Session Three Land Acquisition

LAND ACQUISITION the transfer of private and public lands to farmer beneficiaries

Sec. 3a Definition of Agrarian Reform
SECTION 3. Definitions. For the purpose of this Act, unless the context indicates otherwise:
(a) Agrarian Reform means redistribution of lands, regardless of crops or fruits produced, to farmers and regular farmworkers who are landless,
irrespective of tenurial arrangement, to include the totality of factors and support services designed to lift the economic status of the beneficiaries and
all other arrangements alternative to the physical redistribution of lands, such as production or profit-sharing, labor administration, and the
distribution of shares of stocks, which will allow beneficiaries to receive a just share of the fruits of the lands they work. cdasia

Sec. 4 Scope of the Program

SECTION 4. Scope. The Comprehensive Agrarian Reform Law of 1989 shall cover, regardless of tenurial arrangement
and commodity produced, all public and private agricultural lands, as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture.
More specifically the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No reclassification of
forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act until Congress, taking into
account ecological, developmental and equity considerations, shall have determined by law, the specific limits of the public
domain.
(b) All lands of the public domain in excess of the specific limits as determined by Congress in the preceding
paragraph; cda
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that can be raised
thereon.
Sec. 7 Priorities of Coverage

SECTION 7. Priorities. The Department of Agrarian Reform (DAR) in coordination with the Presidential Agrarian
Reform Council (PARC) shall plan and program the acquisition and distribution of all agricultural lands through a period of ten (10) years
from the effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and corn lands under Presidential Decree No. 27; all idle or abandoned lands; all private lands voluntarily offered
by the owners for agrarian reform; all lands foreclosed by the government financial institutions; all lands
acquired by the Presidential Commission on Good Government (PCGG); and all other lands owned by the
government devoted to or suitable for agriculture, which shall be acquired and distributed immediately
upon the effectivity of this Act, with the implementation to be completed within a period of not more than
four (4) years;
Phase Two: All alienable and disposable public agricultural lands; all arable public agricultural lands under agro-forest, pasture
and agricultural leases already cultivated and planted to crops in accordance with Section 6, Article XIII
of the Constitution; all public agricultural lands which are to be opened for new development and
resettlement; and all private agricultural lands in excess of fifty (50) hectares, insofar as the excess
hectarage is concerned, to implement principally the rights of farmers and regular farmworkers, who are
the landless, to own directly or collectively the lands they till, which shall be distributed immediately
upon the effectivity of this Act, with the implementation to be completed within a period of not more than
four (4) years. cdasia
Phase Three: All other private agricultural lands commencing with large landholdings and proceeding to medium and small
landholdings under the following schedule:
(a) Landholdings above twenty-four (24) hectares up to fifty (50) hectares, to begin on the fourth (4th)
year from the effectivity of this Act and to be completed within three (3) years; and
(b) Landholdings from the retention limit up to twenty-four (24) hectares, to begin on the sixth (6th)
year from the effectivity of this Act and to be completed within four (4) years; to implement principally
the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands
they till.
The schedule of acquisition and redistribution of all agricultural lands covered by this program shall be made in accordance with
the above order of priority, which shall be provided in the implementing rules to be prepared by the Presidential Agrarian Reform Council
(PARC), taking into consideration the following; the need to distribute land to the tillers at the earliest practicable time; the need to enhance
agricultural productivity; and the availability of funds and resources to implement and support the program.
In any case, the PARC, upon recommendation by the Provincial Agrarian Reform Coordinating Committee (PARCCOM), may
declare certain provinces or region as priority land reform areas, in which the acquisition and distribution of private agricultural lands therein
may be implemented ahead of the above schedules.
In effecting the transfer within these guidelines, priority must be given to lands that are tenanted.
The PARC shall establish guidelines to implement the above priorities and distribution scheme, including the determination of who are qualified
beneficiaries: Provided, That an owner-tiller may be a beneficiary of the land he does not own but is actually cultivating to the extent of the
difference between the area of the land he owns and the award ceiling of three (3) hectares.

Sec. 16 Land Acquisition (Compulsory Acquisition)

SECTION 16. Procedure for Acquisition of Private Lands. For purposes of acquisition of private lands, the following
procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land
to the owners thereof, by personal delivery or registered mail, and post the same in a conspicuous place in the municipal
building and barangay hall of the place where the property is located. Said notice shall contain the offer of the DAR to pay a
corresponding value in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.
(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner,
his administrator or representative shall inform the DAR of his acceptance or rejection of the offer.
(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines (LBP) shall pay the landowner the
purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of the government
and surrenders the Certificate of Title and other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the
compensation for the land requiring the landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for
decision.
(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner,
upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance
with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
(f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just
compensation.

Sec. 19 Land Acquisition (Voluntary Offer to Sell)

SECTION 19. Incentives for Voluntary Offers for Sales. Landowners, other than banks and other financial institutions, who voluntarily offer
their lands for sale shall be entitled to an additional five percent (5%) cash payment.


ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., petitioner
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.

G.R. No. 78742
July 14, 1989

"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this precious resource among our people. But it is more
than a slogan. Through the brooding centuries, it has become a battle-cry dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.

Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the well-being and economic security of all the
people," especially the less privileged. In 1973, the new Constitution affirmed this goal adding specifically that "the State shall regulate the
acquisition, ownership, use, enjoyment and disposition of private property and equitably diffuse property ownership and profits." Significantly, there
was also the specific injunction to "formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the
soil."

Facts:

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and corn lands not exceeding seven hectares as long
as they are cultivating or intend to cultivate the same. Their respective lands do not exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands.

According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or removed from his farmholding until such time as the
respective rights of the tenant- farmers and the landowner shall have been determined in accordance with the rules and regulations implementing P.D.
No. 27.

The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention because the Department of Agrarian Reform
has so far not issued the implementing rules required under the above-quoted decree. They therefore ask the Court for a writ of mandamus to compel
the respondent to issue the said rules.

The public respondent argues that P.D. No. 27 has been amended by LOI 474 removing any right of retention from persons who own other
agricultural lands of more than 7 hectares in aggregate area or lands used for residential, commercial, industrial or other purposes from which they
derive adequate income for their family. And even assuming that the petitioners do not fall under its terms, the regulations implementing P.D. No. 27
have already been issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978, (Implementation Guidelines of LOI No. 474),
Memorandum Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small
Landowners), and DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to Apply for Retention and/or to
Protest the Coverage of their Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications
for retention under these measures, the petitioners are now barred from invoking this right.

The petitioners insist that the above-cited measures are not applicable to them because they do not own more than seven hectares of agricultural land.

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one whole and separate Article XIII on Social
Justice and Human Rights, containing grandiose but undoubtedly sincere provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:

SEC. 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.

Issue:

Whether or not all rights acquired by the tenant-farmer under P.D. No. 27, as recognized under E.O. No. 228, are retained by him even under R.A.
No. 6657.

Held:

P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared that he shall "be deemed the owner" of a portion
of land consisting of a family-sized farm except that "no title to the land owned by him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers' cooperative." It was understood, however, that full payment of the just compensation
also had to be made first, conformably to the constitutional requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they acquired by virtue of Presidential Decree No.
27.

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains
with the landowner. No outright change of ownership is contemplated either.

This should counter-balance the express provision in Section 6 of the said law that "the landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally retained by them thereunder, further, that original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act shall retain the same areas as long as they continue to
cultivate said homestead."

R.A. No. 6657 does provide for such limits now in Section 6 of the law, which in fact is one of its most controversial provisions.

Retention Limits. Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private agricultural
land, the size of which shall vary according to factors governing a viable family-sized farm, such as commodity produced, terrain, infrastructure, and
soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner
exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following qualifications: (1) that he is at
least fifteen (15) years of age; and (2) that he is actually tilling the land or directly managing the farm; Provided, That landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the time of the approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead.

All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and recognized. Landowners who were unable to exercise their
rights of retention under P.D. No. 27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions therein prescribed. Subject to the
above-mentioned rulings all the petitions are DISMISSED, without pronouncement as to costs.

ISSUE
1. Whether or not the assailed statutes are valid exercises of police power.
2. Whether or not the content and manner of just compensation provided for the CARP is violative of the Constitution.
3. Whether or not the CARP and EO 228 contravene a well accepted principle of eminent domain by divesting the land owner of his property even
before actual payment to him in full of just compensation

HELD
1. Yes. The subject and purpose of agrarian reform have been laid down by the Constitution itself, which satisfies the first requirement of the lawful
subject. However, objection is raised to the manner fixing the just compensation, which it is claimed is judicial prerogatives. However, there is no
arbitrariness in the provision as the determination of just compensation by DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts will still have the right to review with finality the said determination.
2. No. Although the traditional medium for payment of just compensation is money and no other, what is being dealt with here is not the traditional
exercise of the power and eminent domain. This is a revolutionary kind of expropriation, which involves not mere millions of pesos. The initially
intended amount of P50B may not be enough, and is in fact not even fully available at the time. The invalidation of the said section resulted in the
nullification of the entire program.
3. No. EO 228 categorically stated that all qualified farmer-beneficiaries were deemed full owners of the land they acquired under PP 27, after proof
of full payment of just compensation. The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government
on the receipt by the landowner of the corresponding payment or the deposit of DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner.


FACTS:
1. GR No. 79777: PD 27, EOs 228 & 229 Nicolas Manaay and his wife own a 9-hectare riceland; while Agustin Hermano, Jr. owned 5. They both
have four tenants each on their respective landholdings, who were declared full owners of the said lands by EO 228 as qualified farmers under PD 27.
The Manaays and Hermano question the constitutionality of PD 27 and EOs 228 and 229.
2. GR No. 79310: PP 131, EO 229 Landowners and sugar planters in the Victorias Mill District in Negros, as well as Planters Committee, Inc.
seek to prohibit the implementation of PP 131 and EO 229 for being violative of the constitutional provisions on just compensation, due process, and
equal protection.
Subsequently, the National Federation of Sugarcane Planters (NASP), Manuel Barcelona, and Prudencio Serrano filed their own petitions, which also
assailed the constitutionality of the abovementioned statutes.
3. GR No. 79744: EOs 228 & 229 Inocentes Pabico alleges that the then DAR Secretary placed his landholding under the coverage of OLT, in
violation of due process and the requirement for just compensation. Certificates of Land Transfer were subsequently issued to enants, who then
refused to pay lease rentals to him. He then protested the erroneous inclusion of his small landholding under OLT and asked for the recall and
cancellation of the said CLTs, which was denied without hearing. Although he filed an MR, EOs 228 and 229 were issued, rendering his MR moot
and academic because the said EOs directly effected the transfer of his land to his farmers-tenants.
4. GR No. 78742: PD 316 The Association of Small Landowners in the Philippines invokes the right of retention granted by PD 27 to owners of
rice and corn lands not exceeding 7 hectares as long as they are cultivating or intend to cultivate the same. Their respective lands do not exceed the
statutory limit but are occupied by tenants who are actually cultivating such lands.
Because PD 316 provides that no tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or removed from his
farmholding until such time as the respective rights of the tenant-farmers and the landowner shall have been determined, they petitioned the Court for
a writ of mandamus to compel the DAR Secretary to issue the IRR, as they could not eject their tenants and so are unable to enjoy their right of
retention.

