producLlon of Lhe agrlculLural
lands

c) Lhe 373 mllllon represenLlng 3 of Lhe proceeds from Lhe sale of Lhe 300 hecLares of
agrlculLural land and

d) Lhe 240 sqm home loLs dlsLrlbuLed for free Lo each of Lhe 3274 famllles of Lhe farmworkers
beneflclarles

lll 1C PAClLnuA LulSl1A lnC

1he peLlLloner Paclenda LulslLa lnc ls C8uL8Lu Lo

a) surrender possesslon of Lhe 433373 hecLares of land sub[ecL Lo compulsory coverage under
8A 6637 Lo Lhe ueparLmenL of Agrarlan 8eform (le lncludlng Lhe 200 hecLares Lransferred Lo
LulslLa 8ealLy LhaL Lhe ueparLmenL of Agrarlan 8eform /resldenLlal Agrarlan 8eform Councll
dld noL recognlze) sub[ecL Lo Lhe opporLunlLy granLed under Lhls ueclslon Lo LulslLa 8ealLy
CorporaLlon Lo prove lLs ownershlp

b) pay Lhe quallfled farmworkersbeneflclarles as deLermlned by Lhe ueparLmenL of Agrarlan
8eform Lhe value of Lhe 300 hecLares of land Lransferred Lo LulslLa lndusLrlal ark CorporaLlon
and 8lzal Commerclal 8anklng CorporaLlon based on Lhe May 11 1989 value as deLermlned by
Lhe ueparLmenL of Agrarlan 8eform Lhls same dlrecLlve applles wlLh respecL Lo Lhe 200
hecLares Lransferred Lo LulslLa 8ealLy lnc when and lf Lhe ueparLmenL of Agrarlan 8eform
flnds Lhe sale of Lhe properLy valld oLherwlse Lhe 200 hecLares shall fall under Lhe A8C's
noLlce of Coverage

c) pay Lhe quallfled farmworkersbeneflclarles as deLermlned by Lhe ueparLmenL of Agrarlan
8eform Lhe [usL compensaLlon lL recelved from Lhe governmenL for Lhe 80 hecLares of
exproprlaLed land used for Lhe SublcClark1arlac Lxpressway and

d) pay Lhe quallfled farmworkersbeneflclarles yearly renLal for Lhe use of Lhe land (excepL for
Lhe porLlons already Lransferred Lo LulslLa lndusLrlal ark CorporaLlon 8lzal Commerclal
8anklng CorporaLlon and SublcClark1arlac Lxpressway) from 1989 unLll Lhe land ls Lurned over
Lo Lhe ueparLmenL of Agrarlan 8eform based on Lhe value as deLermlned by Lhe ueparLmenL of
Agrarlan 8eform

1hey are enLlLled Lo 8L1Aln Lhe salarles wages and oLher beneflLs Lhey recelved as employees
of Lhe peLlLloner Paclenda LulslLa lnc

SubmlLLed for Lhe Ln 8anc's conslderaLlon

A81u8C u 88lCn
AssoclaLe !usLlce


looLnoLes

1 8ollo p 3044

2 ld aL 3809

3 ld aL 3643

4 ld aL 3646

3 ld aL 3810

6 ld aL 3810

7 ld aL 3811

8 ld aL 3811

9 ld aL 3811

10 ld aL 3811

11 ld aL 3811

12 ld aL 3812

13 ld aL 3633

14 ld aL 3668

13 ld aL 132728

16 ld aL 4227

17 ld aL 4229

18 8esoluLlon no 280 daLed SepLember 1 1996 rollo p 4226

19 8ollo volume 3 p 4229

20 ld aL 4232

21 ld aL 34203421

22 ld aL 4233

23 ld aL 4233

24 ld aL 4239

23 ld aL 4240

26 ld aL 3669

27 ld aL 133136

28 ld aL 173183

29 ld aL 679680

30 ld aL 386403

31 8ollo pp 340342

32 ld aL 730731

33 ld aL 732763

34 ld aL 103104

33 8ollo pp407423

36 ld aL 436430

37 ld aL 13301339

38 ld aL 13331344

39 1he MedlaLlon anel ls composed of former AssoclaLe !usLlce Ma Allcla AusLrlaMarLlnez as
Chalrperson and former CA !usLlces PecLor Pofllena and 1ereslLa uyLlacco llores as members
rollo volume 3 pp 30603062

40 8ollo volume 3 pp 36943693

41 1he parLles submlLLed Lhe followlng pleadlngs

a) eLlLloner PLl's Memorandum daLed SepLember 23 2010

b) Memorandum daLed SepLember 12 2010 flled by prlvaLe respondenLs AM8ALAMallarl
Croup unlLed LulslLa Workers' unlon and Lhe Supervlsory Croup as represenLed by ALLy
SanLoyo

c) Memorandum daLed SepLember 21 2010 flled by prlvaLe respondenL AM8ALACalang as
represenLed by ALLy ahllga of SenLro ara sa 1unay na 8epormang Agraryo loundaLlon
(SLn18A)

d) Memorandum daLed SepLember 24 2010 flled by respondenLlnLervenor lA8M as
represenLed by ALLy Monsod

e) Memorandum daLed SepLember 23 2010 flled by publlc respondenLs' A8C and uA8 as
represenLed by Lhe Cfflce of Lhe SollclLor Ceneral

f) eLlLlonerlnLervenor LlCC's SepLember 23 2010 Memorandum and

g) eLlLlonerlnLervenor 8C8C's SepLember 23 2010 Memorandum

42 PLl Memorandum p 73

43 lbld

44 C8 no 131437 AugusL 19 1999 312 SC8A 731 761

43 PLl sLaLes LhaL lL has only 337 permanenL farmworkers of Lhe 10302 lW8s PLl
Memorandum p 74

46SecLlon 22 Cuallfled 8eneflclarles 1he lands covered by Lhe CA8 shall be dlsLrlbuLed as
much as posslble Lo landless resldenLs of Lhe same barangay or ln Lhe absence Lhereof landless
resldenLs of Lhe same munlclpallLy ln Lhe followlng order of prlorlLy

(a) agrlculLural lessees and share LenanLs

(b) regular farm workers

(c) seasonal farm workers

(d) oLher farm workers

(e) acLual Llllers or occupanLs of publlc lands

(f) collecLlve or cooperaLlves of Lhe above beneflclarles and

(g) oLhers dlrecLly worklng on Lhe land

rovlded however 1haL Lhe chlldren of landowners who are quallfled under SecLlon 6 of Lhls
AcL shall be glven preference ln Lhe dlsLrlbuLlon of Lhe land of Lhelr parenLs and rovlded
furLher LhaL acLual LenanL Llllers ln Lhe landholdlng shall noL be e[ecLed or removed Lherefrom

8eneflclarles under resldenLlal uecree no 27 who have culpably sold dlsposed of or
abandoned Lhelr land are dlsquallfled Lo become beneflclarles under Lhelr program

A baslc quallflcaLlon of a beneflclary shall be hls wllllngness apLlLude and ablllLy Lo culLlvaLe and
make land as producLlve as posslble 1he uA8 shall adopL a sysLem of monlLorlng Lhe record or
performance of each beneflclary so LhaL any beneflclary gullLy of negllgence or mlsuse of Lhe
land or any supporL exLended Lo hlm shall forfelL hls rlghL Lo conLlnue as such beneflclary 1he
uA8 shall submlL perlodlc reporLs on Lhe performance of Lhe beneflclarles Lo Lhe A8C

lf due Lo landowners reLenLlon rlghLs or Lo Lhe number of LenanLs lessees or workers on Lhe
land Lhere ls noL enough land Lo accommodaLe any or some of Lhem Lhey may be granLed
ownershlp of oLher lands avallable for dlsLrlbuLlon under Lhls AcL aL Lhe opLlon of Lhe
beneflclarles

larmers already ln place and Lhose noL accommodaLed ln Lhe dlsLrlbuLlon of prlvaLelyowned
lands wlll be glven preferenLlal rlghLs ln Lhe dlsLrlbuLlon of lands from Lhe publlc domaln

