(1) Is the operative fact doctrine available in this case?
On July 5, 2011, the Supreme Court en banc voted unanimously (2) Is Sec. 31 of RA 6657 unconstitutional? (11-0) to DISMISS/DENY the petition filed by HLI and AFFIRM (3) Can’t the Court order that DAR’s compulsory acquisition of with MODIFICATIONS the resolutions of the PARC revoking HLI’s Hacienda Lusita cover the full 6,443 hectares allegedly covered by Stock Distribution Plan (SDP) and placing the subject lands in RA 6657 and previously held by Tarlac Development Corporation Hacienda Luisita under compulsory coverage of the (Tadeco), and not just the 4,915.75 hectares covered by HLI’s Comprehensive Agrarian Reform Program (CARP) of the SDP? government. (4) Is the date of the “taking” (for purposes of determining the just compensation payable to HLI) November 21, 1989, when PARC The Court however did not order outright land distribution. Voting approved HLI’s SDP? 6-5, the Court noted that there are operative facts that occurred in (5) Has the 10-year period prohibition on the transfer of awarded the interim and which the Court cannot validly ignore. Thus, the lands under RA 6657 lapsed on May 10, 1999 (since Hacienda Court declared that the revocation of the SDP must, by application Luisita were placed under CARP coverage through the SDOA of the operative fact principle, give way to the right of the original scheme on May 11, 1989), and thus the qualified FWBs should 6,296 qualified farmworkers-beneficiaries (FWBs) to choose now be allowed to sell their land interests in Hacienda Luisita to whether they want to remain as HLI stockholders or [choose third parties, whether they have fully paid for the lands or not? actual land distribution]. It thus ordered the Department of (6) THE CRUCIAL ISSUE: Should the ruling in the July 5, 2011 Agrarian Reform (DAR) to “immediately schedule meetings with Decision that the qualified FWBs be given an option to remain as the said 6,296 FWBs and explain to them the effects, stockholders of HLI be reconsidered? consequences and legal or practical implications of their choice, after which the FWBs will be asked to manifest, in secret voting, III. THE RULING their choices in the ballot, signing their signatures or placing their thumbmarks, as the case may be, over their printed names.” [The Court PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al. with respect to the The parties thereafter filed their respective motions for option granted to the original farmworkers-beneficiaries (FWBs) of reconsideration of the Court decision. Hacienda Luisita to remain with petitioner HLI, which option the Court thereby RECALLED and SET ASIDE. It reconsidered its II. THE ISSUES earlier decision that the qualified FWBs should be given an option to remain as stockholders of HLI, and UNANIMOUSLY directed rendered moot and academic since SDO is no longer one of the immediate land distribution to the qualified FWBs.] modes of acquisition under RA 9700. The majority clarified that in its July 5, 2011 decision, it made no ruling in favor of the 1. YES, the operative fact doctrine is applicable in this case. constitutionality of Sec. 31 of RA 6657, but found nonetheless that there was no apparent grave violation of the Constitution that may [The Court maintained its stance that the operative fact doctrine is justify the resolution of the issue of constitutionality.] applicable in this case since, contrary to the suggestion of the minority, the doctrine is not limited only to invalid or 3. NO, the Court CANNOT order that DAR’s compulsory unconstitutional laws but also applies to decisions made by the acquisition of Hacienda Lusita cover the full 6,443 hectares and President or the administrative agencies that have the force and not just the 4,915.75 hectares covered by HLI’s SDP. effect of laws. Prior to the nullification or recall of said decisions, they may have produced acts and consequences that must be [Since what is put in issue before the Court is the propriety of the respected. It is on this score that the operative fact doctrine should revocation of the SDP, which only involves 4,915.75 has. of be applied to acts and consequences that resulted from the agricultural land and not 6,443 has., then the Court is constrained implementation of the PARC Resolution approving the SDP of to rule only as regards the 4,915.75 has. of agricultural HLI. The majority stressed that the application of the operative fact land.Nonetheless, this should not prevent the DAR, under