ISSUES:
1. W/N PD 27, PP 131, and EOs 228 and 229 were validly enacted.
2. W/N the CARP fund provision in PP131 conforms to the requirements of a valid appropriation.
3. W/N PP 131 and EO 229 should be invalidated because they do not provide for retention limits.
4. W/N the assailed statutes violate the equal protection clause.
5. W/N the assailed statutes are valid exercises of police power.
6. W/N the content and manner of just compensation provided for in the CARP Law is violative of the Constitution.
7. W/N the CARP and EO 228 contravene a well-accepted principle of eminent domain by divesting the landowner of his property even before actual
payment to him in full of just compensation.


HELD:
1. YES. The promulgation of PD 27 by Pres. Marcos in the exercise of his powers under martial law has already been sustained and there is no reason
to modify or reverse it on that issue. As for the power of Pres. Aquino to promulgate PP 131 and EOs 228 & 229, the same was authorized by Sec. 6
of the Transitory Provisions of the 1987 Constitution. Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they shall be suppletory to RA 6657 whenever not inconsistent with
its provisions.
2. NO. PP 131 is not an appropriation measure even if it does provide for the creation of the said fund, for that is not its principal purpose. An
appropriation law is one the primary and specific purpose of which is to authorize the release of public funds from the treasury. The creation of the
fund is only incidental to the main objective of the proclamation, which is agrarian reform.
3. NO. This argument is no longer tenable because RA 6657 does provide for such limits now in Section 6 of the law. As such, landowners who were
unable to exercise their rights of retention under PD 27 shall enjoy the retention rights granted by RA 6657 under the conditions therein prescribed.
4. NO. The petitioners have not shown that they belong to a different class and entitled to a different treatment. The argument that not only
landowners but also owners of other properties must be made to share the burden of implementing land reform must be rejected. There is a
substantial distinction between these two classes of owners that is clearly visible except to those who will not see.
5. YES. The subject and purpose of agrarian reform have been laid down by the Constitution itself, which satisfies the first requirement of a lawful
subject. However, objection is raised to the manner of fixing the just compensation, which it is claimed is entrusted to the administrative authorities
in violation of judicial prerogatives. However, there is no arbitrariness in the provision, as the determination of just compensation by the DAR is not
by any means final and conclusive upon the landowner or any other interested party, because the law provides that the determination made by the
DAR is only preliminary unless accepted by all parties concerned. Otherwise, the courts will still have the right to review with finality the said
determination.
6. NO. Although the traditional medium for payment of just compensation is money and no other, what is being dealt with here is not the traditional
exercise of the power of eminent domain. This is a revolutionary kind of expropriation, which involves not mere millions of pesos. The initially
intended amount of P50B may not be enough, and is in fact not even fully available at this time. The invalidation of the said section will result in the
nullification of the entire program.
NO. EO 228 categorically stated that all qualified farmer- beneficiaries were deemed full owners of the land they acquired under PD 27, after proof
of full- fledged membership in the farmers cooperatives and full payment of just compensation. The CARP Law, for its part, conditions the transfer
of possession and ownership of the land to the government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the landowner.

DOCTRINE:
To the extent that the measures under challenge merely prescribe retention limits for landowners, there is an exercise of police power for the
regulation of private property in accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to deprive such
owners of whatever lands they may own in excess of the maximum area allowed, there is definitely a taking under the power of eminent domain for
which payment of just compensation is imperative.
Title to all expropriated properties shall be transferred to the State only upon full payment of compensation to their respective owners.
Obiter: One of the basic principles of the democratic system is that where the rights of the individual are concerned, the end does not justify the
means. There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a few notable exceptions, will
excuse the bypassing of an individuals rights. It is no exaggeration to say that a person invoking a right guaranteed under Art III of the Constitution
is a majority of one even as against the rest of the nation who would deny him that right.




G.R. No. 127876. December 17, 1999

ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM, SECRETARY OF
AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV, MUNICIPAL AGRARIAN REFORM
OFFICER OF NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, respondents.