47 8uLLS Cl CCu81 8ule 3 SecLlon 2

48 eople v vera 63 hll 36 89 (1937)

49 8ollo p 149

30 Supra noLe 44

31 lranclsco v Pouse of 8epresenLaLlves C8 no 160261 november 10 2003 413 SC8A 133

32 Spouses 8omualdez v Commlsslon on LlecLlons C 8 no 167011 Aprll 30 2008 333 SC8A
370

33 See Carcla v LxecuLlve SecreLary C8 no 137384 Aprll 2 2009 383 SC8A 119

34 ArceLa v Mangrobang C8 no 132893 !une 13 2004 432 SC8A 136

33 1hls law enLlLled An AcL SLrengLhenlng Lhe Comprehenslve Agrarlan 8eform rogram
(CA8) exLendlng Lhe acqulslLlon and dlsLrlbuLlon of all agrlculLural lands lnsLlLuLlng necessary
reforms amendlng for Lhe purpose cerLaln provlslons of 8epubllc AcL no 6637 oLherwlse
known as Lhe Comprehenslve Agrarlan 8eform Law of 1988 as amended and approprlaLlng
funds Lherefore amended Lhe CA8L by removlng Lhe sLock dlsLrlbuLlon opLlon as a mode of
compllance wlLh Lhe agrarlan reform program

36 C8 no 164327 AugusL 13 2007 330 SC8A 233 293296

37 SecLlon 49 of Lhe CA8L sLaLes 1he A8C and Lhe uA8 shall have Lhe power Lo lssue rules
and regulaLlons wheLher subsLanLlve or procedural Lo carry ouL Lhe ob[ecLs and purposes of
Lhls AcL Sald rules shall Lake effecL Len (10) days afLer publlcaLlon ln Lwo (2) naLlonal
newspapers of general clrculaLlon

38 8ollo p 101

39 Supra noLe 13

60 See 8os v CA C8 no 132477 AugusL 31 2003 468 SC8A 471 and Alarcon v CA 433 hll
373 (2003)

61 See 8epubllc v Crflnada Sr C8 no 141143 november 12 2004 clLlng Legarda v CA C8
no 94437 uecember 16 1997 280 SC8A 642 679

62 CenLeno v Spouses vlray 440 hll 881 883 (2002)

63 ue Leon v Cng C8 no 170403 lebruary 2 2010 611 SC8A 381

64 n8 v lnLermedlaLe AppellaLe CourL C8 no 71733 AugusL 23 1989 176 SC8A 736

63 CabuhaL v CourL of Appeals C8 no 122423 SepLember 28 2001 366 SC8A 176

66 8ollo pp 33733376

67 L3818798 klnd SecreLary's CerLlflcaLe ln favor of 1ereslLa C Lopa Cond 8y vlrLue of
whlch 1ereslLa C Lopa ls hereby auLhorlzed and empowered Lo slgn execuLe and dellver
whaLever deeds agreemenLs and oLher documenLs as may be necessary Lo consummaLe Lhe
sale for and ln behalf of Lhe corporaLlon as per uoc no 271 p36 bk lll s1997 of noL ub
AM Lopez

uaLe of lnsLrumenL nov 11 1997

uaLe of lnscrlpLlon Aug 3 1998 aL 820 am

CuL88L8C L CAMCS 8eg of ueeds

L3818799 klnd SecreLary's CerLlflcaLe ln favor of ShlnLaro Mural Cond 8y vlrLue of whlch
ShlnLaro Mural ls hereby auLhorlzed Lo slgn execuLe and dellvery Lhe ueed of AbsoluLe Sale and
whaLever deeds and agreemenLs and oLher documenLs as may be necessary Lo consummaLe
Lhe sald ueed of AbsoluLe Sale for and ln behalf of Lhe corporaLlon as per uoc no 277 p31
bk lll s1997 of noL ub AM Lopez

uaLe of lnsLrumenL nov 11 1997

uaLe of lnscrlpLlon Aug 3 1998 aL 820 am

68 L3818800 klnd Sale ln favor of LulSl1A lnuuS18lAL A8k CC8C8A1lCn Cond 1hls LlLle
ls hereby cancelled by vlrLue of Lhe aforemenLloned documenL and for Lhe sum of
(73000000000) and ln lleu Lhereof 1C1 310986 ls lssued on page 186 vol 11346 as per uoc
no 22 p6 bk ll s1998 of noL ub LC uela Merced !r

uaLe of lnsLrumenL !ul 30 1998

uaLe of lnscrlpLlon Aug 3 1998 aL 820 am

69 L3818803 klnd Crder ln favor of Paclenda LulslLa lncorporaLed rep by Mr edro
Co[uangco Cond 8y vlrLue of an order of uA8 Cuezon ClLy Lhe hereln properLy ls hereby
converLed from AgrlculLural Lo lndusLrlal and resldenLlal uses

uaLe of lnsLrumenL Aug 14 1996

uaLe of lnscrlpLlon Aug 3 1998 aL 820 am

70 1hese governmenL lssuances lnclude

a 8esoluLlon no 392 daLed uecember 11 1996 of Lhe Sangunlang 8arangay of MunlclpallLy of
1arlac recognlzlng LlCC's plan Lo esLabllsh a 300 hecLare lndusLrlal esLaLe ln Lhe munlclpallLy
of 1arlac (8ollo volume 3 p 3377)

b 8oard of lnvesLmenLs (8Cl) CerLlflcaLe of 8eglsLraLlon no 96020 daLed uecember 20 1996
recognlzlng LlCC as duly reglsLered wlLh Lhe 8Cl (ld aL 3384)

c 8esoluLlon no 97202 lssued by Lhe hlllpplne Lconomlc Zone AuLhorlLy (LZA) approvlng
LlCC's appllcaLlon as a mlxed economlc zone as well as proclalmlng Lhe 300 hecLares as a
speclal economlc zone Lo be known as LulslLa lndusLrlal ark 2 (ld aL 33833388)

d CerLlflcaLe of 8eglsLraLlon no 00794 lssued by Lhe PLu88 recognlzlng Lhe LulslLa lndusLrlal
ark 2 pro[ecL as an lndusLrlal subdlvlslon (ld aL 3398) and

e resldenLlal roclamaLlon no 1207 lssued by resldenL 8amos declarlng Lhe 300 hecLares of
Lhe converLed lndusLrlal land as a Speclal Lconomlc Zone (ld aL 34003402)

71 8ollo pp 34733482

72 8oLh 1C1 nos 363800 and 363801 conLalned Lhe followlng annoLaLlon

condlLlons

1 uSL Anu CCCuAnC?

11 1he roperLy and lLs lmprovemenLs shall be used solely as an lndusLrlal esLaLe for non
polluLlng general lndusLrlal and manufacLurlng acLlvlLles provlded LhaL such acLlvlLles are
conflned wlLhln a Lhe bulldlngs and do noL polluLe conLamlnaLe or conLrlbuLe noxlous fumes
smoke or dusL offenslve odor dlsLurblng nolse or vlbraLlon and excesslve heaL Lo Lhe
surroundlng envlronmenL nor conLaln a hazard poLenLlal due Lo Lhe naLure of Lhe producLs
maLerlals or processes lnvolved nor dlscharge any and all oLher polluLanLs and subsLances
whlch may conLamlnaLe Lhe alr Lhe waLer Lhe soll and Lhe envlronmenL

12 WlLhouL Lhe prlor wrlLLen consenL of Paclenda LulslLa lnc Lhe roperLy or any parL Lhereof
shall noL be used as an open fleld depoL or dump for deposlLlng and/or sale of unrecondlLloned
unassembled and/or unremodelled surplus vehlcles machlnerles equlpmenL or scrap and or
any oLher unrecondlLloned or unprocessed second hand maLerlals goods or lLems dormlLory or
for resldenLlal purposes vegeLables/frulL planLaLlon experlmenLal farms such as flshponds and
Lhe esLabllshmenL of resldenLlal pro[ecLs commerclal esLabllshmenLs lncludlng hoLel shopplng
mall reLall esLabllshmenL food sLores and oLher uses oLher Lhan menLloned ln 11 above

