1955 Land Reform Act was passed, setting in motion the expropriation

of all tenanted estates

August 8 1963 the agricultural land reform code was enacted, abolishing
share tenancy and converting all instances of share tenancy into
leasehold tenancy; RA 3844 created the Land Bank of the Philippines to
provide support in all phases of agrarian reform.
o Aimed to create a system of ownercultivatorship in rice and corn, expropriating
ands in excess of 75 hectars for their eventual
resale to tenants
o Its operations were confined mainly to areas in
central Luzon and its implementation at any
level of intensity limited to the pilot project in
Nueva Ejica
RA 6389 Code of agrarian reform declaring the entire country a land
reform area and providing for the automatic conversion of tenancy to
leasehold tenancy in all areas. From 75 to 7 hectars.

FACTS

Hacienda Luisita 6,443 hectare mixed agricultural-industrial-residential

expanse in Tarlac, owned by Compania General de Tabacos de Filipinas
(Tabacalera).
o Tabacalera offered to sell hacienda and their controlling interest
over the sugar mill w/in the hacienda, central azucarera de tarlac
(cat) as an indivisible transaction.
Tadeco controlled by Cojuangco, willing to buy. Hacienda in pesos and
CAT in US dollars.
Philippine gov through central bank, assisted the buyer to obtain a dollar
loan from a US bank.
GSIS also extended a 5.911 million loan in favour of Tadeco to pay the
peso price.
March 31, 1958, Tadeco had fully paid the purchase price for the
acquisition of Hacienda and CAT
May 7 1980, the martial law administration filed a case against tadeco in
the rtc for them to surrender hacienda to the then ministry of agrarian
reform so that the land can be distributed to farmers at cost.
Tadeco hacienda does not have tenants and the sugar lands are not
covered by existing agrarian reform legislations.
RTC Manila Tadeco to surrender hacienda to MAR. Appealed
3/17/88 OSG moved to withdraw the govt case against Tadeco.
CA dismissed case. The dismissal was made subject to the obtention of
tadeco of the PARCs approval of a stock distribution plan that must initially
be implemented after such approval shall have been secured.
Section 10 of EO 229 allows corporate land-owners as an alternative to
the actual land transfer scheme of CARP. To give qualified beenficiaries
the right to purchase shares of stocks of the corporation under a stock
ownership arrangement and or land to share ratio.
o Similar to this, RA 6657 also provides 2 alternative modalities (1)
land or stock transfer, pursuant to either of which the corporate land
owner can comply with carp but subject to well defined conditions
and (2) timeline requirements.
The stock distribution scheme appeared to be tadecos preferred option.
o Tadeco assigned and conveyed to HLI the agriculture land portion
(4915.75h) and other farm-related properties of hacienda in
exchange for HLI shares of stock.
o Cojuangco, reyes, cojuango jr, teopaco were the incorporators of
HLI.

