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.
DECISION
PUNO, J.:

This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the
validity of the acquisition of these haciendas by the government under Republic Act No. 6657,
the Comprehensive Agrarian Reform Law of 1988.
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. Hacienda Palico is 1,024 hectares in area and is registered under Transfer
Certificate of Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466,
0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT
No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is
867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T44665.
The events of this case occurred during the incumbency of then President Corazon C.
Aquino. In February 1986, President Aquino issued Proclamation No. 3 promulgating a
Provisional Constitution. As head of the provisional government, the President exercised
legislative power until a legislature is elected and convened under a new Constitution. [1] In the
exercise of this legislative power, the President signed on July 22, 1987, Proclamation No. 131
instituting a Comprehensive Agrarian Reform Program and Executive Order No. 229 providing
the mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over
legislative power from the President.[2] 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, 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 CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform
Officer (MARO) of Nasugbu, Batangas, sent a notice entitled Invitation to Parties to
petitioner. The Invitation was addressed to Jaime Pimentel, Hda. Administrator, Hda. Palico.

Therein, the MARO invited petitioner to a conference on October 6, 1989 at the DAR office in
Nasugbu to discuss the results of the DAR investigation of Hacienda Palico, which was
scheduled for compulsory acquisition this year under the Comprehensive Agrarian Reform
Program.[4]
[3]

On October 25, 1989, the MARO completed three (3) Investigation Reports after
investigation and ocular inspection of the Hacienda. In the first Report, the MARO found that
270 hectares under Tax Declaration Nos. 465, 466, 468 and 470 were flat to undulating (0-8%
slope) and actually occupied and cultivated by 34 tillers of sugarcane. [5] In the second Report, the
MARO identified as flat to undulating approximately 339 hectares under Tax Declaration No.
0234 which also had several actual occupants and tillers of sugarcane;[6] while in the third Report,
the MARO found approximately 75 hectares under Tax Declaration No. 0354 as flat to
undulating with 33 actual occupants and tillers also of sugarcane.[7]
On October 27, 1989, a Summary Investigation Report was submitted and signed jointly by
the MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and Land
Bank of the Philippines (LBP), and by the Provincial Agrarian Reform Officer (PARO). The
Report recommended that 333.0800 hectares of Hacienda Palico be subject to compulsory
acquisition at a value of P6,807,622.20.[8] The following day, October 28, 1989, two (2) more
Summary Investigation Reports were submitted by the same officers and representatives. They
recommended that 270.0876 hectares and 75.3800 hectares be placed under compulsory
acquisition at a compensation of P8,109,739.00 and P2,188,195.47, respectively.[9]
On December 12, 1989, respondent DAR through then Department Secretary Miriam D.
Santiago sent a Notice of Acquisition to petitioner. The Notice was addressed as follows:

Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.[10]
Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject
to immediate acquisition and distribution by the government under the CARL; that based on the
DARs valuation criteria, the government was offering compensation of P3.4 million for
333.0800 hectares; that whether this offer was to be accepted or rejected, petitioner was to
inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of
petitioners rejection or failure to reply within thirty days, respondent DAR shall conduct
summary administrative proceedings with notice to petitioner to determine just compensation for
the land; that if petitioner accepts respondent DARs offer, or upon deposit of the compensation
with an accessible bank if it rejects the same, the DAR shall take immediate possession of the
land.[11]
Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP
Land Valuation Manager three (3) separate Memoranda entitled Request to Open Trust Account.
Each Memoranda requested that a trust account representing the valuation of three portions of
Hacienda Palico be opened in favor of the petitioner in view of the latters rejection of its offered
value.[12]
Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of
Haciendas Palico and Banilad from agricultural to non-agricultural lands under the provisions of

the CARL.[13] On July 14, 1993, petitioner sent a letter to the DAR Regional Director reiterating
its request for conversion of the two haciendas.[14]
Despite petitioners application for conversion, respondent DAR proceeded with the
acquisition of the two Haciendas. The LBP trust accounts as compensation for Hacienda Palico
were replaced by respondent DAR with cash and LBP bonds. [15] On October 22, 1993, from the
mother title of TCT No. 985 of the Hacienda, respondent DAR registered Certificate of Land
Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOAs were distributed to farmer
beneficiaries.[16]
Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas,
sent a notice to petitioner addressed as follows:

Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas[17]
The MARO informed Pimentel that Hacienda Banilad was subject to compulsory acquisition
under the CARL; that should petitioner wish to avail of the other schemes such as Voluntary
Offer to Sell or Voluntary Land Transfer, respondent DAR was willing to provide assistance
thereto.[18]
On September 18, 1989, the MARO sent an Invitation to Parties again to Pimentel inviting
the latter to attend a conference on September 21, 1989 at the MARO Office in Nasugbu to
discuss the results of the MAROs investigation over Hacienda Banilad.[19]
On September 21, 1989, the same day the conference was held, the MARO submitted two
(2) Reports. In his first Report, he found that approximately 709 hectares of land under Tax
Declaration Nos. 0237 and 0236 were flat to undulating (0-8% slope). On this area were
discovered 162 actual occupants and tillers of sugarcane. [20] In the second Report, it was found that
approximately 235 hectares under Tax Declaration No. 0390 were flat to undulating, on which were 92 actual
occupants and tillers of sugarcane.[21]

The results of these Reports were discussed at the conference. Present in the conference
were representatives of the prospective farmer beneficiaries, the BARC, the LBP, and Jaime
Pimentel on behalf of the landowner.[22] After the meeting, on the same day, September 21, 1989,
a Summary Investigation Report was submitted jointly by the MARO, representatives of the
BARC, LBP, and the PARO. They recommended that after ocular inspection of the property,
234.6498 hectares under Tax Declaration No. 0390 be subject to compulsory acquisition and
distribution by CLOA.[23] The following day, September 22, 1989, a second Summary
Investigation was submitted by the same officers. They recommended that 737.2590 hectares
under Tax Declaration Nos. 0236 and 0237 be likewise placed under compulsory acquisition for
distribution.[24]
On December 12, 1989, respondent DAR, through the Department Secretary, sent to
petitioner two (2) separate Notices of Acquisition over Hacienda Banilad.These Notices were
sent on the same day as the Notice of Acquisition over Hacienda Palico. Unlike the Notice over
Hacienda Palico, however, the Notices over Hacienda Banilad were addressed to:

52 for 729.[31] th On September 4.[27] A second Request to Open Trust Account was sent on November 18. Metro Manila.40 and P21.6498 hectares. Inc. T-44664 and 533.6777 hectares under TCT No. through its President. through the Regional Director. the DAR Regional Director sent to the LBP Land Valuation Manager a Request to Open Trust Account in petitioners name as compensation for 234.[33] Like the Resolutions of Acceptance. Cacho-Gonzales Bldg.108.4190 hectares and P4.4130 hectares of said Hacienda. 7 Flr. Roxas. Hacienda Caylaway Hacienda Caylaway was voluntarily offered for sale to the government on May 6. the Notice of Acquisition was addressed to petitioner at its office in Makati. 101 Aguirre St. T-44663.496. sent to petitioner two (2) separate Resolutions accepting petitioners voluntary offer to sell Hacienda Caylaway. T-44663. 1989. As a result. respondent DAR. Aguirre.995. on August 6. Makati. sent to petitioner a Notice of Acquisition over 241. petitioner informed respondent DAR that it was applying for conversion of Hacienda Caylaway from agricultural to other uses.428. respondent DAR Secretary informed petitioner that a reclassification of the land would not exempt it from agrarian reform.234. M. respondent DAR. The Sangguniang Bayan of Nasugbu.[35] . 1992. the LBP certified that the amounts of P4. 1991. the DAR Regional Director issued two separate Memoranda to the LBP Regional Manager requesting for the valuation of the land under TCT Nos. particularly TCT Nos.[30] The Resolutions were addressed to: Roxas & Company.[32] On the same day.[25] Respondent DAR offered petitioner compensation of P15.Respondent Secretary also denied petitioners withdrawal of the VOS on the ground that withdrawal could only be based on specific grounds such as unsuitability of the soil for agriculture.[34] In a letter dated September 28.. T-44664 and T-44665. The Hacienda has a total area of 867. petitioner applied for conversion of both Haciendas Palico and Banilad.8180 hectares under TCT No.[26] On September 26. T-44664 and T44663. or if the slope of the land is over 18 degrees and that the land is undeveloped. 1988 before the effectivity of the CARL. 1992.Gonzales Bldg.4571 hectares and is covered by four (4) titlesTCT Nos.Roxas y Cia. 1991.6493 hectares of Hacienda Banilad. Nevertheless. 1991 over 723.[28] On December 18.[29] On May 4.00 for 234. T-44662. Limited 7th Floor. T-44664 and T-44663. Legaspi Village Makati.428.468. Batangas allegedly authorized the reclassification of Hacienda Caylaway from agricultural to non-agricultural. Cacho. sent a letter to the Secretary of respondent DAR withdrawing its VOS of Hacienda Caylaway. Metro Manila. 1993. through the Regional Director for Region IV.78 in cash and LBP bonds had been earmarked as compensation for petitioners land in Hacienda Banilad. Leg. Eduardo J. On January 12. petitioner.496. M. 1990.

Batangas approving the Zoning Ordinance reclassifying areas covered by the referenced titles to nonagricultural which was enacted after extensive consultation with government agencies. the petition for conversion of the three haciendas was denied by the MARO on November 8. 1993 approving the Zoning Ordinance enacted by the Municipality of Nasugbu. Eduardo Roxas. 4) Letter dated December 15. including [the Department of Agrarian Reform]. hence. 4 Floor.[38] On October 29. 106 of the Sangguniang Panlalawigan of Batangas dated March 8. [36] On July 14. respondent DARAB held that the case involved the prejudicial question of whether the property was subject to agrarian reform. Petitioners petition was dismissed by the Court of Appeals on April 28. Petitioner alleged that the Municipality of Nasugbu. 1993. petitioner filed its application for conversion of both Haciendas Palico and Banilad. Garcia of the Municipal Planning & Development. on May 11. It questioned the expropriation of its properties under the CARL and the denial of due process in the acquisition of its landholdings. th 2) Resolution No. 1993. N-0017-96-46 (BA) with respondent DAR Adjudication Board (DARAB) praying for the cancellation of the CLOAs issued by respondent DAR in the name of several persons.R. [40] Hence. Meanwhile. [39] Petitioner moved for reconsideration but the motion was denied on January 17. reiterated its request to withdraw the VOS over Hacienda Caylaway in light of the following: 1) Certification issued by Conrado I. Alicia P. petitioner instituted Case No. 1993. 1992 issued by Reynaldo U. had been declared a tourist zone. 1993. that the land is not suitable for agricultural production. and the requisite public hearings. this recourse.. ATI (BA) Bldg. 1993 stating that the lands subject of referenced titles are not feasible and economically sound for further agricultural development. this question should be submitted to the Office of the Secretary of Agrarian Reform for determination. Quezon City dated March 1. 1997 by respondent court. Batangas has no objection to the conversion of the lands subject of referenced titles to non-agricultural. Logarta advising that the Municipality of Nasugbu. 1993. 1994. Gonzales. petitioner. 3) Resolution No. 32484. Diliman. 1993. through its President.Despite the denial of the VOS withdrawal of Hacienda Caylaway. Department of Agriculture. Petitioner assigns the following errors: . Region 4. In a Resolution dated October 14. SP No. and that the Sangguniang Bayan of Nasugbu had reclassified the land to non-agricultural.[37] On August 24. petitioner filed with the Court of Appeals CA-G. 19 of the Sangguniang Bayan of Nasugbu. where the haciendas are located. Coordinator and Deputized Zoning Administrator addressed to Mrs. Officer-in-Charge.

(2) whether the acquisition proceedings over the three haciendas were valid and in accordance with . D. IN FAILING TO GIVE DUE NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE ACQUIRED. OR AT THE VERY LEAST ENTITLE PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY RESPONDENT DAR. AND THE ABSENCE OF A PLAIN. SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAWALL OF WHICH ARE EXCEPTIONS TO THE SAID DOCTRINE. AND THE ZONING ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING CERTAIN PORTIONS OF PETITIONERS LANDHOLDINGS AS NONAGRICULTURAL. 1520 WHICH DECLARED THE MUNICIPALITY OF NASUGBU. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS CAUSE OF ACTION IS PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE RESPONDENTS ACTS.A. 6657. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE PROCESS. CONSIDERING THAT RESPONDENTS BLATANTLY DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF PRIVATE LANDS UNDER R. BATANGAS AS A TOURIST ZONE. MORE PARTICULARLY. B.[41] The assigned errors involve three (3) principal issues: (1) whether this Court can take cognizance of this petition despite petitioners failure to exhaust administrative remedies. BOTH OF WHICH PLACE SAID LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN REFORM. 6657.A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS LANDHOLDINGS ARE SUBJECT TO COVERAGE UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW. IN VIOLATION OF R. C. CONSIDERING THAT PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY STRIPPED OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOAS TO ALLEGED FARMER BENEFICIARIES. IN VIEW OF THE UNDISPUTED FACT THAT PETITIONERS LANDHOLDINGS HAVE BEEN CONVERTED TO NON-AGRICULTURAL USES BY PRESIDENTIAL PROCLAMATION NO.A. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RECOGNIZE THAT PETITIONER WAS BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY WITHOUT JUST COMPENSATION. THE IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL ACTS.

Under these circumstances. There are instances when judicial action may be resorted to immediately. (4) when there is urgent need for judicial intervention.law. (10) when the subject of the controversy is private land.This is not absolute. Exhaustion of Administrative Remedies. The transfer of possession and ownership of the land to the government are conditioned upon the receipt by the landowner of the corresponding payment or deposit by the DAR of the compensation with an accessible bank. petitioner claims that respondent Court of Appeals gravely erred in finding that petitioner failed to exhaust administrative remedies. he is expected to have exhausted all means of administrative redress. the land must first be acquired by the State from the landowner and ownership transferred to the former. title remains with the landowner. (2) when the administrative body is in estoppel. (3) when the act complained of is patently illegal. bear the implied or assumed approval of the latter. in the entire acquisition proceedings. for essentially. In fact. The kind of compensation to be paid the landowner is also specific. (6) when the respondent is a department secretary whose acts. Respondent DAR issued Certificates of Land Ownership Award (CLOAs) to farmer beneficiaries over portions of petitioners land without just compensation to petitioner. whether this court has the power to rule on this issue. 6657. speedy and adequate remedy. [43] Before this may be awarded to a farmer beneficiary. the determination of this compensation was marred by lack of due process. Trust account deposits are not cash or LBP bonds.A. the Comprehensive Agrarian Reform Law of 1988. (8) when there is no other plain.[42] Petitioner rightly sought immediate redress in the courts. before a party may be allowed to invoke the jurisdiction of the courts of justice. (5) when the respondent acted in disregard of due process. I. Until then. the issuance of the CLOAs to farmer beneficiaries necessitated immediate judicial action on the part of the petitioner. speedy and adequate remedy. The Validity of the Acquisition Proceedings Over the Haciendas.[44] There was no receipt by petitioner of any compensation for any of the lands acquired by the government. and (3) assuming the haciendas may be reclassified from agricultural to non-agricultural. (9) when strong public interest is involved. however. As a general rule. (7) when irreparable damage will be suffered. respondent DAR disregarded the basic requirements of administrative due process. II. There was a violation of its rights and to require it to exhaust administrative remedies before the DAR itself was not a plain. [45] RespondentDARs opening of trust account deposits in petitioners name with the Land Bank of the Philippines does not constitute payment under the law. Among these exceptions are: (1) when the question raised is purely legal. . The replacement of the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation. The law provides that the deposit must be made only in cash or LBP bonds. as an alter ego of the President. and (11) in quo warranto proceedings. A Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a beneficiary under R. In its first assigned error.

d) In case of rejection or failure to reply. 6657. The DAR shall decide the case within thirty (30) days after it is submitted for decision. by personal delivery or registered mail. the 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. Modes of Acquisition of Land under R. the landowner. The procedure for the compulsory acquisition of private lands is set forth in Section 16 of R. e) Upon receipt by the landowner of the corresponding payment. c) If the landowner accepts the offer of the DAR. his administrator or representative shall inform the DAR of his acceptance or rejection of the offer. Procedure for Acquisition of Private Lands.A. Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17. however. the DAR shall conduct summary administrative proceedings to determine the compensation for the land requiring the landowner. 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 . 6657 Republic Act No. and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. the Comprehensive Agrarian Reform Law of 1988 (CARL). provides for two (2) modes of acquisition of private land: compulsory and voluntary. and other pertinent provisions hereof. A. the landowners and the beneficiaries. A. within fifteen (15) days from receipt of the notice. 16. 18. 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. For purposes of acquisition of private lands. the following procedures shall be followed: a) After having identified the land. or. 6657. After the expiration of the above period. there is need to lay down the procedure in the acquisition of private lands under the provisions of the law.Petititioners allegation of lack of due process goes into the validity of the acquisition proceedings themselves. the matter is deemed submitted for decision. the DAR shall send its notice to acquire the land to the owners thereof. the LBP and other interested parties to submit evidence as to the just compensation for the land. b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail. --. Before we rule on this matter. viz: Sec.

the Land Bank of the Philippines (LBP) pays the owner the purchase price. f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation. The procedure is as follows: II. his administrator or representative shall inform the DAR of his acceptance or rejection of the offer. or. Update the masterlist of all agricultural lands covered under the CARP in his area of responsibility. If the landowner accepts. However. the LBP representative and other interested parties may submit evidence on just compensation within fifteen days from notice. In the compulsory acquisition of private lands. The masterlist shall include such information as required under the attached CARP Masterlist Form which shall include the name of the landowner. the landholding. he executes and delivers a deed of transfer in favor of the government and surrenders the certificate of title. the landowners and the beneficiaries. with the assistance of the pertinent Barangay Agrarian Reform Committee (BARC). the landowners and the farmer beneficiaries must first be identified. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries. The land shall then be redistributed to the farmer beneficiaries. the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank. 2. the landowner. If the landowner rejects the DARs offer or fails to make a reply. and post it in a conspicuous place in the municipal building and barangay hall of the place where the property is located. 1989 Administrative Order No. and tax declaration number. in case of rejection or lack of response from the latter. After identification. which set the operating procedure in the identification of such lands. by personal delivery or registered mail. the first step in compulsory acquisition is the identification of the land. To fill in this gap. [46] Under Section 16 of the CARL. 12. the DAR shall decide the case and inform the owner of its decision and the amount of just compensation. Within thirty days from the execution of the deed of transfer. landholding area. shall: 1. The Municipal Agrarian Reform Officer. The DAR shall immediately take possession of the land and cause the issuance of a transfer certificate of title in the name of the Republic of the Philippines. OPERATING PROCEDURE A. Upon receipt by the owner of the corresponding payment. Within thirty days from receipt of the Notice of Acquisition.of the Republic of the Philippines. The DAR has made compulsory acquisition the priority mode of land acquisition to hasten the implementation of the Comprehensive Agrarian Reform Program (CARP). Series of 1989. the DAR shall send a Notice of Acquisition to the landowner. the law is silent on how the identification process must be made. Any party may question the decision of the DAR in the regular courts for final determination of just compensation. Within thirty days from submission. the DAR issued on July 26. TCT/OCT number. The landowner. the DAR conducts summary administrative proceedings to determine just compensation for the land. Prepare a Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding covered under Phase I and II of the CARP except those for which the .