2 SLWL8 1he developer ls requlred Lo bulld a waLer and sewerage LreaLmenL planL for boLh
domesLlc and lndusLrlal waLer for facLorles of Lhe lndusLrlal park

3 u8AlnACL all dralnage sysLem shall comply wlLh Lhe dralnage maLer plan of Paclenda
LulslLa lnc SLorm waLer shall draln lnLo exlsLlng dralnage maln llnes All lndusLrlal or facLory
wasLe or by producLs harmful Lo llvlng maLLers havlng an obnoxlous odor and/or deLrlmenLal
Lo Lhe proper malnLenance of Lhe rlver should flrsL be prlmarlly LreaLed accordlng Lo
governmenL regulaLlons before

4 CAS S1A1lCnS/luLL uMS no gas sLaLlons or fuel pumps Lo servlce Lhe general publlc
shall be consLrucLed operaLed or esLabllshed wlLhln Lhe lndusLrlal park

3 AuvL81lSlnC SlCnS AdverLlslng slgns shall conform wlLh Lhe aesLheLlc appearance of Lhe
esLaLe lL shall be llmlLed Lo Lhose necessary for Lhe buslness carrled on wlLhln Lhe properLy and
shall be Lhe leasL obnoxlous ln characLer and deslgn

6 CWL8 LAn1 no elecLrlc generaLlng power planL shall be esLabllshed on Lhe roperLy
wlLhouL Lhe prlor wrlLLen consenL of Paclenda LulslLa lnc whlch consenL shall noL be
unreasonably wlLhheld

7 1L8M Anu LnlC8CLMLn1 Cl 8LS18lC1lCnS 1he resLrlcLlon easemenLs and reservaLlon
menLloned herelnabove shall be valld and run wlLh Lhe land for a perlod of 30 years from 31
!an 1988 and compllance LhereLo may be enforced by courL acLlon elLher by Paclenda LulslLa
lnc or by any properLy owner ln Lhe lndusLrlal esLaLe or boLh as well as by Lhelr respecLlve
successors and asslgns provlded however LhaL publlc uLlllLy or servlce enLlLles may enforce
Lhelr easemenL rlghLs as provlded for hereln lndependenLly of any oLher parLy or parLles

73 L423728 klnd SLC8L1A8?'S CL81lllCA1L ln favor of kC!l kCMAl and k?CSukL PC8l
Cond 8y vlrLue of whlch kC!l kCMAl and k?CSukL PC8l are hereby auLhorlzed and
empowered Lo slgn for and ln behalf of Lhe CorporaLlon and sub[ecL Lo all oLher condlLlons
speclfled ln uoc no 391 p80 bk lll s1999 of noL ub Lul8CClnC C uLLA ML8CLu !8 of
MakaLl ClLy MM

uaLe of lnsLrumenL Aug 19 1999

uaLe of lnscrlpLlon leb 26 2002 aL 920 am

74 L423729 klnd 8LAL LS1A1L MC81CACL (8LM) ln favor of 8lZAL CCMML8ClAL 8AnklnC
CC8C8A1lCn (8C8C) Cond 1he properLy hereln descrlbed ls hereby MorLgaged Lo guaranLee
Lhe paymenL for Lhe sum of 1P8LL Punu8Lu MlLLlCn (30000000000) esos hll Currency
wlLh lnLeresL Lhereon and sub[ecL Lo all oLher condlLlons speclfled ln uoc no 234 p32 bk 18
s1998 of noL ub !L8CML C SA81L of MakaLl ClLy MM

uaLe of lnsLrumenL CcLober 26 1998

uaLe of lnscrlpLlon leb 26 2002 aL 920 am

73 8ollo p 4262

76 ld aL 4264

77 ld aL 14991309

78 ld aL 13231327

79 See 8C8S's Memorandum daLed SepLember 23 2010 p 83 and LluCC's Memorandum
daLed SepLember 23 2010 p 41

80 8ollo pp 636637

81 AlLhough PLl asserLs LhaL lL dlsLrlbuLed 3 of Lhe 80 Mllllon LhaL Lhe governmenL pald for
Lhe land used for Lhe SC1Lx

82 8ollo volume 3 pp 37333738

83 SecLlon 31 of Lhe CA8L provldes x x x CorporaLlons or assoclaLlons whlch volunLarlly dlvesL a
proporLlon of Lhelr caplLal sLock equlLy or parLlclpaLlon ln favor of Lhelr workers or oLher
quallfled beneflclarles under Lhls secLlon shall be deemed Lo have complled wlLh Lhe provlslons
of Lhls AcL

84 Apo lrulLs CorporaLlon v Land 8ank of Lhe hlllpplnes C8 no 164193 CcLober 12 2010
clLlng 8epubllc v CourL of Appeals C8 no 146387 !uly 2 2002 383 SC8A 611

83 WlLh respecL Lo Lhe 80 hecLares acqulred for Lhe SC1Lx noLe LhaL Lhese were acqulred by
Lhe governmenL so LhaL Lhe acqulslLlon carrles Lhe presumpLlon of regularlLy

86 8ollo pp 631664

87 SecLlon 64 of Lhe CA8L provldes

SecLlon 64 llnanclal lnLermedlary for Lhe CA8 1he Land 8ank of Lhe hlllpplnes shall be Lhe
flnanclal lnLermedlary for Lhe CA8 and shall ensure LhaL Lhe soclal [usLlce ob[ecLlves of Lhe
CA8 shall en[oy a preference among lLs prlorlLles

88 Legal compensaLlon ls grounded on Lhe Clvll Code of Lhe hlllpplnes Lhe perLlnenL provlslons
of whlch are quoLed below

ArLlcle 1278 CompensaLlon shall Lake place when Lwo persons ln Lhelr own rlghL are credlLors
and debLors of each oLher

ArLlcle 1279 ln order LhaL compensaLlon may be proper lL ls necessary

(1) 1haL each one of Lhe obllgors be bound prlnclpally and LhaL he be aL Lhe same Llme a
prlnclpal credlLor of Lhe oLher

(2) 1haL boLh debLs conslsL ln a sum of money or lf Lhe Lhlngs due are consumable Lhey be of
Lhe same klnd and also of Lhe same quallLy lf Lhe laLLer has been sLaLed

(3) 1haL Lhe Lwo debLs be due

(4) 1haL Lhey be llquldaLed and demandable

(3) 1haL over nelLher of Lhem Lhere be any reLenLlon or conLroversy commenced by Lhlrd
persons and communlcaLed ln due Llme Lo Lhe debLor

89 ArL 448 1he owner of Lhe land on whlch anyLhlng has been bullL sown or planLed ln good
falLh shall have Lhe rlghL Lo approprlaLe as hls own Lhe works sowlng or planLlng afLer
paymenL of Lhe lndemnlLy provlded for ln ArLlcles 346 and 348 or Lo obllge Lhe one who bullL
or planLed Lo pay Lhe prlce of Lhe land and Lhe one who sowed Lhe proper renL Powever Lhe
bullder or planLer cannoL be obllged Lo buy Lhe land lf lLs value ls conslderably more Lhan LhaL
of Lhe bulldlng or Lrees ln such case he shall pay reasonable renL lf Lhe owner of Lhe land does
noL choose Lo approprlaLe Lhe bulldlng or Lrees afLer proper lndemnlLy

1he parLles shall agree upon Lhe Lerms of Lhe lease and ln case of dlsagreemenL Lhe courL shall
flx Lhe Lerms Lhereof (361a)

x x x

ArL 346 necessary expenses shall be refunded Lo every possessor buL only Lhe possessor ln
good falLh may reLaln Lhe Lhlng unLll he has been relmbursed Lherefor

useful expenses shall be refunded only Lo Lhe possessor ln good falLh wlLh Lhe same rlghL of
reLenLlon Lhe person who has defeaLed hlm ln Lhe possesslon havlng Lhe opLlon of refundlng
Lhe amounL of Lhe expenses or of paylng Lhe lncrease ln value whlch Lhe Lhlng may have
acqulred by reason Lhereof

90 ! velasco's 8eply pp 43

91 !usLlce resblLero ! velasco !r's 8eply Lo SeparaLe Cplnlon of Chlef !usLlce 8enaLo Corona
8eflecLlons (Concurrlng and ulssenLlng) of !usLlce ArLuro u 8rlon and 8eflecLlons of !usLlce
Marla Lourdes A Serreno p 4

92 See lranclsco l Chavez v naLlonal Pouslng AuLhorlLy C8 no 164327 AugusL 13 2007 330
SC8A 233 ue Agbayanl v hlllpplne naLlonal 8ank no L231127 Aprll 29 1971 38 SC8A 429

93 8uben L Agpalo AdmlnlsLraLlve Law Law on ubllc Cfflcers and LlecLlon Law (2003 ed) p
37 clLlng eople v Maceren 79 SC8A 430 (1977)

94 Pardly was Lhere an lnsLance LhaL Lhe CourL applled Lhe operaLlve facL docLrlne ln
conslderlng Lhe effecLs of nulllfylng an execuLlve acL done noL pursuanL Lo Lhe exerclse of quasl
leglslaLlve power Ma[orlLy of Lhe cases found Lhe docLrlne appllcable ln conslderlng Lhe effecLs
of a declaraLlon of unconsLlLuLlonallLy of a sLaLuLe or an admlnlsLraLlve lssuance See Lhe cases
of Coromlnas !r v Labor SLandards Commlsslon no L14837 !une 30 1961 2 SC8A 721
MunlclpallLy of Malabang Lanao del Sur eL al v 8enlLo eL al C8 no L28113 March 29
1969 27 SC8A 333 and ue Agbayanl v hlllpplne naLlonal 8ank supra noLe 40

93 3 CasLan 7Lh ed p 409 as clLed ln u !urado CommenLs and !urlsprudence on CbllgaLlons
and ConLracLs (2002 ed) p 370

96 See Chavez v naLlonal Pouslng AuLhorlLy C8 no 164327 AugusL 13 2007 330 SC8A 233
333 clLlng ClLy of MakaLl v Clvll Servlce Commlsslon C8 no 131392 lebruary 6 2002 376
SC8A 248 237

97 CA8L SecLlon 2 ueclaraLlon of rlnclples and ollcles

98 8ollo pp 36943693

99 ld aL 37603761

100 onencla p 63


1he Lawphll ro[ecL Arellano Law loundaLlon

SLA8A1L ClnlCn

MLnuCZA !

l fully concur wlLh Lhe wellexplalned poslLlon of Chlef !usLlce 8enaLo Corona LhaL Lhe SLock
ulsLrlbuLlon lan (Su) ls unconsLlLuLlonal as lL ls lnconslsLenL wlLh Lhe baslc concepL of agrarlan
reform Land reform enLalls land dlsLrlbuLlon Lo Lhose who Llll Lhe land lf Lhere ls no acLual land
dlsLrlbuLlon Lhere ls no land reform

lndeed Lhe dlsLrlbuLlon of shares of sLock noL land cannoL be consldered as compllance wlLh
Lhe consLlLuLlonal provlslon on agrarlan reform SecLlon 31 of 8epubllc AcL (8A) no 6637
whlch allows sLock dlsLrlbuLlon dlrecLly and expllclLly conLravenes SecLlon 4 ArLlcle xlll of Lhe
ConsLlLuLlon uoubLless Lhe Su of peLlLloner Paclenda LulslLa lnc (PLl) whlch has as lLs basls
SecLlon 31 of 8A no 6637 ls unconsLlLuLlonal

under Lhe Su lnsLead of belng glven lands Lhe larmworkers/8eneflclarles (lW8s) were glven
shares of sLocks ln PLl by whlch scheme belng ln Lhe mlnorlLy Lhey have absoluLely no conLrol
over Lhe land ln facL Lhey can lose lL A case ln polnL ls Lhe segregaLlon and converslon of 300
hecLares of PLl land from agrlculLural Lo nonagrlculLural purposes When Lhe 300 hecLares
were converLed Lransferred morLgaged and sold Lo pay an lndebLedness Lhe lW8s had no say
abouL lL and effecLlvely losL a blg chunk of Lhelr land

ln a genulne land reform Lhe quallfled lW8s should be glven dlrecLly or collecLlvely ownershlp
of Lhe land Lhey Llll wlLh all legal rlghLs and enLlLlemenL sub[ecL only Lo Lhe llmlLaLlons under
Lhe law llke Lhe reLenLlon llmlLs exproprlaLlon and paymenL of [usL compensaLlon under a
collecLlve ownershlp lf Lhey are noL ln conLrol of Lhe cooperaLlve or assoclaLlon lL cannoL be
consldered a compllance wlLh Lhe law

AL any raLe as Lhe ma[orlLy ls of Lhe vlew LhaL Lhe consLlLuLlonallLy of Lhe Su cannoL be
assalled ln Lhls case as lL ls noL Lhe lls moLa l agree wlLh Lhe ponencla LhaL lW8s are real
parLleslnlnLeresL and LhaL Lhe resldenLlal Agrarlan 8eform Councll (A8C) has Lhe power and
auLhorlLy Lo revoke Lhe Su l am also of Lhe consldered poslLlon LhaL Lhere has been serlous
vlolaLlons of Lhe SLock ulsLrlbuLlon CpLlon AgreemenL (SuCA) 1he reasons some conLalned ln
Lhe 1ermlnal 8eporL daLed SepLember 22 2003 by Lhe Speclal 1ask lorce are Lhe followlng

1 1he man days meLhod of compuLaLlon adopLed ln compuLlng Lhe number of shares Lo
whlch each lW8 ls enLlLled pre[udlced Lhe orlglnal quallfled lW8s numberlng abouL 6296 and
denled Lhem of Lhelr rlghLs under Lhe law When Lhelr numbers lncreased Lo 10302 Lhrough
Lhe years under Lhe man days meLhod Lhe value of Lhe shares of Lhe orlglnal lW8s was
effecLlvely dlluLed

under Lhe mandays sysLem Lhe lW8s could be denled Lhe opporLunlLy Lo be granLed shares of
sLock by [usL belng noL allowed Lo work alLogeLher under Lhe gulse of roLaLlon 1here ls also no
guaranLee LhaL Lhey would recelve Lhelr due lf Lhey geL reLrenched or reLlred

2 1he 30year Llme frame for sLock Lransfer exLended Lhe perlod for PLl Lo compleLe Lhe
dlsLrlbuLlon of Lhe 11839197683 shares and Lhus vlolaLed Lhe compllance perlods provlded
under SecLlon 31 of Lhe CA8L and SecLlon 11 of AC no 101988 er SecLlon 11 Lhe approved
sLock dlsLrlbuLlon plan shall be lmplemenLed wlLhln Lhree (3) monLhs from recelpL by Lhe
corporaLe landowner of Lhe approval Lhereof by Lhe A8C and Lhe Lransfer of Lhe shares of
sLocks ln Lhe names of Lhe quallfled beneflclarles shall be recorded ln Lhe sLock and Lransfer
books and submlLLed Lo Lhe SecurlLles and Lxchange Commlsslon (SLC) wlLhln slxLy (60) days
from Lhe sald lmplemenLaLlon of Lhe sLock dlsLrlbuLlon plan

3 1he agrlculLural land lnvolved has noL been malnLalned as unfragmenLed AL leasL 300
hecLares Lhereof have been carved ouL afLer lLs land use has been converLed Lo nonagrlculLural
uses

4 1here was no uA8 verlflcaLlon and audlL of Lhe values of Lhe agrlculLural lands and peLlLloner
PLl's LoLal asseLs 1hus Lhe value of Lhe supposed shares of Lhe lW8s ln PLl ls suspecL

3 PLl falled Lo comply wlLh lLs obllgaLlon Lo granL 3 of Lhe gross sales every year as
producLlon sharlng beneflL on Lop of Lhe worker's salarles

6 PLl falled Lo comply wlLh lLs underLaklng Lo dlsLrlbuLe homeloLs Lo all Lhe lW8s under Lhe
SuCA

Moreover as sLaLed ln Lhe 1ermlnal 8eporL Lhe lW8s dld noL have any parLlclpaLlon ln Lhe
valuaLlon of Lhe agrlculLural land for Lhe purpose of deLermlnlng lLs proporLlonaLe equlLy ln
relaLlon Lo Lhe LoLal asseLs of Lhe corporaLlon

endlng Lhe lssuance of Lhe correspondlng shares of sLocks Lhe lW8s remaln ordlnary farmers
and/or farmworkers and Lhe land remalns under Lhe full ownershlp and conLrol of Lhe orlglnal
owner Lhe PLl/1AuLCC er 1ermlnal 8eporL Lhere was no compllance wlLh Lhe
represenLaLlons/warranLles made under secLlon 3(a) and (b) of sald AdmlnlsLraLlve Crder no
10 As clalmed by PLl lLself Lhe corporaLe acLlvlLy has already sLopped so LhaL Lhe
conLemplaLed proflLablllLy lncreased lncome and greaLer beneflLs enumeraLed ln Lhe Su have
remalned mere llluslons

8egardlng Lhe 300 hecLares sold Lo LulslLa lndusLrlal ark CorporaLlon (LlCC) and 8C8C agaln l
am wlLh Lhe ponencla LhaL Lhey were buyers ln good falLh and Lhus sald porLlons should be
excluded from Lhe CA8's compulsory coverage 8ecords dlsclose LhaL Lhe converslon of Lhese
lands was wlLh Lhe acqulescence of Lhe lW8s and approved by Lhe A8C afLer full compllance
wlLh 8A no 6637 and Lhe uA8's appllcable regulaLlons 1he only dlspuLe on Lhls ls Lhe
proceeds of Lhe sale AfLer Lhe converslon was approved CenLennary Poldlngs sold lL Lo LlCC
for 730 mllllon Cn Lhe oLher hand 8C8C recelved approxlmaLely 184 hecLares of land from
LlCC Lhrough a daclon en pago ln paymenL for LlCC's debL amounLlng Lo 4317 mllllon
1here ls no lndlcaLlon LhaL LlCC and 8C8C boLh of whom exerclsed due dlllgence were on
noLlce LhaL Lhere was a defecL ln Lhe LlLles of Lhe lands Lhey purchased 1he lW8s however are
enLlLled Lo recelve Lhe proceeds of Lhe sales Lo LlCC and 8C8C based on Lhelr value aL Lhe Llme
of Lhe Laklng plus legal lnLeresL

As Lo Lhe remalnlng 200 hecLares (of Lhe orlglnal 300 hecLares converLed from agrlculLural Lo
nonagrlculLural use wlLh Lhe uA8's approval) whlch appear Lo have been sold by PLl Lo LulslLa
8ealLy CorporaLlon (L8C) Lhey should be sub[ecL Lo compulsory CA8 coverage unllke LlCC
and 8C8C L8C never assalled A8C 8esoluLlon no 20033201 or Lhe uA8's noLlce of Coverage
order lLs sllence and lnacLlon may be deemed an acqulescence wlLh Lhe A8C declslon Lo place
Lhe land under Lhe compulsory coverage of Lhe CA8 CerLalnly L8C's slLuaLlon ls dlfferenL from
Lhe Lwo parLlcularly 8C8C who ls a morLgagee and laLer payee or purchaser ln good falLh
L8C however should be relmbursed for whaL lL had pald plus legal lnLeresL

WlLh respecL Lo Lhe 80 hecLares exproprlaLed by Lhe governmenL for Lhe SC1Lx Lhere seems Lo
be no dlspuLe excepL on Lhe dlsposlLlon of Lhe proceeds 1he porLlon should be excluded from
Lhe coverage pursuanL Lo SecLlon 6A of 8epubllc AcL no 6637 as amended by 8A no 9700
Llke ln Lhe purchase by LlCC and 8C8C Lhe proceeds should go Lo Lhe lW8s based on Lhe
value aL Lhe Llme of Laklng plus legal lnLeresL

1here belng a vlolaLlon of Lhe SuCA Lhe peLlLlon should be denled and A8C's 8esoluLlon no
20033201 revoklng Lhe Su as well as lLs 8esoluLlon no 20063401 denylng Lhe peLlLloner's
moLlon for reconslderaLlon should be afflrmed wlLh Lhe modlflcaLlon LhaL Lhe purchase of Lhe
300hecLare porLlon by LlCC and 8C8C as well as Lhe exproprlaLlon of Lhe 80hecLare porLlon
for Lhe SC1Lx complex should be consldered as valld 1hus Lhe sald porLlons should be beyond
Lhe compulsory CA8 coverage

As a consequence of Lhe vlolaLlons Lhe sub[ecL lands should be dlsLrlbuLed Lo Lhe lW8s under
Lhe supervlslon of Lhe uA8 who wlll deLermlne [usL compensaLlon afLer proper audlL and
valuaLlon of Lhose already glven and recelved and seL off needless Lo sLaLe Lhe compensaLlon
should be wlLh legal lnLeresL l agree wlLh Lhe poslLlon of !usLlce ArLuro 8rlon LhaL Lhe reckonlng
daLe for purposes of [usL compensaLlon should be May 11 1989 when Lhe SuCA was execuLed
Sald daLe ls Lhe Llme of Lhe Laklng of Lhe land for agrarlan reform purposes

ln Lhls regard excepL on Lhe maLLer of Lhe 200 hecLares sold Lo L8C l adopL Lhe reasonlng of
and dlsposlLlon recommended by !usLlce 8rlon ln hls SeparaLe Concurrlng and ulssenLlng
Cplnlon

lurLher l fully agree wlLh Lhe ponencla LhaL Lhe lW8s are enLlLled Lo reLaln Lhe salarles wages
and oLher beneflLs Lhey recelved for servlces rendered by Lhem as employees of PLl

1he boLLom llne ls LhaL Lhe quallfled lW8s should be glven dlrecLly or collecLlvely ownershlp of
Lhe land Lhey Llll wlLh all legal rlghLs and enLlLlemenL sub[ecL only Lo Lhe prescrlbed reLenLlon
llmlLs exproprlaLlon and Lhe paymenL of [usL compensaLlon

1he lW8s however who would opL Lo remaln as sLockholders of PLl may walve Lhelr hard
won rlghL Lo acLually own Lhe lands Lhey Llll AfLer all lL ls an aLLrlbuLe of ownershlp sub[ecL of
course Lo Lhe llmlLaLlons under Lhe law

under SecLlon 27 of 8A no 6637 lW8s may sell Lhe lands Lhey acqulred under Lhe CA8
sub[ecL Lo Lhe llmlLaLlons sLaLed Lhereln 1hus

SLC 27 1ransferablllLy of Awarded Lands Lands acqulred by beneflclarles under Lhls AcL may
noL be sold Lransferred or conveyed excepL Lhrough heredlLary successlon or Lo Lhe
governmenL or Lo Lhe L8 or Lo oLher quallfled beneflclarles for a perlod of Len (10) years
rovlded however 1haL Lhe chlldren or Lhe spouse of Lhe Lransferor shall have a rlghL Lo
repurchase Lhe land from Lhe governmenL or L8 wlLhln a perlod of Lwo (2) years uue noLlce of
Lhe avallablllLy of Lhe land shall be glven by Lhe L8 Lo Lhe 8arangay Agrarlan 8eform
CommlLLee (8A8C) of Lhe barangay where Lhe land ls slLuaLed 1he rovlnclal Agrarlan
CoordlnaLlng CommlLLee (A8CCCM) as hereln provlded shall ln Lurn be glven due noLlce
Lhereof by Lhe 8A8C

lf Lhe land has noL yeL been fully pald by Lhe beneflclary Lhe rlghL Lo Lhe land may be
Lransferred or conveyed wlLh prlor approval of Lhe uA8 Lo any helr of Lhe beneflclary or Lo any
oLher beneflclary who as a condlLlon for such Lransfer or conveyance shall culLlvaLe Lhe land
hlmself lalllng compllance herewlLh Lhe land shall be Lransferred Lo Lhe L8 whlch shall glve
due noLlce of Lhe avallablllLy of Lhe land ln Lhe manner speclfled ln Lhe lmmedlaLely precedlng
paragraph

ln Lhe evenL of such Lransfer Lo Lhe L8 Lhe laLLer shall compensaLe Lhe beneflclary ln one lump
sum for Lhe amounLs Lhe laLLer has already pald LogeLher wlLh Lhe value of lmprovemenLs he
has made on Lhe land

Conslderlng however LhaL more Lhan 10 years have elapsed from May 11 1989 Lhe daLe of
Lhe Laklng of Lhe Paclenda LulslLa Lhe quallfled lW8s who can valldly dlspose of Lhelr due
shares may do so ln favor of L8 or oLher quallfled beneflclarles 1he 10year perlod need noL
be counLed from Lhe lssuance of Lhe LmanclpaLlon 1lLle (L) or CerLlflcaLe of Land Cwnershlp
Award (CLCA) because under Lhe SuCA shares noL land were Lo be awarded and dlsLrlbuLed

1he uA8 shall selecL Lhe meLhod of deLermlnlng Lhe wlll of Lhe parLles and supervlse lL

!CSL CA18AL MLnuCZA
AssoclaLe !usLlce


8epubllc of Lhe hlllpplnes
Su8LML CCu81
Manlla

SLCCnu ulvlSlCn

C8 no 172230 lebruary 2 2011

LAND 8ANk CI 1nL nILIINLS et|t|oner
vs
MAGIN ILkkLk AN1CNIC V ILkkLk and kAMCN V ILkkLk represented by the|r Attorney
|nfact A11 kAIALL VILLAkCSA kespondents

x x

C8 no 179421

uLA81MLn1 Cl AC8A8lAn 8LlC8M represenLed by SecreLary nASSL8 C AnCAnuAMAn
eLlLloner
vs
An1CnlC v lL88L8 and 8AMCn v lL88L8 8espondenLs

u L C l S l C n

MLnuCZA !

Challenged ln Lhese consolldaLed peLlLlons for revlew are Lhe AugusL 30 20031 and Lhe !anuary
24 20072 ueclslons of Lhe CourL of Appeals (CA) ln CA C8 S no 88012 and CA C8 S no
88008 respecLlvely 1he separaLe CA declslons afflrmed Lhe declslon of Lhe 8eglonal 1rlal CourL
8ranch 33 Culmba nueva Lcl[a (81C) 1he CA ruled LhaL 8epubllc AcL (8A) no 6637 and noL
resldenLlal uecree (u) no 27 should govern ln Lhe deLermlnaLlon of [usL compensaLlon
afLer Lhe effecLlvlLy of sald acL

1he lacLs

1he consolldaLed records show LhaL on CcLober 11 2000 Magln v lerrer AnLonlo v lerrer
and 8amon v lerrer (Lhe lerrers) represenLed by Lhelr aLLorneylnfacL 8afael vlllarosa flled
Lhelr eLlLlon for ueLermlnaLlon and aymenL of !usL CompensaLlon agalnsL Lhe Land 8ank of
Lhe hlllpplnes (L8) before Lhe 81C dockeLed as Agrarlan Case no 1142C LaLer Lhe lerrers
flled an amended peLlLlon lmpleadlng Lhe ueparLmenL of Agrarlan 8eform (uA8) as well

ln Lhelr peLlLlon Lhe lerrers alleged LhaL Lhey were Lhe absoluLe owners prolndlvlso of a parcel
of agrlculLural land wlLh an area of 117297 hecLares locaLed ln 8agong 8ayan San !ose nueva
Lcl[a lL was one of Lhe parcels of land Lhey lnherlLed from Lhelr deceased moLher LlberaLa
vlllarosa who dled ab lnLesLaLo on !anuary 23 1968 lL was also among Lhe properLles covered
ln Lhe ueed of LxLra!udlclal arLlLlon execuLed by and beLween Lhem Lhelr deceased
grandfaLher Conzalo l vlllarosa Lhelr deceased aunL MaLllde vlllarosa and 8afael vlllarosa

1he lerrers furLher alleged LhaL Lhey found ouL LhaL an LmanclpaLlon aLenL coverlng 33773
hecLares of Lhe sub[ecL agrlculLural land was secreLly lssued ln Lhe name of Alfredo Carbonel
one of lLs occupanLs wlLhouL paymenL of [usL compensaLlon 1he L8 Lhen flxed Lhe [usL
compensaLlon aL a very low prlce of 13268367 or approxlmaLely 1203000 per hecLare ln
vlolaLlon of Lhe guldellnes ln 8A no 6637 oLherwlse known as 1he Comprehenslve Agrarlan
8eform Law 1hey asserLed LhaL Lhe [usL compensaLlon of Lhe sub[ecL agrlculLural land should
aL leasL be compuLed aL 23000000 per hecLare or Lhe LoLal sum of 293000000 for Lhe
enLlre 117297 hecLares conslderlng LhaL lL was lrrlgaLed and sLraLeglcally locaLed

Cn Lhe oLher hand Lhe L8 and Lhe uA8 were of Lhe poslLlon LhaL Lhe sub[ecL agrlculLural
properLy had been placed under Lhe coverage of Lhe CperaLlon Land 1ransfer (CL1) rogram
and Lherefore Lhe provlslons of u no 27 (LmanclpaLlon uecree of 1enanLs) and/or
LxecuLlve Crder (LC) no 228 (ueclarlng lull Land Cwnershlp Lo Cuallfled larmer8eneflclarles
covered by u 27 ueLermlnlng Lhe value of 8emalnlng unvalued 8lce and Corn Lands sub[ecL
of u 27 and rovldlng for Lhe Manner of aymenL 8y Lhe larmer 8eneflclary and Mode of
CompensaLlon Lo Lhe Landowner) should apply 1hus Lhey lnslsLed LhaL Lhe value of Lhe sub[ecL
agrlculLural land be ln accordance wlLh u no 27

ln Lhe proceedlngs below Lhe 81C appolnLed Lhree (3) commlssloners who were Lasked Lo
deLermlne Lhe amounL of [usL compensaLlon Lo be pald Lo Lhe lerrers Cn SepLember 27 2004
afLer Lhe wrlLLen reporLs of Lhe commlssloners were submlLLed Lhe 81C rendered a declslon
Lhe dlsposlLlve porLlon of whlch reads

WPL8LlC8L [udgmenL ls hereby rendered

1 llxlng Lhe [usL compensaLlon for plalnLlffs' 46203 hecLares of land aL 20800000 per
hecLare or a LoLal of 961 02230

2 Crderlng Lhe defendanLs uA8 and L8 Lo pay Lhe above amounL of money Lo Lhe plalnLlffs ln
Lhe manner provlded by law and exlsLlng leglslaLlons

SC C8uL8Lu

unsaLlsfled wlLh Lhe declslon Lhe L8 and Lhe uA8 flled separaLe moLlons for reconslderaLlon
whlch were boLh denled by Lhe 81C ln lLs Crder daLed uecember 1 2004

1hereafLer Lhe L8 and Lhe uA8 flled Lhelr respecLlve peLlLlons for revlew before Lhe CA 1he
L8 peLlLlon was dockeLed as CAC8 S no 88012 and raffled Lo Lhe LlghLh ulvlslon whlle Lhe
uA8 peLlLlon was dockeLed as CAC8 S no 88008 and raffled Lo Lhe LlevenLh ulvlslon

Cn AugusL 30 2003 Lhe CALlghLh ulvlslon ln CAC8 S no 88012 rendered a declslon
afflrmlng Lhe 81C declslon Cn !anuary 24 2007 Lhe CALlevenLh ulvlslon ln CAC8 S no
88008 llkewlse afflrmed Lhe declslon

As earller sLaLed Lhe Lwo dlvlslons of Lhe CA slmllarly ruled LhaL 8A no 6637 and noL u no
27 should govern ln Lhe deLermlnaLlon of [usL compensaLlon ln Lhls case 1hey reasoned ouL
LhaL alLhough Lhe sub[ecL properLy was LenanLed and devoLed Lo rlce producLlon ln 1972 when
u no 27 was lssued Lhe [usL compensaLlon cannoL be based on Lhe value of Lhe properLy ln
1972 because Lhere was Lhen no Laklng of Lhe sub[ecL land as Lhere was no paymenL yeL Lo Lhe
prlvaLe respondenLs 1he CA explalned LhaL Lhe land shall be consldered Laken only upon
paymenL of [usL compensaLlon because lL would compleLe Lhe agrarlan reform process 1he CA
furLher sLaLed LhaL 8A no 6637 was Lhe law of prlmary [urlsdlcLlon whlle u no 27 and oLher
agrarlan laws noL lnconslsLenL wlLh 8A no 6637 shall only apply suppleLorlly

1he L8 and Lhe uA8 flled Lhelr respecLlve moLlons for reconslderaLlon buL Lhese were denled
by Lhe CA ln lLs resoluLlons daLed Aprll 7 20063 and AugusL 22 20074 respecLlvely

ulssaLlsfled wlLh Lhe CA declslons Lhe L8 and Lhe uA8 flled Lhelr separaLe peLlLlons before Lhls
CourL 1he L8 peLlLlon was dockeLed as C8 no 172230 and Lhe uA8 peLlLlon as C8 no
179421 Cn uecember 3 2007 Lhe CourL lssued a resoluLlon3 consolldaLlng Lhe Lwo peLlLlons
because boLh cases lnvolved Lhe same sub[ecL maLLer and quesLlons of law and facL

8oLh peLlLlons baslcally ralse Lhls

lSSuL

WheLher or noL Lhe CourL of Appeals erred ln rullng LhaL 8A 6637 raLher Lhan u no 27/LC
no 228 ls Lhe law LhaL should apply ln Lhe deLermlnaLlon of [usL compensaLlon for Lhe sub[ecL
agrlculLural land

oslLlons of Lhe arLles

1he L8 and Lhe uA8 baslcally argue LhaL u no 27 as reafflrmed by LC no 228 should be
applled ln deLermlnlng Lhe [usL compensaLlon for Lhe sub[ecL properLy 1hey conLend LhaL u
no 27 and LC no 228 prescrlbe Lhe formula ln deLermlnlng Lhe [usL compensaLlon of rlce and
corn lands LenanLed as of CcLober 21 1972 As Lhe sub[ecL properLy was LenanLed and devoLed
Lo rlce producLlon ln 1972 Lhe [usL value should be flxed aL Lhe prevalllng raLe aL LhaL Llme
when Lhe emanclpaLlon of Lhe LenanLfarmers from Lhe bondage of Lhe soll was declared ln u
no 27

As Lo 8A no 6637 boLh Lhe L8 and Lhe uA8 lnslsL LhaL lL applles only Lo rlcelands and
cornlands noL LenanLed as of CcLober 21 1972 8A no 6637 does noL cover rlcelands and
cornlands acqulred under u no 27 and LC no 228 1he governmenL's CL1 program on
LenanLed prlvaLelyowned rlce and corn lands pursuanL Lo u no 27 conLlnues separaLely and
dlsLlncLly from Lhe Comprehenslve Agrarlan 8eform rogram (CA8) acqulslLlon and
dlsLrlbuLlon program under 8A no 6637 because 1) 8A no 6637 operaLes prospecLlvely and
2) Congress lnLended LhaL lands sub[ecL Lo or governed by exlsLlng governmenL programs such
as Lhe CL1 and homesLead under u no 27 are Lo be LreaLed dlsLlncLly

WlLh respecL Lo Lhe appolnLmenL of commlssloners Lhe L8 and Lhe uA8 argue LhaL Lhere was
no legal basls Lherefor because 1) Lhere were no long accounLs or dlfflculL quesLlons of facL LhaL
requlred Lhe experLlse and knowhow of Lhe commlssloners and 2) Lhe formula for [usL
compensaLlon was already provlded under u no 27 and LC no 228

Cn Lhe oLher hand Lhe lerrers adopLed Lhe common rullng of Lhe CA sLaLlng LhaL lL dld noL err
ln applylng Lhe provlslons of 8A no 6637 ln flxlng Lhe [usL compensaLlon for Lhe sub[ecL
properLy

1he CourL's 8ullng

1he lssue as Lo whlch agrarlan law beLween u no 27/LC no 228 and 8A no 6637 should
apply ln Lhe deLermlnaLlon of [usL compensaLlon has been lald Lo resL ln a number of cases ln
Lhe case of Land 8ank of Lhe hlllpplnes v Pon Lll C C naLlvldad6 lL was ruled LhaL

under Lhe facLual clrcumsLances of Lhls case Lhe agrarlan reform process ls sLlll lncompleLe as
Lhe [usL compensaLlon Lo be pald prlvaLe respondenLs has yeL Lo be seLLled Conslderlng Lhe
passage of 8epubllc AcL no 6637 (8A 6637) before Lhe compleLlon of Lhls process Lhe [usL
compensaLlon should be deLermlned and Lhe process concluded under Lhe sald law lndeed 8A
6637 ls Lhe appllcable law wlLh u 27 and LC 228 havlng only suppleLory effecL conformably
wlLh our rullng ln arls v Alfeche7

SecLlon 17 of 8A 6637 whlch ls parLlcularly relevanL provldlng as lL does Lhe guldeposLs for Lhe
deLermlnaLlon of [usL compensaLlon reads as follows

Sec 17 ueLermlnaLlon of !usL CompensaLlonln deLermlnlng [usL compensaLlon Lhe cosL of
acqulslLlon of Lhe land Lhe currenL value of llke properLles lLs naLure acLual use and lncome
Lhe sworn valuaLlon by Lhe owner Lhe Lax declaraLlons and Lhe assessmenL made by
governmenL assessors shall be consldered 1he soclal and economlc beneflLs conLrlbuLed by Lhe
farmers and Lhe farmworkers and by Lhe CovernmenL Lo Lhe properLy as well as Lhe non
paymenL of Laxes or loans secured from any governmenL flnanclng lnsLlLuLlon on Lhe sald land
shall be consldered as addlLlonal facLors Lo deLermlne lLs valuaLlon

lL would cerLalnly be lnequlLable Lo deLermlne [usL compensaLlon based on Lhe guldellne
provlded by u 27 and LC 228 conslderlng Lhe uA8's fallure Lo deLermlne Lhe [usL
compensaLlon for a conslderable lengLh of Llme 1haL [usL compensaLlon should be deLermlned
ln accordance wlLh 8A 6637 and noL u 27 or LC 228 ls especlally lmperaLlve conslderlng LhaL
[usL compensaLlon should be Lhe full and falr equlvalenL of Lhe properLy Laken from lLs owner
by Lhe exproprlaLor Lhe equlvalenL belng real subsLanLlal full and ample Lmphases supplled

ln Land 8ank of Lhe hlllpplnes v Manuel C Callego !r8 Lhe CourL handed down Lhe same
rullng 1hus

1he CourL has already ruled on Lhe appllcablllLy of agrarlan laws namely u no 27/LC no
228 ln relaLlon Lo 8epubllc AcL (8A) no 6637 ln prlor cases concernlng [usL compensaLlon

ln arls v Alfeche9 Lhe CourL held LhaL Lhe provlslons of 8A no 6637 are also appllcable Lo
Lhe agrarlan reform process of lands placed under Lhe coverage of u no 27/LC no 228
whlch has noL been compleLed upon Lhe effecLlvlLy of 8A no 6637 ClLlng Land 8ank of Lhe
hlllpplnes v CourL of Appeals10 Lhe CourL ln arls held LhaL u no 27 and LC no 228 have
suppleLory effecL Lo 8A no 6637 Lo wlL

We cannoL see why Sec 18 of 8A no 6637 should noL apply Lo rlce and corn lands under u
no 27 SecLlon 73 of 8A no 6637 clearly sLaLes LhaL Lhe provlslons of u no 27 and LC
no 228 shall only have a suppleLory effecL SecLlon 7 of Lhe AcL also provldes

Sec 7 rlorlLles1he uA8 ln coordlnaLlon wlLh Lhe A8C shall plan and program Lhe
acqulslLlon and dlsLrlbuLlon of all agrlculLural lands Lhrough a perlod of (10) years from Lhe
effecLlvlLy of Lhls AcL Lands shall be acqulred and dlsLrlbuLed as follows

hase Cne 8lce and Corn lands under u 27 all ldle or abandoned lands all prlvaLe lands
volunLarlly offered by Lhe owners of agrarlan reform x x x and all oLher lands owned by Lhe
governmenL devoLed Lo or sulLable for agrlculLure whlch shall be acqulred and dlsLrlbuLed
lmmedlaLely upon Lhe effecLlvlLy of Lhls AcL wlLh Lhe lmplemenLaLlon Lo be compleLed wlLhln a
perlod of noL more Lhan four (4) years (emphasls supplled)

1hls eloquenLly demonsLraLes LhaL 8A no 6637 lncludes u no 27 lands among Lhe
properLles whlch Lhe uA8 shall acqulre and dlsLrlbuLe Lo Lhe landless And Lo faclllLaLe Lhe
acqulslLlon and dlsLrlbuLlon Lhereof Secs 16 17 and 18 of Lhe AcL should be adhered Lo ln
AssoclaLlon of Small Landowners of Lhe hlllpplnes v SecreLary of Agrarlan 8eform Lhls CourL
applled Lhe provlslons (of) 8A 6637 Lo rlce and corn lands when lL upheld Lhe consLlLuLlonallLy
of Lhe paymenL of [usL compensaLlon for u no 27 lands Lhrough Lhe dlfferenL modes sLaLed
ln Sec 18111avvphl1

arLlcularly ln Land 8ank of Lhe hlllpplnes v naLlvldad where Lhe agrarlan reform process ln
sald case ls sLlll lncompleLe as Lhe [usL compensaLlon Lo be pald prlvaLe respondenLs has yeL Lo
be seLLled Lhe CourL held Lhereln LhaL [usL compensaLlon should be deLermlned and Lhe
process concluded under 8A no 663712

1he reLroacLlve appllcaLlon of 8A no 6637 ls noL only sLaLuLory buL ls also founded on
equlLable conslderaLlons ln Lubrlca v Land 8ank of Lhe hlllpplnes13 Lhe CourL declared LhaL lL
would be hlghly lnequlLable on Lhe parL of Lhe landowners Lhereln Lo compuLe [usL
compensaLlon uslng Lhe values aL Lhe Llme of Laklng ln 1972 and noL aL Lhe Llme of paymenL
conslderlng LhaL Lhe governmenL and Lhe farmerbeneflclarles have already beneflLed from Lhe
land alLhough ownershlp Lhereof has noL yeL been Lransferred ln Lhelr names 1he same
equlLable conslderaLlon ls appllcable Lo Lhe facLual mllleu of Lhe lnsLanL case 1he records show
LhaL respondenLs' properLy had been placed under Lhe agrarlan reform program ln 1972 and
had already been dlsLrlbuLed Lo Lhe beneflclarles buL respondenLs have yeL Lo recelve [usL
compensaLlon due Lhem Lmphases supplled

1he above rullngs were relLeraLed ln Lhe recenL cases of Land 8ank of Lhe hlllpplnes v 8lzallna
CusLllo 8arrldo and Pelrs of 8omeo 8arrldo14 and Land 8ank of Lhe hlllpplnes v Lnrlque
Llvloco13

1he CA was Lherefore correcL ln rullng LhaL Lhe agrarlan reform process ln Lhls parLlcular case
was sLlll lncompleLe because Lhe [usL compensaLlon due Lo Lhe lerrers had yeL Lo be seLLled
Slnce 8A no 6637 was already ln effecLlvlLy before Lhe compleLlon of Lhe process Lhe [usL
compensaLlon should be deLermlned and Lhe process concluded under Lhls law

WlLh respecL Lo Lhe appolnLmenL of Lhe commlssloners lL ls an lssue noL properly broughL and
venLllaLed ln Lhe Lrlal courLs below and only ralsed for Lhe flrsL Llme on appeal AL any raLe Lhe
appolnLmenL was proper because Lhe appllcable law ls 8A no 6637

WPL8LlC8L Lhe peLlLlons for revlew on cerLlorarl are uLnlLu

SC C8uL8Lu

!CSL CA18AL MLnuCZA
AssoclaLe !usLlce

WL CCnCu8

An1CnlC 1 CA8lC
AssoclaLe !usLlce
Chalrperson

An1CnlC LuuA8uC 8 nACPu8A
AssoclaLe !usLlce ulCSuAuC M L8AL1A
AssoclaLe !usLlce
8C8L81C A A8Au
AssoclaLe !usLlce

A 1 1 L S 1 A 1 l C n

l aLLesL LhaL Lhe concluslons ln Lhe above ueclslon had been reached ln consulLaLlon before Lhe
case was asslgned Lo Lhe wrlLer of Lhe oplnlon of Lhe CourL's ulvlslon

An1CnlC 1 CA8lC
AssoclaLe !usLlce
Chalrperson Second ulvlslon

C L 8 1 l l l C A 1 l C n

ursuanL Lo SecLlon 13 ArLlcle vlll of Lhe ConsLlLuLlon and Lhe ulvlslon Chalrperson's
ALLesLaLlon l cerLlfy LhaL Lhe concluslons ln Lhe above ueclslon had been reached ln
consulLaLlon before Lhe case was asslgned Lo Lhe wrlLer of Lhe oplnlon of Lhe CourL's ulvlslon

8LnA1C C CC8CnA
Chlef !usLlce


looLnoLes

1 8ollo (C8 no 172230) pp 4637 enned by AssoclaLe !usLlce Marlano C uel CasLlllo (now a
member of Lhls CourL) wlLh AssoclaLe !usLlce Salvador ! valdez !r and AssoclaLe !usLlce
Magdangal M ue Leon concurrlng

2 8ollo (C8 no 179421) pp 2736 enned by AssoclaLe !usLlce 8osallnda AsunclonvlcenLe
wlLh AssoclaLe !usLlce Llvl !ohn S Asunclon and AssoclaLe !usLlce Lnrlco A Lanzanas
concurrlng

3 8ollo (C8 no 172230) pp 3960

4 8ollo (C8 no 179421) pp 3839

3 ld aL 30

6 497 hll 738 (2003)

7 416 hll 473 (2001)

8 C8 no 173226 !anuary 20 2009 376 SC8A 680

9 416 hll 473 (2001)

10 378 hll 1248 (1999)

11 AssoclaLlon of Small Landowners ln Lhe hlllpplnes lnc v Pon SecreLary of Agrarlan
8eform 236 hll 777 (1989)

12 497 hll 738 (2003)

13 C8 no 170220 november 20 2006 307 SC8A 413

14 C8 no 183688 Aprll 18 2010

13 C8 no 170683 SepLember 22 2010


1he Lawphll ro[ecL Arellano Law loundaLlon