FACTS:
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas, namely, Haciendas Palico, Banilad and Caylaway,
all located in the Municipality of Nasugbu, Batangas. The events of this case occurred during the incumbency of then President Corazon C. Aquino
who issued Proclamation No. 3 promulgating a Provisional Constitution. Before the laws effectivity, petitioner filed with respondent DAR a
voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed under
compulsory acquisition by respondent DAR in accordance with the Republic Act No. 6657, the Comprehensive Agrarian Reform Law of
1988(CARL). In a letter, respondent DAR Secretary informed petitioner that a reclassification of the land would not exempt it from agrarian reform.
Respondent Secretary also denied petitioners withdrawal of the Voluntary Offer to Sell (VOS) on the ground that withdrawal could only be based on
specific grounds such as unsuitability of the soil for agriculture, or if the slope of the land is over 18 degrees and that the land is undeveloped.
Despite the denial of the VOS withdrawal of Hacienda Caylaway, petitioner filed its application for conversion of both Haciendas Palico and
Banilad. petitioner, through its President, Eduardo Roxas, reiterated its request to withdraw the VOS over Hacienda Caylaway
Petitioner instituted Case with respondent DAR Adjudication Board (DARAB) praying for the cancellation of the CLOAs is sued by respondent
DAR in the name of several persons. Petitioner alleged that the haciendas had been declared a tourist zone, is not suitable for agricultural production.
DARAB held that the case involved the prejudicial question of whether the property was subject to agrarian reform, hence, this question should be
submitted to the Office of the Secretary of Agrarian Reform for determination. Petitioner filed with the Court of Appeals. It questioned the
expropriation of its properties under the CARL and the denial of due process in the acquisition of its landholdings. Meanwhile, the petition for
conversion of the three haciendas was denied by the MARO. Petitioners petition was dismissed by the Court of Appeals. Petitioner moved for
reconsideration but the motion was denied by court of Appeals.

ISSUES:
Whether or not the DAR observes due process of the proceedings over the three haciendas

HELD:
The acquisition proceedings over the three haciendas are nullified for respondent DAR's failure to observe due process therein. In accordance with
the guidelines set forth in this decision and the applicable administrative procedure, the case is hereby remanded to respondent DAR for proper
acquisition proceedings and determination of petitioner's application for conversion. Failure of respondent DAR to comply with the requisites of due
process in the acquisition proceedings does not give this Court the power to nullify the CLOAs already issued to the farmer beneficiaries. To assume
the power is to short-circuit the administrative process, which has yet to run its regular course. Respondent DAR must be given the chance to correct
its procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer beneficiaries in 1993. Since then
until the present, these farmers have been cultivating their lands. It goes against the basic precepts of justice, fairness and equity to deprive these
people, through no fault of their own, of the land they till.

Roxas and Company, Inc. vs. DAMBA-NSFW and DAR

FACTS:

Roxas & Co. is a domestic corporation and is the registered owner of three haciendas. On July 27, 1987, the Congress of the Philippines formally
convened and took over legislative power from the President. This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform
Law (CARL) of 1988. The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988. Before the laws effectivity, on May
6, 1988, [Roxas & Co.] filed with respondent DAR a voluntary offer to sell [VOS] Hacienda Caylaway pursuant to the provisions of E.O. No. 229.
Haciendas Palico and Banilad were later placed under compulsory acquisition by DAR in accordance with the CARL. On August 6, 1992 [Roxas
& Co.], through its President, sent a letter to theSecretary of DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of
Nasugbu, Batangas allegedly authorized the reclassification of Hacienda Caylaway from agricultural to non-agricultural As a result, petitioner
informed respondent DAR that it was applying for conversion of Hacienda Caylaway from agricultural to other uses. The petitions nub on the
interpretation of Presidential Proclamation (PP) 1520 reads: DECLARING THE MUNICIPALITIES OF MARAGONDON AND TERNATE IN
CAVITE PROVINCE AND THE MUNICIPALITY OF NASUGBU IN BATANGAS AS A TOURISTZONE, AND FOR OTHER PURPOSES
Essentially, Roxas & Co. filed its application for conversion of its three haciendas from agricultural to non-agricultural on the assumption that the
issuance of PP 1520 which declared Nasugbu, Batangas as a tourism zone, reclassified them to non-agricultural uses. Its pending application
notwithstanding, the Department of Agrarian Reform (DAR) issued Certificates of Land Ownership Award (CLOAs) to the farmer-beneficiaries in
the three haciendas including CLOA No. 6654 which was issued on October 15, 1993 covering 513.983 hectares, the subject of G.R. No. 167505.
Roxas & Co. filed with the DAR an application for exemption from the coverage of the Comprehensive Agrarian Reform Program (CARP) of 1988
on the basis of PP 1520 and of DAR Administrative Order (AO) No. 6, Series of 1994 3 which states that all lands already classified as commercial,
industrial, or residential before the effectivity of CARP no longer need conversion clearance from the DAR.

ISSUES:

Whether PP 1520 reclassified in 1975 all lands in the Maragondon-Ternate-Nasugbu tourism zone to non-agricultural useto exempt Roxas & Co.s
three haciendas in Nasugbu from CARP coverage;

RULING:
PP 1520 DID NOT AUTOMATICALLY CONVERT THE AGRICULTURAL LANDS IN THE THREE MUNICIPALITIES
INCLUDINGNASUGBU TO NON-AGRICULTURAL LANDS.