The LBP representative and the MARO concerned shall be furnished a copy each of his report. DAR Central Office. In all cases. Send a Notice of Coverage and a letter of invitation to a conference/ meeting to the landowner covered by the Compulsory Case Acquisition Folder. Upon determination of the valuation. C. B. 4. 6. The landowner shall also be asked to indicate his retention area. the PARO may validate the report of the MARO through ocular inspection and verification of the property. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO). 2. a Notice of Acquisition (CARP CA Form 8) for the subject property. the BARC representative(s). Invitations to the said conference/ meeting shall also be sent to the prospective farmer-beneficiaries.O. He shall discuss the MARO/ BARC investigation report and solicit the views. review. Series of 1988. specifically through the Bureau of Land Acquisition and Distribution (BLAD). Ensure that the individual case folders are forwarded to him by his MAROs. This ocular inspection and verification shall be mandatory when the computed value exceeds 500. objection.Summary Investigation Report of Findings and Evaluation c) CARP CA Form 3Applicants Information Sheet d) CARP CA Form 4Beneficiaries Undertaking e) CARP CA Form 5Transmittal Report to the PARO The MARO/ BARC shall certify that all information contained in the abovementioned forms have been examined and verified by him and that the same are true and correct.[47] The valuation worksheet and the related CACF valuation forms shall be duly certified correct by the PARO and all the personnel who participated in the accomplishment of these forms. No. agreements or suggestions of the participants thereon.landowners have already filed applications to avail of other modes of land acquisition. The PARO shall: 1. Serve the Notice to the landowner . 3. forward the case folder. together with the duly accomplished valuation forms and his recommendations. The minutes of the meeting shall be signed by all participants in the conference and shall form an integral part of the CACF. Within three days from receipt of the case folder from the PARO. 4. 3. evaluate and determine the final land valuation of the property covered by the case folder. compute the valuation of the land in accordance with A. the Land Bank of the Philippines (LBP) representative. Immediately upon receipt of a case folder. to the Central Office. and other interested parties to discuss the inputs to the valuation of the property. for the signature of the Secretary or her duly authorized representative. A summary review and evaluation report shall be prepared and duly certified by the BLAD Director and the personnel directly participating in the review and final valuation. 2. A case folder shall contain the following duly accomplished forms: a) CARP CA Form 1MARO Investigation Report b) CARP CA Form 2-. shall: 1.000 per estate. Prepare.

personally or through registered mail within three days from its approval. The Notice shall
include, among others, the area subject of compulsory acquisition, and the amount of just
compensation offered by DAR.
3. Should the landowner accept the DARs offered value, the BLAD shall prepare and submit to
the Secretary for approval the Order of Acquisition. However, in case of rejection or nonreply, the DAR Adjudication Board (DARAB) shall conduct a summary administrative
hearing to determine just compensation, in accordance with the procedures provided under
Administrative Order No. 13, Series of 1989. Immediately upon receipt of the DARABs
decision on just compensation, the BLAD shall prepare and submit to the Secretary for
approval the required Order of Acquisition.
4. Upon the landowners receipt of payment, in case of acceptance, or upon deposit of payment
in the designated bank, in case of rejection or non-response, the Secretary shall immediately
direct the pertinent Register of Deeds to issue the corresponding Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines.Once the property is transferred, the
DAR, through the PARO, shall take possession of the land for redistribution to qualified
beneficiaries.

Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform
Officer (MARO) keep an updated master list of all agricultural lands under the CARP in his area
of responsibility containing all the required information. The MARO prepares a Compulsory
Acquisition Case Folder (CACF) for each title covered by CARP. The MARO then sends the
landowner a Notice of Coverage and a letter of invitation to a conference/ meeting over the land
covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries, the
representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the
Philippines (LBP) and other interested parties to discuss the inputs to the valuation of the
property and solicit views, suggestions, objections or agreements of the parties. At the
meeting, the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer
(PARO) who shall complete the valuation of the land. Ocular inspection and verification of the
property by the PARO shall be mandatory when the computed value of the estate
exceeds P500,000.00. Upon determination of the valuation, the PARO shall forward all papers
together with his recommendation to the Central Office of the DAR. The DAR Central Office,
specifically, the Bureau of Land Acquisition and Distribution (BLAD), shall review, evaluate and
determine the final land valuation of the property. The BLAD shall prepare, on the signature of
the Secretary or his duly authorized representative, a Notice of Acquisition for the subject
property.[48] From this point, the provisions of Section 16 of R.A. 6657 then apply.[49]
For a valid implementation of the CAR Program, two notices are required: (1) the Notice of
Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to
DAR A. O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to the landowner under
Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to
the conference, and its actual conduct cannot be understated. They are steps designed to comply
with the requirements of administrative due process. The implementation of the CARL is an
exercise of the States police power and the power of eminent domain. To the extent that the
CARL prescribes retention limits to the landowners, there is an exercise of police power for the

regulation of private property in accordance with the Constitution. [50] But where, to carry out such
regulation, the owners are deprived of lands they own in excess of the maximum area allowed,
there is also a taking under the power of eminent domain. The taking contemplated is not a mere
limitation of the use of the land. What is required is the surrender of the title to and physical
possession of the said excess and all beneficial rights accruing to the owner in favor of the
farmer beneficiary.[51] The Bill of Rights provides that [n]o person shall be deprived of life,
liberty or property without due process of law.[52] The CARL was not intended to take away
property without due process of law.[53] The exercise of the power of eminent domain requires
that due process be observed in the taking of private property.
DAR A. O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was
amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of
1993. The Notice of Coverage and letter of invitation to the conference meeting were
expanded and amplified in said amendments.
DAR A. O. No. 9, Series of 1990 entitled Revised Rules Governing the Acquisition of
Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to R.
A. 6657, requires that:

B. MARO
1. Receives the duly accomplished CARP Form Nos. 1 & 1.1 including supporting documents.
2. Gathers basic ownership documents listed under 1.a or 1.b above and prepares corresponding
VOCF/ CACF by landowner/ landholding.
3. Notifies/ invites the landowner and representatives of the LBP, DENR, BARC and
prospective beneficiaries of the schedule of ocular inspection of the property at least one
week in advance.
4. MARO/ LAND BANK FIELD OFFICE/ BARC

a) Identify the land and landowner, and determine the suitability for
agriculture and productivity of the land and jointly prepare Field
Investigation Report (CARP Form No. 2), including the Land Use
Map of the property.
b) Interview applicants and assist them in the preparation of the
Application For Potential CARP Beneficiary (CARP Form No. 3).
c) Screen prospective farmer-beneficiaries and for those found qualified,
cause the signing of the respective Application to Purchase and
Farmers Undertaking (CARP Form No. 4).
d) Complete the Field Investigation Report based on the result of the
ocular inspection/ investigation of the property and documents
submitted. See to it that Field Investigation Report is duly
accomplished and signed by all concerned.

5. MARO

a) Assists the DENR Survey Party in the conduct of a boundary/
subdivision survey delineating areas covered by OLT, retention,
subject of VOS, CA (by phases, if possible), infrastructures, etc.,
whichever is applicable.
b) Sends Notice of Coverage (CARP Form No. 5) to landowner concerned
or his duly authorized representative inviting him for a
conference.
c) Sends Invitation Letter (CARP Form No. 6) for a conference/ public
hearing to prospective farmer-beneficiaries, landowner,
representatives of BARC, LBP, DENR, DA, NGOs, farmers
organizations and other interested parties to discuss the following
matters:
Result of Field Investigation
Inputs to valuation
Issues raised
Comments/ recommendations by all parties concerned.
d) Prepares Summary of Minutes of the conference/ public hearing to be
guided by CARP Form No. 7.
e) Forwards the completed VOCF/CACF to the Provincial Agrarian
Reform Office (PARO) using CARP Form No. 8 (Transmittal
Memo to PARO).
x x x.
DAR A. O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS)
and Compulsory Acquisition (CA) transactions involving lands enumerated under Section 7 of
the CARL.[54] In both VOS and CA transactions, the MARO prepares the Voluntary Offer to Sell
Case Folder (VOCF) and the Compulsory Acquisition Case Folder (CACF), as the case may be,
over a particular landholding. The MARO notifies the landowner as well as representatives of
the LBP, BARC and prospective beneficiaries of the date of the ocular inspection of the property
at least one week before the scheduled date and invites them to attend the same. The MARO,
LBP or BARC conducts the ocular inspection and investigation by identifying the land and
landowner, determining the suitability of the land for agriculture and productivity, interviewing
and screening prospective farmer beneficiaries. Based on its investigation, the MARO, LBP or

No. DAR A. 9. or by registered mail with return card. Series of 1990 was amended by DAR A. Identification and Documentation xxx 5 DARMO Issues Notice of Coverage to LO CARP by personal delivery with proof of Form No. areas with infrastructure. After the survey and field investigation. 1. the MARO sends a Notice of Coverage to the landowner or his duly authorized representative inviting him to a conference or public hearing with the farmer beneficiaries. and at the same time invites him to join the field investigation to be conducted on his property which should be scheduled at least two weeks in advance of said notice. A copy of said Notice CARP shall be posted for at least Form No. O. The Minutes of the conference/ public hearing shall form part of the VOCF or CACF which files shall be forwarded by the MARO to the PARO. and the areas subject to VOS and CA. He then forwards the records to the RARO for another review.2 service. if he desires to avail of his right of retention. DAR A. Series of 1993 provided. representatives of the BARC. and other comments and recommendations by all parties concerned. In addition to the field investigation.BARC prepares the Field Investigation Report which shall be signed by all parties concerned. Series of 1993. that: IV. a boundary or subdivision survey of the land may also be conducted by a Survey Party of the Department of Environment and Natural Resources (DENR) to be assisted by the MARO. issues that may be raised in relation thereto. among others. LGU office concerned notifies DAR . non-government organizations. farmers organizations and other interested parties. inputs to the valuation of the subject landholding. areas retained by the landowner.[55] This survey shall delineate the areas covered by Operation Land Transfer (OLT). evaluates and validates the Field Investigation Report and other documents in the VOCF/ CACF. At the public hearing. Department of Agriculture (DA). DENR. O. the parties shall discuss the results of the field investigation. 1. LBP. O. No. OPERATING PROCEDURES: "Steps Responsible Activity Forms/ Agency/Unit Document (Requirements) A.17 one week on the bulletin board of the municipal and barangay halls where the property is located. informing him that his property is now under CARP coverage and for LO to select his retention area. The PARO reviews. No.

Map Local Office conducts the investigation on subject property to identify the landholding. 4 shall be forwarded to the LBP representative for validation. determines its suitability and productivity. after which the duly accomplished Part I of CARP Form No. Similarly. 6 DARMO Sends notice to the LBP. on the issue of suitability to agriculture. DENR Land Use DENR and prospective ARBs. the field investigation shall proceed even if the LO. he signs the FIR (Part I) and accomplishes Part II thereof. representatives of Form No. LBP. DENR and DA which shall jointly conduct further investigation thereon.3 representatives and prospective ARBs of the schedule of the field investigation to be conducted on the subject property. degree of development or slope. 7 DARMO With the participation of CARP BARC the LO. The team shall submit its report of findings which shall be binding to both DAR and LBP. the conflict shall be resolved by a composite team of DAR. the representatives of the DENR and prospective ARBs are not available provided. and jointly prepares the Field Investigation Report (FIR) and Land Use Map. pursuant .4 LBP the LBP. BARC. CARP BARC. and on issues affecting idle lands. DENR Form No. 17. they were given due notice of the time and date of the investigation to be conducted. However. If he agrees to the ocular inspection report of DAR.about compliance with posting requirement thru return indorsement on CARP Form No. if the LBP representative is not available or could not come on the scheduled date. the field investigation shall also be conducted. In the event that there is a difference or variance between the findings of the DAR and the LBP as to the propriety of covering the land under CARP. whether in whole or in part.

unproductive/ unsuitable to agriculture. the landowner by personal 4 delivery with proof of service or registered mail with return card and posts a copy thereof for at least one week on the bulletin board of the municipal and barangay halls where the property is located. the plan shall be approved by DENR-LMS. "uncarpable Survey Plan areas such as 18% slope and above.[56] This time. DENR and DA dated 27 January 1992. 17." DAR A. retention. Series of 1993. The field investigation is . No.to Joint Memorandum Circular of the DAR. The Notice of Coverage shall also invite the landowner to attend the field investigation to be scheduled at least two weeks from notice. infrastructure. he may choose which area he shall retain. LBP. Form No. compliance with posting 17 requirement thru return endorsement on CARP Form No. Representatives of the DAR Municipal Office (DARMO) must send the Notice of Coverage to the landowner by personal delivery with proof of service. Review and Completion of Documents. 1. the Notice of Coverage is sent to the landowner before the conduct of the field investigation and the sending must comply with specific requirements. or by registered mail with return card. Land Survey 10 DARMO Conducts perimeter or Perimeter And/or segregation survey or DENR delineating areas covered Segregation Local Office by OLT. informing him that his property is under CARP coverage and that if he desires to avail of his right of retention. 11 DARMO Forwards VOCF/CACF CARP to DARPO. modified the identification process and increased the number of government agencies involved in the identification and delineation of the land subject to acquisition. 6 x x x. B. In case of segregation or subdivision survey. 5 the Application of Purchase and Farmers' Undertaking (APFU). LGU office concerned CARP Notifies DAR about Form No. 9 DARMO Furnishes a copy of the CARP duly accomplished FIR to Form No. C. 8 DARMO Screens prospective ARBS CARP BARC and causes the signing of Form No. O.

as in this case. the conflict shall be resolved by a composite team of the DAR. administrator also of Hacienda Banilad. provided they were duly notified thereof. that a public hearing shall be conducted where he and representatives of the concerned sectors of society may attend to discuss the results of the field investigation. After the field investigation. Clearly then. the LBP and farmer beneficiaries. through Jaime Pimentel. The field investigation shall be conducted on the date set with the participation of the landowner and the various representatives. through the Municipal Agrarian Reform Officer (MARO). 12 does not specify how notices or letters of invitation shall be sent to the landowner. respondent DAR claims that Jaime Pimentel. They also include the Notice of Coverage first laid down in DAR A. [59] No letter of invitation was sent or conference meeting held with respect to Hacienda Caylaway because it was subject to a Voluntary Offer to Sell to respondent DAR. Series of 1990 and DAR A. the degree or development of the slope. the Notice of Coverage also informs the landowner that a field investigation of his landholding shall be conducted where he and the other representatives may be present. DENR and prospective farmer beneficiaries. was notified and sent an invitation to the conference. [57] The invitation was received on the same day it was sent as indicated by a signature and the date received at the bottom left corner of said invitation. O. No. No. O. 9. O. 1. The Compulsory Acquisition of Haciendas Palico and Banilad In the case at bar. 12. The procedure in the sending of these notices is important to comply with the requisites of due process especially when the owner. A copy of the Notice of Coverage shall be posted for at least one week on the bulletin board of the municipal and barangay halls where the property is located. No. Lejano. the land valuation and other pertinent matters. Another copy of the Report and Map shall likewise be posted for at least one week in the municipal or barangay halls where the property is located. LBP. pursuant to DAR A. etc. through MARO Leopoldo C. sent to the various parties the Notice of Coverage and invitation to the conference. Should there be a variance between the findings of the DAR and the LBP as to whether the land be placed under agrarian reform. respondent DAR claims that it. Series of 1993. The Operating Procedure in DAR Administrative Order No. a copy of which shall be furnished the landowner by personal delivery with proof of service or registered mail with return card. O. sent a letter of invitation entitled Invitation to Parties dated September 29. Series of 1989 and subsequently amended in DAR A. it also notifies him. The teams findings shall be binding on both DAR and LBP. 12. 9. No. the farmer beneficiaries and other interested parties. No. 1. the LBP. the field investigation shall proceed. DAR A.for the purpose of identifying the landholding and determining its suitability for agriculture and its productivity. [58] The Minutes was also signed by the representatives of the BARC. the lands suitability to agriculture. 1989 and signed the Minutes of the meeting on behalf of petitioner corporation. the administrator of Hacienda Palico. Series of 1993. O. Series of 1990. is a juridical . Series of 1989 was already in effect more than a month earlier. the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in Section 16 of the law. This Notice of Coverage does not merely notify the landowner that his property shall be placed under CARP and that he is entitled to exercise his retention right. B.. The date of the field investigation shall also be sent by the DAR Municipal Office to representatives of the LBP. O.[60] When respondent DAR. 1989 to petitioner corporation. the DAR Municipal Office shall prepare the Field Investigation Report and Land Use Map. DENR and DA which shall jointly conduct further investigation. If the landowner and other representatives are absent. BARC. Under DAR A. With regard to Hacienda Banilad. No. the representatives of the BARC. Pimentel actually attended the conference on September 21.