In the SDP, the properties and assets of Tadeco contributed to the capitol
stock of HLI have an aggregate value of 590M, a net value of 355M, which
translated to 355M shares with a par value of PHP 1/share.
May 9 1989, 93% of the then farmworker-beneficiaries complement of
hacienda signified in a referendum their acceptnance of the proposed
HLIs stock distribution option plan.
May 11 1989, SDOA (styled as a MOA) was entered into by tadeco, HLI
and 5,848 farmer benificiaries and attested to by then DAR Sec Phiip
Juico.
SDOA; included therein
o Production-sharing equivalent to 3% of gross sales from the
production of the agricultural land payable to the farmer
beneficiaries in cash dividens or incentive bonus;
o Distribution of free homelots of not more than 240 sqm each to
family beneficiaries.
The production sharing is payable irrespective of whether HLI makes
oney or not implying that the benefits do not partake the nature of
dividends, as the term ordinarily understood under corporation law.
Out of 5315; 5117 opted to receive shares in HLI, while 132 chose actual
land distribution.
After a review of the SDP, then DAR sec, Miriam Santiago wrote a letter to
cojuanco, Tadeco president, proposing that the SDP be revised. (p221)
Reply: The proposed revisions of the SDP are already embodied in both
the SDP and MOA. -> na approve naman ni madam Santiago.
At the time of approval of the SDP, HLI had 6296 of permanent, seasonal
and casual master list/payroll and non-master list members
From 1989 to 2005, HLI claimed to have extended the following benefits to
the FWB (p222); of which, two groups subsequently contested this claim
of HLI.
August 15, 19915 HLI applied for the conversion of 500 hactares of land of
the hacienda from agricultural to industrial use pursuant to section 65 of ra
6657.
o The application had the backing of 5000+ fwb.
o Approved by DAR, subject to payment of 3% of the gross selling
rice to the fwb and to HLI continues compliance with its
undertakings under the SDP, among other conditions.
Dec 13, 1996 HLI in exchange for subscription of 12M shares of stocks of
Centennary Holdings inc ceded 300 hecatres of the converted area to the
latter. HLI transferred the remaining the remaining 200 hecatres to luicita
reality corp in two separate transactions in 1997 & 1998, both uniformly
involving 100 hectares for php250M each.
o Centennary, a corporation with an authorized capital stock oh 12M
divided into 12M shares and wholly owned by HLI.
Subsequently, centenary sold the entire 300 hactares to Luisita for 750M.
Acquired for the purpose of developing an industrial complex.
Apart from the 500 hecatres alluded to, another 80.51 hecatres were later
detached from the area coverage of hacienda which had been acquired by
the government as part of the subic-clark-tarlac expressway complex.
Two separate petitions reached DAR in the latter part 2003.
o 1st: alleged that HLI had failed togive them their dividends and the
1% share in gross sales, as well as the 33% share in the proceeds
of the sale of the converted 500 hecatres of land. Further claimed
that their lives have not improved contrary to the promise and
rationale for the adoption of the SDOA. Prayed for the renegotiation
of the SDOA, or its revocation.
o 2nd: called in this petition is the revocation and nullification of the
SOA and distribution of the lands in the hacienda.
DAR constituted a special task force to attend to issue relating to the SDP
of HLI. Was mandated to review the terms and conditions of the SDOA

and PARC Resolution No. 89-12-2 relative to HLIs SDP; evaluate HLIs
compliance reports; evaluate the merits of the petitions for the revocation
of the SDP; conduct ocular inspections or field investigations; and
recommend appropriate remedial measures for approval of the secretary.
o Filed a report finding that HLI has not complied with its obligation
under RA 6657 despite its implementation of the SDP.
The recommendations were adopted by DAR sec.
Recommended to PARC exec committee the
revocation of PARC resolution approving HLIs SDP
and the acquisition of Hacienda thought the
compulsory acquisition scheme.
HLI sought reconsideration. On the same day, DAR Tarlac provincial office
issued the notice of coverage which HLI received on jan 4, 2006.
o In its motion, HLI has filed the instant recourse in light of what it
considers as the DARs hasty placing of hacienda under CARP
even before PARC could rule or even read the motion for
reconsideration.

ISSUE
1. The alternative modes of acquisition of land; and
2. The stock distribution
HELD/RATIO:
1. Re: PARCs Authority to Revoke a Stock Distribution Plan
Under sec 31 of 6657, the authority to approve the plan for stock
distribution, of the corporate landowner belongs to PARC. They
also have the power to revoke the SDP, which it previously
approved. It is deemed possessed by PARC under the principle
necessary implication, a basic postulate that what is implied in a
statute is as much a part of it as that which is expressed.
The power to approve a license includes by implication, even if not
expressly granted, the power to revoke it. The power to revoke is a
limited authority to grant the license, from which it is derived from
the first place. It is only for the violation of such conditions that the
mayor may revoke said permit
NECESSARY IMPLICATION: 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.
Only PARC can effect such revocation. Not the DAR sec.
o (HLI foists on the court that subjecting its landholdings to
compulsory distribution after its approved by SDP has been
implemented would impair the contractual obligations
created under SDOA
o The SDOA is a special contract imbued with public interest
entered into and crafted pursuant to the provisions of
RA6657. It embodies the SDP, which requires for its validity,
or at least its enforceability, PARCs approval. The fact that
the certificate of compliance is revocable by the same
issuing authority supports the idea that everything about the
implementation of the SDP is, at the first instance, subject to
administrative adjudication.
o The rights, obligations and remedies of the parties to the
SDOA embodying the SDP are primarily governed by 6657.
HLI was created precisely to comply with 6657.)
2. Re: Constitutional Issue
(HLI insists that agrarian reform is not only about transfer of land
ownership to farmers and other qualified beneficiaries, the
constitutionality of a law cannot be attacked collaterally. The attack
on the constitutionality of sec 31 of 6657 must fail.)