Roxas & Co. contends that PP 1520 declared the three municipalities as each constituting a tourism zone, reclassified all landstherein to tourism and,
therefore, converted their use to non-agricultural purposes.The perambulatory clauses of PP 1520 identified only "certain areas in the sector
comprising the [three Municipalities that] havepotential tourism value" and mandated the conduct of "necessary studies" and the segregation
of "specific geographic areas" toachieve its purpose. Which is why the PP directed the Philippine Tourism Authority (PTA) to identify what those
potential tourismareas are. If all the lands in those tourism zones were to be wholly converted to non-agricultural use, there would have been noneed
for the PP to direct the PTA to identify what those "specific geographic areas" are.In the above-cited case of Roxas & Co. v. CA, 9 the Court made it
clear that the "power to determine whether Haciendas Palico,Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the
[Comprehensive Agrarian Reform Law] lies withthe [Department of Agrarian Reform], not with this Court." The DAR, an administrative body of
special competence, denied, byOrder, the application for CARP exemption of Roxas & Co., it finding that PP 1520 did not automatically reclassify
all the lands in the affected municipalities from their original uses. It appears that the PTA had not yet, at that time, identified the "specific
geographic areas" for tourism development and had no pending tourism development projects in the areas. Further, report from the Center for Land
Use Policy Planning and Implementation (CLUPPI) indicated that the areas were planted with sugar cane and other crops. 11 Relatedly, the DAR, by
Memorandum Circular No. 7, Series of 2004,12 came up with clarificatory guidelines and therein decreed thatB. Proclamations declaring general
areas such as whole provinces, municipalities, barangays, islands or peninsulas astourist zones that merely:(1) recognize certain still unidentified
areas within the covered provinces, municipalities, barangays, islands, or peninsulasto be with potential tourism value and charge the Philippine
Tourism Authority with the task to identify/delineate specificgeographic areas within the zone with potential tourism value and to coordinate said
areas development; or (2) recognize the potential value of identified spots located within the general area declared as tourist zone (i.e. x x x x)and
direct the Philippine Tourism Authority to coordinate said areas development;could not be regarded as effecting an automatic reclassification of the
entirety of the land area declared as tourist zone. This is sobecause "reclassification of lands" denotes their allocation into some specific use and
"providing for the manner of their utilizationand disposition (Sec. 20, Local Government Code) or the "act of specifying how agricultural lands shall
be utilized for non-agricultural uses such as residential, industrial, or commercial, as embodied in the land use plan." A proclamation that
merelyrecognizes the potential tourism value of certain areas within the general area declared as tourist zone clearly does not allocate,reserve, or
intend the entirety of the land area of the zone for non-agricultural purposes. Neither does said proclamation direct that otherwise CARPable lands
within the zone shall already be used for purposes other than agricultural. Moreover, to view these kinds of proclamation as a reclassification for non-
agricultural purposes of entire provinces, municipalities,barangays, islands, or peninsulas would be unreasonable as it amounts to an automatic and
sweeping exemption from CARP in thename of tourism development. The same would also undermine the land use reclassification powers vested in
local governmentunits in conjunction with pertinent agencies of government.C. There being no reclassification, it is clear that said
proclamations/issuances, assuming [these] took effect before June 15, 1988,could not supply a basis for exemption of the entirety of the lands
embraced therein from CARP coverageD. The DARs reading into these general proclamations of tourism zones deserves utmost consideration, more
especially in thepresent petitions which involve vast tracts of agricultural land. To reiterate, PP 1520 merely recognized the "potential tourism value"
of certain areas within the general area declared as tourism zones. It did not reclassify the areas to non-agricultural use.A mere reclassification of an
agricultural land does not automatically allow a landowner to change its use since there is still that process of conversion before one is permitted to
use it for other purposes.


VARIATIONS ON LAND ACQUISITION

Sec. 31 Corporate Landowners (Stock Distribution Option)

SECTION 31. Corporate Landowners. 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, under such terms and conditions,
consistent with this Act, as they may agree upon, subject to confirmation by the DAR.
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.
Corporations or associations which voluntarily divest a proportion of their capital stock, equity or participation in favor of their
workers or other qualified beneficiaries under this section shall be deemed to have complied with the provisions of the Act: Provided, That the
following conditions are complied with:
a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and other financial benefits, the
books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the
beneficiaries;
b) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured of at least
one (1) representative in the board of directors, or in a management or executive committee, if one exists, of the corporation or
association; and
c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares.
d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless said transaction is in favor of
a qualified and registered beneficiary within the same corporation.
If within two (2) years from the approval of this Act, the land or stock transfer envisioned above is not made or realized or the plan for such stock
distribution approved by the PARC within the same period, the agricultural land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act. acd


Hacienda Luisita Inc. versus Presidential Agrarian Reform Council et. al, GR. No. 171101, July 5, 2011.

Facts:

The SC en banc voted 11-0 dismissing the petition filed by HLI Affirm with modifications the resolutions of the Presidential Agrarian Reform
Council (PARC for brevity) revoking Hacienda Luisita Inc. (HLI for brevity) Stock Distribution Plan (SDP) and placing the subject land in HL
under compulsory coverage of the CARP of the government.