or any of its directors.[64] and bring home to the corporation notice of the filing of the action. secretary. the distinction between natural and juridical persons in the sending of notices may be found in the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). These persons are those through whom the private domestic corporation or partnership is capable of action. cashier. Makati.entity.At the time the notices were sent and the preliminary conference conducted. cashier or director of petitioner corporation. pleadings and notices in cases against a private domestic corporation before the DARAB and the regular courts are served on the president.. the law does not distinguish. agent. Petitioner is a domestic corporation. Service upon private domestic corporation or partnership. Rule V of the DARAB Revised Rules of Procedure. The DAR Administrative Orders also do not distinguish. manager. petitioners principal place of business was listed in respondent DARs records as Soriano Bldg. cashier. Whether the landowner be a natural or juridical person to whose address the Notice may be sent by personal delivery or registered mail. Neither did he exercise his functions in Plaza Cervantes. Metro Manila. considered an agent of the corporation? The purpose of all rules for service of process on a corporation is to make it reasonably certain that the corporation will receive prompt and proper notice in an action against it. as administrator of the two Haciendas. service may be made on the president. Metro Manila. agent. The evidence does not indicate whether Pimentels duties is so integrated with the corporation that he would immediately realize his responsibilities and know what he should do with any legal papers served on him. Manila nor in Cacho-Gonzales Bldg. manager. [63] Service must be made on a representative so integrated with the corporation as to make it a priori supposable that he will realize his responsibilities and know what he should do with any legal papers served on him. cashier. secretary. Service upon Private Domestic Corporation or Partnership.. Service of pleadings before the DARAB is governed by Section 6. Notices and pleadings are served on private domestic corporations or partnerships in the following manner: Sec.[61] and therefore. 13. Rule 14 provides: Sec.[66] and 7th Flr.If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered. secretary. [65] Petitioners evidence does not show the official duties of Jaime Pimentel as administrator of petitioners haciendas. agent or any of its directors.. Summonses. manager. officers and employees. service may be made on the president. Manila. has a personality separate and distinct from its shareholders. He performed his official functions . Similarly. CachoGonzales Bldg. 6. Is he. secretary.If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered. Plaza Cervantes.. The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by personal delivery or registered mail. [67] Pimentel did not hold office at the principal place of business of petitioner. the Revised Rules of Court of the Philippines.-.[62] Jaime Pimentel is not the president. manager. Makati. 101 Aguirre St. in Section 13. In the proceedings before the DAR. or any of its directors or partners.

whether these retained portions were compact or contiguous.[70] The acquisition of the landholdings did not cover the entire expanse of the two haciendas. through its duly authorized representative. Hacienda Banilad has an area of 1. Even respondent DARs evidence does not indicate this authority. was notified of any ocular inspection and investigation that was to be conducted by respondent DAR. the exact areas of the landholdings were not properly segregated and delineated. Batangas. Notably. Hacienda Palico has an area of 1. but only portions thereof. which portions it could rightfully retain. hence. Upon receipt of this notice. that not all areas in the haciendas were placed under the comprehensive agrarian reform program invariably by reason of elevation or character or use of the land. horticulture and woodland. Neither is there proof that petitioner was given the opportunity to at least choose and identify its retention area in those portions to be acquired compulsorily. and which portions were excluded from CARP coverage. On the contrary. the various tax declarations over the haciendas describe the landholdings as sugarland. there is no showing that Pimentel himself was duly authorized to attend the conference meeting with the MARO. petitioner corporation had no idea which portions of its estate were subject to compulsory acquisition. Respondents admit at the same time. Nevertheless. and forest. Respondents insist that the lands were identified because they are all registered property and the technical description in their respective titles specifies their metes and bounds. a place over two hundred kilometers away from Metro Manila.[69] Assuming further that petitioner was duly notified of the CARP coverage of its haciendas. In fact. one year after Pimentel was informed of the preliminary conference. pasture land. DAR A.O. The two haciendas in the instant case cover vast tracts of land. 9.[71] Under Section 16 of the CARL. No. sugarland. respondent DAR had information of the address of petitioners principal place of business. Series of 1990 was issued and this required that the Notice of Coverage must be sent to the landowner concerned or his duly authorized representative.024 hectares and only 688. however. therefore. Even respondent DARs evidence does not show that petitioner. Curiously. the areas found actually subject to CARP were not properly identified before they were taken over by respondent DAR.and actually resided in the haciendas in Nasugbu. and the notices and letters of invitation were validly served on petitioner through him. These Notices were sent barely three to four months after Pimentel was notified of the preliminary conference. BARC and LBP representatives and farmer beneficiaries for purposes of compulsory acquisition of petitioners landholdings. The Notices of Acquisition over Haciendas Palico and Banilad were addressed to petitioner at its offices in Manila and Makati. Before Notices of Acquisition were sent to petitioner. viz: . assuming that Pimentel was an agent of petitioner corporation. [68] Why respondent DAR chose to notify Pimentel instead of the officers of the corporation was not explained by the said respondent. petitioner claims that it had no knowledge of the letter-invitation.0688 hectares were subject to CARP. the sending of the Notice of Acquisition specifically requires that the land subject to land reform be first identified. is guaranteed in Section 6 of the CARL. could not have given Pimentel the authority to bind it to whatever matters were discussed or agreed upon by the parties at the preliminary conference or public hearing. however.7576 hectares were targetted for acquisition. The haciendas are not entirely agricultural lands. The right of retention and how this right is exercised.050 hectares but only 964.

The government shall purchase all agricultural lands it deems productive and suitable to farmer cultivation voluntarily offered for sale to it at . The Voluntary Acquisition of Hacienda Caylaway Petitioner was also left in the dark with respect to Hacienda Caylaway. If the area chosen for retention is tenanted. pertains to the landowner. Section II. 9. In case the tenant chooses to be a beneficiary in another agricultural land. 6657 on June 15. The tenant must exercise this option within a period of one (1) year from the time the landowner manifests his choice of the area for retention. VOS transactions were first governed by DAR Administrative Order No. Provided. 1988. all VOS filed before June 15. dated 26 July 1989.x x x. shall pertain to the landowner. All VOS filed before 15 June 1988. Subsection A. 229. series of 1989. 12. shall be heard and processed in accordance with the procedure provided for in Executive Order No. the date of effectivity of the CARL. the tenant shall have the option to choose whether to remain on the portion or be a beneficiary in the same or another agricultural land with similar or comparable features. Voluntary Offer to Sell. a landowner may retain not more than five hectares out of the total area of his agricultural land subject to CARP. In case the tenant chooses to remain in the retained area. which shall be compact or contiguous. 1988 shall be heard and processed in accordance with the procedure provided for in Executive Order No. Series of 1989. "x x x. thus: III.[72] before the effectivity of R. he loses his right as a leaseholder to the land retained by the landowner. 229 provides: Sec. Under the law. however. The VOS in the instant case was made on May 6. he shall be considered a leaseholder and shall lose his right to be a beneficiary under this Act. 19. Retention Limits. which shall be compact or contiguous. 1988." Section 9 of E. 229. paragraph 3. the tenant shall have the option to choose whether to remain therein or be a beneficiary in the same or another agricultural land with similar or comparable features. The right to choose the area to be retained. which was the subject of a Voluntary Offer to Sell (VOS). All VOS transactions which are now pending before the DAR and for which no payment has been made shall be subject to the notice and hearing requirements provided in Administrative Order No.Section 6. The right to choose the area to be retained.O. [73] and under this order. C.A. That in case the area selected for retention by the landowner is tenanted.

[83] Resolution No. however.[78] In 1975. pursuant to Proclamation No.[79] In 1993. formally accepted the VOS over two of these four titles. Batangas a tourist zone. cannot be dispensed with. 19. the notice of coverage and the preliminary conference with the landowner. O.O. 19 of the Sangguniang Bayan was approved by the Sangguniang Panlalawigan of Batangas on March 8. 1988? The answer is no. III. including the subject haciendas.[74] Hacienda Caylaway was voluntarily offered for sale in 1989.O. 19 reclassifying certain areas of Nasugbu as non-agricultural. It is petitioners claim that the three haciendas are not subject to agrarian reform because they have been declared for tourism. The Conversion of the three Haciendas.[80] On March 20. then President Marcos issued Proclamation No. 12. the LBP and farmer beneficiaries. the Revised Zoning Ordinance of Nasugbu[82] which zoning ordinance was based on a Land Use Plan for Planning Areas for New Development allegedly prepared by the University of the Philippines. No. No. the Regional Director for Region IV of the Department of Agriculture certified that the haciendas are not feasible and sound for agricultural development.a valuation determined in accordance with Section 6.A. R. the Sangguniang Bayan of Nasugbu. Batangas adopted Resolution No. was not denied participation therein. Section 5 of E. It is part of administrative due process and is an essential requisite to enable the landowner himself to exercise. before the VOS is accepted by respondent DAR. representatives of the BARC. First of all.A.[84] . as landowner. 1520 declaring the municipality of Nasugbu. 229 does not lay down the operating procedure. Series of 1992. the E. 1520. much less the notice requirements. Notice to the landowner. 6657.8544 hectares thereof fell within the coverage of R. Executive Order No. the same E. Respondent DAR. avers that surveys on the land covered by the four titles were conducted in 1989.[81] This Resolution approved Municipal Ordinance No. through the Regional Director. In other words. on the other hand. In two separate Resolutions both dated January 12. 1993. Executive Order 229 does not contain the procedure for the identification of private land as set forth in DAR A. Such transaction shall be exempt from the payment of capital gains tax and other taxes and fees. The Hacienda has a total area of 867. 1989.O. not agricultural purposes. 229 merely reiterates the procedure of acquisition in Section 16. however. respondent DAR. 6657. The results of the survey and the land valuation summary report.[76] Petitioner claims it does not know where these portions are located. A. were allegedly reclassified as nonagricultural 13 years before the effectivity of R. Series of 1989.4571 hectares and is covered by four (4) titles.5257 hectares. Lands in Nasugbu. is silent as to the procedure for the identification of the land. 6657. requires that the land. landowner and beneficiaries of the land subject to agrarian reform beidentified before the notice of acquisition should be issued. [75] The land covered by the two titles has an area of 855. do not indicate whether notices to attend the same were actually sent to and received by petitioner or its duly authorized representative.[77] To reiterate. Does this mean that these requirements may be dispensed with regard to VOS filed before June 15. and that petitioner. 1992. 229. his right of retention guaranteed under the CARL. like Section 16 of the CARL. but only 648. at the very least.

6657 and E. Section 5 (1) of E. the RARO shall evaluate the PARO Report and forward the records and his report to the Undersecretary for Legal Affairs. 54. documents on the comprehensive land use plans and accompanying ordinances passed upon and approved by the local government units concerned. No. commercial. 129-A. Respondent DARs failure to observe due process in the acquisition of petitioners landholdings does not ipso facto give this Court the power to adjudicate over petitioners application for conversion of its haciendas from agricultural to nonagricultural. The MARO reviews the application and its supporting documents and conducts field investigation and ocular inspection of the property. pursuant to R. otherwise known as the Comprehensive Agrarian Reform Law of 1988. Under this A. 54. Series of 1987 and reiterated in the CARL and Memorandum Circular No. O. the haciendas should likewise be converted. 129-A. together with the National Land Use Policy. Petitioner urges this Court to take cognizance of the conversion proceedings and rule accordingly.827 hectares in Nasugbu into a tourist area known as the Batulao Resort Complex. A. Series of 1993 of the Office of the President. At the time petitioner filed its application for conversion. the conversion of agricultural lands. provides that action on applications for land use conversion on individual landholdings shall remain as the responsibility of the DAR.[87] Applications for conversion were initially governed by DAR A. "B. Series of 1990. which shall utilize as its primary reference. The DARs mandate over applications for conversion was first laid down in Section 4 (j) and Section 5 (1) of Executive Order No. Series of 1990 entitled Revised Rules and Regulations Governing Conversion of Private Agricultural Lands and . the Rules of Procedure governing the processing and approval of applications for land use conversion was the DAR A.52 hectares in Barangay Caylaway as within the potential tourist belt. Series of 1987. No. No. No. industrial and other land uses. hence. 2. The DARs jurisdiction over applications for conversion is provided as follows: "A. 129-A. "D. The PARO may conduct further field investigation and submit a supplemental report together with his recommendation to the Regional Agrarian Reform Officer (RARO) who shall review the same.. Series of 1993 of the Office of the President. 6657. and 13. 1520 was also upheld by respondent DAR in 1991 when it approved conversion of 1. No. vests in the DAR. A. likewise empowers the DAR to authorize under certain conditions.O. "C Section 65 of R. The findings of the MARO are subject to review and evaluation by the Provincial Agrarian Reform Officer (PARO). the RARO shall approve or disapprove applications for conversion. exclusive authority to approve or disapprove applications for conversion of agricultural lands for residential.[86] We do not agree. O. Applications over areas exceeding fifty hectares are approved or disapproved by the Secretary of Agrarian Reform. 129-A. For lands less than five hectares. 1. the application for conversion is filed with the MARO where the property is located. Series of 1987. pursuant to Section 4 (j) of Executive Order No. O. restructuring or readjustment of agricultural lands into nonagricultural uses. For lands exceeding five hectares. Section 4 of Memorandum Circular No. The agency charged with the mandate of approving or disapproving applications for conversion is the DAR. O.Petitioner claims that Proclamation No. [85] Petitioner presents evidence before us that these areas are adjacent to the haciendas subject of this petition. The Department of Agrarian Reform (DAR) is mandated to approve or disapprove applications for conversion.

The MARO only posts the notice and thereafter issues a certificate to the fact of posting. 7. O.[90] Indeed. The procedure does not end with the Secretary. which has yet to run its regular course. development and management. The power to determine whether Haciendas Palico. No. O. 07.s and other implementing guidelines. the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. DAR A.DAR Central Office). the guiding principle in land use conversion is: to preserve prime agricultural lands for food production while. Land Use Conversion refers to the act or process of changing the current use of a piece of agricultural land into some other use as approved by the DAR. including its allocation.[91] Respondent DAR is in a better position to resolve petitioners application for conversion. we stress that the 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. They involve factual findings and highly technical matters within the special training and expertise of the DAR. from Undersecretary to the Office of the Secretary shall be the same as that of the Regional Director to the Office of the Secretary. To assume the power is to short-circuit the administrative process. Banilad and Caylaway are non-agricultural. and from the Secretary to the Office of the President or the Court of Appeals as the case may be. including Presidential issuances and national policies related to land use conversion have been consolidated in DAR A. exempt from the coverage of the CARL lies with the DAR. or Secretary of Agrarian Reform. No.This recommendation is transmitted to the Regional Director. not with this Court. recognizing the need of the other sectors of society (housing. 2. Finally. The Chairman of the CLUPPI deliberates on the merits of the investigation report and recommends the appropriate action. The procedure is that once an application for conversion is filed. and the appeal fee. as the case may be. O. viz: Appeal from the decision of the Undersecretary shall be made to the Secretary. thru the Undersecretary. No. the field investigation is not conducted by the MARO but by a special task force. and DAR A.O. Under this recent issuance. Respondent DAR must be given the chance to correct its procedural lapses in the acquisition proceedings. industry and commerce) for land. being primarily the agency possessing the necessary expertise on the matter. The mode of appeal/ motion for reconsideration. These A. [89] The conversion of agricultural land to uses other than agricultural requires field investigation and conferences with the occupants of the land. when coinciding with the objectives of the Comprehensive Agrarian Reform Law to promote social justice. however. known as the Center for Land Use Policy Planning and Implementation (CLUPPI. Series of 1997. at the same time. The Order provides that the decision of the Secretary may be appealed to the Office of the President or the Court of Appeals. hence. Series of 1997 lays down with specificity how the DAR must go about its task. This time.Non-Agricultural Uses. industrialization and the optimum use of land as a national resource for public welfare. Applications involving more than fifty hectares are approved or disapproved by the Secretary. the CLUPPI prepares the Notice of Posting. The CLUPPI conducts the field investigation and dialogues with the applicants and the farmer beneficiaries to ascertain the information necessary for the processing of the application.[88] Land Use refers to the manner of utilization of land. In . Series of 1990 entitled Rules of Procedure Governing the Processing and Approval of Applications for Land Use Conversion.

