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?
III. THE RULING
[The CourtPARTIALLY GRANTEDthe 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 therebyRECALLEDandSET ASIDE. It
reconsidered its earlier decision that the qualified FWBs should be given an
option to remain as stockholders of HLI, and UNANIMOUSLY directed
immediate land distribution to the qualified FWBs.]
1. YES, the operative fact doctrine is applicable in this case.
[The Court maintained its stance that the operative fact doctrine is
applicable in this case since, contrary to the suggestion of the minority, the
doctrine is not limited only to invalid or unconstitutional laws but also
applies to decisions made by the President or the administrative agencies
that have the force and effect of laws. Prior to the nullification or recall of
said decisions, they may have produced acts and consequences that must
be respected. It is on this score that the operative fact doctrine should be

applied to acts and consequences that resulted from the implementation of

the PARC Resolution approving the SDP of HLI. The majority stressed that
the application of the operative fact doctrine by the Court in its July 5, 2011
decision was in fact favorable to the FWBs because not only were they
allowed to retain the benefits and homelots they received under the stock
distribution scheme, they were also given the option to choose for
themselves whether they want to remain as stockholders of HLI or not.]
2. NO, Sec. 31 of RA 6657 NOT unconstitutional.
[The Court maintained that the Court is NOT compelled to rule on the
constitutionality of Sec. 31 of RA 6657, reiterating that it was not raised at
the earliest opportunityand that the resolution thereof isnot the lis motaof
the case. Moreover, the issue has been renderedmoot and academicsince
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 thatthe 500hectare 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 80.51hectare land used for the SCTEX be distributed to the FWBs.]
4. YES, the date of taking is November 21, 1989, when PARC approved
HLIs SDP.
[For the purpose of determining just compensation, the date of taking is
November 21, 1989 (the date when PARC approved HLIs SDP) since this is
the time that the FWBs were considered to own and possess the agricultural
lands in Hacienda Luisita. To be precise, these lands became subject of the
agrarian reform coverage through the stock distribution scheme only upon
the approval of the SDP, that is, on November 21, 1989. Such approval is
akin to a notice of coverage ordinarily issued under compulsory acquisition.
On the contention of the minority (Justice Sereno) that the date of the notice
of coverage [after PARCs revocation of the SDP], that is, January 2, 2006, is
determinative of the just compensation that HLI is entitled to receive, the
Court majority noted that none of the cases cited to justify this position
involved the stock distribution scheme. Thus, said cases do not squarely
apply to the instant case. The foregoing notwithstanding, it bears stressing
that the DAR's land valuation is only preliminary and is not, by any means,
final and conclusive upon the landowner. The landowner can file an original
action with the RTC acting as a special agrarian court to determine just

compensation. The court has the right to review with finality the
determination in the exercise of what is admittedly a judicial function.]
5. NO, the 10-year period prohibition on the transfer of awarded lands
under RA 6657 has NOT lapsed on May 10, 1999; thus, the qualified FWBs
should NOT yet be allowed to sell their land interests in Hacienda Luisita to
third parties.
[Under RA 6657 and DAO 1, the awarded lands may only be transferred or
conveyed after 10 years from the issuance and registration of the
emancipation patent (EP) or certificate of land ownership award (CLOA).
Considering that the EPs or CLOAs have not yet been issued to the qualified
FWBs in the instant case, the 10-year prohibitive period has not even started.
Significantly, the reckoning point isthe issuance of the EP or CLOA, andnot
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.]