Thereafter, the SC voting 6-5 averred that there are operative facts that occurred in the premises. The SC thereat declared that the revocation of the
SDP shall, by application of the operative fact principle, give the 5296 qualified Farmworkers Beneficiaries (FWBs for brevity) to choose whether
they want to remain as HLI stockholders or choose actual land distribution. Considering the premises, DAR immediately scheduled a meeting
regarding the effects of their choice and therefrom proceeded to secret voting of their choice.

The parties, thereafter, filed their respective Motion for Reconsideration regarding the SCs decision.

Issue:

1) Whether or not operative fact doctrine is applicable in the said case.

2) Whether or not Sec. 31 of R.A. 6657 unconstitutional.

3) Whether or not 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?

4) Whether or not qualified FWBs shall be entitled to the option of remaining as stockholder be reconsidered.

Ruling:

1) Operative Fact Doctrine is applicable to the instant case. The court ruled that the doctrine is not limited only to invalid or unconstitutional law but
also to decisions made by the president or the administrative agencies that have the force and effect of laws, especially if the said decisions produced
acts and consequences that must be respected. That the implementation of PARC resolution approving SDP of HLI manifested such right and
benefits favorable to the FWBs;

2) The SC said that the constitutionality of Sec. 31 of R.A. 6657 is not the lis mota of the case and it was not raised at the earliest opportunity and
did not rule on the constitutionality of the law;

3) The SC ruled that it has not yet lapsed on May 10, 1999, and qualified FWBs are not allowed to sell their land interest in HL to third parties; That
the start of the counting of the prohibitive period shall be ten years from the issuance and registration of the Emancipation Patent (EP for brevity) or
Certificate of Land Ownership Award (CLOA for brevity), and considering that the EPs and CLOAs have not yet been issued, the prohibitive period
has not started yet.

4) The SC ruled in the affirmative, giving qualified FWBs the option to remain as stockholder

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.]

The SC PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al., The 6,296 original FWBs shall forfeit and relinquish
their rights over the HLI shares of stock issued to them in favor of HLI. The HLI Corporate Secretary shall cancel the shares issued to the said FWBs
and transfer them to HLI in the stocks and transfer book. The 4,206 non-qualified FWBs shall remain as stockholders of HLI.


I. THE FACTS

In 1958, the Spanish owners of Compaia General de Tabacos de Filipinas (Tabacalera) sold Hacienda Luisita and the Central Azucarera de Tarlac,
the sugar mill of the hacienda, to the Tarlac Development Corporation (Tadeco), then owned and controlled by the Jose Cojuangco Sr. Group. The
Central Bank of the Philippines assisted Tadeco in obtaining a dollar loan from a US bank. Also, the GSIS extended a PhP5.911 million loan in favor
of Tadeco to pay the peso price component of the sale, with the condition that 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 however did not comply with 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) so that the land can be distributed to farmers at cost. Responding, Tadeco alleged that Hacienda Luisita
does not have tenants, besides which sugar lands of which the hacienda consisted are not 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, during the administration of President Corazon Cojuangco Aquino, the Office of the Solicitor General moved to withdraw the
governments case against Tadeco, et al. The CA dismissed the case, subject to the 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, herein petitioner HLI, as vehicle to
facilitate stock acquisition by the farmworkers. 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.

On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda Luisita signified in a referendum their
acceptance of the proposed HLIs Stock Distribution Option Plan (SODP). On May 11, 1989, the SDOA was formally entered into by Tadeco, HLI,
and the 5,848 qualified FWBs. This attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics of HLIs SDP,
which was eventually approved by the PARC after a follow-up referendum conducted by the DAR on October 14, 1989, in which 5,117 FWBs, out
of 5,315 who participated, opted to receive shares in HLI.

On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to industrial use, pursuant to Sec. 65 of
RA 6657. The DAR approved the application on August 14, 1996, subject to payment of three percent (3%) of the gross selling price to the FWBs
and to HLIs continued compliance with its undertakings under the SDP, among other conditions.

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. Apart from the 500
hectares, another 80.51 hectares were later detached from Hacienda Luisita and acquired by the government as part of the Subic-Clark-Tarlac
Expressway (SCTEX) complex. Thus, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded to HLI.

Such, was the state of things when two separate petitions reached the DAR in the latter part of 2003. The first 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.

From the foregoing resolution, HLI sought reconsideration. Its motion notwithstanding, 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.


II. THE ISSUES

(1) Does the PARC possess jurisdiction to recall or revoke HLIs SDP?

(2) [Issue raised by intervenor FARM (group of farmworkers)] Is Sec. 31 of RA 6657, which allows stock transfer in lieu of outright land transfer,
unconstitutional?

(3) Is the revocation of the HLIs SDP valid? [Did PARC gravely abuse its discretion in revoking the subject SDP and placing the hacienda under
CARPs compulsory acquisition and distribution scheme?]

(4) Should those portions of the converted land within Hacienda Luisita that RCBC and LIPCO acquired by purchase be excluded from the coverage
of the assailed PARC resolution? [Did the 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?]


III. THE RULING

[The Court DENIED the petition of HLI and AFFIRMED the PARC resolution placing the lands subject of HLIs SDP under compulsory coverage
on mandated land acquisition scheme of the CARP, with the MODIFICATION that the original 6,296 qualified FWBs were given the option to
remain as stockholders of HLI. It also excluded from the mandatory CARP coverage that part of Hacienda Luisita that had been acquired by RCBC
and LIPCO.]