In accordance with the guidelines set forth in this decision and the applicable administrative procedure. of the land they till. the case is hereby remanded to respondent DAR for proper acquisition proceedings and determination of petitioner's application for conversion. IN VIEW WHEREOF. Anyhow. SO ORDERED. through no fault of their own. the farmer beneficiaries hold the property in trust for the rightful owner of the land.Hacienda Palico alone. [93] It goes against the basic precepts of justice. the petition is granted in part and the acquisition proceedings over the three haciendas are nullified for respondent DAR's failure to observe due process therein. fairness and equity to deprive these people. . these farmers have been cultivating their lands. CLOA's were issued to 177 farmer beneficiaries in 1993. [92] Since then until the present.

versus - CORONA. RENE GALANG.: Land for the landless. SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM..J. and great disparity in. Petitioner. JR. JR. G. ABAD. and SERENO. DEL CASTILLO.* BERSAMIN. and JULIO SUNIGA[1] and his SUPERVISORY GROUP OF THE HACIENDA LUISITA. No. x-----------------------------------------------------------------------------------------x DECISION VELASCO. PRESIDENTIAL AGRARIAN REFORM COUNCIL.. the distribution of land among the people. JJ. Petitioners-in-Intervention. PERALTA. NOEL MALLARI. even if only the number of agrarian suits filed serves to be the norm. INC. JR. 171101 Present: LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING CORPORATION. . ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA. C.R. this battle cry and root of discord continues to reflect the seemingly ceaseless discourse on. VILLARAMA. a shibboleth the landed gentry doubtless has received with much misgiving. MENDOZA. Through the years. 2011 Respondents.. if not resistance. and Promulgated: WINDSOR ANDAYA. CARPIO.HACIENDA LUISITA. PEREZ. July 5. J.. BRION. LEONARDO-DE CASTRO. INCORPORATED. dramatizing the increasingly urgent demand . VELASCO.

however.[6] abolishing share tenancy and converting all instances of share tenancy into leasehold tenancy. the Agricultural Land Reform Code (RA 3844) was enacted. In 1955. [RA] 1400) was passed.[8] Subsequently. has been a government policy even before the Commonwealth era. or the broader term agrarian reform. initial steps toward land reform were already taken to address social unrest. the latest being what is considered a comprehensive piece. however. Congress passed the Code of Agrarian Reform (RA 6389) declaring the entire country a land reform area.[3] Land reform. policies advanced. As its major thrust. and providing for the automatic conversion of tenancy to leasehold tenancy in all areas. the retention limit was cut down to seven hectares. setting in motion the expropriation of all tenanted estates. RA 3844 aimed to create a system of ownercultivatorship in rice and corn. remains the same: clear the way for the true freedom of the farmer.of the dispossessed x x x for a plot of earth as their place in the sun. at the onset of the American regime.[4] Then. [2] As administrations and political alignments change. and its implementation at any level of intensity limited to the pilot project in Nueva Ecija. the Land Reform Act (Republic Act No. The stated goal. the face of land reform varies and is masked in myriads of ways. The law.[5] On August 8. under the 1935 Constitution. specific provisions on social justice and expropriation of landed estates for distribution to tenants as a solution to land ownership and tenancy issues were incorporated. In fact. From 75 hectares.[9] . had this restricting feature: its operations were confined mainly to areas in Central Luzon. supposedly to be accomplished by expropriating lands in excess of 75 hectares for their eventual resale to tenants. and agrarian reform laws enacted. 1963.[7] RA 3844 created the Land Bank of the Philippines (LBP) to provide support in all phases of agrarian reform.

its validity or some of its provisions challenged at every possible turn. Inc. affecting all agricultural lands and covering both tenant-farmers and regular farmworkers.[13] So it was that Proclamation No. ushering in a new process of land classification. took effect. was issued instituting a comprehensive agrarian reform program (CARP) to cover all agricultural lands. Executive Order No. an experiment [even]. the mechanisms for CARP implementation. can either purchase the land they tilled or shift from share to fixed-rent leasehold tenancy. RA 6657 met stiff opposition. also known as CARL or the CARP Law.Barely a month after declaring martial law in September 1972. On June 15. On July 22. Secretary of Agrarian Reform [15] stated the observation that the assault was inevitable. depending on the size of the landholding worked on. as all life is an experiment. borrowing from Justice Holmes. regardless of tenurial arrangement and commodity produced. 1988. Aquino and the drafting and eventual ratification of the 1987 Constitution. the Court said. It created the Presidential Agrarian Reform Council (PARC) as the highest policy-making body that formulates all policies. v. Series of 1987. and distribution. 1987. as its title[14] indicates. 229 (EO 229) was issued providing. and regulations necessary for the implementation of CARP.[12] Then came the revolutionary government of then President Corazon C. acquisition. then President Ferdinand Marcos issued Presidential Decree No. . privately-owned rice and corn lands. the CARP being an untried and untested project. 27 (PD 27) for the emancipation of the tiller from the bondage of the soil. rules. Its provisions foreshadowed the establishment of a legal framework for the formulation of an expansive approach to land reform. [11] While touted as revolutionary. as provided in the Constitution. As to be expected. 131. Association of Small Landowners in the Philippines. [10] Based on this issuance. the scope of the agrarian reform program PD 27 enunciated covered only tenanted. RA 6657 or the Comprehensive Agrarian Reform Law of 1988. tenant-farmers.

The Case In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary injunctive relief.443-hectare mixed agricultural-industrial-residential expanse straddling several municipalities of Tarlac and owned by Compaia General de Tabacos de Filipinas (Tabacalera). should there be any. 1957 a PhP 5. while that for the controlling interest in CAT. as an indivisible transaction. One of the conditions contained in the approving GSIS Resolution No. then owned and/or controlled by the Jose Cojuangco. through the then Central Bank of the Philippines. the Central Azucarera de Tarlac (CAT). in US dollars. [18] The Facts At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita). was willing to buy. 356. 3203. 200634-01[17] issued on December 22.911 million loan in favor of Tadeco to pay the peso price component of the sale. petitioner Hacienda Luisita. In 1957. assisted the buyer to obtain a dollar loan from a US bank. Sr. (HLI) assails and seeks to set aside PARC Resolution No. 2006. 2005-32-01 [16] and Resolution No. and whenever conditions should exist warranting such action under the provisions of the Land Tenure Act.[19] To facilitate the adverted sale-and-purchase package. Group. As agreed upon. Inc. as later amended by Resolution No. Series of 1958. [21] .[20] Also. reads as follows: That the lots comprising the Hacienda Luisita shall be subdivided by the applicant-corporation and sold at cost to the tenants. Tadeco undertook to pay the purchase price for Hacienda Luisita in pesos. respectively. the Spanish owners of Tabacalera offered to sell Hacienda Luisita as well as their controlling interest in the sugar mill within the hacienda. The Tarlac Development Corporation (Tadeco). 2005 and May 3. as well as the implementing Notice of Coverage dated January 2. the Philippine government. the Government Service Insurance System (GSIS) Board of Trustees extended on November 27. once a 6. 2006 (Notice of Coverage).

Jr. 1988. now the Department of Agrarian Reform [DAR]) so that the land can be distributed to farmers at cost. 1958. to the following conditions embodied in the letter dated April 8. 1988. 1988 joining the x x x governmental agencies concerned in moving for the dismissal of the case subject. et al. besides which sugar landsof which the hacienda consistedare not covered by existing agrarian reform legislations. as follows: 1. 1988 (Annex 2) of the Secretary of the [DAR] quoted. As perceived then. the government commenced the case against Tadeco as a political message to the family of the late Benigno Aquino. The dismissal action was. Therefrom. [24] The appellate court wrote: The defendants-appellants x x x filed a motion on April 13. the CA dismissed the case the Marcos government initially instituted and won against Tadeco. for them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR.[22] The details of the events that happened next involving the hacienda and the political color some of the parties embossed are of minimal significance to this narration and need no belaboring. however. On March 17. [23] Eventually. the Office of the Solicitor General (OSG) moved to withdraw the governments case against Tadeco. 1980. et al. Tadeco appealed to the Court of Appeals (CA). et al. the Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR. Should TADECO fail to obtain approval of the stock distribution plan for failure to comply with all the requirements . Responding. however. the martial law administration filed a suit before the Manila Regional Trial Court (RTC) against Tadeco. Suffice it to state that on May 7.As of March 31. made subject to the obtention by Tadeco of the PARCs approval of a stock distribution plan (SDP) that must initially be implemented after such approval shall have been secured. Tadeco had fully paid the purchase price for the acquisition of Hacienda Luisita and Tabacaleras interest in CAT.. Tadeco or its owners alleged that Hacienda Luisita does not have tenants. By Resolution of May 18.

In no case shall the compensation received by the workers at the time the shares of stocks are distributed be reduced. equity or participation in favor of their workers or other qualified beneficiaries under this section shall be deemed to have . 31 of RA 6657 provides: SEC. 31. under the latters Sec. to give qualified beneficiaries the right to purchase shares of stocks of the corporation under a stock ownership arrangement and/or land-to-share ratio. pursuant to either of which the corporate landowner can comply with CARP. and should be revived if any of the conditions as above set forth is not duly complied with by the TADECO. but subject to well-defined conditions and timeline requirements. xxxx WHEREFORE. i.. If such stock distribution plan is approved by PARC. land or stock transfer. also provides two (2) alternative modalities.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 x x x. Section 10 of EO 229[26] allows corporate landowners. [25] Markedly. x x x Corporations or associations which voluntarily divest a proportion of their capital stock.e. Upon certification by the DAR. but TADECO fails to initially implement it. Like EO 229. as an alternative to the actual land transfer scheme of CARP. 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. Sec. the present case on appeal is hereby dismissed without prejudice. under such terms and conditions as may be agreed upon by them. RA 6657. 31. Corporate Landowners. bears in relation to the companys total assets. actually devoted to agricultural activities.for corporate landowners set forth in the guidelines issued by the [PARC]: or 2.

HLI. Series of 1988 (DAO 10). For this purpose. Tadeco assigned and conveyed to HLI the agricultural land portion (4. DAR issued Administrative Order No. the [voluntary] 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.[28] it organized a spin-off corporation. the stock distribution scheme appeared to be Tadecos preferred option. 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. From the start. as vehicle to facilitate stock acquisition by the farmworkers.75 hectares) and other farm-related properties of Hacienda Luisita in exchange for HLI shares of stock. and (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. (c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares. 1988. for.complied with the provisions of this Act: Provided. 10. (Emphasis added. of the corporation or association. [27] entitled Guidelines and Procedures for Corporate Landowners Desiring to Avail Themselves of the Stock Distribution Plan under Section 31 of RA 6657. or in a management or executive committee. if one exists. 31. the beneficiaries shall be assured of at least one (1) representative in the board of directors. the books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries.[29] .915. on August 23.) Vis--vis the stock distribution aspect of the aforequoted Sec. (b) Irrespective of the value of their equity in the corporation or association. the agricultural land of the corporate owners or corporation shall be subject to the compulsory coverage of this Act. If within two (2) years from the approval of this Act.

under the law. In the SDOA. the Stock Distribution Option Agreement (SDOA).296% thereof being P118.422. Teopaco were the incorporators of HLI.[31] As appearing in its proposed SDP. a net value of PhP 355. The percentage of the value of the agricultural land of Hacienda Luisita (P196. that has to be distributed to the THIRD PARTY [FWBs] under the stock distribution plan. Reyes. and the 5.000. Jose Cojuangco.000 of which were to be issued only to qualified and registered beneficiaries of the CARP.462.000 divided into 1.976. the latter. This translated to 355.630.531.391. 150.000.000 divided into 400.531.462. 1989 from PhP 1.758. and Paz C. or after deducting the total liabilities of the farm amounting to PhP 235..220.000 shares with a par value of PhP 1/share to PhP 400.000 to any stockholder of the corporation. Lopa.85 shares.85 or 118. Josephine C. 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. Teresita C. with the Securities and Exchange Commissions (SECs) approval. HLI.00) transferred and conveyed to the SECOND PARTY [HLI] is 33. as appraised and approved by the SEC. and the remaining 250.531.00 per share.Pedro Cojuangco.391.500.554.[33] was entered into by Tadeco. which is P355.531. Jr. . 1989.increased its capital stock on May 10.500.462 shares with a par value of P1. have an aggregate value of PhP 590. styled as a Memorandum of Agreement (MOA).220.00) in relation to the total assets (P590. the parties agreed to the following: 1.296% that.462 shares with a par value of PhP 1/share.[32] On May 9.[30] To accommodate the assets transfer from Tadeco to HLI. On May 11. is the proportion of the outstanding capital stock of the SECOND PARTY.000 shares also with par value of PhP 1/share. the properties and assets of Tadeco contributed to the capital stock of HLI.554.000.976. 1989. The SDOA embodied the basis and mechanics of the SDP. which would eventually be submitted to the PARC for approval.000.848 qualified FWBs[34] and attested to by then DAR Secretary Philip Juico. the said 33.000.00 or 355.

The SECOND PARTY shall guarantee to the qualified beneficiaries of the [SDP] that every year they will receive on top of their regular compensation. in favor of the farmworkers appearing as shareholders of the SECOND PARTY at the start of said year which will empower the THIRD PARTY or their representative to vote in stockholders and board of directors meetings of the SECOND PARTY convened during the year the entire 33. with each family-beneficiary being assured of receiving and owning a homelot in the barangay where it actually resides on the date of the execution of this Agreement. The qualified beneficiaries of the stock distribution plan shall be the farmworkers who appear in the annual payroll. . whether it be in the form of cash dividends or incentive bonuses or both.296% of the shares subject to distribution will be entitled to. In addition.2. 6. for a period of 30 years. valid and effective for one (1) year.391. 5. 3. FIRST PARTY shall execute at the beginning of each fiscal year an irrevocable proxy.391.976. an amount that approximates the equivalent of three (3%) of the total gross sales from the production of the agricultural land. who are regularly or periodically employed by the SECOND PARTY.85 shares shall have been completely acquired and distributed to the THIRD PARTY. inclusive of the permanent and seasonal employees.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. At the end of each fiscal year. residential or homelots of not more than 240 sq. the SECOND PARTY shall arrange with the FIRST PARTY [Tadeco] theacquisition and distribution to the THIRD PARTY on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from the FIRST PARTY and distributed to the THIRD PARTY. 4.m.296% of the outstanding capital stock of the SECOND PARTY earmarked for distribution and thus be able to gain such number of seats in the board of directors of the SECOND PARTY that the whole 33. the SECOND PARTY shall within a reasonable time subdivide and allocate for free and without charge among the qualified family-beneficiaries residing in the place where the agricultural land is situated. each.976.

HLI submitted to DAR its SDP. designated as Proposal for Stock Distribution under C. [36] One hundred thirty-two (132) chose actual land distribution.[35] which was substantially based on the SDOA. in a follow-up referendum the DAR conducted on October 14. Subsequently. Defensor-Santiago) addressed a letter dated November 6.7.117 FWBs.R. Tadeco/HLI would admit that the ratio of the land-to-shares of stock corresponds to 33. as the term is ordinarily understood under corporation law. given that. While a little bit hard to follow. implying that the benefits do not partake the nature of dividends. Cojuangco (Cojuangco). then DAR Secretary Miriam Defensor-Santiago (Sec. out of 5. proposing that the SDP be revised. opted to receive shares in HLI.P. along the following lines: .[37] After a review of the SDP. 1989.315 who participated. during the period material.A. The production-sharing. (Emphasis added.976.391.. 1989 [38] to Pedro S.55 million with net assets of PhP 355. is payable irrespective of whether [HLI] makes money or not.) of the government and with the supervision of the [DAR].P. 5. while the total assets of HLI was PhP 590.53 million.A. and (b) distribution of free homelots of not more than 240 square meters each to family-beneficiaries. with the end in view of improving the lot of the qualified beneficiaries of the [SDP] and obtaining for them greater benefits. Notably. the assigned value of the agricultural land in the hacienda was PhP 196.R.3% of the outstanding capital stock of the HLI equivalent to 118. as the SDP indicated.63 million.) As may be gleaned from the SDOA. then Tadeco president. included as part of the distribution plan are: (a) production-sharing equivalent to three percent (3%) of gross sales from the production of the agricultural land payable to the FWBs in cash dividends or incentive bonus. This Agreement is entered into by the parties in the spirit of the (C.85 sharesof stock with a par value of PhP 1/share.

Defensor-Santiago. That over the implementation period of the [SDP].1. that the 33% shareholdings of the [FWBs] will be maintained at any given time. composed of permanent. That the stock distribution plan provide for clear and definite terms for determining the actual number of seats to be allocated for the [FWBs] in the HLI Board.296. 4. 5. approved the SDP of Tadeco/HLI.000.. That HLI provide guidelines and a timetable for the distribution of homelots to qualified [FWBs]. the PARC.[39] Following that exchange. 89-12-2[40] dated November 21. That the mechanics for distributing the stocks be explicitly stated in the [MOA] signed between the [Tadeco]. more or less. HLI claimed to have extended the following benefits to the FWBs: (a) 3 billion pesos (P3. In a letter-reply of November 14. 3. seasonal and casual master list/payroll and non-master list members. 1989. 1989 to Sec. i. under then Sec.000) worth of salaries. numbering 6.e.000. That the 3% cash dividends mentioned in the [SDP] be expressly provided for [in] the MOA. Defensor-Santiago. wages and fringe benefits . That a safeguard shall be provided by [Tadeco]/HLI against the dilution of the percentage shareholdings of the [FWBs]. by Resolution No.[41] At the time of the SDP approval. HLI had a pool of farmworkers. 2. [Tadeco]/HLI shall ensure that there will be no dilution in the shares of stocks of individual [FWBs]. HLI and its [FWBs] prior to the implementation of the stock plan. From 1989 to 2005. Tadeco/HLI explained that the proposed revisions of the SDP are already embodied in both the SDP and MOA. and 6.

(e) 240-square meter homelots distributed for free. Conversion of Lands. such as but not limited to free hospitalization/medical/maternity services.(b) 59 million shares of stock distributed for free to the FWBs.000. commercial or industrial purposes. or conversion of the land and its disposition: Provided.000) representing 3% of the gross produce. the DAR. or the locality has become urbanized and the land will have a greater economic value for residential. 1995. as evidenced by the Manifesto of Support they signed and which was submitted to the DAR.4 million pesos (P2. old age/death benefits and no interest bearing salary/educational loans and rice sugar accounts. had the backing of 5.000. may authorize the reclassification.5 million pesos (P37.000) representing 3% from the sale of 500 hectares of converted agricultural land of Hacienda Luisita. according to HLI.000) representing 3% from the sale of 80 hectares at 80 million pesos (P80.After the lapse of five (5) years from its award. including respondent Rene Galang. (c) 150 million pesos (P150. providing: SEC.[43]pursuant to Sec. when the land ceases to be economically feasible and sound for agricultural purposes. That the beneficiary shall have fully paid its obligation. 65 of RA 6657. On August 15.500. upon application of the beneficiary or the landowner. 65.000) for the SCTEX. (f) 2. and Jose Julio Suniga.400. (g) Social service benefits. and subject to existing laws. [44] After .000 or so FWBs. with due notice to the affected parties. [42] Two separate groups subsequently contested this claim of HLI. The application. HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to industrial use. (d) 37.

000.[52] As a result. in exchange for subscription of 12.the usual processing. LIPCO transferred the parcels covered by its TCT Nos. 287910[47] was canceled and TCT No. Reyes.10 loan obligations.000 shares of stocks of Centennary Holdings. From the area covered by TCT No. Series of 1996. 292091[48] was issued in the name of Centennary. Lahoz. Inc. Later on.732. Ernesto G.100.[45]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. Teopaco.100. (Centennary). HLI transferred the remaining 200 hectares covered by TCT No.[50] Centennary. were issued to RCBC. in a Deed of Absolute Assignment dated November 25. respectively. Teresita C. Centennarys TCT No. 310986 was. both uniformly involving 100 hectares for PhP 250 million each.[55] covering 180 and four hectares. . among other conditions.695. accordingly. LIPCOs titles were canceled and new ones. a corporation with an authorized capital stock of PhP 12. HLI. TCT Nos.000 divided into 12. 365800 and 365801 to the Rizal Commercial Banking Corporation (RCBC) by way of dacion en pago in payment of LIPCOs PhP 431. The latter acquired it for the purpose of developing an industrial complex. had the following incorporators: Pedro Cojuangco. 391051 and 391052. 1996. Lopa. the DAR. 310986[53] in the name of LIPCO. 287909 to Luisita Realty Corporation (LRC) [49] in two separate transactions in 1997 and 1998.[46] Consequently. TCT No. 365801. approved the application on August 14. 2004. thru then Sec. 1996. 292091 was canceled to be replaced by TCT No. On December 13. HLIs Transfer Certificate of Title (TCT) No. Ernesto Garilao. partially canceled. ceded 300 hectares of the converted area to the latter. Subsequently.000 shares and wholly-owned by HLI. and Bernardo R. specifically: (a) TCT No. 365800[54] and (b) TCT No. for which two (2) separate titles were issued in the name of LIPCO. Centennary sold[51] the entire 300 hectares to Luisita Industrial Park Corporation (LIPCO) for PhP 750 million. Josephine C. per DAR Conversion Order No. 310986 was carved out two (2) parcels. 030601074-764(95).

They also cited violations by HLI of the SDOAs terms. the petition was filed on behalf of AMBALAs members purportedly composing about 80% of the 5.335. AMBALA[60] appeared.[56] Such. its revocation. identifying themselves as head of the Supervisory Group of HLI (Supervisory Group). [58] They prayed for a renegotiation of the SDOA. Meanwhile.Apart from the 500 hectares alluded to. the Special Task Force was mandated to review the terms and conditions of the SDOA and PARC Resolution . or. the DAR constituted a Special Task Force to attend to issues relating to the SDP of HLI. 2005 also filed with DAR. in short. 4. They further claimed that their lives have not improved contrary to the promise and rationale for the adoption of the SDOA. was the state of things when two separate petitions. HLIs answer[62] to the AMBALA petition was contained in its letter dated January 21. another 80. where the handwritten name of respondents Rene Galang as Pangulo AMBALA and Noel Mallari as SecGen.339 FWBs of Hacienda Luisita.915 hectares Tadeco ceded to HLI. Among other duties. 2003 by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA). As alleged. [59] The Petisyon was ostensibly filed on December 4. In absolute terms. denominated as Petition/Protest. HLI would eventually answer[61] the petition/protest of the Supervisory Group. in the alternative. alleging that HLI had failed to give them their dividends and the one percent (1%) share in gross sales. On the other hand. as well as the thirty-three percent (33%) share in the proceeds of the sale of the converted 500 hectares of land. In the first.[57] respondents Jose Julio Suniga and Windsor Andaya.75 hectares remained of the original 4.51 hectares were later detached from the area coverage of Hacienda Luisita which had been acquired by the government as part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. reached the DAR in the latter part of 2003. Revocation and nullification of the SDOA and the distribution of the lands in the hacienda were the call in the second petition. and 60 other supervisors sought to revoke the SDOA. both undated. styled asPetisyon (Petition).

Incorporated (HLI) Stock Distribution Plan (SDP) Conflict[64] dated September 22. on motion duly seconded. the PARC issued the assailed Resolution No. and recommend appropriate remedial measures for approval of the Secretary.[63] After investigation and evaluation. 89-12-2 relative to HLIs SDP.No. 89-12-2 dated November 21. evaluate HLIs compliance reports. 1989 approving HLIs SDP. finding that HLI has not complied with its obligations under RA 6657 despite the implementation of the SDP.[67] On December 22. Nasser Pangandaman (Sec. evaluate the merits of the petitions for the revocation of the SDP.[68] . the PARC Validation Committee favorably endorsed the DAR Secretarys recommendation afore-stated. disposing as follows: NOW. and (b) the acquisition of Hacienda Luisita through the compulsory acquisition scheme. 2005. Sec. to approve and confirm the recommendation of the PARC Executive Committee adopting in toto the report of the PARC ExCom Validation Committee affirming the recommendation of the DAR to recall/revoke the SDO plan of Tarlac Development Corporation/Hacienda Luisita Incorporated. further. RESOLVED.[66] Subsequently. the Special Task Force submitted its Terminal Report: Hacienda Luisita. as it is HEREBY RESOLVED. Pangandaman). Pangandaman recommended to the PARC Executive Committee (Excom) (a) the recall/revocation of PARC Resolution No. that the lands subject of the recalled/revoked TDC/HLI SDO plan be forthwith placed under the compulsory coverage or mandated land acquisition scheme of the [CARP]. RESOLVED. 200532-01. 2005 (Terminal Report). THEREFORE. conduct ocular inspections or field investigations. APPROVED. Following review.[65] The Terminal Report and the Special Task Forces recommendations were adopted by then DAR Sec.

. for public respondents PARC and the DAR. A letter-request dated December 28. filed his Manifestation and Motion with Comment Attached dated December 4. [78] Should this shift in alliance deny him standing. Mallari stated that he has broken away from AMBALA with other AMBALA exmembers and formed Farmworkers Agrarian Reform Movement. Mallari also prayed that FARM be allowed to intervene. but was not acted upon by. 2006.[77] In it. On December 2. HLI has filed the instant recourse 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. the DAR Tarlac provincial office issued the Notice of Coverage[71] which HLI received on January 4. impleaded by HLI as respondent in his capacity as Sec-Gen. Noel Mallari. Therefrom. AMBALA. December 23. sought reconsideration. without any copy of the documents adverted to in the resolution attached.[73] PARC would eventually deny HLIs motion reconsideration via Resolution No. On July 13. acting on HLIs motion.[74] the Court. 2006. filed its Comment[76] on the petition. 2006-34-01 dated May 3. the PARC secretariat. 2006 (Manifestation and Motion). 2005-32-01 and the notice of coverage. 2005 [69] for certified copies of said documents was sent to. 2006. 2006. for By Resolution of June 14.[75] enjoining the implementation of Resolution No.[70] On the same day. on January 2. Its motion notwithstanding. 2005-32-01 was served on HLI the following day. 2006. [72] As HLI later rued. the OSG. 2006.A copy of Resolution No. (FARM). HLI. it can not know from the above-quoted resolution the facts and the law upon which it is based. issued a temporary restraining order. Inc.

2010. RCBC and LIPCO contended that the assailed resolution effectively nullified the TCTs under their respective names as the properties covered in the TCTs were veritably included in the January 2. 2010. represented by Suniga and Andaya. HLI. the Supervisory Group [79] and the AMBALA-Rene Galang faction submitted their Comment/Opposition dated December 17. On August 18. and former . on August 24. filed with the Court a joint submission and motion for approval of a Compromise Agreement (English and Tagalog versions) dated August 6. et al. represented by Mallari.[82] In both motions. and the FARM and its 27 members[83] argue their case. the Court heard the main and intervening petitioners on oral arguments. the Court. In the main. Alicia Austria-Martinez.[80] On October 30. 2006 notice of coverage. RCBC filed a Motion for Leave to Intervene and to File and Admit Attached Petition-In-Intervention dated October 18. heard public respondents as well as the respective counsels of the AMBALA-MallariSupervisory Group. and the United Luisita Workers Union. 2010. On the other hand. the Supervisory Group. Mallari returned to the AMBALA fold. the Court. Both motions for leave to intervene were granted and the corresponding petitions-in-intervention admitted. On January 10. creating the AMBALA-Noel Mallari faction and leaving Renato Lalic. 2007. issued a Resolution[84] creating a Mediation Panel composed of then Associate Justice Ma. particularly would-be intervenors Renato Lalic. they claimed that the revocation of the SDP cannot legally affect their rights as innocent purchasers for value. 2007. Prior to the oral arguments. Mallari had a parting of ways with other FARM members. As things stand. 2010.As events would later develop. however. 2007. [81] LIPCO later followed with a similar motion. 2006. the AMBALA-Galang faction. On August 31. as the remaining members of FARM who sought to intervene. represented by Eldifonso Pingol. as chairperson. AMBALA. et al. in a bid to resolve the dispute through an amicable settlement.

WHETHER THE PETITIONS TO NULLIFY. POWER AND/OR AUTHORITY TO NULLIFY. 20. OR RESCIND THE SDOA? III. REVOKE. POWER AND/OR AUTHORITY AT THIS TIME. were conducted. [IF SO].CA Justices Hector Hofilea and Teresita Dy-Liacco Flores.E. RECALL.. as members.e. ARTICLES 1380. and 27. x x x CAN THEY STILL EXERCISE SUCH JURISDICTION. September 8. II. RECALL. REVOKE OR RESCIND THE SDOA HAVE ANY LEGAL BASIS OR GROUNDS AND WHETHER THE PETITIONERS THEREIN ARE THE REAL PARTIES-IN-INTEREST TO FILE SAID PETITIONS. 1381 AND 1382 x x x ARTICLE 1390 x x x AND ARTICLE 1409 x x x THAT CAN BE INVOKED TO NULLIFY. WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY PANGANDAMAN HAVE JURISDICTION.. The Issues HLI raises the following issues for our consideration: I. I. mediation had to be discontinued when no acceptable agreement could be reached. 2010. viz. Meetings on five (5) separate dates.Despite persevering and painstaking efforts on the part of the panel. . ARTICLE 1191 x x x. 14. REVOKE OR RESCIND THE SDOA. 9. i. RECALL. AFTER SIXTEEN (16) YEARS FROM THE EXECUTION OF THE SDOA AND ITS IMPLEMENTATION WITHOUT VIOLATING SECTIONS 1 AND 10 OF ARTICLE III (BILL OF RIGHTS) OF THE CONSTITUTION AGAINST DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW AND THE IMPAIRMENT OF CONTRACTUAL RIGHTS AND OBLIGATIONS? MOREOVER. ARE THERE LEGAL GROUNDS UNDER THE CIVIL CODE.

THE ASSAILED RESOLUTION NO. RESPONDENT PARC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT EXCLUDE THE SUBJECT PROPERTY FROM THE COVERAGE OF THE CARP DESPITE THE FACT THAT PETITIONER-INTERVENOR RCBC HAS ACQUIRED VESTED RIGHTS AND INDEFEASIBLE TITLE OVER THE SUBJECT PROPERTY AS AN INNOCENT PURCHASER FOR VALUE. 68) AND NOT BY THE x x x [CARL] x x x. 391051 AND 391052 IN THE NAME OF PETITIONER-INTERVENOR RCBC. II. RCBC submits the following issues: I. B. A. OBLIGATIONS AND REMEDIES OF THE PARTIES TO THE SDOA ARE NOW GOVERNED BY THE CORPORATION CODE (BATAS PAMBANSA BLG. 2005-32-01 AND THE NOTICE OF COVERAGE DATED 02 JANUARY 2006 HAVE THE EFFECT OF NULLIFYING TCT NOS. PETITIONERINTERVENOR RCBC CANNOT BE PREJUDICED BY A SUBSEQUENT REVOCATION OR RESCISSION OF THE SDOA. 2005-32-01 AND THE NOTICE OF COVERAGE DATED 02 JANUARY 2006 WERE ISSUED WITHOUT AFFORDING PETITIONER-INTERVENOR RCBC ITS RIGHT TO DUE PROCESS AS AN INNOCENT PURCHASER FOR VALUE. THE ASSAILED RESOLUTION NO. . AS AN INNOCENT PURCHASER FOR VALUE. On the other hand. WHETHER THE RIGHTS.IV.

as embodied in the SDOA. and (5) corollary to (4). (4) the validity or propriety of such recall or revocatory action. We first proceed to the examination of the preliminary issues before delving on the more serious challenges bearing on the validity of PARCs assailed issuance and the grounds for it. (3) the jurisdiction of PARC to recall or revoke HLIs SDP. the principal determinative issues tendered in the main petition and to which all other related questions must yield boil down to the following: (1) matters of standing. i. Our Ruling I.e.. gained HLI employment in June 1990 . The government. like RCBC. and. As HLI would have it. the self-styled head of AMBALA. Simply formulated. LIPCO would allege that the assailed resolution and the notice of coverage were issued without affording it the right to due process as an innocent purchaser for value. 31 of RA 6657. Supervisory Group. such as but not limited to the absence of valid grounds to warrant the rescission and/or revocation of the SDP. Galang. Windsor Andaya. LIPCO also argues. would ascribe on PARC the commission of grave abuse of discretion when it included those portions in the notice of coverage. and Rene Galang. asserts having acquired vested and indefeasible rights over certain portions of the converted property. hence. And apart from raising issues identical with those of HLI. AMBALA and their respective leaders are real parties-in-interest HLI would deny real party-in-interest status to the purported leaders of the Supervisory Group and AMBALA. (2) the constitutionality of Sec. who filed the revocatory petitions before the DAR. Julio Suniga. the validity of the terms and conditions of the SDP. is estopped from recovering properties which have since passed to innocent parties.LIPCO.

meaning.[90] At any rate.and. is employed by HLI. As such. Article XIII of the Constitution. Being qualified beneficiaries of the SDP. but are in the category of other farmworkers mentioned in Sec. Suniga and the other 61 supervisors are certainly parties who would benefit or be prejudiced by the judgment recalling the SDP or replacing it with some other modality to comply with RA 6657. he comes within the definition of a real party-in-interest under Sec. but the company nonetheless considered them FWBs under the SDOA as a mere concession to enable them to enjoy the same benefits given qualified regular farmworkers.[87] The SDOA no less identifies the SDP qualified beneficiaries as the farmworkers who appear in the annual payroll. could not have been a party to the SDOA executed a year earlier. one who stands to be benefited or injured by the judgment in the suit or is the party entitled to the avails of the suit.[89] thus only entitled to a share of the fruits of the land. HLI alleges that supervisors are not regular farmworkers. the following admission made by Atty. thus. counsel of HLI. during the oral arguments should put to rest any lingering doubt as to the status of protesters Galang. and Andaya: . Gener Asuncion. if the SDOA would be canceled and land distribution effected. Suniga. Even assuming that members of the Supervisory Group are not regular farmworkers. Corona.[86] the supervisors would be excluded from receiving lands as farmworkers other than the regular farmworkers who are merely entitled to the fruits of the land. 4. citing Fortich v. thus. as indeed Fortich teaches. Rule 3 of the Rules of Court. However. a qualified beneficiary of the SDP. [88] Galang. they are. who are regularly or periodically employed by [HLI]. 2. inclusive of the permanent and seasonal employees. and is. The same holds true with respect to the Supervisory Group whose members were admittedly employed by HLI and whose names and signatures even appeared in the annex of the SDOA. this does not detract from the fact that they are still identified as being among the SDP qualified beneficiaries. entitled to bring an action upon the SDP. so HLI claims. per HLIs own admission. thus. [85] As regards the Supervisory Group.

has yet to be submitted to be part of the records. farmer-leaders are expressly allowed to represent themselves. such authorization document. Asuncion: Yes. Your Honor please. (Emphasis supplied. their fellow farmers or their organizations in any proceedings before the DAR. . for as records show and as HLI aptly noted. real party in interest which that question refers to the complaints of protest initiated before the DAR and the real party in interest there be considered as possessed by the farmer beneficiaries who initiated the protest. To date. [92] his petisyonfiled with DAR did not carry the usual authorization of the individuals in whose behalf it was supposed to have been instituted. that when there are two or more representatives for any individual or group. Quasi-Judicial Powers of the DAR. under Sec. 50.) Clearly. which would logically include a list of the names of the authorizing FWBs.[91] Further. 50. however. paragraph 4 of RA 6657. their fellow farmers or their organizations in any proceedings before the DAR: Provided. Specifically: SEC. that Galang represents AMBALA. This is not necessarily to say. the respective leaders of the Supervisory Group and AMBALA are contextually real parties-in-interest allowed by law to file a petition before the DAR or PARC.Justice Bersamin: x x x I heard you a while ago that you were conceding the qualified farmer beneficiaries of Hacienda Luisita were real parties in interest? Atty. the representatives should choose only one among themselves to represent such party or group before any DAR proceedings. however.x x x xxxx Responsible farmer leaders shall be allowed to represent themselves.

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. right or privilege is deemed to include all incidental power. however. the authority to approve the plan for stock distribution of the corporate landowner belongs to PARC. privileges or jurisdiction which it grants. the empowerment only includes the power to disapprove. 31 of RA 6657. including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. EO 229 empowers PARC to approve the plan for stock distribution in appropriate cases. but not to recall its previous approval of the SDP after it has been implemented by the parties. to contain all such provisions as may be necessary to effectuate its object and purpose. [93] To HLI. as implemented by DAO 10. Veridiano II is instructive: . Under Sec. It may be. powers. by implication. or to make effective rights. as HLI argued. We disagree. HLI maintains that PARC is without authority to revoke an SDP. a basic postulate that what is implied in a statute is as much a part of it as that which is expressed. Such power or authority. However. for neither RA 6657 nor EO 229 expressly vests PARC with such authority. is deemed possessed by PARC under the principle of necessary implication. as urged. every statutory grant of power. right or privilege. it is the court which has jurisdiction and authority to order the revocation or rescission of the PARC-approved SDP. While.[94] We have explained that every statute is understood.PARCs Authority to Revoke a Stock Distribution Plan On the postulate that the subject jurisdiction is conferred by law. PARC also has the power to revoke the SDP which it previously approved.[96] Gordon v. contrary to petitioner HLIs posture.[95] Further.

to deny PARC such revocatory power would reduce it into a toothless agency of CARP. Thus. the President as chair. cannot plausibly do so. as the acceptance and/or approval of the SDP sought to be taken back or undone is the act of PARC whose official composition includes. if the FDA grants a license upon its finding that the applicant drug store has complied with the requirements of the general laws and the implementing administrative rules and regulations.The power to approve a license includes by implication. the power to revoke it. [98] With the view We take of the case. The broad sweep of HLIs argument ignores certain established legal precepts and must. be rejected. and at least eleven (11) other department heads. By the same token. 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. having granted the permit upon his ascertainment that the conditions thereof as applied x x x have been complied with. the DAR Secretary as vice-chair. By extension. . therefore.) Following the doctrine of necessary implication. The DAR Secretary. no less. it is only for the violation of such conditions that the mayor may revoke the said permit.[97](Emphasis supplied. As public respondents aptly observe. it is only for their violation that the FDA may revoke the said license. from which it is derived in the first place.[99] On another but related issue. 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. even if not expressly granted. by his own authority as such. the HLI foists on the Court the argument that subjecting its landholdings to compulsory distribution after its approved SDP has been implemented would impair the contractual obligations created under the SDOA. only PARC can effect such revocation. the power to revoke is limited by the authority to grant the license.

in the contractual relations between or among parties is deemed read into the contract and its implementation cannot successfully be resisted by force of the non-impairment guarantee. Art. and cannot affect acts or contracts already perfected. entered into and crafted pursuant to the provisions of RA 6657. III of the Constitution providing that [n]o law impairing the obligation of contracts shall be passed.) Needless to stress. which requires for its validity.A law authorizing interference. 2005-32-01 is not the kind of issuance within the ambit of Sec. a breach of its terms and conditions is not a PARC administrative matter. or at least its . however. the assailed Resolution No. no impingement of the impairment clause. Thus. Parenthetically. There is.[101] (Emphasis supplied. when appropriate. The SDOA is a special contract imbued with public interest. Article II [of the Constitution] is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging. the non-impairment protection being applicable only to laws that derogate prior acts or contracts by enlarging. in fine. vis--vis HLIs SDOA. the nonimpairment clause under Section 10.: The prohibition [against impairment of the obligation of contracts] is aligned with the general principle that laws newly enacted have only aprospective operation. obtains if a subsequent law changes the terms of a contract between the parties. imposes new conditions. abridging or in any manner changing the intention of the parties thereto. as in the case of RA 6657. dispenses with those agreed upon or withdraws existing remedies for the enforcement of the rights of the parties. It embodies the SDP. Gallant Maritime Services. 10. HLI tags the SDOA as an ordinary civil law contract and. the constitutional proscription would not apply to laws already in effect at the time of contract execution. but one that gives rise to a cause of action cognizable by regular courts. [102] This contention has little to commend itself. in that instance. their provisions are read into contracts and deemed a part thereof. As held in Serrano v. as to laws already in existence. in relation to DAO 10. as such. Impairment. Inc. abridging or in any manner changing the intention of the parties. [100] Necessarily.

RA 6657 should be the applicable law to the instant case. the latter shall prevailgeneralia specialibus non derogant. in determining their rights. it adds. the rights. organization and regulation of private corporations. at the first instance. Without doubt. On the other hand. PARCs approval. obligations and remedies. obligations and remedies of the parties to the SDOA embodying the SDP are primarily governed by RA 6657. Contrary to the view of HLI. the present impasse between HLI and the private respondents is not an intra-corporate dispute which necessitates the application of the Corporation Code. the Corporation Code is the general law providing for the formation. which the OSG aptly described as the mother law of the SDOA and the SDP. should be the applicable law on the disposition of the agricultural landof HLI. It should abundantly be made clear that HLI was precisely created in order to comply with RA 6657. HLI also parlays the notion that the parties to the SDOA should now look to the Corporation Code.enforceability. subject to administrative adjudication. Without in any way minimizing the relevance of the Corporation Code since the FWBs of HLI are also stockholders. paradoxical for HLI to shield itself from the coverage of CARP by invoking exclusive applicability of the Corporation Code under the guise of being a corporate entity. its applicability is limited as the rights of the parties arising from the SDP should not be made to supplant or circumvent the agrarian reform program. thus. Evidently. And the fact that the certificate of compliance[103]to be issued by agrarian authorities upon completion of the distribution of stocksis revocable by the same issuing authority supports the idea that everything about the implementation of the SDP is. As between a general and special law. . What private respondents questioned before the DAR is the proper implementation of the SDP and HLIs compliance with RA 6657.[104] It is.[105] Besides. instead of to RA 6657. RA 6657 is the special law on agrarian reform. The Code.

[106] . XIII of the Constitution. following this equation: value of the agricultural lands divided by total corporate assets. 31 of RA 6657.HLI further contends that the inclusion of the agricultural land of Hacienda Luisita under the coverage of CARP and the eventual distribution of the land to the FWBs would amount to a disposition of all or practically all of the corporate assets of HLI. if ever it comes to pass. Constitutional Issue FARM asks for the invalidation of Sec. to resort to stock distribution. requires the applicability of the Corporation Code provisions on corporate dissolution. as a mode of CARP compliance. the mere inclusion of the agricultural land of Hacienda Luisita under the coverage of CARP and the lands eventual distribution to the FWBs will not. 4. This brings us to the validity of the revocation of the approval of the SDP sixteen (16) years after its execution pursuant to Sec. to FARM.296%. 31 of RA 6657 for the reasons set forth in the Terminal Report of the Special Task Force. We are not persuaded. the matter of the constitutionality of said section. Art. But first. However. HLI would add that this contingency. without more. an arrangement which. insofar as it affords the corporation. impairs the fundamental right of farmers and farmworkers under Sec. the provisions of the Corporation Code on corporate dissolution would apply insofar as the winding up of HLIs affairs or liquidation of the assets is concerned. As stated in the SDOA itself. Indeed. as endorsed by PARC Excom. the percentage of the value of the agricultural land of Hacienda Luisita in relation to the total assets transferred and conveyed by Tadeco to HLI comprises only 33. automatically trigger the dissolution of HLI. By no stretch of imagination would said percentage amount to a disposition of all or practically all of HLIs corporate assets should compulsory land acquisition and distribution ensue.

3l of RA 6657. it does so only when the following essential requirements are first met. 31 of RA 6657 permits stock transfer in lieu of outright agricultural land transfer. composed of a small minority of 27 farmers. and pass upon the constitutionality of. since as early as November 21. FARM argues that Sec. as here. HLI added. (2) that the constitutional question is raised at the earliest possible opportunity by a proper party or one with locus standi. 4. acts of the executive or legislative departments. has yet to explain its failure to challenge the constitutionality of Sec. Art. 31 of RA 6657 and necessarily its counterpart provision in EO 229 must fail as explained below. be attacked collaterally. cannot. For FARM. intervenor FARM. When the Court is called upon to exercise its power of judicial review over. It draws attention in this regard to Sec. l989 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 . The instant challenge on the constitutionality of Sec. XIII of the Constitution. HLI insists that agrarian reform is not only about transfer of land ownership to farmers and other qualified beneficiaries. in fine.To a more specific.[107] Reacting. 3(a) of RA 6657 on the concept and scope of the term agrarian reform.[108] Not all the foregoing requirements are satisfied in the case at bar. and (3) the issue of constitutionality must be the very lis mota of the case. there is stock certificate ownership of the farmers or farmworkers instead of them owning the land. this modality of distribution is an anomaly to be annulled for being inconsistent with the basic concept of agrarian reform ingrained in Sec. but direct point. as envisaged in the Constitution. While there is indeed an actual case or controversy. to wit: (1) there is an actual case or controversy. The constitutionality of a law.

did not question the constitutionality of the provision. an issue assailing the constitutionality of a statute or governmental act. the constitutional issue tendered not being critical to the resolution of the case. the AMBALA petition did NOT question the constitutionality of Sec. remiss in belatedly questioning the constitutionality of Sec. It was only on December 4.[110] If some other grounds exist by which judgment can be made without touching the constitutionality of a law. The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not likewise obtain. 31 of RA 6657 which is quite too late in the day. Even the public respondents. Executive Secretary explains why: . 31 of RA 6657. 1989 before it challenged the constitutionality of Sec. but by petitioner AMBALA. 31 only on May 3. Furthermore. Thelis mota aspect is not present. but concentrated on the purported flaws and gaps in the subsequent implementation of the SDP. as represented by the Solicitor General. The unyielding rule has been to avoid.[109] FARM is. 2007 when it filed its Supplemental Comment with the Court. 31 of RA 6657. The FARM members slept on their rights and even accepted benefits from the SDP with nary a complaint on the alleged unconstitutionality of Sec. 89-12-2 dated November 21. but not. It has been emphasized in a number of cases that the question of constitutionality will not be passed upon by the Court unless it is properly raised and presented in an appropriate case at the first opportunity. whenever plausible. therefore. whose 27 members formerly belonged to AMBALA. it took FARM some eighteen (18) years from November 21. FARM.without so much of a protest. On the other hand. Thus. 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. raised the constitutionality of Sec. by FARM or any of its members. 31 upon which the benefits were derived. to stress. 2003 or 14 years after approval of the SDP via PARC Resolution No.[111] Garcia v. such recourse is favored. The second requirement that the constitutional question should be raised at the earliest possible opportunity is clearly wanting. 1989 that said plan and approving resolution were sought to be revoked.

any of these key issues may be resolved without plunging into the constitutionality of Sec. there must be a clear and unequivocal breach of the Constitution. 31 of RA 6657 is no longer an available option under existing law. offends certain constitutional and statutory provisions. And before the Court. The question of whether or not it is unconstitutional should be a moot issue. 31 of RA 6657. looking deeply into the underlying petitions of AMBALA. to justify its nullification. [113] amending Sec. or argumentative. 31 of RA 6657 vis--vis the stock distribution component of said Sec. and not one that is doubtful. has proceeded to resolve constitutional issues otherwise already moot and academic[114]provided the following requisites are present: . 7 of RA 6657. It is true that the Court. speculative. The petitioner must be able to show that the case cannot be legally resolved unless the constitutional question raised is determined. 2009. 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. In its pertinent part. such as the application of the statute or the general law. Sec. proceeding from the basic positions originally taken by AMBALA (to which the FARM members previously belonged) and the Supervisory Group. To be sure. et al. although properly presented. [112] (Italics in the original. Thus.) The lis mota in this case. the modes of acquisition shall be limited to voluntary offer to sell and compulsory acquisition. 5 of RA 9700 provides: [T]hat after June 30. Moreover. 5 of RA 9700. is the alleged non-compliance by HLI with the conditions of the SDP to support a plea for its revocation. 31. has all but superseded Sec. in some cases. for all intents and purposes. as couched and implemented.. it is not the said section per se that is invalid.Lis Mota the fourth requirement to satisfy before this Court will undertake judicial review means that the Court will not pass upon a question of unconstitutionality. It may be well to note at this juncture that Sec. This requirement is based on the rule that every law has in its favor the presumption of constitutionality. the stock distribution scheme under Sec. but rather it is the alleged application of the said provision in the SDP that is flawed. if the case can be disposed of on some other ground.

taking into account ecological. No language can be found in the 1987 Constitution that disqualifies or prohibits corporations or cooperatives of farmers from being the legal entity through which collective ownership can be exercised. (Emphasis supplied. 4 EXPRESSLY authorizes collective ownership by farmers. the case is capable of repetition yet evading review. These requisites do not obtain in the case at bar. there appears to be no breach of the fundamental law. Direct transfer to individual farmers is the most commonly used method by DAR and widely accepted. the State shall encourage and undertake the just distribution of all agricultural lands. Indirect transfer through collective ownership of the agricultural land is the alternative to direct ownership of agricultural land by individual farmers. undertake an agrarian reform program founded on the right of the farmers and regular farmworkers. to OWN directly or COLLECTIVELY THE LANDS THEY TILL or. Sec. subject to such priorities and reasonable retention limits as the Congress may prescribe. In determining retention limits. developmental.) The wording of the provision is unequivocalthe farmers and regular farmworkers have a right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. and subject to the payment of just compensation. when the constitutional issue raised requires formulation of controlling principles to guide the bench. to receive a just share of the fruits thereof. For one. To this end. or equity considerations. the bar. in a mass or body. [116] By . The basic law allows two (2) modes of land distributiondirect and indirect ownership. The aforequoted Sec. The State shall further provide incentives for voluntary land-sharing. The word collective is defined as indicating a number of persons or things considered as constituting one group or aggregate. who are landless. second. the State shall respect the right of small landowners. Article XIII of the Constitution reads: The State shall. by law. third. and the public. the exceptional character of the situation and the paramount public interest is involved. [115] while collectively is defined as in a collective sense or manner. 4. fourth.x x x first. there is a grave violation of the Constitution. in the case of other farmworkers.

the following rules shall be observed by the PARC. bears in relation to the companys total assets. In general. under such terms and conditions as may be agreed upon by them. x x x xxxx Upon certification by the DAR. 29. 31. 31 allows corporations or associations to own agricultural land with the farmers becoming stockholders or members. In case it is not economically feasible and sound to divide the land. Corporate Landowners. Said provisions read: SEC.In the case of farms owned or operated by corporations or other business associations. lands shall be distributed directly to the individual worker-beneficiaries.using the word collectively. Its Sec. Collective ownership is permitted in two (2) provisions of RA 6657. actually devoted to agricultural activities. 29 allows workers cooperatives or associations to collectively own the land. then it shall be owned collectively by the worker beneficiaries who shall form a workers cooperative or association which will deal with the corporation or business association. 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.) SEC. the Constitution allows for indirect ownership of land and not just outright agricultural land transfer. 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. x x x (Emphasis supplied. while the second paragraph of Sec. In no case shall the compensation received by the workers at the time the shares of stocks are distributed be reduced. The same . Farms owned or operated by corporations or other business associations.

MONSOD. MR. NOLLEDO. NOLLEDO. Yes. do the farmers own specific areas of land where they only unite in their efforts? MS. with respect to their equity or participation. NIEVA. stewardship or State ownership? MS. MR. thus: MR. Thus. XIII of the Constitution that land can be owned COLLECTIVELY by farmers. In this section. referring to farmers cooperatives. NIEVA. Sec. not the State. while corporations are juridical persons under the Corporation Code. 31. we mean communal ownership. are authorized vehicles for the collective ownership of agricultural land. we mean the principle of direct ownership by the tiller? MR. NOLLEDO. Cooperatives can be registered with the Cooperative Development Authority and acquire legal personality of their own. And when we talk of the phrase to own directly. Because I understand that there are two basic systems involved: the moshave type of agriculture and the kibbutz. MR. Even the framers of the l987 Constitution are in unison with respect to the two (2) modes of ownership of agricultural lands tilled by farmersDIRECT and COLLECTIVE. x x x (Emphasis supplied. we conceive of cooperatives. as differentiated from individual farmers.) Clearly. So are both contemplated in the report? . And when we talk of collectively. 29 of RA 6657 and corporations or associations under the succeeding Sec. And when we talk of collectively. workers cooperatives or associations under Sec. NOLLEDO.principle shall be applied to associations. 31 is constitutional as it simply implements Sec. 4 of Art. that is farmers cooperatives owning the land. That is one way.

Thus. the main requisite for collective ownership of land is collective or group work by farmers of the agricultural land. The textual reference to a law and Congress necessarily implies that the above constitutional provision is not self-executory and that legislation is needed to implement the urgently needed program of agrarian reform. katulad ng sitwasyon sa Negros. TADEO. Irrespective of whether the landowner is a cooperative. x x x When we speak here of to own directly or collectively the lands they till. Ang ibig sabihin ng directly ay tulad sa implementasyon sa rice and corn lands kung saan inaari na ng mga magsasaka ang lupang binubungkal nila. ang gusto ng mga magbubukid ay gawin nila itong cooperative or collective farm. the farmers will work on the agricultural land sama-sama or collectively. an agrarian reform program founded on the policy of land for the landless. And RA 6657 has been enacted precisely pursuant to and as a mechanism to carry out the . Sec. Likewise. TADEO. Ang ibig sabihin naman ng collectively ay sama-samang paggawa sa isang lupain o isang bukid. association or corporation composed of farmers. XIII of the Constitution makes mention of a commitment on the part of the State to pursue.[117] (Emphasis supplied. then it falls within the ambit of collective ownership scheme. TINGSON. Art. Tulad sa Negros. we used to hear land for the landless. is this land for the tillers rather than land for the landless? Before. by law.) As Commissioner Tadeo explained. 4. Ang ibig sabihin ay sama-sama nilang sasakahin. xxxx MR. taking into account such abstract variable as equity considerations. Ang prinsipyong umiiral dito ay iyong land for the tillers. as long as concerted group work by the farmers on the land is present. but subject to such priorities as Congress may prescribe. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na pagmamay-ari directly at ang tinatawag na samasamang gagawin ng mga magbubukid. but now the slogan is land for the tillers. Is that right? MR.MR.

We emphasize that Sec. Albeit land ownership for the landless appears to be thedominant theme of that policy. be approximated. The legislature. 31 of RA 6657. the framers of the Constitution would have worded said section in a manner mandatory in character. 4. If the intention were otherwise. restates[118] the agrarian reform policy established in the aforementioned provision of the Constitution of promoting the welfare of landless farmers and farmworkers. or else the enactment suffers from the vice of unconstitutionality. if not achieved. the stock distribution option devised under Sec. Sec. 4 of Article XIII of the Constitution. is not inconsistent with the States commitment to farmers and farmworkers to advance their interests under the policy of social justice. does not constrict Congress to passing an agrarian reform law planted on direct land transfer to and ownership by farmers and no other. has chosen a modality for collective ownership by which the imperatives of social justice may. They conclude that such . Thus. This piece of legislation. the farmers lose control over the land to the board of directors and executive officials of the corporation who actually manage the land. With the view We take of this case. For this Court. RA 6657 thus defines agrarian reform as the redistribution of lands to farmers and regular farmworkers who are landless to lift the economic status of the beneficiaries and all other arrangements alternative to the physical redistribution of lands. 31 of RA 6657. as couched. with its direct and indirect transfer features.constitutional directives. in fact. FARM contends that the farmers in the stock distribution scheme under Sec. Article XIII of the Constitution. thru Sec. as instrument of social justice under Sec. labor administration and the distribution of shares of stock which will allow beneficiaries to receive a just share of the fruits of the lands they work. 31 do not own the agricultural land but are merely given stock certificates. The Court should be bound by such policy choice. such as production or profit sharing. in its estimation. 31 of RA 6657 hews with the agrarian reform policy.

or the right to share in its proceeds to that extent when distributed according to law and equity and that its holder is not the owner of any part of the capital of the corporation.[119] A share of stock typifies an aliquot part of the corporations property. While it is true that the farmer is issued stock certificates and does not directly own the land. which include the agricultural lands. bears in relation to the companys total assets.[120] However. Anent the alleged loss of control of the farmers over the agricultural land operated and managed by the corporation. and the extent of his interest is described by the term shares. actually devoted to agricultural activities. It must be remembered that the determination of the .arrangement runs counter to the mandate of the Constitution that any agrarian reform must preserve the control over the land in the hands of the tiller. The expression shares of stock when qualified by words indicating number and ownership expresses the extent of the owners interest in the corporate property. 31 shows otherwise. the Corporation Code is clear that the FWB becomes a stockholder who acquires an equitable interest in the assets of the corporation. still. It was explained that the equitable interest of the shareholder in the property of the corporation is represented by the term stock. Said provision provides that qualified beneficiaries have the right to purchase such proportion of the capital stock of the corporation that the agricultural land. the FWBs will ultimately own the agricultural lands owned by the corporation when the corporation is eventually dissolved and liquidated. This contention has no merit. The wording of the formula in the computation of the number of shares that can be bought by the farmers does not mean loss of control on the part of the farmers. a reading of the second paragraph of Sec.

percentage of the capital stock that can be bought by the farmers depends on the value of the agricultural land and the value of the total assets of the corporation. this Court may take judicial notice of cases where FWBs sold the awarded land even to non-qualified persons and in violation of the prohibition period provided under the law. by PARC or DAR from the correct application of the formula prescribed by the second paragraph of Sec. Ergo. despite actual land distribution. however. such as corporations. There is. On the contrary. The PARC composed of the President of thePhilippines and cabinet secretaries must see to it that control over the board of directors rests with the farmers by rejecting the inclusion of non-agricultural assets which will yield the majority in the board of directors to non-farmers. 31 of RA 6675 does not make said provision constitutionally infirm. there have been so many instances where. were prohibited from owning agricultural lands are no longer realistic under existing . This only proves to show that the mere fact that there is land distribution does not guarantee a successful implementation of agrarian reform. 31 of RA 6657 does not trench on the constitutional policy of ensuring control by the farmers. nothing unconstitutional in the formula prescribed by RA 6657. the principle of land to the tiller and the old pastoral model of land ownership where non-human juridical persons. Any deviation. the implementation of agrarian reform was still unsuccessful. As a matter of fact. it is the application of said provision that can be challenged. Before the SDP is approved. As it were. thus. strict scrutiny of the proposed SDP must always be undertaken by the DAR and PARC. Rather. A view has been advanced that there can be no agrarian reform unless there is land distribution and that actual land distribution is the essential characteristic of a constitutional agrarian reform program. such that the value of the agricultural land contributed to the corporation must always be more than 50% of the total assets of the corporation to ensure that the majority of the members of the board of directors are composed of the farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers should always own majority of the common shares entitled to elect the members of the board of directors to ensure that the farmers will have a clear majority in the board. Sec. The policy on agrarian reform is that control over the agricultural land must always be in the hands of the farmers.

Towards this end. Aside from the fact that there appears to be no violation of the Constitution. lack of guaranteed buyers of produce. The experiences learned from failed land reform activities in various parts of the country are lack of financing. The former is too often left to his own devices when faced with failing crops and bad weather. Thus. expediency and justice of legislation or its provisions.[122] . While direct singular ownership over farmland does offer advantages. One such option is collective ownership through juridical persons composed of farmers. It would be speculative for this Court to assume that the legislature will enact another law providing for a similar stock option. lack of fertilizers. such as the ability to make quick decisions unhampered by interference from others. the Court will not interfere inordinately with the exercise by Congress of its official functions. government must be flexible and creative in its mode of implementation to better its chances of success. courts will not pass upon questions of wisdom. the heavy presumption being that a law is the product of earnest studies by Congress to ensure that no constitutional prescription or concept is infringed.conditions. Thus. yet at best. an individual farmer will often face greater disadvantages and difficulties than those who exercise ownership in a collective manner through a cooperative or corporation. lack of farm equipment. these advantages only but offset the disadvantages that are often associated with such ownership arrangement.[121] Corollarily. As a matter of sound practice. lack of farm-to-market roads. there is still no successful implementation of agrarian reform to speak of in such a case. at the end of the day. Although success is not guaranteed. Practically. among others. all reasonable doubts should be resolved in favor of the constitutionality of a law and the validity of the acts and processes taken pursuant thereof. or compelled to obtain usurious loans in order to purchase costly fertilizers or farming equipment. a cooperative or a corporation stands in a better position to secure funding and competently maintain the agri-business than the individual farmer. the requirement that the instant case be capable of repetition yet evading review is also wanting.

the inquiry should be: whether or not PARC gravely abused its discretion in revoking or recalling the subject SDP and placing the hacienda under CARPs compulsory acquisition and distribution scheme. The findings. must be demonstrated in such a manner as to leave no doubt in the mind of the Court. 31 of RA 6657. The findings may be grouped into two: (1) the SDP is contrary to either the policy on agrarian reform. or a clear conflict with the Constitution. not merely a doubtful or argumentative one. the following are essentially the reasons underpinning PARCs revocatory or recall action: . We are bound by words of the statute. for. Sec.Consequently. the grounds for nullity must be beyond reasonable doubt.[124] II.[123] FARM has not presented compelling arguments to overcome the presumption of constitutionality of Sec. and (2) the alleged violation by HLI of the conditions/terms of the SDP. In more particular terms. The stage is now set for the determination of the propriety under the premises of the revocation or recall of HLIs SDP. Or to be more precise. In other words. or DAO 10. indeed. The wisdom of Congress in allowing an SDP through a corporation as an alternative mode of implementing agrarian reform is not for judicial determination. analysis and recommendation of the DARs Special Task Force contained and summarized in its Terminal Report provided the bases for the assailed PARC revocatory/recalling Resolution. 31 of RA 6657. before a statute or its provisions duly challenged are voided. an unequivocal breach of. Established jurisprudence tells us that it is not within the province of the Court to inquire into the wisdom of the law.

stated that the man days criterion worked to dilute the entitlement of the original share beneficiaries. at least substantially. (3) The issuance of HLI shares of stock on the basis of number of hours workedor the so-called man daysis grossly onerous to the FWBs. . is represented by the same counsel as that appearing for the Supervisory Group. (2) HLI has failed to keep Hacienda Luisita intact and unfragmented. can unilaterally deny work to anyone. 31 of RA 6657 and DAO 10. on the other hand. the lives of the FWBs have hardly improved and the promised increased income has not materialized. as HLI. in the guise of rotation. And training its sight on the resulting dilution of the equity of the FWBs appearing in HLIs masterlist. and (6) Several homelot awardees have yet to receive their individual titles. all its obligations under the SDP. for its part.(1) Despite the lapse of 16 years from the approval of HLIs SDP. in some pleadings. PARCs Resolution No.[125] (4) The distribution/transfer of shares was not in accordance with the timelines fixed by law. as couched and implemented. FARM. posits the view that legal bases obtain for the revocation of the SDP. denying HLIs motion for reconsideration of Resolution No. and tags the reasons given for the revocation of the SDP as unfounded. In elaboration of this ground. (5) HLI has failed to comply with its obligations to grant 3% of the gross sales every year as production-sharing benefit on top of the workers salary. 2005-32-01. which. FARM would state that the SDP. because it does not conform to Sec. 2006-34-01. a position shared by AMBALA. Petitioner HLI claims having complied with. Public respondents. as approved by PARC itself. aver that the assailed resolution rests on solid grounds set forth in the Terminal Report.

to own directly or collectively the lands they till or. who are landless. parity when there should have been differentiation. and the establishment of owner cultivatorship of economic-sized farms as the basis of Philippine agriculture.spawned disparity when there should be none. and equity considerations. with due regard to the rights of landowners to just compensation and to the ecological needs of the nation. and subject to the payment of just compensation. Sec.[126] The petition is not impressed with merit.It is the policy of the State to pursue a Comprehensive Agrarian Reform Program (CARP). having taken into account ecological. the State shall encourage the just distribution of all agricultural lands. developmental. (Emphasis supplied. The welfare of the landless farmers and farm workers will receive the highest consideration to promote social justice and to move the nation towards sound rural development and industrialization. 2 of RA 6657. To this end. it is stated that the SDP violates the agrarian reform policy under Sec. Declaration of Principles and Policies. In the Terminal Report adopted by PARC. shall be undertaken to provide farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands. to receive a share of the fruits thereof. To this end. The State shall respect the right of small landowners and shall provide incentives for voluntary land-sharing.) Paragraph 2 of the above-quoted provision specifically mentions that a more equitable distribution and ownership of land x x x shall be undertaken to provide . The agrarian reform program is founded on the right of farmers and regular farm workers. subject to the priorities and retention limits set forth in this Act. 2 of RA 6657 states: SECTION 2. as the said plan failed to enhance the dignity and improve the quality of lives of the FWBs through greater productivity of agricultural lands. in the case of other farm workers. a more equitable distribution and ownership of land. We disagree.

include the cost of homelots. by no stretch of imagination can said provision be construed as a guarantee in improving the lives of the FWBs.[128] On top of these. Benefits and Credit Privileges (in Thousand Pesos) Since the Stock Option was Approved by PARC/CARP. Of note is the term opportunity which is defined as a favorable chance or opening offered by circumstances.848.farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands. Verily. it merely provides for a possibility or favorable chance of uplifting the economic status of the FWBs.[127] Considering this. Significantly. At best. INC.040. Nothing in that option agreement. and the PhP 37. law or department order indicates otherwise. improving the economic status of the FWBs is neither among the legal obligations of HLI under the SDP nor an imperative imposition by RA 6657 and DAO 10. . it is worth remembering that the shares of stocks were given by HLI to the FWBs for free. a violation of which would justify discarding the stock distribution option. some PhP 3 billion by way of salaries/wages and higher benefits exclusive of free hospital and medical benefits to their immediate family. HLI manifests having given the FWBs 3% of the PhP 80 million paid for the 80 hectares of land traversed by the SCTEX. as added up by the Court.5 million representing 3% from the proceeds of the sale of the 500hectare converted lands. as stated in the report. HLI draws particular attention to its having paid its FWBs. Total Non-Direct Cash Out (Hospital/Medical Benefits) = PhP 303. And attached as Annex G to HLIs Memorandum is the certified true report of the finance manager of Jose Cojuangco & Sons Organizations-Tarlac Operations. The sum total. which may or may not be attained. the PhP 150 million or so representing 3% of the gross produce of the hacienda. While not included in the report. during the regime of the SDP (1989-2005).927. Pertinently. captioned as HACIENDA LUISITA. the FWBs have benefited from the SDP. The cash out figures. Salaries. detailing what HLI gave their workers from 1989 to 2005. yields the following numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) = PhP 2.

no corporation could guarantee a profitable run all the time.[130] But as aptly noted during the oral arguments. whence the DAR-attested SDOA/MOA is based.[129] The Court is fully aware that one of the criteria under DAO 10 for the PARC to consider the advisability of approving a stock distribution plan is the likelihood that the plan would result in increased income and greater benefits to [qualified beneficiaries] than if the lands were divided and distributed to them individually. the forces of nature or the inherent risky nature of business. an SDP cannot guarantee. Neither does HLIs SDP. The provisions of the first paragraph of the adverted Sec. The Court can take judicial notice of the fact that there were many instances wherein after a farmworker beneficiary has been awarded with an agricultural land. the onerous condition of the FWBs economic status. actually exact assurance of success on something that is subject to the will of man. worse still.[131] Just like in actual land distribution. albeit public respondents erroneously submit otherwise. can hardly be attributed to HLI and its SDP and provide a valid ground for the plans revocation. infringe Sec. In all then. it cannot be over-emphasized that.To address urgings that the FWBs be allowed to disengage from the SDP as HLI has not anyway earned profits through the years. As has been suggested. DAO 10 ought to have not. a comfortable life for the FWBs. one of the key features of an SDP of a corporate landowner is the likelihood of the corporate vehicle not earning. 31 are without relevance to the issue on the propriety of the assailed order revoking HLIs SDP. their life of hardship. as a mode of CARP compliance. if that really be the case. for the paragraph deals with the transfer of agricultural lands to the government. as a matter of common business sense. thus: . or. losing money. he just subsequently sells it and is eventually left with nothing in the end. 31 of RA 6657. as it cannot. as indeed the SDOA does not guarantee.

subject to confirmation by the DAR. with their sub-paragraphs. of Sec. The second and third paragraphs. as they may agree. actually devoted to agricultural activities. the beneficiaries shall be assured of at least one (1) representative in the board of directors. bears in relation to the companys total assets. . 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. 31. 31 provide as follows: Upon certification by the DAR. (c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares. the books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries. Corporate Landowners. consistent with this Act. 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 this Act: Provided. x x x Corporations or associations which voluntarily divest a proportion of their capital stock. if one exists. or in a management or executive committee.SEC. 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. (b) Irrespective of the value of their equity in the corporation or association. under such terms and conditions as may be agreed upon by them. of the corporation or association. In no case shall the compensation received by the workers at the time the shares of stocks are distributed be reduced. and (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.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.

