9.

HACIENDA LUISITA, INCORPORATED, LUISITA INDUSTRIAL PARK CORPORATION and

RIZAL COMMERCIAL BANKING CORPORATION, vS. PRESIDENTIAL AGRARIAN REFORM
COUNCIL (PARC); SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF
AGRARIAN REFORM; ALYANSA 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

G.R. No. 17110, NOVEMBER 22, 2011

FACTS: On July 5, 2011, the Supreme Court en banc voted unanimously (11-0) to DISMISS/DENY the
petition filed by HLI and AFFIRM with MODIFICATIONS the resolutions of the PARC revoking HLIs Stock
Distribution Plan (SDP) and placing the subject lands in Hacienda Luisita under compulsory coverage of
the Comprehensive Agrarian Reform Program (CARP) of the government. The Court however did not
order outright land distribution. Voting 6-5, the Court noted that there are operative facts that occurred in
the interim and which the Court cannot validly ignore. Thus, the Court declared that the revocation of the
SDP must, by application of the operative fact principle, give way to the right of the original 6,296 qualified
farmworkers-beneficiaries (FWBs) to choose whether they want to remain as HLI stockholders or [choose
actual land distribution]. It thus ordered the Department of Agrarian Reform (DAR) to 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. The parties thereafter filed their respective motions for reconsideration of the Court
decision.

ISSUES: (1) Is the operative fact doctrine available in this case? (2) Is Sec. 31 of RA 6657
unconstitutional? (3) Cant the Court order that DARs compulsory acquisition of Hacienda Lusita cover
the full 6,443 hectares allegedly covered by RA 6657 and previously held by Tarlac Development
Corporation (Tadeco), and not just the 4,915.75 hectares covered by HLIs SDP? (4) Is the date of the
taking (for purposes of determining the just compensation payable to HLI) November 21, 1989, when
PARC approved HLIs SDP? (5) Has the 10-year period prohibition on the transfer of awarded lands
under RA 6657 lapsed on May 10, 1999 (since Hacienda Luisita were placed under CARP coverage
through the SDOA scheme on May 11, 1989), and thus the qualified FWBs should now be allowed to sell
their land interests in Hacienda Luisita to third parties, whether they have fully paid for the lands or not?
(6) THE CRUCIAL ISSUE: Should the ruling in the July 5, 2011 Decision that the qualified FWBs be given
an option to remain as stockholders of HLI be reconsidered.