(1) YES, the PARC has jurisdiction to revoke HLIs SDP under the doctrine of necessary implication.

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. Contrary to petitioner HLIs posture, PARC also has the power to revoke the SDP which it previously approved. It may be, as urged, 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. Such power
or authority, however, 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 the doctrine of necessary implication, 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. To deny PARC such revocatory
power would reduce it into a toothless agency of CARP, because the very same agency tasked to ensure compliance by the corporate landowner with
the approved SDP would be without authority to impose sanctions for non-compliance with it.


(2) NO, Sec. 31 of RA 6657 is not unconstitutional. [The Court actually refused to pass upon the constitutional question because it was not
raised at the earliest opportunity and because 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.]

When the Court is called upon to exercise its power of judicial review over, and pass upon the constitutionality of, acts of the executive or legislative
departments, it does so only when the following essential requirements are first met, to wit: (1) there is an actual case or controversy; (2) that the
constitutional question is raised at the earliest possible opportunity by a proper party or one with locus standi; and (3) the issue of constitutionality
must be the very lis mota of the case.

Not all the foregoing requirements are satisfied in the case at bar.

While there is indeed an actual case or controversy, intervenor FARM, composed of a small minority of 27 farmers, has yet to explain its failure to
challenge the constitutionality of Sec. 31 of RA 6657 as early as November 21, 1989 when PARC approved the SDP of Hacienda Luisita or at least
within a reasonable time thereafter, and why its members received benefits from the SDP without so much of a protest. It was only on December 4,
2003 or 14 years after approval of the SDP that said plan and approving resolution were sought to be revoked, but not, to stress, by FARM or any of
its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT question the constitutionality of Sec. 31 of RA 6657, but
concentrated on the purported flaws and gaps in the subsequent implementation of the SDP. Even the public respondents, as represented by the
Solicitor General, did not question the constitutionality of the provision. On the other hand, FARM, whose 27 members formerly belonged to
AMBALA, raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM
some eighteen (18) years from November 21, 1989 before it challenged the constitutionality of Sec. 31 of RA 6657 which is quite too late in the
day. The FARM members slept on their rights and even accepted benefits from the SDP with nary a complaint on the alleged unconstitutionality of
Sec. 31 upon which the benefits were derived. The Court cannot now be goaded into resolving a constitutional issue that FARM failed to assail after
the lapse of a long period of time and the occurrence of numerous events and activities which resulted from the application of an alleged
unconstitutional legal provision.

The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not likewise obtain. The lis
mota aspect is not present, the constitutional issue tendered not being critical to the resolution of the case. The unyielding rule has been to avoid,
whenever plausible, an issue assailing the constitutionality of a statute or governmental act. If some other grounds exist by which judgment can be
made without touching the constitutionality of a law, such recourse is favored.

The lis mota in this case, proceeding from the basic positions originally taken by AMBALA (to which the FARM members previously belonged) and
the Supervisory Group, is the alleged non-compliance by HLI with the conditions of the SDP to support a plea for its revocation. And before the
Court, the lis mota 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, as couched and implemented, offends certain constitutional and statutory provisions. To be sure, any of these key issues may be
resolved without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into the underlying petitions of AMBALA, et
al., it is not the said section per se that is invalid, but rather it is the alleged application of the said provision in the SDP that is flawed.

It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis--vis the
stock distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: [T]hat after June 30, 2009, the modes of
acquisition shall be limited to voluntary offer to sell and compulsory acquisition. Thus, for all intents and purposes, the stock distribution
scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional should be
a moot issue.


(3) YES, the revocation of the HLIs SDP valid. [NO, the PARC did NOT gravely abuse its discretion in revoking the subject SDP and
placing the hacienda under CARPs compulsory acquisition and distribution scheme.]

The revocation of the approval of the SDP is valid: (1) the mechanics and timelines of HLIs stock distribution violate DAO 10 because the minimum
individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of man days and the hiring of additional
farmworkers; (2) the 30-year timeframe for HLI-to-FWBs stock transfer is contrary to what Sec. 11 of DAO 10 prescribes.

In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock distribution, We find that it violates two (2) provisions
of DAO 10. Par. 3 of the SDOA states:

3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the acquisition
and distribution to the THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of
118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the
entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY.

[I]t is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the time of the approval of the SDP, suffered from watering
down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got less than the guaranteed
18,804.32 HLI shares per beneficiary, because the acquisition and distribution of the HLI shares were based on man days or number of days
worked by the FWB in a years time. As explained by HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she
becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not get any share at year end. The number of HLI shares
distributed varies depending on the number of days the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to the
original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of
farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include the original 6,296 FWBs, were given shares out of the
118,931,976.85 HLI shares representing the 33.296% of the total outstanding capital stock of HLI. Clearly, the minimum individual allocation of
each original FWB of 18,804.32 shares was diluted as a result of the use of man days and the hiring of additional farmworkers.

Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year timeframe for HLI-to-FWBs stock transfer is an
arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved stock distribution plan
within three (3) months from receipt by the corporate landowner of the approval of the plan by PARC. In fact, based on the said provision, the
transfer of the shares of stock in the names of the qualified FWBs should be recorded in the stock and transfer books and must be submitted to the
SEC within sixty (60) days from implementation.

