HACIENDA LUISITA, INCORPORATED, Petitioner,

LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING

CORPORATION,Petitioners-in-Intervention,
vs.
PRESIDENTIAL AGRARIAN REFORM COUNCIL (PARC); SECRETARY NASSER
PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYA NSA NG MGA
MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and
JULIO SUNIGA and his SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. and
WINDSOR ANDAYA, Respondents
G.R. No. 171101 July 5, 2011
(ang nakahighlight in RED, dili kaayo necessary as in necessary sa facts, pero murag to
important to ignore )
[Republic Act 6657(Comprehensive Agrarian Reform Law of 1988), Section 31 provides
Corporate landowners may voluntarily transfer ownership over their agricultural landholdings to
the Republic of the Philippines pursuant to Section 20 hereof or to qualified beneficiaries.]
FACTS:
On March 31, 1958, Hacienda Luisita, a 6443-hectare mixed agricultural-industrial-residential expanse in
Tarlac, was sold by the Spanish owners of Compaia General de Tabacos de Filipinas (Tabacalera) to Tarlac
Development Corporation (TADECO), as well as sold the controlling interest in the sugar mills within the hacienda
called Central Azucarera de Tarlac (CAT). TADECO then was owned/controlled by Jose Cojuangco Sr. Group. The
Government Service Insurance System (GSIS) through the Central Bank helped facilitate the sale by extending
PhP5.911 million loan in favor of TADECO on the condition the lots comprising the Hacienda Luisita be
subdivided by the applicant-corporation and sold at cost to the tenants, should there be any, and whenever
conditions should exist warranting such action under the provisions of the Land Tenure Act.. TADECO failed to
comply this condition.

On May 7, 1980, the martial law administration filed a suit before the Manila RTC against Tadeco, et al., for
them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR, now DAR or Department of
Agriarian Reform) so that the land can be distributed to farmers at cost. Responding, Tadeco alleged that Hacienda
Luisita does not have tenants covered by existing agrarian reform legislations. The Manila RTC rendered judgment
ordering Tadeco to surrender Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the CA. On March 17,
1988, the Office of the Solicitor General moved to withdraw the case against Tadeco, et al. The CA dismissed the
case upon PARCs approval of Tadecos proposed stock distribution plan (SDP) in favor of its farmworkers. [Under
EO 229 and later RA 6657, Tadeco had the option of availing stock distribution as an alternative modality to actual
land transfer to the farmworkers.]

On August 23, 1988, Tadeco organized a spin-off corporation, HLI, herein petitioner, to facilitate stock
acquisition by the farmworkers upon favoring stock distribution scheme over land distribution. For this purpose,
Tadeco conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of
Hacienda Luisita in exchange for HLI shares of stock. The farmworker-beneficiaries (FWBs) approved the
referendum of proposed HLIs Stock Distribution Option Agreement (SDOA) as attested by then DAR Secretary
Philip Juico.

On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary
Holdings, Inc. (Centennary), ceded 300 hectares of the converted area to the latter. Subsequently, Centennary sold
the entire 300 hectares for PhP750 million to Luisita Industrial Park Corporation (LIPCO), which used it in developing
an industrial complex. From this area was carved out 2 parcels, for which 2 separate titles were issued in the name of
LIPCO. Later, LIPCO transferred these 2 parcels to the Rizal Commercial Banking Corporation (RCBC) in payment of
LIPCOs PhP431,695,732.10 loan obligations to RCBC. LIPCOs titles were cancelled and new ones were issued to
RCBC. (This paragraph pertains to separate appellants, LIPCO and RCBC)

From 1989 to 2005, the HLI claimed to have extended benefits to the farmworkers under through Resolution
89-12-2 under the DAR Secretary Miriam Defensor-Santiago. However, two separate groups subsequently
contested this claim of HLI. The first dissent was filed by the Supervisory Group of HLI (Supervisory Group),
praying for a renegotiation of the SDOA, or, in the alternative, its revocation. The second petition, praying for the
revocation and nullification of the SDOA and the distribution of the lands in the hacienda, was filed by Alyansa ng
mga Manggagawang Bukid ng Hacienda Luisita (AMBALA). The DAR then constituted a Special Task Force (STF)
to attend to issues relating to the SDP of HLI. After investigation and evaluation, the STF found that HLI has not
complied with its obligations under RA 6657 despite the implementation of the SDP. On December 22, 2005, the
PARC issued the assailed Resolution No. 2005-32-01, recalling/revoking the SDO plan of Tadeco/HLI. It further
resolved that the subject lands be forthwith placed under the compulsory coverage or mandated land acquisition
scheme of the CARP.

HLI also filed a petition before the Supreme Court in light of what it considers as the DARs hasty placing of
Hacienda Luisita under CARP even before PARC could rule or even read the motion for reconsideration. PARC
would eventually deny HLIs motion for reconsideration via Resolution No. 2006-34-01 dated May 3, 2006.

ISSUES
1. Whether or not PARC possess jurisdiction to recall or revoke HLIs Stock Distribution Program.

2. Whether or not Sec. 31 of RA 6657, which allows stock transfer in lieu of outright land transfer, unconstitutional?

3. Whether or not PARC gravely abuse its discretion in revoking the subject SDP and placing the hacienda under
CARPs compulsory acquisition and distribution scheme

4. Whether or not PARC gravely abuse its discretion when it included LIPCOs and RCBCs respective properties that
once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of
Coverage

RULINGS
1. Yes, PARC has jurisdiction to revoke HLIs SDP under the doctrine of necessary implication.
Pursuant to the doctrine, it may be stated that the conferment of express power to approve a plan for stock distribution of the
agricultural land of corporate owners necessarily includes the power to revoke or recall the approval of the plan, as opposed to HLIs
claim that PARC has only the power to disapprove and not revoke.

2. No, Section 31 of RA RA 6657 is not unconstitutional. The Court however actually refused to pass upon the constitutional
question because it was not raised at the earliest opportunity (FARM under AMBALA took some 18 years to challenge the
constitutionality of RA 6657 which is quite late) and because the resolution thereof is not the lis mota (cause) of the case.
The cause is whether or not PARC acted in grave abuse of discretion when it ordered the recall of the SDP for such non-compliance
and the fact that the SDP offends certain constitutional and statutory provisions. Any of these key issues may be resolved without
necessarily touching the issue into the constitutionality of Sec. 31 of RA 6657

3. No. The revocation of the SDP by PARC should be upheld because of violations of DAO 10, such as 1.)dilution of shares by
hiring additional frameworkers and 2.) the 30-year timeframe for HLI-to-FWBs stock transfer that resulted to watering down of
shares, thereby receiving less than what is guaranteed to the beneficiaries and issuing the shares to beneficiaries in a long period of
time. DAO 10 has the force and effect of law and must be duly complied with. The PARC is, therefore, correct in revoking the SDP.
Consequently, the PARC Resolution No. 89-12-2 dated November 21, l989 approving the HLIs SDP is nullified and voided.

4. Yes. The portions of the converted land within Hacienda Luisita that RCBC and LIPCO acquired by purchase should be excluded
from the coverage of the assailed PARC resolution. It can rightfully be said that both LIPCO and RCBC are purchasers in good faith
for value entitled to the benefits arising from such status. RCBC and LIPCO purchased the lots in question on their honest and well-
founded belief that the previous registered owners could legally sell and convey the lots though these were previously subject of
CARP coverage. The PARC, and consequently DAR, gravely abused its discretion when it placed LIPCOs and RCBCs property
which once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of Coverage.

Summary Ruling: (stated in the case verbatim)

[WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01 dated December 22, 2005 and Resolution No.
2006-34-01 dated May 3, 2006, placing the lands subject of HLIs SDP under compulsory coverage on mandated land acquisition
scheme of the CARP, are hereby AFFIRMED with the MODIFICATION that the original 6,296 qualified FWBs shall have the option
to remain as stockholders of HLI. DAR shall immediately schedule meetings with the said 6,296 FWBs and explain to them the
effects, consequences and legal or practical implications of their choice, after which the FWBs will be asked to manifest, in secret
voting, their choices in the ballot, signing their signatures or placing their thumbmarks, as the case may be, over their printed
names.]