RULING: [The Court PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al.
with respect to the option granted to the original farmworkers-beneficiaries (FWBs) of Hacienda Luisita to
remain with petitioner HLI, which option the Court thereby RECALLED and SET ASIDE. It reconsidered
its earlier decision that the qualified FWBs should be given an option to remain as stockholders of HLI,
and UNANIMOUSLY directed immediate land distribution to the qualified FWBs.] 1. YES, the operative
fact doctrine is applicable in this case. [The Court maintained its stance that the operative fact doctrine is
applicable in this case since, contrary to the suggestion of the minority, the doctrine is not limited only to
invalid or unconstitutional laws but also applies to decisions made by the President or the administrative
agencies that have the force and effect of laws. Prior to the nullification or recall of said decisions, they
may have produced acts and consequences that must be respected. It is on this score that the operative
fact doctrine should be applied to acts and consequences that resulted from the implementation of the
PARC Resolution approving the SDP of HLI. The majority stressed that the application of the operative
fact doctrine by the Court in its July 5, 2011 decision was in fact favorable to the FWBs because not only
were they allowed to retain the benefits and homelots they received under the stock distribution scheme,
they were also given the option to choose for themselves whether they want to remain as stockholders of
HLI or not.] 2. NO, Sec. 31 of RA 6657 NOT unconstitutional. [The Court maintained that the Court is NOT
compelled to rule on the constitutionality of Sec. 31 of RA 6657, reiterating that it was not raised at the
earliest opportunity and that the resolution thereof is not the lis mota of the case. Moreover, the issue has
been rendered moot and academic since SDO is no longer one of the modes of acquisition under RA
9700. The majority clarified that in its July 5, 2011 decision, it made no ruling in favor of the
constitutionality of Sec. 31 of RA 6657, but found nonetheless that there was no apparent grave violation
of the Constitution that may justify the resolution of the issue of constitutionality.] 3. NO, the Court
CANNOT order that DARs compulsory acquisition of Hacienda Lusita cover the full 6,443 hectares and
not just the 4,915.75 hectares covered by HLIs SDP. [Since what is put in issue before the Court is the
propriety of the revocation of the SDP, which only involves 4,915.75 has. of agricultural land and not
6,443 has., then the Court is constrained to rule only as regards the 4,915.75 has. of agricultural land.
Nonetheless, this should not prevent the DAR, under its mandate under the agrarian reform law, from
subsequently subjecting to agrarian reform other agricultural lands originally held by Tadeco that were
allegedly not transferred to HLI but were supposedly covered by RA 6657. However since the area to be
awarded to each FWB in the July 5, 2011 Decision appears too restrictive considering that there are
roads, irrigation canals, and other portions of the land that are considered commonly-owned by
farmworkers, and these may necessarily result in the decrease of the area size that may be awarded per
FWB the Court reconsiders its Decision and resolves to give the DAR leeway in adjusting the area that
may be awarded per FWB in case the number of actual qualified FWBs decreases. In order to ensure the
proper distribution of the agricultural lands of Hacienda Luisita per qualified FWB, and considering that
matters involving strictly the administrative implementation and enforcement of agrarian reform laws are
within the jurisdiction of the DAR, it is the latter which shall determine the area with which each qualified
FWB will be awarded. On the other hand, the majority likewise reiterated its holding that the 500-hectare
portion of Hacienda Luisita that have been validly converted to industrial use and have been acquired by
intervenors Rizal Commercial Banking Corporation (RCBC) and Luisita Industrial Park Corporation
(LIPCO), as well as the separate 80.51-hectare SCTEX lot acquired by the government, should be
excluded from the coverage of the assailed PARC resolution. The Court however ordered that the unused
balance of the proceeds of the sale of the 500-hectare converted land and of the 80.51-hectare land used
for the SCTEX be distributed to the FWBs.] 4. YES, the date of taking is November 21, 1989, when
PARC approved HLIs SDP. [For the purpose of determining just compensation, the date of taking is
November 21, 1989 (the date when PARC approved HLIs SDP) since 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, on November 21, 1989. Such approval is akin to a notice of coverage
ordinarily issued under compulsory acquisition. On the contention of the minority (Justice Sereno) that the
date of the notice of coverage [after PARCs revocation of the SDP], that is, January 2, 2006, is
determinative of the just compensation that HLI is entitled to receive, the Court majority noted that none of
the cases cited to justify this position involved the stock distribution scheme. Thus, said cases do not
squarely apply to the instant case. 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.] 5. NO, the 10-year period prohibition on the transfer of awarded lands
under RA 6657 has NOT lapsed on May 10, 1999; thus, the qualified FWBs should NOT yet be allowed to
sell their land interests in Hacienda Luisita to third parties. [Under RA 6657 and DAO 1, the awarded
lands may only be transferred or conveyed after 10 years from the issuance and registration of the
emancipation patent (EP) or certificate of land ownership award (CLOA). Considering that the EPs or
CLOAs have not yet been issued to the qualified FWBs in the instant case, the 10-year prohibitive period
has not even started. Significantly, the reckoning point is the issuance of the EP or CLOA, and not the
placing of the agricultural lands under CARP coverage. Moreover, should the FWBs be immediately
allowed the option to sell or convey their interest in the subject lands, then all efforts at agrarian reform
would be rendered nugatory, since, at the end of the day, these lands will just be transferred to persons
not entitled to land distribution under CARP.] 6. YES, the ruling in the July 5, 2011 Decision that the
qualified FWBs be given an option to remain as stockholders of HLI should be reconsidered. [The Court
reconsidered its earlier decision that the qualified FWBs should be given an option to remain as
stockholders of HLI, inasmuch as these qualified FWBs will never gain control [over the subject lands]
given the present proportion of shareholdings in HLI. The Court noted that the share of the FWBs in the
HLI capital stock is [just] 33.296%. Thus, even if all the holders of this 33.296% unanimously vote to
remain as HLI stockholders, which is unlikely, control will never be in the hands of the FWBs. Control
means the majority of [sic] 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 total HLI capital shares 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.]
 10. Hacienda Luisita Incorporated vs. Presidential Agrarian Reform Council,