To the Court, there is a purpose, which is at once discernible as it is practical, for the three-month threshold. Remove this timeline and the corporate
landowner can veritably evade compliance with agrarian reform by simply deferring to absurd limits the implementation of the stock distribution
scheme.

Evidently, the land transfer beneficiaries are given thirty (30) years within which to pay the cost of the land thus awarded them to make it less
cumbersome for them to pay the government. To be sure, the reason underpinning the 30-year accommodation does not apply to corporate
landowners in distributing shares of stock to the qualified beneficiaries, as the shares may be issued in a much shorter period of time.

Taking into account the above discussion, the revocation of the SDP by PARC should be upheld [because of violations of] DAO 10. It bears stressing
that under Sec. 49 of RA 6657, the PARC and the DAR have the power to issue rules and regulations, substantive or procedural. Being a product of
such rule-making power, 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, those 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.

[T]here are two (2) requirements before one may be considered a purchaser in good faith, namely: (1) that the purchaser buys the property of another
without notice that some other person has a right to or interest in such property; and (2) that the purchaser pays a full and fair price for the property at
the time of such purchase or before he or she has notice of the claim of another.

It can rightfully be said that both LIPCO and RCBC arebased on the above requirements and with respect to the adverted transactions of the
converted land in questionpurchasers in good faith for value entitled to the benefits arising from such status.

First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial land, there was no notice of any supposed defect in the title of
its transferor, Centennary, or that any other person has a right to or interest in such property. In fact, at the time LIPCO acquired said parcels of land,
only the following annotations appeared on the TCT in the name of Centennary: the Secretarys Certificate in favor of Teresita Lopa, the Secretarys
Certificate in favor of Shintaro Murai, and the conversion of the property from agricultural to industrial and residential use.

The same is true with respect to RCBC. At the time it acquired portions of Hacienda Luisita, only the following general annotations appeared on the
TCTs of LIPCO: the Deed of Restrictions, limiting its use solely as an industrial estate; the Secretarys Certificate in favor of Koji Komai and
Kyosuke Hori; and the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP 300 million.

To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan, as
the DAR conversion order was annotated at the back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots
were validly converted to commercial or industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC
Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion and
disposition of agricultural lands previously covered by CARP land acquisition after the lapse of five (5) years from its award when the land ceases
to be economically feasible and sound for agricultural purposes or the locality has become urbanized and the land will have a greater economic value
for residential, commercial or industrial purposes. Moreover, DAR notified all the affected parties, more particularly the FWBs, and gave them the
opportunity to comment or oppose the proposed conversion. DAR, after going through the necessary processes, granted the conversion of 500
hectares of Hacienda Luisita pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and
its original exclusive jurisdiction over all matters involving the implementation of agrarian reform. The DAR conversion order became final and
executory after none of the FWBs interposed an appeal to the CA. In this factual setting, 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. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject lots.

And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value. Undeniably, LIPCO acquired 300 hectares of land from
Centennary for the amount of PhP750 million pursuant to a Deed of Sale dated July 30, 1998. On the other hand, in a Deed of Absolute Assignment
dated November 25, 2004, LIPCO conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of
PhP431,695,732.10.

In relying upon the above-mentioned approvals, proclamation and conversion order, both RCBC and LIPCO cannot be considered at fault for
believing that certain portions of Hacienda Luisita are industrial/commercial lands and are, thus, outside the ambit of CARP. 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.

[The Court went on to apply the operative fact doctrine to determine what should be done in the aftermath of its disposition of the above-enumerated
issues:

While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot
close its eyes to certain operative facts that had occurred in the interim. Pertinently, the operative fact doctrine realizes that, in declaring
a law or executive action null and void, or, by extension, no longer without force and effect, undue harshness and resulting unfairness must be
avoided. This is as it should realistically be, since rights might have accrued in favor of natural or juridical persons and obligations justly incurred
in the meantime. The actual existence of a statute or executive act is, prior to such a determination, an operative fact and may have consequences
which cannot justly be ignored; the past cannot always be erased by a new judicial declaration.

While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld, the revocation must, by application of the operative
fact principle, give way to the right of the original 6,296 qualified FWBs to choose whether they want to remain as HLI stockholders or not. The
Court cannot turn a blind eye to the fact that in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP
approved by PARC per its Resolution No. 89-12-2 dated November 21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI
salaries and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the gross produce from agricultural lands, and 3% of
the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were
distributed as of April 22, 2005. On August 6, 20l0, HLI and private respondents submitted a Compromise Agreement, in which HLI gave the FWBs
the option of acquiring a piece of agricultural land or remain as HLI stockholders, and as a matter of fact, most FWBs indicated their choice of
remaining as stockholders. These facts and circumstances tend to indicate that some, if not all, of the FWBs may actually desire to continue as HLI
shareholders. A matter best left to their own discretion.]

[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.]


Sec. 6 para. 1 Award of Lands to Children of Landowners

SECTION 6. Retention Limits. Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or
private agricultural land, the size of which shall vary according to factors governing a viable family-size farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention
by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following qualifications:
(1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or directly managing the farm: Provided, That landowners
whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the areas originally retained by them thereunder: Provided,
further, That original homestead grantees or their direct compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead.