J.A.B. Bulao & Associates

CASE 2012-0050: HACIENDA LUISITA, INCORPORATED,                 PETITIONER, LUISITA INDUSTRIAL PARK CORPORATION AND RIZAL COMMERCIAL BANKING CORPORATION,                       PETITIONERS-IN-INTERVENTION VS. PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, AND JULIO SUNIGA^[1][1] AND HIS SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. AND WINDSOR ANDAYA, RESPONDENTS. (G.R. NO. 171101, APRIL 24, 2012, VELASCO, JR., J.:)

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DISPOSITIVE:

WHEREFORE, the Motion to Clarify and Reconsider Resolution of November 22, 2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. and the Motion for Reconsideration/Clarification dated December 9, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya are hereby DENIED with this qualification: the July 5, 2011 Decision, as modified by the November 22, 2011 Resolution, is FURTHER MODIFIED in that the government, through DAR, is ordered to pay Hacienda Luisita, Inc. the just compensation for the 240-square meter homelots distributed to the FWBs.

 The July 5, 2011 Decision, as modified by the November 22, 2011 Resolution and further modified by this Resolution is declared FINAL and EXECUTORY.  The entry of judgment of said decision shall be made upon the time of the promulgation of this Resolution.

No further pleadings shall be entertained in this case. 

SO ORDERED.

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Republic of thePhilippines

SUPREME COURT

BaguioCity

EN BANC

x—————————————————————————————–x

R E S O L U T I O N

VELASCO, JR., J.:

Before the Court are the Motion to Clarify and Reconsider Resolution of November 22, 2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI) and the Motion for Reconsideration/Clarification dated December 9, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya (collectively referred to as “Mallari, et al.”).

In Our July 5, 2011 Decision^[3][2] in the above-captioned case, this Court denied the petition for review filed by HLI and affirmed the assailed Presidential Agrarian Reform Council (PARC) Resolution No. 2005-32-01 dated December 22, 2005 and PARC Resolution No. 2006-34-01 dated May 3, 2006 with the modification that the original 6,296 qualified farmworker-beneficiaries of Hacienda Luisita (FWBs) shall have the option to remain as stockholders of HLI.

Upon separate motions of the parties for reconsideration, the Court, by Resolution^[4][3] of November 22, 2011, recalled and set aside the option thus granted to the original FWBs to remain as stockholders of HLI, while maintaining that all the benefits and homelots received by all the FWBs shall be respected with no obligation to refund or return them.

HLI invokes the following grounds in support of its instant Motion to Clarify and Reconsider Resolution of November 22, 2011 dated December 16, 2011:

A

WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT IN DETERMINING THE JUST COMPENSATION, THE DATE OF “TAKING” IS NOVEMBER 21, 1989, WHEN PARC APPROVED HLI’s SDP [STOCK DISPTRIBUTION PLAN] “IN VIEW OF THE FACT THAT THIS IS THE TIME THAT THE FWBs WERE CONSIDERED TO OWN AND POSSESS THE AGRICULTURAL LANDS IN HACIENDA LUISITA” BECAUSE:

(1) THE SDP IS PRECISELY A MODALITY WHICH THE AGRARIAN LAW GIVES THE LANDOWNER AS ALTERNATIVE TO COMPULSORY COVERAGE IN WHICH CASE, THEREFORE, THE FWBs CANNOT BE CONSIDERED AS OWNERS AND POSSESSORS OF THE AGRICULTURAL LANDS AT THE TIME THE SDP WAS APPROVED BY PARC;

(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A NOTICE OF COVERAGE IN COMPULSORY COVERAGE OR ACQUISITION BECAUSE SDP AND COMPULSORY COVERAGE ARE TWO DIFFERENT MODALITIES WITH INDEPENDENT AND SEPARATE RULES AND MECHANISMS;

(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006 MAY, AT THE VERY LEAST, BE CONSIDERED AS THE TIME WHEN THE FWBs CAN BE CONSIDERED TO OWN AND POSSESS THE AGRICULTURAL LANDS OF HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME WHEN HACIENDA LUISITA WAS PLACED UNDER COMPULSORY ACQUISITION IN VIEW OF FAILURE OF HLI TO PERFORM CERTAIN OBLIGATIONS OF THE SDP, OR SDOA [STOCK DISTRIBUTION OPTION AGREEMENT];

(4) INDEED, THE IMMUTABLE RULE AND THE UNBENDING JURISPRUDENCE IS THAT “TAKING”TAKES PLACEWHEN THE OWNER IS ACTUALLY DEPRIVED OR DISPOSSESSED OF HIS PROPERTY;

(5) TO INSIST THAT THE “TAKING” IS WHEN THE SDP WAS APPROVED BY PARC ON NOVEMBER 21, 1989 AND THAT THE SAME BE CONSIDERED AS THE RECKONING PERIOD TO DETERMINE THE JUST COMPENSATION IS DEPRIVATION OF LANDOWNER’S PROPERTY WITHOUT DUE PROCESS OF LAW;

(6) HLI SHOULD BE ENTITLED TO PAYMENT OF INTEREST ON THE JUST COMPENSATION.

B

WITH DUE RESPECT, THE HONORABLE COURT ERRED WHEN IT REVERSED ITS DECISION GIVING THE FWBs THE OPTION TO REMAIN AS HLI STOCKHOLDERS OR NOT, BECAUSE:

(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH THE HONORABLE COURT HAS DECLARED IN ITS DECISION AND EVEN IN ITS RESOLUTION AND THAT HAS TO BE RESPECTED AND IMPLEMENTED;

(2) NEITHER THE CONSTITUTION NOR THE CARL [COMPREHENSIVE AGRARIAN REFORM LAW] REQUIRES THAT THE FWBs SHOULD HAVE CONTROL OVER THE AGRICULTURAL LANDS;

(3) THE OPTION HAS NOT BEEN SHOWN TO BE DETRIMENTAL BUT INSTEAD BENEFICIAL TO THE FWBs AS FOUND BY THE HONORABLE COURT.

C

WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT THE PROCEEDS FROM THE SALES OF THE 500-HECTARE CONVERTED LOT AND THE 80.51-HECTARE SCTEX CANNOT BE RETAINED BY HLI BUT RETURNED TO THE FWBs AS BY SUCH MANNER; HLI IS USING THE CORPORATION CODE TO AVOID ITS LIABILITY TO THE FWBs FOR THE PRICE IT RECEIVED FROM THE SALES, BECAUSE:

(1) THE PROCEEDS OF THE SALES BELONG TO THE CORPORATION AND NOT TO EITHER HLI/TADECO OR THE FWBs, BOTH OF WHICH ARE STOCKHOLDERS ENTITLED TO THE EARNINGS OF THE CORPORATION AND TO THE NET ASSETS UPON LIQUIDATION;

(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE SALES TO FWBs IS TO IMPOSE ALL LIABILITIES OF THE CORPORATION ON HLI/TADECO WHICH IS UNFAIR AND VIOLATIVE OF THE CORPORATION CODE.

Mallari, et al. similarly put forth the following issues in its Motion for Reconsideration/Clarification dated December 9, 2011:

I

REPUBLIC ACT NO. 6657 [RA 6657] OR THE COMPREHENSIVE AGRARIAN REFORM LAW [CARL] DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR STOCK DISTRIBUTION OPTION SHOULD RETAIN MAJORITY SHAREHOLDING OF THE COMPANY TO WHICH THE AGRICULTURAL LAND WAS GIVEN.

II

IF THE NOVEMBER 22, 2011 DECISION OF THIS HONORABLE COURT ORDERING LAND DISTRIBUTION WOULD BE FOLLOWED, THIS WOULD CAUSE MORE HARM THAN GOOD TO THE LIVES OF THOSE PEOPLE LIVING IN THE HACIENDA, AND MORE PARTICULARLY TO THE WELFARE OF THE FWBs.

III

ON THE CONCLUSION BY THIS HONORABLE COURT THAT THE OPERATIVE FACT DOCTRINE IS APPLICABLE TO THE CASE AT BAR, THEN FWBs WHO MERELY RELIED ON THE PARC APPROVAL SHOULD NOT BE PREJUDICED BY ITS SUBSEQUENT NULLIFICATION.

IV

THOSE WHO CHOOSE LAND SHOULD RETURN WHATEVER THEY GOT FROM THE SDOA [STOCK DISTRIBUTION OPTION AGREEMENT] AND TURN OVER THE SAME TO HLI FOR USE IN THE OPERATIONS OF THE COMPANY, WHICH IN TURN WILL REDOUND TO THE BENEFIT OF THOSE WHO WILL OPT TO STAY WITH THE SDO.

V

FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING FOR PURPOSES OF JUST COMPENSATION SHOULD BE AT THE TIME HLI WAS DISPOSSESSED OF CONTROL OVER THE PROPERTY, AND THAT PAYMENT BY [THE GOVERNMENT] OF THE LAND SHOULD BE TURNED OVER TO HLI FOR THE BENEFIT AND USE OF THE COMPANY’S OPERATIONS THAT WILL, IN TURN, REDOUND TO THE BENEFIT OF FWBs WHO WILL OPT TO STAY WITH THE COMPANY.

Basically, the issues raised by HLI and Mallari, et al. boil down to the following: (1) determination of the date of “taking”; (2) propriety of the revocation of the option on the part of the original FWBs to remain as stockholders of HLI; (3) propriety of distributing to the qualified FWBs the proceeds from the sale of the converted land and of the 80.51-hectare Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just compensation for the homelots given to the FWBs.

Payment of just compensation

HLI contends that since the SDP is a modality which the agrarian reform law gives the landowner as alternative to compulsory coverage, then the FWBs cannot be considered as owners and possessors of the agricultural lands of Hacienda Luisita at the time the SDP was approved by PARC.^[5][4] It further claims that the approval of the SDP is not akin to a Notice of Coverage in compulsory coverage situations because stock distribution option and compulsory acquisition are two (2) different modalities with independent and separate rules and mechanisms.  Concomitantly, HLI maintains that the Notice of Coverage issued on January 2, 2006 may, at the very least, be considered as the date of “taking” as this was the only time that the agricultural lands of Hacienda Luisita were placed under compulsory acquisition in view of its failure to perform certain obligations under the SDP.^[6][5]

Mallari, et al. are of a similar view. They contend that Tarlac Development Corporation (Tadeco), having as it were majority control over HLI, was never deprived of the use and benefit of the agricultural lands of Hacienda Luisita. Upon this premise, Mallari, et al. claim the “date of taking” could not be at the time of the approval of the SDP.^[7][6]

A view has also been advanced that the date of the “taking” should be left to the determination of the Department of Agrarian Reform (DAR) in conjunction with its authority to preliminarily determine the just compensation for the land made subject of CARP.  

Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita (AMBALA), in its Comment/Opposition (to the Motion to Clarify and Reconsider Resolution of November 22, 2011) dated January 30, 2012, on the other hand, alleges that HLI should not be paid just compensation altogether.^[8][7] It argues that when the Court of Appeals (CA) dismissed the case^[9][8] the government of then President Ferdinand E. Marcos initially instituted and won against Tadeco, the CA allegedly imposed as a condition for its dismissal of the action that should the stock distribution program fail, the lands should be distributed to the FWBs, with Tadeco receiving by way of compensation only the amount of PhP 3,988,000.^[10][9]

AMBALA further contends that if HLI or Tadeco is, at all, entitled to just compensation, the “taking” should be reckoned as of November 21, 1989, the date when the SDP was approved, and the amount of compensation should be PhP 40,000 per hectare as this was the same value declared in 1989 by Tadeco to ensure that the FWBs will not control the majority stockholdings in HLI.^[11][10]

 At the outset, it should be noted that Section 2, Rule 52 of the Rules of Court states, “No second motion for reconsideration of a judgment or final resolution by the same party shall be entertained.” A second motion for reconsideration, as a rule, is prohibited for being a mere reiteration of the issues assigned and the arguments raised by the parties.^[12][11]

In the instant case, the issue on just compensation and the grounds HLI and Mallari, et al. rely upon in support of their respective stance on the matter had been previously raised by them in their first motion for reconsideration and fully passed upon by the Court in its November 22, 2011 Resolution. The similarities in the issues then and now presented and the grounds invoked are at once easily discernible from a perusal of the November 22, 2011 Resolution, the pertinent portions of which read:

 In Our July 5, 2011 Decision, We stated that “HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR for land distribution to the FWBs.” We also ruled that the date of the “taking” is November 21, 1989, when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2.