its doctrine by the Court in its July 5, 2011 decision was in fact mandate under the agrarian reform law, from subsequently favorable to the FWBs because not only were they allowed to subjecting to agrarian reform other agricultural lands originally retain the benefits and homelots they received under the stock held by Tadeco that were allegedly not transferred to HLI but were distribution scheme, they were also given the option to choose for supposedly covered by RA 6657. themselves whether they want to remain as stockholders of HLI or not.] However since the area to be awarded to each FWB in the July 5, 2011 Decision appears too restrictive – considering that there are 2. NO, Sec. 31 of RA 6657 NOT unconstitutional. roads, irrigation canals, and other portions of the land that are considered commonly-owned by farmworkers, and these may [The Court maintained that the Court is NOT compelled to rule on necessarily result in the decrease of the area size that may be the constitutionality of Sec. 31 of RA 6657, reiterating that it was awarded per FWB – the Court reconsiders its Decision and not raised at the earliest opportunity and that the resolution thereof resolves to give the DAR leeway in adjusting the area that may be is not the lis mota of the case. Moreover, the issue has been awarded per FWB in case the number of actual qualified FWBs decreases. In order to ensure the proper distribution of the approval of the SDP, that is, on November 21, 1989. Such agricultural lands of Hacienda Luisita per qualified FWB, and approval is akin to a notice of coverage ordinarily issued under considering that matters involving strictly the administrative compulsory acquisition. On the contention of the minority (Justice implementation and enforcement of agrarian reform laws are Sereno) that the date of the notice of coverage [after PARC’s within the jurisdiction of the DAR, it is the latter which shall revocation of the SDP], that is, January 2, 2006, is determinative determine the area with which each qualified FWB will be of the just compensation that HLI is entitled to receive, the Court awarded. majority noted that none of the cases cited to justify this position involved the stock distribution scheme. Thus, said cases do not On the other hand, the majority likewise reiterated its holding that squarely apply to the instant case. The foregoing notwithstanding, the 500-hectare portion of Hacienda Luisita that have been validly it bears stressing that the DAR's land valuation is only preliminary converted to industrial use and have been acquired by intervenors and is not, by any means, final and conclusive upon the Rizal Commercial Banking Corporation (RCBC) and Luisita landowner. The landowner can file an original action with the RTC Industrial Park Corporation (LIPCO), as well as the separate acting as a special agrarian court to determine just compensation. 80.51-hectare SCTEX lot acquired by the government, should be The court has the right to review with finality the determination in excluded from the coverage of the assailed PARC resolution. The the exercise of what is admittedly a judicial function.] Court however ordered that the unused balance of the proceeds of the sale of the 500-hectare converted land and of the 5. NO, the 10-year period prohibition on the transfer of awarded 80.51-hectare land used for the SCTEX be distributed to the lands under RA 6657 has NOT lapsed on May 10, 1999; thus, the FWBs.] qualified FWBs should NOT yet be allowed to sell their land interests in Hacienda Luisita to third parties. 4. YES, the date of “taking” is November 21, 1989, when PARC approved HLI’s SDP. [Under RA 6657 and DAO 1, the awarded lands may only be transferred or conveyed after 10 years from the issuance and [For the purpose of determining just compensation, the date of registration of the emancipation patent (EP) or certificate of land “taking” is November 21, 1989 (the date when PARC approved ownership award (CLOA). Considering that the EPs or CLOAs HLI’s SDP) since this is the time that the FWBs were considered have not yet been issued to the qualified FWBs in the instant to own and possess the agricultural lands in Hacienda Luisita. To case, the 10-year prohibitive period has not even started. be precise, these lands became subject of the agrarian reform Significantly, the reckoning point is the issuance of the EP or coverage through the stock distribution scheme only upon the 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.]