JULY 5, 2011, G.R. NO. 171101 171101,

FACTS: In 1988, RA 6657 or the CARP law was passed. It is a program aimed at redistributing public and
private agricultural lands to farmers and farmworkers who are landless. One of the lands covered by this
law is the Hacienda Luisita, a 6,443-hectare mixed agricultural-industrial-residential expanse straddling
several municipalities of Tarlac. Hacienda Luisita was bought in 1958 from the Spanish owners by the
Tarlac Development Corporation (TADECO), which is owned and/or controlled by Jose Cojuanco Sr.,
Group. Back in 1980, the Martial Law administration filed an expropriation suit against TADECO to
surrender the Hacienda to the then Ministry of Agrarian Reform (now DAR) so that the land can be
distributed to the farmers at cost. The RTC rendered judgment ordering TADECO to surrender Hacienda
Luisita to the MAR. In 1988, the OSG moved to dismiss the governments case against TADECO. The CA
dismissed it, but the dismissal was subject to the condition that TADECO shall obtain the approval of
FWB (farm worker beneficiaries) to the SDP (Stock Distribution Plan) and to ensure its implementation.
Sec 31 of the CARP Law allows either land transfer or stock transfer as two alternative modes in
distributing land ownership to the FWBs. Since the stock distribution scheme is the preferred option of
TADECO, it organized a spin-off corporation, the Hacienda Luisita Inc. (HLI), as vehicle to facilitate stock
acquisition by the farmers. After conducting a follow-up referendum and revision of terms of the Stock
Distribution Option Agreement (SDOA) proposed by TADECO, the Presidential Agrarian Reform Council
(PARC), led by then DAR Secretary Miriam Santiago, approved the SDP of TADECO/HLI through
Resolution 89-12-2 dated Nov 21, 1989. From 1989 to 2005, the HLI claimed to have extended those
benefits to the farmworkers. Such claim was subsequently contested by two groups representing the
interests of the farmers the HLI Supervisory Group and the AMBALA. In 2003, each of them wrote letter
petitions before the DAR asking for the renegotiation of terms and/or revocation of the SDOA. They
claimed that they havent actually received those benefits in full, that HLI violated the terms, and that their
lives havent really improved contrary to the promise and rationale of the SDOA. The DAR created a
Special Task Force to attend to the issues and to review the terms of the SDOA and the Resolution 89-12-
2. Adopting the report and the recommendations of the Task Force, the DAR Sec recommended to the
PARC (1) the revocation of Resolution 89-12-2 and (2) the acquisition of Hacienda Luisita through
compulsory acquisition scheme. Consequently, the PARC revoked the SDP of TADECO/HLI and
subjected those lands covered by the SDP to the mandated land acquisition scheme under the CARP
law. These acts of the PARC was assailed by HLI via Rule 65. On the other hand, FARM, an intervenor,
asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the corporation, as a mode of CARP
compliance, to resort to stock transfer in lieu of outright agricultural land transfer. For FARM, this modality
of distribution is an anomaly to be annulled for being inconsistent with the basic concept of agrarian
reform ingrained in Sec. 4, Art. XIII of the Constitution.

ISSUES: 1. W/N PARC has the authority to revoke the Stock Distribution Plan or SDP Yes. Under Sec. 31
of RA 6657, as implemented by DAO 10, the authority to approve the plan for stock distribution of the
corporate landowner belongs to PARC. It may be that RA 6657 or other executive issuances on agrarian
reform do not explicitly vest the PARC with the power to revoke/recall an approved SDP, but such power
or authority is deemed possessed by PARC under the principle of necessary implication, a basic postulate
that what is implied in a statute is as much a part of it as that which is expressed. Following this doctrine,
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. 2: W/N the
Court may exercise its power of judicial review over the constitutionality of Sec 31 of RA 6657 No. First,
the intervenor FARM failed to challenged the constitutionality of RA 6657, Sec 31 at the earliest possible
opportunity. It should have been raised as early as Nov 21, 1989, when PARC approved the SDP of HLI
or at least within a reasonable time thereafter. Second, the constitutionality of RA 6657 is not the very lis
mota of this case. Before the SC, the lis mota of the petitions filed by the HLI is whether or not the PARC
acted with grave abuse of discretion in revoking the SDP of HLI. With regards to the original positions of
the groups representing the interests of the farmers, their very lis mota is the non-compliance of the HLI
with the SDP so that the the SDP may be revoked. Such issues can be resolved without delving into the
constitutionality of RA 6657. Hence, the essential requirements in passing upon the constitutionality of
acts of the executive or legislative departments have not been met in this case. 3. W/N Sec 31 of RA
6657 is consistent with the Constitutions concept of agrarian reform Yes. The wording of the Art XIII, Sec
4 of the Constitution 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. 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. The stock
distribution option devised under Sec. 31 of RA 6657 hews with the agrarian reform policy, as instrument
of social justice under Sec. 4 of Article XIII of the Constitution. Albeit land ownership for the landless
appears to be the dominant theme of that policy, the Court emphasized that Sec. 4, Article XIII of the
Constitution, as couched, does not constrict Congress to passing an agrarian reform law planted on direct
land transfer to and ownership by farmers and no other, or else the enactment suffers from the vice of
unconstitutionality. If the intention were otherwise, the framers of the Constitution would have worded said
section in a manner mandatory in character.