ESSESNTIAL REQUISITS of judicial review:

o There is an actual case or controversy;
o That the constitutional question is raised at the earliest
possible opportunity by a proper party or one with locus
standi;
o The issue of constitutionality must be the very lis mota at the
case.
o Not all the foregoing requirements are satisfied.
FARM has yet to explain its failure to challenge the constitutionality
of sec 32 of 657 since as early as Nov 21 1989 when PARC
approved the SDP of hacienda or at least within a reasonable time
thereafter and why its members received benefits from the SDP
without so much of a protest.
o It was only 14 years after that the said plan and approving
resolution were sought to be revoked, but not by FARM or
any of its members.
AMBALA the one who asked about the
constitutionality, but it did not focus there. Rather, they
focused on the purported flaws and gaps in
subsequent implementation of the SDP.
Even the OSG did not question the constitutionality of
the provision.
The 27 members of FARM that were previously
members of AMBALA only brought up the question of
constitutionality 18 years before it challenged the
constitutionality of sec 31 of 6657 which is too late in
the day.
The question of constitutionality will not be passed upon by the
court unless it is properly raised and resented in an appropriate
case at the first opportunity. FARM is therefore remiss belatedly
questioning the constitutionality of sec 31 of 6657.
The last and most important requisite that the constitutional issue
must be the very lis mota of the case does not likewise obtain, said
requisite is not present.
Sec 5 of RA9700 amending sec 7 of RA 6657 has all but
superseded sec 31 of 6657, vis--vis the stock distribution
component of said sec 31. (p249)
o Sec 5 of ra9700 provides: after june 30, 2009, the modes of
acquisition shall be limited to voluntary offer to sell and
compulsory acquisition. The stock distribution scheme under
sec 31 of 6657 is no longer an available option under
existing law. The question of WON it is unconstitutional
should be a moot issue. The requisites to resolve moot
cases are also not present at the case at bar.
There is no breach of the fundamental law. Sec 4, Art XIII of the
constitution states: the right of the farmers and regular
farmworkers, who are landless, to won directly or collectively the
lads they till or in the case of other farmworkers, to receive a just
share of the fruits thereof.
o The basic law ALLOWS TWO MODES OF LAND
DISTRIBUTION:
Direct transfer to individual farmers the most
commonly used method by DAR and widely accepted.
Indirect transfer through collective ownership the
alternative to direct ownership of agricultural land by
individual farmers.
o Sec 4 expressly authorizes collective ownership by farmers.
The constitution allows for indirect ownership of land and not just
outright agricultural land transfer. This is in recognition of the fact

that land reform may become successful even if it is done through

the medium of juridical entities composed of farmers
o Collective ownership is permitted in two provision of 6657:
Sec 29 allows workers cooperative or associations
to collectively own the land.
Main requisites
In general, lands shall be distributed directly to
for collective
individual worker-beneficiaries
ownership of
It shall be owned collectively by the workerland:
beneficiaries who shall form a workers
Collective
cooperative or association which will deal with
or group
the corporation or business association.
work by
Sec 31; second paragraph allows corporations or
farmers of
associations to own agricultural land with the farmers
the
becoming stockholders or members. (p251)
agricultura
Upon certification by 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 activates bears in
relation to the companys total assets, under
such terms and conditions as may be agreed
upon them. The same principle is to be applied
to associations.
o Sec 29 & 31 are authorized vehicles for the collective
ownership of agricultural land.
o Sec 31 is constitutional as it simply implements sec 4 of art
xiii of the constitution that land can be owned collectively by
farmers.
Even the farmers of the 1987 constitution are in
unison with respect to the two modes of ownership of
agricultural lands tilled by farmers.
RA 6657 has been enacted precisely pursuant to and as a
mechanism to carry out the constitutional directives.