Hacienda Luisita Inc. (HLI) v.

Presidential Agrarian
Reform Council (PARC), et al., G.R. No. 171101,
November 22, 2011
RESOLUTION
VELASCO, JR., J.:
I.

THE 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
farmworkersbeneficiaries (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.
II.

THE 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?

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.]

III. THE 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

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.

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.]

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

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.

Heirs of Dr. Jose Deleste v. Land Bank of the

Philippines, et al., G.R. No. 169913. June 8, 2011.
Post under Political Law at Sunday, October 16,
2011 Posted by Schizophrenic Mind

[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.]

Administrative cases; due process. (J. Abad)

Petitioners contend that DAR failed to notify them
that it is putting the subject property under the
coverage of the agrarian reform program; hence,
their right to due process of law was violated. The
SC agreed. The importance of an actual notice in
subjecting a property under the agrarian reform
program

cannot

compliance

with

be
it

underrated,
violates

the

as

non-

essential

requirements of administrative due process of law.

If the illegality in the issuance of the CLTs is
patent, the Court must immediately take action
and declare the issuance as null and void.
Accordingly, there being no question that the CLTs
in the instant case were improperly issued, for
which reason, their cancellation is warranted.
The same holds true with respect to the EPs and

certificates of title issued by virtue of the void

CLTs, as there can be no valid transfer of title
should the CLTs on which they were grounded are
void.

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Saturday, October 20, 2012

Association Of Small Landowners Vs. Secretary Of
DAR Case Digest
Asso. Of Small Landowners Vs. Sec. Of DAR
175 SCRA 343
G.R. No. L-78742
July 14, 1989
Facts: Several petitions are the root of the case:
a.

A petition alleging the constitutionality of PD

No. 27, EO 228 and 229 and RA 6657. Subjects of
the petition are a 9-hectare and 5 hectare

Riceland worked by four tenants. Tenants were

declared full owners by EO 228 as qualified
farmers under PD 27. The petitioners now contend
that President Aquino usurped the legislatures
power.
b.
A petition by landowners and sugarplanters
in Victorias Mill Negros Occidental against
Proclamation 131 and EO 229. Proclamation 131
is the creation of Agrarian Reform Fund with initial
fund of P50Billion.
c.
A petition by owners of land which was placed
by the DAR under the coverage of Operation Land
Transfer.
d.
A petition invoking the right of retention under
PD 27 to owners of rice and corn lands not
exceeding seven hectares.
Issue: Whether or Not the aforementioned EOs,
PD, and RA were constitutional.
Held: The promulgation of PD 27 by President
Marcos was valid in exercise of Police power and
eminent domain.
The power of President Aquino to promulgate
Proc. 131 and EO 228 and 229 was authorized
under Sec. 6 of the Transitory Provisions of the
1987 Constitution. Therefore it is a valid exercise
of Police Power and Eminent Domain.

RA 6657 is likewise valid. The carrying out of the

regulation under CARP becomes necessary to
deprive 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. The taking contemplated is not a
mere limitation of the use of the land. What is
required is the surrender of the title and the
physical possession of said excess and all
beneficial rights accruing to the owner in favour
of the farmer.
A statute may be sustained under the police
power only if there is concurrence of the lawful
subject and the method.
Subject and purpose of the Agrarian Reform Law
is valid, however what is to be determined is the
method employed to achieve it.
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