In its Motion for Clarification and Partial Reconsideration, HLI disagrees with the foregoing ruling and contends that the “taking” should be reckoned from finality of the Decision of this Court, or at the very least, the reckoning period may be tacked to January 2, 2006, the date when the Notice of Coverage was issued by the DAR pursuant to PARC Resolution No. 2006-34-01 recalling/revoking the approval of the SDP.

For their part, Mallari, et al. argue that the valuation of the land cannot be based on November 21, 1989, the date of approval of the SDP. Instead, they aver that the date of “taking” for valuation purposes is a factual issue best left to the determination of the trial courts.

At the other end of the spectrum, AMBALA alleges that HLI should no longer be paid just compensation for the agricultural land that will be distributed to the FWBs, since the Manila Regional Trial Court (RTC) already rendered a decision ordering the Cojuangcos to transfer the control of Hacienda Luisita to the Ministry of Agrarian Reform, which will distribute the land to small farmers after compensating the landowners P3.988 million. In the event, however, that this Court will rule that HLI is indeed entitled to compensation, AMBALA contends that it should be pegged at forty thousand pesos (PhP 40,000) per hectare, since this was the same value that Tadeco declared in 1989 to make sure that the farmers will not own the majority of its stocks.

Despite the above propositions, We maintain that the date of “taking” is November 21, 1989, the date when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2, in view of the fact that this is the time that the FWBs were considered to own and possess the agricultural lands in Hacienda Luisita. To be precise, these lands became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP, that is, November 21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition. Further, any doubt should be resolved in favor of the FWBs. As this Court held in Perez-Rosario v. CA:

It is an established social and economic fact that the escalation of poverty is the driving force behind the political disturbances that have in the past compromised the peace and security of the people as well as the continuity of the national order. To subdue these acute disturbances, the legislature over the course of the history of the nation passed a series of laws calculated to accelerate agrarian reform, ultimately to raise the material standards of living and eliminate discontent. Agrarian reform is a perceived solution to social instability. The edicts of social justice found in the Constitution and the public policies that underwrite them, the extraordinary national experience, and the prevailing national consciousness, all command the great departments of government to tilt the balance in favor of the poor and underprivileged whenever reasonable doubt arises in the interpretation of the law. But annexed to the great and sacred charge of protecting the weak is the diametric function to put every effort to arrive at an equitable solution for all parties concerned: the jural postulates of social justice cannot shield illegal acts, nor do they sanction false sympathy towards a certain class, nor yet should they deny justice to the landowner whenever truth and justice happen to be on her side. In the occupation of the legal questions in all agrarian disputes whose outcomes can significantly affect societal harmony, the considerations of social advantage must be weighed, an inquiry into the prevailing social interests is necessary in the adjustment of conflicting demands and expectations of the people, and the social interdependence of these interests, recognized. (Emphasis and citations omitted.)

Considering that the issue on just compensation has already been passed upon and denied by the Court in its November 22, 2011 Resolution, a subsequent motion touching on the same issue undeniably partakes of a second motion for reconsideration, hence, a prohibited pleading, and as such, the motion or plea must be denied.  Sec. 3 of Rule 15 of the Internal Rules of the Supreme Court is clear:

SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second motion for reconsideration, and any exception to this rule can only be granted in the higher interest of justice by the Court en banc upon a vote of at least two-thirds of its actual membership. There is reconsideration “in the higher interest of justice” when the assailed decision is not only legally erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and irremediable injury or damage to the parties. A second motion for reconsideration can only be entertained before the ruling sought to be reconsidered becomes final by operation of law or by the Court’s declaration.

In the Division, a vote of three Members shall be required to elevate a second motion for reconsideration to the Court En Banc.

Nonetheless, even if we entertain said motion and examine the arguments raised by HLI and Mallari, et al. one last time, the result will be the same.

Sec. 4, Article XIII of the 1987 Constitution expressly provides that the taking of land for use in the agrarian reform program of the government is conditioned on the payment of just compensation. As stated:

Section 4.         The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. (Emphasis supplied.)

Just compensation has been defined as “the full and fair equivalent of the property taken from its owner by the expropriator.”^[13][12] The measure is not the taker’s gain, but the owner’s loss.^[14][13] In determining just compensation, the price or value of the property at the time it was taken from the owner and appropriated by the government shall be the basis. If the government takes possession of the land before the institution of expropriation proceedings, the value should be fixed as of the time of the taking of said possession, not of the filing of the complaint.^[15][14]

In Land Bank of the Philippines v. Livioco, the Court held that “the ‘time of taking’ is the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred to the Republic.”^[16][15] It should be noted, however, that “taking” does not only take place upon the issuance of title either in the name of the Republic or the beneficiaries of the Comprehensive Agrarian Reform Program (CARP). “Taking” also occurs when agricultural lands are voluntarily offered by a landowner and approved by PARC for CARP coverage through the stock distribution scheme, as in the instant case. Thus, HLI’s submitting its SDP for approval is an acknowledgment on its part that the agricultural lands of Hacienda Luisita are covered by CARP. However, it was the PARC approval which should be considered as the effective date of “taking” as it was only during this time that the government officially confirmed the CARP coverage of these lands.

Indeed, stock distribution option and compulsory land acquisition are two (2) different modalities under the agrarian reform program. Nonetheless, both share the same end goal, that is, to have “a more equitable distribution and ownership of land, with due regard to the rights of landowners to just compensation.”^[17][16]

The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives corporate landowners the option to give qualified beneficiaries the right to avail of a stock distribution or, in the phraseology of the law, “the right to purchase such proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the company’s total assets,” does not detract from the avowed policy of the agrarian reform law of equitably distributing ownership of land. The difference lies in the fact that instead of actually distributing the agricultural lands to the farmer-beneficiaries, these lands are held by the corporation as part of the capital contribution of the farmer-beneficiaries, not of the landowners, under the stock distribution scheme. The end goal of equitably distributing ownership of land is, therefore, undeniable. And since it is only upon the approval of the SDP that the agricultural lands actually came under CARP coverage, such approval operates and takes the place of a notice of coverage ordinarily issued under compulsory acquisition.

Moreover, precisely because due regard is given to the rights of landowners to just compensation, the law on stock distribution option acknowledges that landowners can require payment for the shares of stock corresponding to the value of the agricultural lands in relation to the outstanding capital stock of the corporation.

Although Tadeco did not require compensation for the shares of stock corresponding to the value of the agricultural lands in relation to the outstanding capital stock of HLI, its inability to receive compensation cannot be attributed to the government. The second paragraph of Sec. 31 of RA 6657 explicitly states that “[u]pon certification by DAR, corporations owning agricultural lands may give their qualified beneficiaries the right to purchase such proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the company’s total assets, under such terms and conditions as may be agreed upon by them. x x x”^[18][17]  On the basis of this statutory provision, Tadeco could have exacted payment for such shares of stock corresponding to the value of the agricultural lands of Hacienda Luisita in relation to the outstanding capital stock of HLI, but it did not do so.

What is notable, however, is that the divestment by Tadeco of the agricultural lands of Hacienda Luisita and the giving of the shares of stock for free is nothing but an enticement or incentive for the FWBs to agree with the stock distribution option scheme and not further push for land distribution. And the stubborn fact is that the “man days” scheme of HLI impelled the FWBs to work in the hacienda in exchange for such shares of stock.

Notwithstanding the foregoing considerations, the suggestion that there is “taking” only when the landowner is deprived of the use and benefit of his property is not incompatible with Our conclusion that “taking” took place on November 21, 1989. As mentioned in Our July 5, 2011 Decision, even from the start, the stock distribution scheme appeared to be Tadeco’s preferred option in complying with the CARP when it organized HLI as its spin-off corporation in order to facilitate stock acquisition by the FWBs. For this purpose, Tadeco assigned and conveyed to HLI the agricultural lands of Hacienda Luisita, set at 4,915.75 hectares, among others. These agricultural lands constituted as the capital contribution of the FWBs in HLI. In effect, Tadeco deprived itself of the ownership over these lands when it transferred the same to HLI.

While it is true that Tadeco has majority control over HLI, the Court cannot subscribe to the view Mallari, et al. espouse that, on the basis of such majority stockholding, Tadeco was never deprived of the use and benefit of the agricultural lands of Hacienda Luisita it divested itself in favor of HLI.

It bears stressing that “[o]wnership is defined as a relation in law by virtue of which a thing pertaining to one person is completely subjected to his will in everything not prohibited by law or the concurrence with the rights of another.”^[19][18] The attributes of ownership are: jus utendi or the right to possess and enjoy, jus fruendi or the right to the fruits, jus abutendi or the right to abuse or consume, jus disponendi or the right to dispose or alienate, and jus vindicandi or the right to recover or vindicate.^[20][19]

When the agricultural lands of Hacienda Luisita were transferred by Tadeco to HLI in order to comply with CARP through the stock distribution option scheme, sealed with the imprimatur of PARC under PARC Resolution No. 89-12-2 dated November 21, 1989, Tadeco was consequently dispossessed of the afore-mentioned attributes of ownership. Notably, Tadeco and HLI are two different entities with separate and distinct legal personalities. Ownership by one cannot be considered as ownership by the other.

Corollarily, it is the official act by the government, that is, the PARC’s approval of the SDP, which should be considered as the reckoning point for the “taking” of the agricultural lands of Hacienda Luisita. Although the transfer of ownership over the agricultural lands was made prior to the SDP’s approval, it is this Court’s consistent view that these lands officially became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP. And as We have mentioned in Our November 22, 2011 Resolution, such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition.

Further, if We adhere to HLI’s view that the Notice of Coverage issued on January 2, 2006 should, at the very least, be considered as the date of “taking” as this was the only time that the agricultural portion of the hacienda was placed under compulsory acquisition in view of HLI’s failure to perform certain obligations under the SDP, this Court would, in effect, be penalizing the qualified FWBs twice for acceding to the adoption of the stock distribution scheme: first, by depriving the qualified FWBs of the agricultural lands that they should have gotten early on were it not for the adoption of the stock distribution scheme of which they only became minority stockholders; and second, by making them pay higher amortizations for the agricultural lands that should have been given to them decades ago at a much lower cost were it not for the landowner’s initiative of adopting the stock distribution scheme “for free.”

Reiterating what We already mentioned in Our November 22, 2011 Resolution, “[e]ven if it is the government which will pay the just compensation to HLI, this will also affect the FWBs as they will be paying higher amortizations to the government if the ‘taking’ will be considered to have taken place only on January 2, 2006.”  As aptly observed by Justice Leonardo-De Castro in her Concurring Opinion, “this will put the land beyond the capacity of the [FWBs] to pay,” which this Court should not countenance.

Considering the above findings, it cannot be gainsaid that effective “taking” took place in the case at bar upon the approval of the SDP, that is, on November 21, 1989.

HLI postulates that just compensation is a question of fact that should be left to the determination by the DAR, Land Bank of the Philippines (LBP) or even the special agrarian court (SAC).^[21][20]  As a matter of fact, the Court, in its November 22, 2011 Resolution, dispositively ordered the DAR and the LBP to determine the compensation due to HLI. And as indicated in the body of said Resolution:

The foregoing notwithstanding, it bears stressing that the DAR’s land valuation is only preliminary and is not, by any means, final and conclusive upon the landowner. The landowner can file an original action with the RTC acting as a special agrarian court to determine just compensation. The court has the right to review with finality the determination in the exercise of what is admittedly a judicial function.

As regards the issue on when “taking” occurred with respect to the agricultural lands in question, We, however, maintain that this Court can rule, as it has in fact already ruled on its reckoning date, that is, November 21, 1989, the date of issuance of PARC Resolution No. 89-12-2, based on the above-mentioned disquisitions. The investment on SACs of original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners^[22][21] will not preclude the Court from ruling upon a matter that may already be resolved based on the records before Us. By analogy, Our ruling in Heirs of Dr. Jose Deleste v. LBP is applicable:

Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive jurisdiction over all matters involving the implementation of the agrarian reform program. However, this will not prevent the Court from assuming jurisdiction over the petition considering that the issues raised in it may already be resolved on the basis of the records before Us. Besides, to allow the matter to remain with the Office of the DAR Secretary would only cause unnecessary delay and undue hardship on the parties. Applicable, by analogy, is Our ruling in the recent Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Department of Labor and Employment Secretary, where We held:

But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if a remand would be ordered under a situation where we are in the position to resolve the case based on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of Appeals:

[w]e have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case.^[23][22] (Emphasis supplied; citations omitted.)

Even though the compensation due to HLI will still be preliminarily determined by DAR and LBP, subject to review by the RTC acting as a SAC, the fact that the reckoning point of “taking” is already fixed at a certain date should already hasten the proceedings and not further cause undue hardship on the parties, especially the qualified FWBs.

By a vote of 8-6, the Court affirmed its ruling that the date of  “taking” in determining just compensation is November 21, 1989 when PARC approved HLI’s stock option plan.

As regards the issue of interest on just compensation, We also leave this matter to the DAR and the LBP, subject to review by the RTC acting as a SAC.

Option will not ensure 

control over agricultural lands

In Our November 22, 2011 Resolution, this Court held:

After having discussed and considered the different contentions raised by the parties in their respective motions, We are now left to contend with one crucial issue in the case at bar, that is, control over the agricultural lands by the qualified FWBs.

Upon a review of the facts and circumstances, We realize that the FWBs will never have control over these agricultural lands for as long as they remain as stockholders of HLI. In Our July 5, 2011 Decision, this Court made the following observations:

There is, thus, nothing unconstitutional in the formula prescribed by RA 6657.  The policy on agrarian reform is that control over the agricultural land must always be in the hands of the farmers.  Then it falls on the shoulders of DAR and PARC to see to it the farmers should always own majority of the common shares entitled to elect the members of the board of directors to ensure that the farmers will have a clear majority in the board.  Before the SDP is approved, strict scrutiny of the proposed SDP must always be undertaken by the DAR and PARC, such that the value of the agricultural land contributed to the corporation must always be more than 50% of the total assets of the corporation to ensure that the majority of the members of the board of directors are composed of the farmers.  The PARC composed of the President of thePhilippines and cabinet secretaries must see to it that control over the board of directors rests with the farmers by rejecting the inclusion of non-agricultural assets which will yield the majority in the board of directors to non-farmers. Any deviation, however, by PARC or DAR from the correct application of the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not make said provision constitutionally infirm. Rather, it is the application of said provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the constitutional policy of ensuring control by the farmers.

In line with Our finding that control over agricultural lands must always be in the hands of the farmers, We reconsider our ruling that the qualified FWBs should be given an option to remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control given the present proportion of shareholdings in HLI.

A revisit of HLI’s Proposal for Stock Distribution under CARP and the Stock Distribution Option Agreement (SDOA) upon which the proposal was based reveals that the total assets of HLI is PhP 590,554,220, while the value of the 4,915.7466 hectares is PhP 196,630,000.  Consequently, the share of the farmer-beneficiaries in the HLI capital stock is 33.296% (196,630,000 divided by 590,554.220); 118,391,976.85 HLI shares represent 33.296%. Thus, even if all the holders of the 118,391,976.85 HLI shares unanimously vote to remain as HLI stockholders, which is unlikely, control will never be placed in the hands of the farmer-beneficiaries.  Control, of course, means the majority of 50% plus at least one share of the common shares and other voting shares.  Applying the formula to the HLI stockholdings, the number of shares that will constitute the majority is 295,112,101 shares (590,554,220 divided by 2 plus one [1] HLI share).  The 118,391,976.85 shares subject to the SDP approved by PARC substantially fall short of the 295,112,101 shares needed by the FWBs to acquire control over HLI.  Hence, control can NEVER be attained by the FWBs.  There is even no assurance that 100% of the 118,391,976.85 shares issued to the FWBs will all be voted in favor of staying in HLI, taking into account the previous referendum among the farmers where said shares were not voted unanimously in favor of retaining the SDP.  In light of the foregoing consideration, the option to remain in HLI granted to the individual FWBs will have to be recalled and revoked.

Moreover, bearing in mind that with the revocation of the approval of the SDP, HLI will no longer be operating under SDP and will only be treated as an ordinary private corporation; the FWBs who remain as stockholders of HLI will be treated as ordinary stockholders and will no longer be under the protective mantle of RA 6657. (Emphasis in the original.)

 HLI, however, takes exception to the above-mentioned ruling and contends that “[t]here is nothing in the Constitution nor in the agrarian laws which require that control over the agricultural lands must always be in the hands of the farmers.”^[24][23] Moreover, both HLI and Mallari, et al. claim that the option given to the qualified FWBs to remain as stockholders of HLI is neither iniquitous nor prejudicial to the FWBs.^[25][24]

The Court agrees that the option given to the qualified FWBs whether to remain as stockholders of HLI or opt for land distribution is neither iniquitous nor prejudicial to the FWBs. Nonetheless, the Court is not unmindful of the policy on agrarian reform that control over the agricultural land must always be in the hands of the farmers. Contrary to the stance of HLI, both the Constitution and RA 6657 intended the farmers, individually or collectively, to have control over the agricultural lands of HLI; otherwise, all these rhetoric about agrarian reform will be rendered for naught. Sec. 4, Art. XIII of the 1987 Constitution provides:

Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing. (Emphasis supplied.)

Pursuant to and as a mechanism to carry out the above-mentioned constitutional directive, RA 6657 was enacted. In consonance with the constitutional policy on agrarian reform, Sec. 2 of RA 6657 also states:

SECTION 2. Declaration of Principles and Policies. – It is the policy of the State to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and farm workers will receive the highest consideration to promote social justice and to move the nation towards sound rural development and industrialization, and the establishment of owner cultivatorship of economic-sized farms as the basis of Philippine agriculture.

To this end, a more equitable distribution and ownership of land, with due regard to the rights of landowners to just compensation and to the ecological needs of the nation, shall be undertaken to provide farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands.

The agrarian reform program is founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a share of the fruits thereof. To this end, the State shall encourage the just distribution of all agricultural lands, subject to the priorities and retention limits set forth in this Act, having taken into account ecological, developmental, and equity considerations, and subject to the payment of just compensation. The State shall respect the right of small landowners and shall provide incentives for voluntary land-sharing.

The State shall recognize the right of farmers, farm workers and landowners, as well as cooperatives and other independent farmers’ organization, to participate in the planning, organization, and management of the program, and shall provide support to agriculture through appropriate technology and research, and adequate financial, production, marketing and other support services.

The State shall apply the principles of agrarian reform or stewardship, whenever applicable, in accordance with law, in the disposition or utilization of other natural resources, including lands of the public domain, under lease or concession, suitable to agriculture, subject to prior rights, homestead rights of small settlers and the rights of indigenous communities to their ancestral lands.

The State may resettle landless farmers and farm workers in its own agricultural estates, which shall be distributed to them in the manner provided by law.

By means of appropriate incentives, the State shall encourage the formation and maintenance of economic-sized family farms to be constituted by individual beneficiaries and small landowners.

The State shall protect the rights of subsistence fishermen, especially of local communities, to the preferential use of communal marine and fishing resources, both inland and offshore. It shall provide support to such fishermen through appropriate technology and research, adequate financial, production and marketing assistance and other services, The State shall also protect, develop and conserve such resources. The protection shall extend to offshore fishing grounds of subsistence fishermen against foreign intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and fishing resources.

The State shall be guided by the principles that land has a social function and land ownership has a social responsibility. Owners of agricultural land have the obligation to cultivate directly or through labor administration the lands they own and thereby make the land productive.

The State shall provide incentives to landowners to invest the proceeds of the agrarian reform program to promote industrialization, employment and privatization of public sector enterprises. Financial instruments used as payment for lands shall contain features that shall enhance negotiability and acceptability in the marketplace.

The State may lease undeveloped lands of the public domain to qualified entities for the development of capital-intensive farms, traditional and pioneering crops especially those for exports subject to the prior rights of the beneficiaries under this Act. (Emphasis supplied.)

Based on the above-quoted provisions, the notion of farmers and regular farmworkers having the right to own directly or collectively the lands they till is abundantly clear. We have extensively discussed this ideal in Our July 5, 2011 Decision:

The wording of the provision is unequivocal –– the farmers and regular farmworkers have a right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL.  The basic law allows two (2) modes of land distribution—direct and indirect ownership.  Direct transfer to individual farmers is the most commonly used method by DAR and widely accepted.  Indirect transfer through collective ownership of the agricultural land is the alternative to direct ownership of agricultural land by individual farmers.  The aforequoted Sec. 4 EXPRESSLY authorizes collective ownership by farmers. No language can be found in the 1987 Constitution that disqualifies or prohibits corporations or cooperatives of farmers from being the legal entity through which collective ownership can be exercised.   The word ‘collective’ is defined as ‘indicating a number of persons or things considered as constituting one group or aggregate,’ while ‘collectively’ is defined as ‘in a collective sense or manner; in a mass or body.’  By using the word ‘collectively,’ the Constitution allows for indirect ownership of land and not just outright agricultural land transfer.  This is in recognition of the fact that land reform may become successful even if it is done through the medium of juridical entities composed of farmers.

Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows workers’ cooperatives or associations to collectively own the land, while the second paragraph of Sec. 31 allows corporations or associations to own agricultural land with the farmers becoming stockholders or members.  Said provisions read:

SEC. 29.  Farms owned or operated by corporations or other business associations.—In the case of farms owned or operated by corporations or other business associations, the following rules shall be observed by the PARC.

In general, lands shall be distributed directly to the individual worker-beneficiaries.

In case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the worker beneficiaries who shall form a workers’ cooperative or association which will deal with the corporation or business association.  x x x

SEC. 31.  Corporate Landowners.— x x x

x x x x

      Upon certification by the DAR, corporations owning agricultural lands may give their qualified beneficiaries the right to purchase such proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to the company’s total assets, under such terms and conditions as may be agreed upon by them.  In no case shall the compensation received by the workers at the time the shares of stocks are distributed be reduced.  The same principle shall be applied to associations, with respect to their equity or participation. x x x 

Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and corporations or associations under the succeeding Sec. 31, as differentiated from individual farmers, are authorized vehicles for the collective ownership of agricultural land.  Cooperatives can be registered with the Cooperative Development Authority and acquire legal personality of their own, while corporations are juridical persons under the Corporation Code.  Thus, Sec. 31 is constitutional as it simply implements Sec. 4 of Art. XIII of the Constitution that land can be owned COLLECTIVELY by farmers. Even the framers of the l987 Constitution are in unison with respect to the two (2) modes of ownership of agricultural lands tilled by farmers––DIRECT and COLLECTIVE, thus:

MR. NOLLEDO. And when we talk of the phrase ‘to own directly,’ we mean the principle of direct ownership by the tiller?

MR. MONSOD.  Yes.

MR. NOLLEDO.  And when we talk of ‘collectively,’ we mean communal ownership, stewardship or State ownership?

MS. NIEVA.  In this section, we conceive of cooperatives; that is farmers’ cooperatives owning the land, not the State.

MR. NOLLEDO.  And when we talk of ‘collectively,’ referring to farmers’ cooperatives, do the farmers own specific areas of land where they only unite in their efforts?

MS. NIEVA.  That is one way.

MR. NOLLEDO.  Because I understand that there are two basic systems involved: the ‘moshave’ type of agriculture and the ‘kibbutz.’  So are both contemplated in the report?

MR. TADEO.  Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na pagmamay-ari – directly – at ang tinatawag na sama-samang gagawin ng mga magbubukid.  Tulad sa Negros, ang gusto ng mga magbubukid ay gawin nila itong ‘cooperative or collective farm.’  Ang ibig sabihin ay sama-sama nilang sasakahin.

x x x x

MR. TINGSON.  x x x When we speak here of ‘to own directly or collectively the lands they till,’ is this land for the tillers rather than land for the landless?  Before, we used to hear ‘land for the landless,’ but now the slogan is ‘land for the tillers.’  Is that right?

MR. TADEO.  Ang prinsipyong umiiral dito ay iyong land for the tillers.  Ang ibig sabihin ng ‘directly’ ay tulad sa implementasyon sa rice and corn lands kung saan inaari na ng mga magsasaka ang lupang binubungkal nila.  Ang ibig sabihin naman ng ‘collectively’ ay sama-samang paggawa sa isang lupain o isang bukid, katulad ng sitwasyon saNegros.

As Commissioner Tadeo explained, the farmers will work on the agricultural land ‘sama-sama’ or collectively.  Thus, the main requisite for collective ownership of land is collective or group work by farmers of the agricultural land.  Irrespective of whether the landowner is a cooperative, association or corporation composed of farmers, as long as concerted group work by the farmers on the land is present, then it falls within the ambit of collective ownership scheme. (Emphasis in the original; underscoring supplied.)

As aforequoted, there is collective ownership as long as there is a concerted group work by the farmers on the land, regardless of whether the landowner is a cooperative, association or corporation composed of farmers. However, this definition of collective ownership should be read in light of the clear policy of the law on agrarian reform, which is to emancipate the tiller from the bondage of the soil and empower the common people. Worth noting too is its noble goal of rectifying “the acute imbalance in the distribution of this precious resource among our people.”^[26][25] Accordingly, HLI’s insistent view that control need not be in the hands of the farmers translates to allowing it to run roughshod against the very reason for the enactment of agrarian reform laws and leave the farmers in their shackles with sheer lip service to look forward to.

Notably, it has been this Court’s consistent stand that control over the agricultural land must always be in the hands of the farmers. As We wrote in Our July 5, 2011 Decision:

There is, thus, nothing unconstitutional in the formula prescribed by RA 6657.  The policy on agrarian reform is that control over the agricultural land must always be in the hands of the farmers.  Then it falls on the shoulders of DAR and PARC to see to it the farmers should always own majority of the common shares entitled to elect the members of the board of directors to ensure that the farmers will have a clear majority in the board.  Before the SDP is approved, strict scrutiny of the proposed SDP must always be undertaken by the DAR and PARC, such that the value of the agricultural land contributed to the corporation must always be more than 50% of the total assets of the corporation to ensure that the majority of the members of the board of directors are composed of the farmers.  The PARC composed of the President of the Philippines and cabinet secretaries must see to it that control over the board of directors rests with the farmers by rejecting the inclusion of non-agricultural assets which will yield the majority in the board of directors to non-farmers. Any deviation, however, by PARC or DAR from the correct application of the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not make said provision constitutionally infirm. Rather, it is the application of said provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the constitutional policy of ensuring control by the farmers. (Emphasis supplied.)

There is an aphorism that “what has been done can no longer be undone.” That may be true, but not in this case. The SDP was approved by PARC even if the qualified FWBs did not and will not have majority stockholdings in HLI, contrary to the obvious policy by the government on agrarian reform. Such an adverse situation for the FWBs will not and should not be permitted to stand. For this reason, We maintain Our ruling that the qualified FWBs will no longer have the option to remain as stockholders of HLI.

FWBs Entitled

to Proceeds of Sale

          HLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51 hectares of the land as corporate owner and argues that the return of said proceeds to the FWBs is unfair and violative of the Corporation Code.

          This claim is bereft of merit.

It cannot be denied that the adverted 500-hectare converted land and the SCTEX lot once formed part of what would have been agrarian-distributable lands, in fine subject to compulsory CARP coverage. And, as stated in our July 5, 2011 Decision, were it not for the approval of the SDP by PARC, these large parcels of land would have been distributed and ownership transferred to the FWBs, subject to payment of just compensation, given that, as of 1989, the subject 4,915 hectares of Hacienda Luisita were already covered by CARP. Accordingly, the proceeds realized from the sale and/or disposition thereof should accrue for the benefit of the FWBs, less deductions of the 3% of the proceeds of said transfers that were paid to the FWBs, the taxes and expenses relating to the transfer of titles to the transferees, and the expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate corporate purposes, as prescribed in our November 22, 2011 Resolution.

Homelots

In the present recourse, HLI also harps on the fact that since the homelots given to the FWBs do not form part of the 4,915.75 hectares covered by the SDP, then the value of these homelots should, with the revocation of the SDP, be paid to Tadeco as the landowner.^[27][26]

We disagree. As We have explained in Our July 5, 2011 Decision, the distribution of homelots is required under RA 6657 only for corporations or business associations owning or operating farms which opted for land distribution. This is provided under Sec. 30 of RA 6657. Particularly:

SEC. 30. Homelots and Farmlots for Members of Cooperatives. ¾ The individual members of the cooperatives or corporations mentioned in the preceding section shall be provided with homelots and small farmlots for their family use, to be taken from the land owned by the cooperative or corporation. (Italics supplied.)

The “preceding section” referred to in the above-quoted provision is Sec. 29 of RA 6657, which states:

SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations.¾In the case of farms owned or operated by corporations or other business associations, the following rules shall be observed by the PARC.

In general, lands shall be distributed directly to the individual worker-beneficiaries.

In case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the worker-beneficiaries who shall form a workers’ cooperative or association which will deal with the corporation or business association. Until a new agreement is entered into by and between the workers’ cooperative or association and the corporation or business association, any agreement existing at the time this Act takes effect between the former and the previous landowner shall be respected by both the workers’ cooperative or association and the corporation or business association.

Since none of the above-quoted provisions made reference to corporations which opted for stock distribution under Sec. 31 of RA 6657, then it is apparent that said corporations are not obliged to provide for homelots. Nonetheless, HLI undertook to “subdivide and allocate for free and without charge among the qualified family-beneficiaries x x x residential or homelots of not more than 240 sq. m. each, with each family beneficiary being assured of receiving and owning a homelot in the barrio or barangay where it actually resides.” In fact, HLI was able to distribute homelots to some if not all of the FWBs. Thus, in our November 22, 2011 Resolution, We declared that the homelots already received by the FWBs shall be respected with no obligation to refund or to return them.

 The Court, by a unanimous vote, resolved to maintain its ruling that the FWBs shall retain ownership of the homelots given to them with no obligation to pay for the value of said lots. However, since the SDP was already revoked with finality, the Court directs the government through the DAR to pay HLI the just compensation for said homelots in consonance with Sec. 4, Article XIII of the 1987 Constitution that the taking of land for use in the agrarian reform program is “subject to the payment of just compensation.” Just compensation should be paid to HLI instead of Tadeco in view of the Deed of Assignment and Conveyance dated March 22, 1989 executed between Tadeco and HLI, where Tadeco transferred and conveyed to HLI the titles over the lots in question. DAR is ordered to compute the just compensation of the homelots in accordance with existing laws, rules and regulations. 

To recapitulate, the Court voted on the following issues in this manner:

1. In determining the date of “taking,” the Court voted 8-6 to maintain the ruling fixing November 21, 1989 as the date of “taking,” the value of the affected lands to be determined by the LBP and the DAR;

1. On the propriety of the revocation of the option of the FWBs to remain as HLI stockholders, the Court, by unanimous vote, agreed to reiterate its ruling in its November 22, 2011 Resolution that the option granted to the FWBs stays revoked;

1. On the propriety of returning to the FWBs the proceeds of the sale of the 500-hectare converted land and of the 80.51-hectare SCTEX land, the Court unanimously voted to maintain its ruling to order the payment of the proceeds of the sale of the said land to the FWBs less the 3% share, taxes and expenses specified in the fallo of the November 22, 2011 Resolution;

1. On the payment of just compensation for the homelots to HLI, the Court, by unanimous vote, resolved to amend its July 5, 2011 Decision and November 22, 2011 Resolution by ordering the government, through the DAR, to pay to HLI the just compensation for the homelots thus distributed to the FWBS.

WHEREFORE, the Motion to Clarify and Reconsider Resolution of November 22, 2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. and the Motion for Reconsideration/Clarification dated December 9, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya are hereby DENIED with this qualification: the July 5, 2011 Decision, as modified by the November 22, 2011 Resolution, is FURTHER MODIFIED in that the government, through DAR, is ordered to pay Hacienda Luisita, Inc. the just compensation for the 240-square meter homelots distributed to the FWBs.

 The July 5, 2011 Decision, as modified by the November 22, 2011 Resolution and further modified by this Resolution is declared FINAL and EXECUTORY.  The entry of judgment of said decision shall be made upon the time of the promulgation of this Resolution.

No further pleadings shall be entertained in this case. 

SO ORDERED.

PRESBITERO J. VELASCO, JR. 

                                                                        Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

            ANTONIO T. CARPIO                         TERESITA J. LEONARDO-DE CASTRO                                   Associate Justice                                                Associate Justice

                      ARTURO D. BRION                                        DIOSDADO M. PERALTA

                      Associate Justice                                                 Associate Justice

LUCAS P. BERSAMIN                                   MARIANO C. DEL CASTILLO

        Associate Justice                                             Associate Justice

  ROBERTO A. ABAD                             MARTIN S. VILLARAMA, JR.

        Associate Justice                                              Associate Justice

          JOSE PORTUGAL PEREZ                          JOSE CATRAL MENDOZA

                     Associate Justice                                                Associate Justice

MARIA LOURDES P. A. SERENO                 BIENVENIDO L. REYES

          Associate Justice                                        Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice

C E R T I F I C A T I O N

                Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

                                                                   RENATO C. CORONA

                                                                                                                          Chief Justice

CASE 2012-0047: C. ALCANTARA & SONS, INC. VS. COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR ARBITER ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA AND EDUARDO GENELSA (G.R. NO. 155109, MARCH 14, 2012, PERALTA, J.:) AND RELATED CASES (G.R. NO. 155135, G.R. NO. 179220) SUBJECT/S: ILLEGAL STRIKES; LIABILITY OF STRIKING UNION OFFICERS AND MEMBERS; WHEN SEPARATION PAY IS GRANTED AS FORM OF FINANCIAL ASSISTANCE (BRIEF TITLE: C. ALCANTARA & SONS VS. C.A. ET AL.)

=================

DISPOSITIVE:

        WHEREFORE, premises considered, the motion for reconsideration of the Union, its officers and members are DENIED for lack of merit, while the motion for partial reconsideration filed by C. Alcantara & Sons, Inc. is PARTLY GRANTED. The Decision of the Court dated September 29, 2010 is hereby PARTLY RECONSIDERED by deleting the award of separation pay.

SO ORDERED.

                                DIOSDADO M. PERALTA

                                Associate Justice

=================

SUBJECTS/DOCTRINES/DIGEST

THE CBA PROVIDES NO STRIKE – NO LOCKOUT PROVISION WHICH ENJOINED BOTH THE UNION AND THE COMPANY FROM RESORTING TO THE USE OF ECONOMIC WEAPONS AVAILABLE TO THEM UNDER THE LAW AND TO INSTEAD TAKE RECOURSE TO VOLUNTARY ARBITRATION IN SETTLING THEIR DISPUTES.^[1][22]  THE UNION STAGED A STRIKE? WAS THE STRIKE ILLEGAL.

YES. MORE SO BECAUSE THE NLRC AND CA SAID SO.

        The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the Union, participated in by the Union officers and members, is illegal being in violation of the no strike-no lockout provision of the CBA which enjoined both the Union and the company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling their disputes.^[2][22] We, therefore, find no reason to depart from such conclusion.

XXXXXXXXXXXXXXXXXXX

WHAT IS THE LIABILITY OF A UNION OFFICER WHO KNOWINGLY PARTICIPATES IN AN ILLEGAL STRIKE?

HE MAY BE DECLARED TO HAVE LOST HIS EMPLOYMENT STATUS.

XXXXXXXXXXXXXXXXX

HOW ABOUT IF A UNION OFFICER OR ANY WORKER COMMITS ILLEGAL ACTS DURING A STRIKE THAT IS LEGAL, WHAT IS THEIR LIABILITY?

THEY MAY ALSO BE DECLARED TO HAVE LOST THEIR EMPLOYMENT.

        Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and members participating in illegal strikes and/or committing illegal acts, to wit:

ART. 264. PROHIBITED ACTIVITIES

(a)    x x x

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any Union officer who knowingly participates in an illegal strike and any worker or Union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.

Thus, the above-quoted provision sanctions the dismissal of a Union officer who knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful strike.^[3][23]  In this case, the Union officers were in clear breach of the above provision of law when they knowingly participated in the illegal strike.^[4][24]

XXXXXXXXXXXXXXXXX 

WHAT ARE EXAMPLES OF ILLEGAL ACTS COMMITTED DURING A LAWFUL STRIKE?

AS IN THIS CASE THE FOLLOWING CONSTITUTES ILLEGAL ACTS:

A.       THEY THREATENED, COERCED, AND INTIMIDATED NON-STRIKING EMPLOYEES, OFFICERS, SUPPLIERS AND CUSTOMERS; 

B.      THEY OBSTRUCTED THE FREE INGRESS TO AND EGRESS FROM THE COMPANY PREMISES; AND

C.       THEY RESISTED AND DEFIED THE IMPLEMENTATION OF THE WRIT OF PRELIMINARY INJUNCTION ISSUED AGAINST THE STRIKERS.^[5][25]

As to the Union members, the same provision of law provides that a member is liable when he knowingly participates in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that CASI presented substantial evidence to show that the striking Union members committed the following prohibited acts:

a.       They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers; 

b.      They obstructed the free ingress to and egress from the company premises; and

c.       They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers.^[6][25]

The commission of the above prohibited acts by the striking Union members warrants their dismissal from employment.

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THE LABOR ARBITER ORDERED THE REINSTATEMENT OF STRIKING UNION MEMBERS. BUT LATER THE NLRC REVERSED THE ORDER. WILL THE UNION MEMBERS BE STILL ENTITLED TO BACK WAGES?

YES, FROM THE DATE OF ORDER OF REINSTATEMENT TO THE DATE WHEN THE ORDER WAS REVERSED BY NLRC. THE REINSTATEMENT ORDER IS SELF EXECUTORY.

        As clearly narrated earlier, the LA found the strike illegal and sustained the dismissal of the Union officers, but ordered the reinstatement of the striking Union members for lack of evidence showing that they committed illegal acts during the illegal strike. This decision, however, was later reversed by the NLRC.  Pursuant to Article 223^[7][26] of the Labor Code and well-established jurisprudence,^[8][27] the decision of the LA reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal.^[9][28] The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the employee, merely reinstated in the payroll.^[10][29] It is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.^[11][30] If the employer fails to exercise the option of re-admitting the employee to work or to reinstate him in the payroll, the employer must pay the employee’s salaries during the period between the LA’s order of reinstatement pending appeal and the resolution of the higher court overturning that of the LA.^[12][31] In this case, CASI is liable to pay the striking Union members their accrued wages for four months and nine days, which is the period from the notice of the LA’s order of reinstatement until the reversal thereof by the NLRC.^[13][32]

        Citing Escario v. National Labor Relations Commission (Third Division),^[14][33]  CASI claims that the award of the four-month accrued salaries to the Union members is not sanctioned by jurisprudence. In Escario, the Court categorically stated that the strikers were not entitled to their wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. The Court further held that it was neither fair nor just that the dismissed employees should litigate against their employer on the latter’s time.^[15][34] In this case, however, the four-month accrued salaries awarded to the Union members are not the backwages referred to in Escario. To be sure, the awards were not given as their salaries during the period of the strike. Rather, they constitute the employer’s liability to the employees for its failure to exercise the option of actual reinstatement or payroll reinstatement following the LA’s decision to reinstate the Union members as mandated by Article 223 of the Labor Code adequately discussed earlier. In other words, such monetary award refers to the Union members’ accrued salaries by reason of the reinstatement order of the LA which is self-executory pursuant to Article 223.^[16][35] We, therefore, sustain the award of the four-month accrued salaries.

XXXXXXXXXXXX

CA AWARDED THE WORKERS SEPARATION PAY AS FORM OF FINANCIAL ASSISTANCE. IS THIS VALID?

NO. SEPARATION PAY MAY  BE GIVEN AS A FORM OF FINANCIAL ASSISTANCE WHEN A WORKER IS DISMISSED IN CASES SUCH AS THE INSTALLATION OF LABOR-SAVING DEVICES, REDUNDANCY, RETRENCHMENT TO PREVENT LOSSES, CLOSING OR CESSATION OF OPERATION OF THE ESTABLISHMENT, OR IN CASE THE EMPLOYEE WAS FOUND TO HAVE BEEN SUFFERING FROM A DISEASE SUCH THAT HIS CONTINUED EMPLOYMENT IS PROHIBITED BY LAW.^[17][36]

WHY?

IT IS A STATUTORY RIGHT DEFINED AS THE AMOUNT THAT AN EMPLOYEE RECEIVES AT THE TIME OF HIS SEVERANCE FROM THE SERVICE AND IS DESIGNED TO PROVIDE THE EMPLOYEE WITH THE WHEREWITHAL DURING THE PERIOD THAT HE IS LOOKING FOR ANOTHER EMPLOYMENT.^[18][37] IT IS ORIENTED TOWARDS THE IMMEDIATE FUTURE, THE TRANSITIONAL PERIOD THE DISMISSED EMPLOYEE MUST UNDERGO BEFORE LOCATING A REPLACEMENT JOB.^[19][38]

XXXXXXXXXXXXXXX

HOW ABOUT IF THE CAUSES ARE JUST CAUSES?

THE EMPLOYEE IS NOT ENTITLED TO SUCH SEPARATION PAY AS FORM OF FINANCIAL EXCEPTION BECAUSE LAWBREAKERS SHOULD NOT BENEFIT FROM THEIR ILLEGAL ACTS.^[20][39]  

XXXXXXXXXXXXXXXXXX

IS THIS RULE ABSOLUTE?

NO THERE IN AN EXCEPTION. WHERE THE EMPLOYEE IS VALIDLY DISMISSED FOR CAUSES OTHER THAN SERIOUS MISCONDUCT OR THOSE REFLECTING ON HIS MORAL CHARACTER. THE REASON IS SOCIAL JUSTICE.

XXXXXXXXXXX

GIVE EXAMPLES WHEN SEPARATION PAY WAS GRANTED DESPITE DISMISSAL FROM THE SERVICE?

INDEED, WE APPLIED SOCIAL JUSTICE AND EQUITY CONSIDERATIONS IN SEVERAL CASES TO JUSTIFY THE AWARD OF FINANCIAL ASSISTANCE. IN PIÑERO V. NATIONAL LABOR RELATIONS COMMISSION,^[21][46] THE COURT DECLARED THE STRIKE TO BE ILLEGAL FOR FAILURE TO COMPLY WITH THE PROCEDURAL REQUIREMENTS. WE, LIKEWISE, SUSTAINED THE DISMISSAL OF THE UNION PRESIDENT FOR PARTICIPATING IN SAID ILLEGAL STRIKE. CONSIDERING, HOWEVER, THAT HIS INFRACTION IS NOT SO REPREHENSIBLE AND UNSCRUPULOUS AS TO WARRANT COMPLETE DISREGARD OF HIS LONG YEARS OF SERVICE, AND CONSIDERING FURTHER THAT HE HAS NO PREVIOUS DEROGATORY RECORDS, WE GRANTED FINANCIAL ASSISTANCE TO SUPPORT HIM IN THE TWILIGHT OF HIS LIFE AFTER LONG YEARS OF SERVICE.^[22][47] THE SAME COMPASSION WAS ALSO APPLIED IN APARENTE, SR. V. NLRC^[23][48] WHERE THE EMPLOYEE WAS DECLARED TO HAVE BEEN VALIDLY TERMINATED FROM SERVICE AFTER HAVING BEEN FOUND GUILTY OF DRIVING WITHOUT A VALID DRIVER’S LICENSE, WHICH IS A CLEAR VIOLATION OF THE COMPANY’S RULES AND REGULATIONS.^[24][49] WE, LIKEWISE, AWARDED FINANCIAL ASSISTANCE IN SALAVARRIA V. LETRAN COLLEGE^[25][50] TO THE LEGALLY DISMISSED TEACHER FOR VIOLATION OF SCHOOL POLICY BECAUSE SUCH INFRACTION NEITHER AMOUNTED TO SERIOUS MISCONDUCT NOR REFLECTED THAT OF A MORALLY DEPRAVED PERSON. 

XXXXXXXXXXXXXX

GIVE EXAMPLES WHEN SEPARATION PAY WAS NOT GIVEN.

WE HAD THE OCCASION TO RESOLVE THE SAME ISSUE IN TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION (TMPCWA) V. NATIONAL LABOR RELATIONS COMMISSION.^[26][43]  FOLLOWING THE DECLARATION THAT THE STRIKE STAGED BY THE UNION MEMBERS IS ILLEGAL, THE UNION OFFICERS AND MEMBERS WERE CONSIDERED VALIDLY DISMISSED FROM EMPLOYMENT FOR COMMITTING ILLEGAL ACTS DURING THE ILLEGAL STRIKE. THE COURT AFFIRMED THE CA’S CONCLUSION THAT THE COMMISSION OF ILLEGAL ACTS DURING THE ILLEGAL STRIKE CONSTITUTED SERIOUS MISCONDUCT.^[27][44] HENCE, THE AWARD OF SEPARATION PAY TO THE UNION OFFICIALS AND MEMBERS WAS NOT SUSTAINED.^[28][45]  

. . . . .

HOWEVER, IN A NUMBER OF CASES CITED IN TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION (TMPCWA) V. NATIONAL LABOR RELATIONS COMMISSION,^[29][51] WE REFRAINED FROM AWARDING SEPARATION PAY OR FINANCIAL ASSISTANCE TO UNION OFFICERS AND MEMBERS WHO WERE SEPARATED FROM SERVICE DUE TO THEIR PARTICIPATION IN OR COMMISSION OF ILLEGAL ACTS DURING THE STRIKE.^[30][52]  IN PILIPINO TELEPHONE CORPORATION V. PILIPINO TELEPHONE EMPLOYEES ASSOCIATION (PILTEA),^[31][53] THE STRIKE WAS FOUND TO BE ILLEGAL BECAUSE OF PROCEDURAL INFIRMITIES AND FOR DEFIANCE OF THE SECRETARY OF LABOR’S ASSUMPTION ORDER. HENCE, WE UPHELD THE UNION OFFICERS’ DISMISSAL WITHOUT GRANTING FINANCIAL ASSISTANCE. IN SUKHOTAI CUISINE AND RESTAURANT V. COURT OF APPEALS,^[32][54] AND MANILA DIAMOND HOTEL AND RESORT, INC. (MANILA DIAMOND HOTEL) V. MANILA DIAMOND HOTEL EMPLOYEES UNION,^[33][55] THE UNION OFFICERS AND MEMBERS WHO PARTICIPATED IN AND COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE WERE DEEMED TO HAVE LOST THEIR EMPLOYMENT STATUS AND WERE NOT AWARDED FINANCIAL ASSISTANCE.

IN TELEFUNKEN SEMICONDUCTORS EMPLOYEES UNION V. COURT OF APPEALS,^[34][56] THE COURT HELD THAT THE STRIKERS’ OPEN AND WILLFUL DEFIANCE OF THE ASSUMPTION ORDER OF THE SECRETARY OF LABOR CONSTITUTE SERIOUS MISCONDUCT AND REFLECTIVE OF THEIR MORAL CHARACTER, HENCE, GRANTING OF FINANCIAL ASSISTANCE TO THEM CANNOT BE JUSTIFIED. IN CHUA V. NATIONAL LABOR RELATIONS COMMISSION,^[35][57] WE DISALLOWED THE AWARD OF FINANCIAL ASSISTANCE TO THE DISMISSED EMPLOYEES FOR THEIR PARTICIPATION IN THE UNLAWFUL AND VIOLENT STRIKE WHICH RESULTED IN MULTIPLE DEATHS AND EXTENSIVE PROPERTY DAMAGE BECAUSE IT CONSTITUTES SERIOUS MISCONDUCT ON THEIR PART.

        Finally, as regards the separation pay as a form of financial assistance awarded by the Court, we find it necessary to reconsider the same and delete the award pursuant to prevailing jurisprudence.

        Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the employee was found to have been suffering from a disease such that his continued employment is prohibited by law.^[36][36]  It is a statutory right defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment.^[37][37] It is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job.^[38][38] As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from their illegal acts.^[39][39] The rule, however, is subject to exceptions.^[40][40] The Court, in Philippine Long Distance Telephone Co. v. NLRC,^[41][41] laid down the guidelines when separation pay in the form of financial assistance may be allowed, to wit:

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed x x x.^[42][42]  

        We had the occasion to resolve the same issue in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission.^[43][43]  Following the declaration that the strike staged by the Union members is illegal, the Union officers and members were considered validly dismissed from employment for committing illegal acts during the illegal strike. The Court affirmed the CA’s conclusion that the commission of illegal acts during the illegal strike constituted serious misconduct.^[44][44] Hence, the award of separation pay to the Union officials and members was not sustained.^[45][45]  

        Indeed, we applied social justice and equity considerations in several cases to justify the award of financial assistance. In Piñero v. National Labor Relations Commission,^[46][46] the Court declared the strike to be illegal for failure to comply with the procedural requirements. We, likewise, sustained the dismissal of the Union president for participating in said illegal strike. Considering, however, that his infraction is not so reprehensible and unscrupulous as to warrant complete disregard of his long years of service, and considering further that he has no previous derogatory records, we granted financial assistance to support him in the twilight of his life after long years of service.^[47][47] The same compassion was also applied in Aparente, Sr. v. NLRC^[48][48] where the employee was declared to have been validly terminated from service after having been found guilty of driving without a valid driver’s license, which is a clear violation of the company’s rules and regulations.^[49][49] We, likewise, awarded financial assistance in Salavarria v. Letran College^[50][50] to the legally dismissed teacher for violation of school policy because such infraction neither amounted to serious misconduct nor reflected that of a morally depraved person.  

        However, in a number of cases cited in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,^[51][51] we refrained from awarding separation pay or financial assistance to Union officers and members who were separated from service due to their participation in or commission of illegal acts during the strike.^[52][52]  In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA),^[53][53] the strike was found to be illegal because of procedural infirmities and for defiance of the Secretary of Labor’s assumption order. Hence, we upheld the Union officers’ dismissal without granting financial assistance. In Sukhotai Cuisine and Restaurant v. Court of Appeals,^[54][54] and Manila Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union,^[55][55] the Union officers and members who participated in and committed illegal acts during the illegal strike were deemed to have lost their employment status and were not awarded financial assistance.

In Telefunken Semiconductors Employees Union v. Court of Appeals,^[56][56] the Court held that the strikers’ open and willful defiance of the assumption order of the Secretary of Labor constitute serious misconduct and reflective of their moral character, hence, granting of financial assistance to them cannot be justified. In Chua v. National Labor Relations Commission,^[57][57] we disallowed the award of financial assistance to the dismissed employees for their participation in the unlawful and violent strike which resulted in multiple deaths and extensive property damage because it constitutes serious misconduct on their part.

        Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as we concluded in Toyota, Telefunken, Chua and the other cases cited above, we delete the award of separation pay as a form of financial assistance.

===================

Republic of thePhilippines

Supreme Court

Manila

SPECIAL SECOND DIVISION

 x—————————————————————————————–x

RESOLUTION

PERALTA, J.:

         For resolution are the (1) Motion for Partial Reconsideration^[58][1] filed by C. Alcantara & Sons, Inc. (CASI) and (2) Motion for Reconsideration^[59][2] filed by Nagkahiusang  Mamumuo sa Alsons-SPFL (the Union) and the Union officers^[60][3] and their striking members^[61][4] of the Court’s Decision^[62][5] dated September 29, 2010. In a Resolution^[63][6] dated December 13, 2010, the parties were required to submit their respective Comments. After several motions for extension, the parties submitted the required comments. Hence, this resolution.

        For a proper perspective, we state briefly the facts of the case.

        The negotiation between CASI and the Union on the economic provisions of the Collective Bargaining Agreement (CBA) ended in a deadlock prompting the Union to stage a strike,^[64][7] but the strike was later declared by the Labor Arbiter (LA) to be illegal having been staged in violation of the CBA’s no strike-no lockout provision.^[65][8] Consequently, the Union officers were deemed to have forfeited their employment with the company and made them liable for actual damages plus interest and attorney’s fees, while the Union members were ordered to be reinstated without backwages there being no proof that they actually committed illegal acts during the strike.^[66][9]

        Notwithstanding the provision of the Labor Code mandating that the reinstatement aspect of the decision be immediately executory, the LA refused to reinstate the dismissed Union members. On November 8, 1999, the NLRC affirmed the LA decision insofar as it declared the strike illegal and ordered the Union officers dismissed from employment and liable for damages but modified the same by considering the Union members to have been validly dismissed from employment for committing prohibited and illegal acts.^[67][10]

        On petition for certiorari, the Court of Appeals (CA) annulled the NLRC decision and reinstated that of the LA. Aggrieved, CASI, the Union and the Union officers and members elevated the matter to this Court. The cases were docketed as G.R. Nos. 155109 and 155135.^[68][11]

During the pendency of the cases, the affected Union members (who were ordered reinstated) filed with the LA a motion for reinstatement pending appeal and the computation of their backwages. Instead of reinstating the Union members, the LA awarded separation pay and other benefits.^[69][12]  On appeal, the NLRC denied the Union members’ claim for separation pay, accrued wages and other benefits.^[70][13] When elevated to the CA, the appellate court held that reinstatement pending appeal applies only to illegal dismissal cases under Article 223 of the Labor Code and not to cases under Article 263.^[71][14]  Hence, the petition by theUnion and its officers and members in G.R. No. 179220.

        G.R. Nos. 155109, 155135, and 179220 were consolidated. On September 29, 2010, the Court rendered a decision the dispositive portion of which reads:

WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its officers and members in G.R. No. 155135 for lack of merit, and REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the petition of C. Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the decision of the National Labor Relations Commission in NLRC CA M-004996-99 dated November 8, 1999.

Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and their dismissed members in G.R. No. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union members backwages for four (4) months and nine (9) days and separation pays equivalent to one-half month salary for every year of service to the company up to the date of their termination, with interest of 12% per annum from the time this decision becomes final and executory until such backwages and separation pays are paid. The Court DENIES all other claims.

SO ORDERED.^[72][15]

        The Court agreed with the CA on the illegality of the strike as well as the termination of the Union officers, but disagreed with the CA insofar as it affirmed the reinstatement of the Union members. The Court, instead, sustained the dismissal not only of the Union officers but also the Union members who, during the illegal strike, committed prohibited acts by threatening, coercing, and intimidating non-striking employees, officers, suppliers and customers; obstructing the free ingress to and egress from the company premises; and resisting and defying the implementation of the writ of preliminary injunction issued against the strikers.^[73][16]

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         The Court further held that the terminated Union members, who were ordered reinstated by the LA, should have been immediately reinstated due to the immediate executory nature of the reinstatement aspect of the LA decision. In view, however, of CASI’s failure to reinstate the dismissed employees, the Court ordered CASI to pay the terminated Union members their accrued backwages from the date of the LA decision until the eventual reversal by the NLRC of the order of reinstatement.^[74][17] In addition to the accrued backwages, the Court awarded separation pay as a form of financial assistance to the Union members equivalent to one-half month salary for every year of service to the company up to the date of their termination.^[75][18] 

        Not satisfied, CASI filed a Motion for Partial Reconsideration of the above decision based on the following grounds:

I.

IT IS RESPECTFULLY SUBMITTED THAT A PRECEDENT SETTING RULING OF THIS HONORABLE COURT IN ESCARIO V. NLRC [G.R. No. 160302, 27 SEPTEMBER 2010] – PARTICULARLY ON THE PROPER APPLICATION OF ARTICLES 264 AND 279 OF THE LABOR CODE – SUPPORTS THE AFFIRMATION AND NOT THE REVERSAL OF THE FINDINGS OF THE COURT OF APPEALS [“CA”], AND NEGATES THE ENTITLEMENT TO ACCRUED WAGES OF THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE, NOTWITHSTANDING THAT THE LABOR ARBITER AWARDED THE SAME.

II.

IT IS RESPECTFULY SUBMITTED THAT THIS HONORABLE COURT ERRED WHEN IT RESOLVED TO GRANT SEPARATION PAY TO THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE CONSIDERING THAT JURISPRUDENCE CITED TO JUSTIFY THE GRANT OF SEPARATION PAY DO NOT APPLY TO THE PRESENT CASE AS IT APPLIES ONLY TO DISMISSALS FOR A JUST CAUSE.^[76][19]

        The Union, its officers and members likewise filed their separate motion for reconsideration assailing the Court’s conclusions that: (1) the strike is illegal; (2) that the officers of the Union and its appointed shop stewards automatically forfeited their employment status when they participated in the strike; (3) that the Union members committed illegal acts during the strike and are deemed to have lost their employment status; and (4) that CASI is entitled to actual damages and attorney’s fees.^[77][20] They also fault the Court in not finding that: (1) CASI and its officers are guilty of acts of unfair labor practice or violation of Article 248 of the Labor Code; (2) the lockout declared by the company is illegal; (3) CASI and its officers committed acts of discrimination; (4) CASI and its officers violated Article 254 of the Labor Code; and (5) CASI and its officers are liable for actual, moral, and exemplary damages to the Union, its officers and members.^[78][21]

        Simply stated, CASI only questions the propriety of the award of backwages and separation pay, while the Union, its officers and members seek the reversal of the Court’s conclusions on the illegality of the strike, the validity of the termination of the Union officers and members, and the award of actual damages and attorney’s fees as well as the denial of their counterclaims against CASI.

        After a careful review of the records of the case, we find it necessary to reconsider the Court’s September 29, 2010 decision, but only as to the award of separation pay.

        The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the Union, participated in by the Union officers and members, is illegal being in violation of the no strike-no lockout provision of the CBA which enjoined both the Union and the company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling their disputes.^[79][22] We, therefore, find no reason to depart from such conclusion.

        Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and members participating in illegal strikes and/or committing illegal acts, to wit:

ART. 264. PROHIBITED ACTIVITIES

(a)    x x x

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any Union officer who knowingly participates in an illegal strike and any worker or Union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.

Thus, the above-quoted provision sanctions the dismissal of a Union officer who knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful strike.^[80][23]  In this case, the Union officers were in clear breach of the above provision of law when they knowingly participated in the illegal strike.^[81][24]

As to the Union members, the same provision of law provides that a member is liable when he knowingly participates in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that CASI presented substantial evidence to show that the striking Union members committed the following prohibited acts:

a.       They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers; 

b.      They obstructed the free ingress to and egress from the company premises; and

c.       They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers.^[82][25]

The commission of the above prohibited acts by the striking Union members warrants their dismissal from employment.

        As clearly narrated earlier, the LA found the strike illegal and sustained the dismissal of the Union officers, but ordered the reinstatement of the striking Union members for lack of evidence showing that they committed illegal acts during the illegal strike. This decision, however, was later reversed by the NLRC.  Pursuant to Article 223^[83][26] of the Labor Code and well-established jurisprudence,^[84][27] the decision of the LA reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal.^[85][28] The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the employee, merely reinstated in the payroll.^[86][29] It is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.^[87][30] If the employer fails to exercise the option of re-admitting the employee to work or to reinstate him in the payroll, the employer must pay the employee’s salaries during the period between the LA’s order of reinstatement pending appeal and the resolution of the higher court overturning that of the LA.^[88][31] In this case, CASI is liable to pay the striking Union members their accrued wages for four months and nine days, which is the period from the notice of the LA’s order of reinstatement until the reversal thereof by the NLRC.^[89][32]

        Citing Escario v. National Labor Relations Commission (Third Division),^[90][33]  CASI claims that the award of the four-month accrued salaries to the Union members is not sanctioned by jurisprudence. In Escario, the Court categorically stated that the strikers were not entitled to their wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. The Court further held that it was neither fair nor just that the dismissed employees should litigate against their employer on the latter’s time.^[91][34] In this case, however, the four-month accrued salaries awarded to the Union members are not the backwages referred to in Escario. To be sure, the awards were not given as their salaries during the period of the strike. Rather, they constitute the employer’s liability to the employees for its failure to exercise the option of actual reinstatement or payroll reinstatement following the LA’s decision to reinstate the Union members as mandated by Article 223 of the Labor Code adequately discussed earlier. In other words, such monetary award refers to the Union members’ accrued salaries by reason of the reinstatement order of the LA which is self-executory pursuant to Article 223.^[92][35] We, therefore, sustain the award of the four-month accrued salaries.

        Finally, as regards the separation pay as a form of financial assistance awarded by the Court, we find it necessary to reconsider the same and delete the award pursuant to prevailing jurisprudence.

        Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the employee was found to have been suffering from a disease such that his continued employment is prohibited by law.^[93][36]  It is a statutory right defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment.^[94][37] It is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job.^[95][38] As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from their illegal acts.^[96][39] The rule, however, is subject to exceptions.^[97][40] The Court, in Philippine Long Distance Telephone Co. v. NLRC,^[98][41] laid down the guidelines when separation pay in the form of financial assistance may be allowed, to wit:

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed x x x.^[99][42]  

        We had the occasion to resolve the same issue in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission.^[100][43]  Following the declaration that the strike staged by the Union members is illegal, the Union officers and members were considered validly dismissed from employment for committing illegal acts during the illegal strike. The Court affirmed the CA’s conclusion that the commission of illegal acts during the illegal strike constituted serious misconduct.^[101][44] Hence, the award of separation pay to the Union officials and members was not sustained.^[102][45]  

        Indeed, we applied social justice and equity considerations in several cases to justify the award of financial assistance. In Piñero v. National Labor Relations Commission,^[103][46] the Court declared the strike to be illegal for failure to comply with the procedural requirements. We, likewise, sustained the dismissal of the Union president for participating in said illegal strike. Considering, however, that his infraction is not so reprehensible and unscrupulous as to warrant complete disregard of his long years of service, and considering further that he has no previous derogatory records, we granted financial assistance to support him in the twilight of his life after long years of service.^[104][47] The same compassion was also applied in Aparente, Sr. v. NLRC^[105][48] where the employee was declared to have been validly terminated from service after having been found guilty of driving without a valid driver’s license, which is a clear violation of the company’s rules and regulations.^[106][49] We, likewise, awarded financial assistance in Salavarria v. Letran College^[107][50] to the legally dismissed teacher for violation of school policy because such infraction neither amounted to serious misconduct nor reflected that of a morally depraved person.  

        However, in a number of cases cited in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,^[108][51] we refrained from awarding separation pay or financial assistance to Union officers and members who were separated from service due to their participation in or commission of illegal acts during the strike.^[109][52]  In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA),^[110][53] the strike was found to be illegal because of procedural infirmities and for defiance of the Secretary of Labor’s assumption order. Hence, we upheld the Union officers’ dismissal without granting financial assistance. In Sukhotai Cuisine and Restaurant v. Court of Appeals,^[111][54] and Manila Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union,^[112][55] the Union officers and members who participated in and committed illegal acts during the illegal strike were deemed to have lost their employment status and were not awarded financial assistance.

In Telefunken Semiconductors Employees Union v. Court of Appeals,^[113][56] the Court held that the strikers’ open and willful defiance of the assumption order of the Secretary of Labor constitute serious misconduct and reflective of their moral character, hence, granting of financial assistance to them cannot be justified. In Chua v. National Labor Relations Commission,^[114][57] we disallowed the award of financial assistance to the dismissed employees for their participation in the unlawful and violent strike which resulted in multiple deaths and extensive property damage because it constitutes serious misconduct on their part.

        Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as we concluded in Toyota, Telefunken, Chua and the other cases cited above, we delete the award of separation pay as a form of financial assistance.

        WHEREFORE, premises considered, the motion for reconsideration of the Union, its officers and members are DENIED for lack of merit, while the motion for partial reconsideration filed by C. Alcantara & Sons, Inc. is PARTLY GRANTED. The Decision of the Court dated September 29, 2010 is hereby PARTLY RECONSIDERED by deleting the award of separation pay.

SO ORDERED.

                                DIOSDADO M. PERALTA

                                Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

PRESBITERO J. VELASCO, JR.               JOSE CATRAL MENDOZA

               Associate Justice                              Associate Justice

BIENVENIDO L. REYES

Associate Justice

ATTESTATION

        I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                ANTONIO T. CARPIO

        Associate Justice

Special Second Division, Chairperson

        CERTIFICATION

        Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                        RENATO C. CORONA

                                                                  Chief Justice

CASE 2012-0049: JUDGE ADORACION G. ANGELES VS. HON. MA. MERCEDITAS N. GUTIERREZ, OMBUDSMAN; HON. ORLANDO C. CASIMIRO, OVERALL DEPUTY OMBUDSMAN; HON. SYLVIA A. SEVERO, GRAFT INVESTIGATOR AND PROSECUTION OFFICER I; HON. MARILOU B. ANCHETA-MEJICA, ACTING DIRECTOR, PIAB-D; HON. JOSE T. DE JESUS, JR., ASSISTANT OMBUDSMAN, PAMO; ALL OF THE OMBUDSMAN; AND SSP EMMANUEL Y. VELASCO (G.R. NOS. 189161 & 189173, MARCH 21, 2012, SERENO, J.) SUBJECT/S: POWER OF THE COURT OVER THE OMBUDSMAN’S EXERCISE OF ITS INVESTIGATIVE AND PROSECUTORIAL POWERS  (BRIEF TITLE: JUDGE ANGELES VS. OMBUDSMAN)

=======================

DISPOSITIVE:

WHEREFORE, we DISMISS the Petition for Certiorari filed by Judge Adoracion G. Angeles. We AFFIRM the two Joint Orders of the Ombudsman in Case Nos. OMB-C-C-07-0103-C and OMB-C-A-O7-0117-C dated 21 March 2007 and 30 June 2008, respectively.

SO ORDERED.

=======================

Republic of the Philippines
Supreme Court
Manila

SECOND DIVISION

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

SERENO, J.:

The Case

This is a special civil action for certiorari under Rule 65 of the 1997 Rules of Court. The Court is once again asked to determine whether the Office of the Ombudsman (Ombudsman) committed grave abuse of discretion in the exercise of its discretionary powers to investigate and prosecute criminal complaints.

This Petition dated 01 September 2009 seeks to set aside the Joint Order^[1][1] dated 21 March 2007 of the Ombudsman (the questioned Joint Order) exonerating respondent Senior State Prosecutor Emmanuel Y. Velasco (respondent Velasco or respondent) from the charges filed by petitioner Judge Adoracion G. Angeles (petitioner Judge Angeles or petitioner).

The Facts

The Complaint filed with the Ombudsman

          Petitioner Judge Angeles was, at the time this Petition was filed, the Presiding Judge of Branch 121 of the Caloocan City Regional Trial Court (RTC); while private respondent Velasco was a senior state prosecutor at the Department of Justice (DOJ).

On 20 February 2007, petitioner Judge Angeles filed a criminal Complaint against respondent Velasco with the Ombudsman^[2][2] and sought his indictment before the Sandiganbayan for the following acts allegedly committed in his capacity as a prosecutor:

1.       Giving an unwarranted benefit, advantage or preference to the accused in a criminal case for smuggling by failing to present a material witness;

2.       Engaging in private practice by insisting on the reopening of child abuse cases against petitioner;

3.       Falsifying a public document to make it appear that a clarificatory hearing on the child abuse Complaint was conducted.^[3][3]

Failure to present a material witness

          According to the Complaint, respondent Velasco, who was the trial prosecutor in a criminal case involving the smuggling of jewelry,^[4][4] failed to present a material witness in the aforesaid case.^[5][5] The witness, a gemmologist of the Bureau of Customs, was to testify on the type of  substance making up the pieces of smuggled jewelry.^[6][6]

          According to petitioner, considering the materiality of the gemmologist’s testimony, which respondent must have known of, since he was the handling trial prosecutor of the case, his failure to offer the said testimony in court shows that he tried to suppress the evidence in favor of the accused in the said case. This act was alleged to be in violation of Section 3(e) of the Anti Graft and Corrupt Practices Act,^[7][7] which considers as a corrupt practice the acts of public officers that give unwarranted benefits to any private party through either manifest partiality, evident bad faith, or gross inexcusable negligence in the discharge of their official functions.^[8][8]

The gemmologist, however, was eventually presented as a witness after respondent Velasco had filed a Motion to adduce additional evidence in the said case.^[9][9]

Insistence on the reopening of child abuse cases

The second act complained of refers to respondent Velasco’s filing of two Petitions to reopen the child abuse cases filed against petitioner Judge Angeles. Petitioner was previously charged with inflicting physical and psychological abuse on Maria Mercedes Vistan, her 13-year-old grandniece.^[10][10] Respondent was the one who conducted the preliminary investigation of the Complaint for child abuse and later indicted petitioner for 21 counts thereof.^[11][11] However, the DOJ later on reversed respondent Velasco’s recommendation^[12][12] upon a Petition for Review filed by respondent. Consequently, the Informations, which had been filed in the meantime, were ordered withdrawn by the trial court.^[13][13] Petitioner later filed an administrative Complaint against respondent for gross misconduct, gross ignorance of the law, incompetence, and manifest bad faith arising from the alleged malicious indictment.

According to petitioner, the move of respondent to reopen the child abuse cases was allegedly meant to exact vengeance for petitioner’s filing of the above-mentioned administrative Complaint.^[14][14] Meanwhile, the two Petitions to reopen the child abuse cases, which were filed by respondent in the DOJ and the Office of the President, were denied for having been filed in the wrong venues.

Petitioner alleges in her Complaint that since respondent Velasco was not the trial prosecutor in the said case, his unauthorized act of filing two Petitions to reopen the child abuse cases constituted a violation of Section 7(b)(2) of the Code of Conduct and Ethical Standards for Public Officials and Employees.^[15][15] This code considers as unlawful the acts of public officials and employees engaging in the private practice of their profession, unless authorized by the Constitution or by law.^[16][16] This single act of moving to reopen the child abuse cases was the only instance of private practice imputed to respondent Velasco. No other act constituting private practice was cited by petitioner.

Falsification of Public Document

The alleged falsification of public document arose from the same preliminary investigation conducted by respondent in the child abuse cases mentioned above. According to petitioner Judge Angeles, respondent Velasco made it appear that he had conducted a clarificatory hearing on the Complaint for child abuse on 22 June 1999 as shown in the Minutes^[17][17] of the said hearing.^[18][18] Petitioner alleges that Leonila Vistan, the witness who supposedly attended the hearing, was seriously sick and could not have appeared at the alleged clarificatory hearing.^[19][19] Moreover, respondent had, in fact, resolved the cases two days earlier, on 20 June 1999, as shown by the date on the Resolution indicting petitioner. Thus, the latter alleges, the Minutes of the hearing on 22 June 1999 must have been falsified by respondent by making it appear that Leonila Vistan had participated in an inexistent proceeding. This act is in violation of Article 171 of the Revised Penal Code,^[20][20] which criminalizes it as a falsification of a public document.^[21][21]

The Decision of the Ombudsman

In the questioned Joint Order, the Ombudsman dismissed the charges against respondent Velasco. It found that after evaluation of the facts and evidence presented by complainant, there was no cause to conduct a preliminary investigation or an administrative adjudication with regard to the charges.

On the first charge of suppression of testimonial evidence in connection with the smuggling case, the Ombudsman dismissed the charge on the ground that petitioner had no sufficient personal interest in the subject matter of the grievance.^[22][22] The Ombudsman explained that petitioner was neither one of the parties nor the presiding judge in the said criminal case and, therefore, had no personal interest in it.

Moreover, granting that the personal interest of petitioner was not in issue, respondent Velasco acted based on his discretion as prosecutor and his appreciation of the evidence in the case, and any lapse in his judgment cannot be a source of criminal liability. The Ombudsman said that it had no authority to investigate the prosecutor’s exercise of discretion, unless there is sufficient evidence that the exercise was tainted with malice and bad faith.^[23][23]

The Ombudsman likewise dismissed the second charge of private practice of profession on the ground of failure to exhaust administrative remedies.^[24][24] It pointed out that petitioner should have first elevated her concern to the DOJ, which had primary jurisdiction over respondent’s actions and conduct as public prosecutor.^[25][25]  Moreover, the Ombudsman found that respondent Velasco was not engaged in private practice when he filed the two Petitions for the reopening of the child abuse cases against petitioner, since he was the investigating prosecutor of the said cases.^[26][26]

Finally, on the falsification of a public document, which was also dismissed, the Ombudsman said that the issue should have been raised earlier, when petitioner Judge Angeles filed her Petition for Review of the Resolution of respondent Velasco. Moreover, petitioner should have substantiated the allegation of falsification, because the mere presentation of the alleged falsified document did not in itself establish falsification.   The Ombudsman also ruled that with the belated filing of the charge and the reversal by the DOJ of respondent Velasco’s Resolution indicting petitioner, the materiality of the alleged falsified document is no longer in issue.^[27][27]

Petitioner filed a Motion for Reconsideration^[28][28] of the questioned Joint Order, which was denied by the Ombudsman for lack of merit.^[29][29]

Hence, the present Rule 65 Petition.

Issue

Whether the Ombudsman committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the Complaint against respondent Velasco.

The Court’s Ruling

We dismiss the Petition.

I

Power of the Court over the Ombudsman’s Exercise

of its Investigative and Prosecutorial Powers

As a general rule, the Court does not interfere with the Ombudsman’s exercise of its investigative and prosecutorial powers without good and compelling reasons.  Such reasons are clearly absent in the instant Petition.

At the outset, we emphasize that certiorari is an extraordinary prerogative writ that is never demandable as a matter of right.  Also, it is meant to correct only errors of jurisdiction and not errors of judgment committed in the exercise of the discretion of a tribunal or an officer. This is especially true in the case of the exercise by the Ombudsman of its constitutionally mandated powers. That is why this Court has consistently maintained its well-entrenched policy of non-interference in the Ombudsman’s exercise of its investigatory and prosecutorial powers.^[30][30]

General   Rule   of  Non-Interference

with the Plenary Powers of the Ombudsman

The general rule has always been non-interference by the courts in the exercise by the office of the prosecutor or the Ombudsman of its plenary investigative and prosecutorial powers. In Esquivel v. Ombudsman,^[31][31] we explained thus:

The Ombudsman is empowered to determine whether there exists reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof and, thereafter, to file the corresponding information with the appropriate courts. Settled is the rule that the Supreme Court will not ordinarily interfere with the Ombudsman’s exercise of his investigatory and prosecutory powers without good and compelling reasons to indicate otherwise. Said exercise of powers is based upon the constitutional mandate and the court will not interfere in its exercise. The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman, but upon practicality as well. Otherwise, innumerable petitions seeking dismissal of investigatory proceedings conducted by the Ombudsman will grievously hamper the functions of the office and the courts, in much the same way that courts will be swamped if they had to review the exercise of discretion on the part of public prosecutors each time they decided to file an information or dismiss a complaint by a private complainant. (Emphasis supplied; citations omitted.)

In Presidential Commission on Good Government v. Desierto,^[32][32] we further clarified the plenary powers of the Ombudsman. We emphasized that if the latter, using professional judgment, finds a case dismissible, the Court shall respect that finding, unless the exercise of such discretionary power was tainted with grave abuse of discretion.

The Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto^[33][33] explained the rationale for the plenary powers of the Ombudsman, which is virtually free from legislative, executive or judicial intervention. Its plenary powers were constitutionally designed to insulate it from outside pressure and improper influence. Accordingly, the Court has consistently respected and recognized, as we do now in this case, the  independence and competence of the Ombudsman, as it acts as “the champion of the people and the preserver of the integrity of public service.”

The Discretionary Nature of 

Preliminary Investigation

The determination by the Ombudsman of probable cause or of whether there exists a reasonable ground to believe that a crime has been committed, and that the accused is probably guilty thereof, is usually done after the conduct of a preliminary investigation. However, a preliminary investigation is by no means mandatory.

 The Rules of Procedure of the Office of the Ombudsman (Ombudsman Rules of Procedure),^[34][34] specifically Section 2 of Rule II, states:

Evaluation. — Upon evaluating the complaint, the investigating officer shall recommend whether it may be: a) dismissed outright for want of palpable merit; b) referred to respondent for comment; c) indorsed to the proper government office or agency which has jurisdiction over the case; d) forwarded to the appropriate officer or official for fact-finding investigation; e) referred for administrative adjudication; or f) subjected to a preliminary investigation.

Thus, the Ombudsman need not conduct a preliminary investigation upon receipt of a complaint. Indeed, we have said in Knecht v. Desierto^[35][35] and later in Mamburao, Inc. v. Office of the Ombudsman^[36][36] and Karaan v. Office of the Ombudsman^[37][37] that should investigating officers find a complaint utterly devoid of merit, they may recommend its outright dismissal. Moreover, it is also within their discretion to determine whether or not preliminary investigation should be conducted.

The Court has undoubtedly acknowledged the powers of the Ombudsman to dismiss a complaint outright without a preliminary investigation in The Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto.^[38][38]

We reiterate that the Ombudsman has full discretion to determine whether a criminal case should be filed, including whether a preliminary investigation is warranted.  The Court therefore gives due deference to the Ombudsman’s decision to no longer conduct a preliminary investigation in this case on the criminal charges levelled against respondent Velasco.

II

No Grave Abuse of Discretion in the

Ombudsman’s Evaluation of Evidence

This Court acknowledges exceptional cases calling for a review of the Ombudsman’s action when there is a charge and sufficient proof to show grave abuse of discretion.

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility. The abuse must be in a manner so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.^[39][39]

The determination of grave abuse of discretion as the exception to the general rule of non-interference in the Ombudsman’s exercise of its powers is precisely the province of the extraordinary writ of certiorari. However, we highlight the exceptional nature of that determination.

In this Petition, we do not find any grave abuse of discretion that calls for the Court’s exceptional divergence from the general rule.

Notably, the burden of proof to show grave abuse of discretion is on petitioner, and she has failed to discharge this burden. She  merely states why she does not agree with the findings of the Ombudsman, instead of demonstrating and proving grave abuse of discretion. In her arguments, petitioner would also have us pass upon the factual findings of the Ombudsman. That we cannot do, for this Court is not a trier of facts.

Even if we were to extend liberally the exception to the general rule against the review of the findings of the Ombudsman, an examination of the records would show that no grave abuse of discretion was demonstrated to warrant a reversal of the Joint Order dismissing the Complaint against respondent Velasco.

A. On the first charge of suppression of evidence

On the charge of suppression of evidence arising from the failure of respondent Velasco to present the testimony of a material witness, the Ombudsman found – and  we defer to its findings – that he acted based on his discretion as prosecutor and on his appreciation of the evidence in the case, and any lapse in his judgment cannot be a source of criminal liability. The Ombudsman also found that there was no sufficient evidence that the failure of respondent to present the witness was tainted with malice; or that the failure of respondent to do so gave any private party unwarranted benefit, advantage or preference in the discharge of the former’s official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.

Moreover, in G.R. No. 187596,^[40][40] a case involving the same incidents and parties as the present Petition, this Court affirmed the factual findings of the Court of Appeals (CA). We take judicial notice of the CA’s factual finding that the charge of suppression of evidence by respondent in the smuggling case was dispelled by the Chief State Prosecutor himself in a Certification dated 17 October 2002.^[41][41] The Certification vouching for the integrity and competence of respondent in his handling of the smuggling case states:

This is to certify that I had never called the attention nor even had castigated State Prosecutor EMMANUEL Y. VELASCO with regard to the way he handled the case of People of the Philippines versus Lintag, et al. (Pasay Regional Trial Court, Criminal Case Number 99-0129, for violation of the Tariff and Customs Code of the Philippines) specifically with regard to the aspect of the presentation of one of the prosecution’s witnesses, a gemologist (sic).  In fact, SP Velasco successfully prosecuted said case.^[42][42]

Thus, we find no grave abuse of discretion in the Ombudsman’s dismissal of the first charge.

However, we need to clarify that we cannot subscribe to the other reason for the Ombudsman’s dismissal of the charge pursuant to paragraph 4, Section 20 of the Ombudsman Act. The provision allows the Ombudsman to decide not to conduct the necessary investigation of any administrative act or omission complained of, if it believes that the complainant has no sufficient personal interest in the subject matter of the grievance. It is clear that, in relation to Section 19, Section 20 of the Ombudsman Act applies only to administrative cases. As for Section 19, its subject heading is “Administrative Complaints.” It lists acts or omissions that may be the subject of a complaint on which the Ombudsman shall act. On the other hand, the subject heading of Section 20 is “Exceptions.”  It lists the exceptional situations in which the Ombudsman has the option not to investigate an administrative complaint even when its subject is an act or omission listed in Section 19. That both Sections 19 and 20 of the Ombudsman Act apply only to administrative complaints is made even clearer in the Ombudsman Rules of Procedure.  Their counterpart provisions appear in the Ombudsman Rules of Procedure under Rule III which outlines the procedure for administrative cases.^[43][43]  Clearly, then, paragraph 4, Section 20 of the Ombudsman Act applies only to administrative complaints. It should not have been used by the Ombudsman as a ground to dismiss the first charge, since the Complaint filed by petitioner before the Ombudsman was criminal in nature. The criminal nature of petitioner’s Complaint is clear from its prayer seeking the indictment of respondent before the Ombudsman.^[44][44] This lapse notwithstanding, we do not find any arbitrariness or whim in the manner that the Ombudsman disposed of the charge. If there was any abuse of discretion at all, it was not grave.

B. On the second charge of private practice

The Ombudsman found that respondent Velasco was not engaged in private practice when he filed two Petitions for the reopening of the child abuse cases against petitioner on the ground that respondent was acting in his capacity as the investigating prosecutor of the said cases. Again, this Court takes judicial notice of the CA’s finding in G.R. No. 187596, adverted to earlier, that respondent’s isolated act of filing a pleading did not necessarily constitute private practice of law.^[45][45] We have, in fact, said so in Maderada v. Mediodea,^[46][46] citing People v. Villanueva:^[47][47]

Private practice has been defined by this Court as follows:

“Practice is more than an isolated appearance, for it consists in frequent or customary action, a succession of acts of the same kind. In other words, it is frequent habitual exercise. Practice of law to fall within the prohibition of statute [referring to the prohibition for judges and other officials or employees of the superior courts or of the Office of the Solicitor General from engaging in private practice] has been interpreted as customarily or habitually holding one’s self out to the public, as a lawyer and demanding payment for such services.  x x x.”

Clearly, by no stretch of the imagination can the act of respondent Velasco be considered private practice, since he was not customarily or habitually holding himself out to the public as a lawyer and demanding payment for those services. The appellate court also noted that, on the contrary, he filed the motion in good faith and in the honest belief that he was performing his duty as a public servant.^[48][48]

Thus, the Ombudsman did not commit any grave abuse of discretion when it dismissed the second charge against respondent Velasco.

However, we again need to point out that we do not share the Ombudsman’s finding that the charge is dismissible on the ground of failure to exhaust administrative remedies pursuant to paragraph 1, Section 20 of the Ombudsman Act. As already explained earlier, the said provision applies only to administrative cases, while the Complaint before the Ombudsman was not administrative, but criminal, in nature.  Still, we do not find any abuse of discretion when the Ombudsman proffered this ground for dismissing the second charge.

C. On the third charge of falsification of public document

Finally, the Ombudsman correctly found that the charge of falsification had not been substantiated, and that the mere presentation of the alleged manufactured document alone would not in itself establish falsification. To recall, petitioner Angeles claimed that Leonila Vistan could not have appeared before respondent Velasco because she was sick, but offered no supporting evidence. Also, it does not follow that a clarificatory hearing could not have been conducted, just because respondent Velasco had prepared a Resolution on 20 June 1999, two days before that hearing.

Moreover, as found by the CA in G.R. No. 187596 adverted to earlier, a clarificatory hearing was in fact conducted. The appellate court found that the declarations of petitioner could not prevail over the positive assertion of Percival Abril and Jesusa Hernandez, who testified that they had seen Leonila Vistan before Velasco at the clarificatory hearing on 22 June 1999.^[49][49]

However, the Court differs with the Ombudsman on the latter’s pronouncement that the issue of falsification of public document should have been raised by petitioner earlier, when she filed her Petition for Review of the Resolution of respondent Velasco; and that, consequently, the charge of falsification of a public document was no longer in issue because of its belated filing. We draw attention to the fact that the Petition for Review of respondent’s Resolution indicting petitioner Judge Angeles was under an entirely different proceeding. The purpose of the Petition was to reverse the aforesaid Resolution, and not to exact criminal liability on respondent for the crime of falsification of a public document, as in the Complaint before the Ombudsman. Thus, it cannot be said that the issue of falsification of a public document in the criminal Complaint was raised belatedly, because the Complaint was not a continuation of the previous Petition for Review of respondent’s Resolution. The two proceedings were completely independent of each other. This lapse, however, did not constitute grave abuse of discretion.

In sum, this Court finds no compelling reason to depart from its long-standing policy of non-interference in the exercise by the Ombudsman of its investigatory and prosecutorial powers which, as we have emphasized, are plenary.

Although the Court diverges from some of the conclusions reached by the Ombudsman, we find that its dismissal of the charges against respondent Velasco was arrived at after a rational deliberation.  Such deliberation was shown by its reasoned disposition of the case in the exercise of its constitutionally mandated discretionary powers. The Ombudsman did not overstep the boundaries of its plenary powers and acted within the permissible limits. We do not find any arbitrariness or abuse that was so gross and patent in the manner it exercised its discretion as would warrant this Court’s reversal. 

Absent a clear showing of grave abuse of discretion, we uphold the findings of the Ombudsman.

Final Note

Finally, the Court notes with strong disapproval both parties’ resort to abuse of the judicial processes of this Court. This is the third case we know of that the parties have filed against each other, and that has reached the Supreme Court.^[50][50]

This fact is especially regrettable, considering that petitioner as judge and respondent as prosecutor should have been well-cognizant of our clogged court dockets and should have thus exercised more restraint in filing cases against each other. Canon 12 of the Code of Professional Responsibility enjoins a lawyer from filing multiple actions arising from the same cause and from misusing court process.^[51][51] Judging from the number of cases and the vengeful tone of the charges that the parties have hurled against each other in their pleadings, they seem more bent on settling what has become a personal score between them, rather than on achieving the ends of justice.^[52][52]

The parties are warned against trifling with court process. This case shall, hopefully, serve as a reminder of their ethical and professional duties and put an immediate end to their recriminations.

WHEREFORE, we DISMISS the Petition for Certiorari filed by Judge Adoracion G. Angeles. We AFFIRM the two Joint Orders of the Ombudsman in Case Nos. OMB-C-C-07-0103-C and OMB-C-A-O7-0117-C dated 21 March 2007 and 30 June 2008, respectively.

SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

    ARTURO D. BRION                                   JOSE PORTUGAL PEREZ                    

         Associate Justice                                                   Associate Justice

BIENVENIDO L. REYES

Associate Justice

A T T E S T A T I O N

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                              ANTONIO T. CARPIO

                                                                    Associate Justice

                                                          Chairperson, Second Division

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

                                                                            Chief Justice