85 shares.00) transferred and conveyed to the SECOND PARTY is 33. These shares under the SDP are to be given to FWBs for free.531.296% that.804.924.85 HLI shares. under the law. the said 33.296% thereof being P118. The total number of shares to be distributed to said qualified FWBs is 118.000 and of HLIs other assets is PhP 393.296%. The appraised value of the agricultural land is PhP 196.531.531.00 or 355.630.296% of the 355.The mandatory minimum ratio of land-to-shares of stock supposed to be distributed or allocated to qualified beneficiaries.391.554. Paragraph one (1) of the SDOA.220. then each FWB is entitled to 18. The percentage of the value of the agricultural land of Hacienda Luisita (P196.462 shares with a par value of P1. bears in relation to the companys total assets had been observed. if we divide the 118. PhP 590.391.220) is 33. therefore. that has to be distributed to the THIRD PARTY under the stock distribution plan.630. . which is P355.554.296 FWBs strictly adheres to the formula prescribed by Sec.000) in relation to the total assets (PhP 590.85 HLI shares by 6.462. This was arrived at by getting 33. 31(b) of RA 6657.976.00) in relation to the total assets (P590. is the proportion of the outstanding capital stock of the SECOND PARTY.976.391.00 per share. The total value of HLIs assets is. The stipulation reads: 1.296 original qualified farmworkerbeneficiaries (FWBs) in HLI. 31 of RA 6657.462.32 HLI shares. conforms to Sec. Thus.554.462 shares which is the outstanding capital stock of HLI with a value of PhP 355.296 FWBs. 31 of RA 6657 refers to as that proportion of the capital stock of the corporation that the agricultural land.000.531.220.85 or 118.391.220.976. which was based on the SDP. actually devoted to agricultural activities.976. which represents the stockholdings of the 6.[132] The percentage of the value of the agricultural lands (PhP 196. adverting to what Sec.630. The Court finds that the determination of the shares to be distributed to the 6.

Corporate Landowners x x x . Also. no allegations have been made against HLI restricting the inspection of its books by accountants chosen by the FWBs. in line with the last paragraph of Sec. and nothing in it remotely supports the public respondents posture. 31(b) of the third paragraph. the Court finds that the SDOA contained provisions making certain the FWBs representation in HLIs governing board.85 shares with par value of PhP 1 each. We have closely examined the last paragraph alluded to. that the FWBs shall be assured of at least one (1) representative in the board of directors or in a management or executive committee irrespective of the value of the equity of the FWBs in HLI. in favor of the farmworkers appearing as shareholders of the SECOND PARTY at the start of said year which will empower the THIRD PARTY or their representative to vote in stockholders and board of directors meetings of the SECOND PARTY convened during the year the entire 33. with particular focus on the two-year period mentioned.391. should have been made in full within two (2) years from the approval of RA 6657.976.[133] Public respondents submission is palpably erroneous. 31 provides: SEC. said Sec. submit that the distribution of the mandatory minimum ratio of land-to-shares of stock.Anent the requirement under Sec. Public respondents. valid and effective for one (1) year.296% of the outstanding capital stock of the SECOND PARTY earmarked for distribution and thus be able to gain such number of seats in the board of directors of the SECOND PARTY that the whole 33. 31 of said law. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from the FIRST PARTY and distributed to the THIRD PARTY. thus: 5. FIRST PARTY shall execute at the beginning of each fiscal year an irrevocable proxy. In its pertinent part. referring to the 118.296% of the shares subject to distribution will be entitled to. the assumption may be made that there has been no violation of the statutory prescription under subparagraph (a) on the auditing of HLIs accounts. 31. hence. however.

If within two (2) years from the approval of this Act. We shall now delve into what PARC and respondents deem to be other instances of violation of DAO 10 and the SDP. the words two (2) years clearly refer to the period within which the corporate landowner. 2 of RA 6657 as well as the statutory issues. well within the two-year period reckoned from June 1988 when RA 6657 took effect. RA 6657. to avoid land transfer as a mode of CARP coverage under RA 6657. is to avail of the stock distribution option or to have the SDP approved. keeping Hacienda Luisita unfragmented is also not among the imperative impositions by the SDP. the agricultural land of the corporate owners or corporation shall be subject to the compulsory coverage of this Act. . The HLI secured approval of its SDP in November 1989. (Word in bracket and emphasis added.) Properly viewed. the [voluntary] 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. Having hurdled the alleged breach of the agrarian reform policy under Sec. On the Conversion of Lands Contrary to the almost parallel stance of the respondents. and DAO 10.

65 of RA 6657 which reads: Sec. 5(a) does not exact from the corporate landowner-applicant the undertaking to keep the farm intact and unfragmented ad infinitum. of course. or the locality has become urbanized and the land will have a greater economic value for residential. anti-climactic to mention that DAR viewed the conversion as not violative of any issuance. In not too many words. Corporate operation may be viable even if the corporate agricultural land does not remain intact or [un]fragmented. 5(a)just like the succeeding Sec. commercial or industrial purposes. 5(b) of DAO 10 on increased income and greater benefits to qualified beneficiariesis but one of the stated criteria to guide PARC in deciding on whether or not to accept an SDP. Accordingly. the Terminal Report and the PARC-assailed resolution would take HLI to task for securing approval of the conversion to non-agricultural uses of 500 hectares of the hacienda. the DAR upon application of the beneficiary or landowner with due notice to the affected parties. Said Sec. The PARC is wrong. In the first place.After the lapse of five years from its award when the land ceases to be economically feasible and sound for agricultural purposes. the Report and the resolution view the conversion as an infringement of Sec. let alone undermining the viability of Hacienda Luisitas operation. as the DAR Secretary approved the land conversion applied for and its disposition via his Conversion Order dated August 14. Sec. 1996 pursuant to Sec. 5(a) of DAO 10 which reads: a. 65. Conversion of Lands. 5(a) is viability of corporate operations: [w]hat is thus required is not the agricultural land remaining intact x x x but the viability of the corporate operations with its agricultural land being intact and unfragmented. and subject to existing . And there is logic to HLIs stated observation that the key phrase in the provision of Sec.[134] It is. that the continued operation of the corporation with its agricultural land intact and unfragmented is viable with potential for growth and increased profitability.The Terminal Report states that the proposed distribution plan submitted in 1989 to the PARC effectively assured the intended stock beneficiaries that the physical integrity of the farm shall remain inviolate.

the cry of some groups of not having received their share from the gross production sales has not adequately been validated on the ground by the Special Task Force. especially when they are affirmed by the CA. factual findings of administrative agencies are conclusive when supported by substantial evidence and are accorded due respect and weight. could be the books of account of HLI.laws. the entries in its financial books tend to indicate compliance by HLI of the profitsharing equivalent to 3% of the gross sales from the production of the agricultural land on top of (a) the salaries and wages due FWBs as employees of the company and (b) the 3% of the gross selling price of the converted land and that portion used for the SCTEX. it would appear that the Special Task Force rejected HLIs claim of compliance on the basis of this ratiocination: The Task Force position: Though. 4 of the MOA is clear and must be followed. There is a distinction between the total gross sales from the production of the land and the proceeds from the sale of the land. This . [136] such as in this particular instance. As culled from its Terminal Report. The phrase the beneficiaries are entitled every year to an amount approximately equivalent to 3% would only be feasible if the subject is the produce since there is at least one harvest per year. Evidently. One such exception is when the findings of an administrative agency are conclusions without citation of specific evidence on which they are based. The former refers to the fruits/yield of the agricultural land while the latter is the land itself. while such is not the case in the sale of the agricultural land. the Supervisory Group receives the 3% gross production share and that others alleged that they received 30 million pesos still others maintain that they have not received anything yet. such rule is not absolute. as the case may be. Indeed. Item No. A plausible evidence of compliance or non-compliance. allegedly. may authorize the x x x conversion of the land and its dispositions.[135] However. x x x On the 3% Production Share On the matter of the alleged failure of HLI to comply with sharing the 3% of the gross production sales of the hacienda and pay dividends from profit.

then. the Conversion Order dated 14 August 1996 provides that the benefits. HLI had complied substantially with this SDP undertaking and the conversion order. the 33% share being claimed by the FWBs as part owners of the Hacienda. On Titles to Homelots . with more reason. In fact. the revocation of the approval of the SDP is not without basis as shown below. it admits that the FWBs. At most. xxxx The FWBs do not receive any other benefits under the MOA except the aforementioned [(viz: shares of stocks (partial). is only 3% of the purchase price of the converted land. though not all. as stockholders. rescission.negates then the claim of HLI that. all that the FWBs can be entitled to. Besides. will not be permitted for a slight or casual breach of contract. predicated on violation of reciprocity. should have been given the FWBs. 3% gross production sale (not all) and homelots (not all)]. Even in contract law.[137] Despite the foregoing findings. The 3% gross production share then is different from the 3% proceeds of the sale of the converted land and. Judging from the above statements. if any. wages and the like. To be sure. Three percent of the gross selling price of the sale of the converted land shall be awarded to the beneficiaries of the SDO. have received their share of the gross production sales and in the sale of the lot to SCTEX. and to which they could have been entitled if only the land were acquired and redistributed to them under the CARP. this slight breach would not justify the setting to naught by PARC of the approval action of the earlier PARC. presently received by the FWBs shall not in any way be reduced or adversely affected. rescission may be had only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement. the Special Task Force is at best silent on whether HLI has failed to comply with the 3% production-sharing obligation or the 3% of the gross selling price of the converted land and the SCTEX lot.

to be taken from the land owned by the cooperative or corporation. 30. then it shall be owned collectively by the worker-beneficiaries who shall form a workers cooperative or association which will deal with the corporation or business association. 29. In case it is not economically feasible and sound to divide the land. Homelots and Farmlots for Members of Cooperatives. the following rules shall be observed by the PARC. as in this case.In the case of farms owned or operated by corporations or other business associations. 30 of RA 6657 states: SEC. Until a new agreement is entered into by and between the workers cooperative or association and the corporation or business association. lands shall be distributed directly to the individual worker-beneficiaries. any agreement existing at the time this Act takes effect between the former and the previous landowner shall be respected by both the workers cooperative or association and the corporation or business association. Under the SDP.The individual members of the cooperatives or corporations mentioned in the preceding section shall be provided with homelots and small farmlots for their family use. Farms Owned or Operated by Corporations or Other Business Associations. Sec. Concomitantly. In general. The preceding section referred to in the above-quoted provision is as follows: SEC.Under RA 6657. said corporations are not obliged to provide for it except by stipulation. the foregoing provisions do not make reference to corporations which opted for stock distribution under Sec. the distribution of homelots is required only for corporations or business associations owning or operating farms which opted for land distribution. Noticeably. 31 of RA 6657. HLI undertook to subdivide and allocate for free and without charge among the qualified family-beneficiaries x x x residential or homelots of .

the qualified family beneficiaries were not given the 240 square meters each. 3 of the SDOA on the mechanics and timelines of stock distribution. So. within a reasonable time. your Honor please.[138] Other than the financial report. Atty. m. We find that it violates two (2) provisions of DAO 10. it is still the contention of the FWBs that not all was given the 240-square meter homelots and. On Man Days and the Mechanics of Stock Distribution In our review and analysis of par. of those who were already given.not more than 240 sq. During the oral arguments. some still do not have the corresponding titles. Par. Asuncion: We will. with each family beneficiary being assured of receiving and owning a homelot in the barrio or barangay where it actually resides. HLI was afforded the chance to refute the foregoing allegation by submitting proof that the FWBs were already given the said homelots: Justice Velasco: x x x There is also an allegation that the farmer beneficiaries. however. each. no other substantial proof showing that all the qualified beneficiaries have received homelots was submitted by HLI. can you also [prove] that the qualified family beneficiaries were already provided the 240 square meter homelots. More than sixteen (16) years have elapsed from the time the SDP was approved by PARC. and yet. 3 of the SDOA states: . this Court is constrained to rule that HLI has not yet fully complied with its undertaking to distribute homelots to the FWBs under the SDP. Hence.

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.

Based on the above-quoted provision, the distribution of the shares of stock
to the FWBs, albeit not entailing a cash out from them, is contingent on the number
of man days, that is, the number of days that the FWBs have worked during the
year. This formula deviates from Sec. 1 of DAO 10, which decrees the distribution
of equal number of shares to the FWBs as the minimum ratio of shares of stock for
purposes of compliance with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.The [SDP] submitted by the
corporate landowner-applicant shall provide for the distribution of
an equal number of shares of the same class and value, with the
same rights and features as all other shares, to each of the qualified
beneficiaries. This distribution plan in all cases, shall be at least
the minimum ratio for purposes of compliance with Section 31 of R.A.
No. 6657.
On top of the minimum ratio provided under Section 3 of this
Implementing Guideline, the corporate landowner-applicant may
adoptadditional stock distribution schemes taking into account
factors such as rank, seniority, salary, position and other
circumstances which may be deemed desirable as a matter of sound
company policy. (Emphasis supplied.)

The above proviso gives two (2) sets or categories of shares of stock which a
qualified beneficiary can acquire from the corporation under the SDP. The first
pertains, as earlier explained, to the mandatory minimum ratio of shares of stock to

be distributed to the FWBs in compliance with Sec. 31 of RA 6657. This minimum
ratio contemplates of that proportion of the capital stock of the corporation that
the agricultural land, actually devoted to agricultural activities, bears in
relation to the companys total assets.[139] It is this set of shares of stock which, in
line with Sec. 4 of DAO 10, is supposed to be allocated for the distribution of an
equal number of shares of stock of the same class and value, with the same rights
and features as all other shares, to each of the qualified beneficiaries.
On the other hand, the second set or category of shares partakes of a
gratuitous extra grant, meaning that this set or category constitutes an
augmentation share/s that the corporate landowner may give under an additional
stock distribution scheme, taking into account such variables as rank, seniority,
salary, position and like factors which the management, in the exercise of its sound
discretion, may deem desirable.[140]
Before anything else, it should be stressed that, at the time PARC approved
HLIs SDP, HLI recognized 6,296 individuals as qualified FWBs. And under the
30-year stock distribution program envisaged under the plan, FWBs who came in
after 1989, new FWBs in fine, may be accommodated, as they appear to have in
fact been accommodated as evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original 1989
FWBs shall depend on the number of man days, HLI violated the afore-quoted rule
on stock distribution and effectively deprived the FWBs of equal shares of stock in
the corporation, for, in net effect, these 6,296 qualified FWBs, who theoretically
had given up their rights to the land that could have been distributed to them,
suffered a dilution of their due share entitlement. As has been observed during the
oral arguments, HLI has chosen to use the shares earmarked for farmworkers as
reward system chips to water down the shares of the original 6,296 FWBs.
[141]
Particularly:
Justice Abad: If the SDOA did not take place, the other thing that
would have happened is that there would be CARP?
Atty. Dela Merced: Yes, Your Honor.

Justice Abad: Thats the only point I want to know x x x. Now, but
they chose to enter SDOA instead of placing the land under CARP. And
for that reason those who would have gotten their shares of the land
actually gave up their rights to this land in place of the shares of the
stock, is that correct?
Atty. Dela Merced: It would be that way, Your Honor.
Justice Abad: Right now, also the government, in a way, gave up
its right to own the land because that way the government takes own
[sic] the land and distribute it to the farmers and pay for the land, is that
correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent (33%) of the
shares of HLI to the farmers at that time that numbered x x x those who
signed five thousand four hundred ninety eight (5,498) beneficiaries, is
that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their shares, some
workers came in from 1989, 1990, 1991, 1992 and the rest of the years
that you gave additional shares who were not in the original list of
owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any right that would
have belong to them in 1989 when the land was supposed to have been
placed under CARP?
Atty. Dela Merced: If you are talking or referring (interrupted)
Justice Abad: None! You tell me. None. They gave up no rights to
land?
Atty. Dela Merced: They did not do the same thing as we did in
1989, Your Honor.

HLI hired farmworkers in addition to the original 6. to the original (interrupted) Justice Abad: So why is it that the rights of those who gave up their lands would be diluted.296 FWBs.804. The TADECO who has shares there about sixty six percent (66%) and the five thousand four hundred ninety eight (5.976. the FWB.804. the minimum individual allocation of each original FWB of 18. Dela Merced: None.804. . The number of HLI shares distributed varies depending on the number of days the FWBs were allowed to work in one year. because the company has chosen to use the shares as reward system for new workers who come in? It is not that the new workers.296 FWBs. The original FWBs got less than the guaranteed 18.32 HLI shares. Atty.32 HLI shares per beneficiary.931.Justice Abad: No. Clearly.296 FWBs. each original FWB is entitled to 18.85 HLI shares representing the 33.498) farmers at the time of the SDOA? Explain to me. it is clear as day that the original 6. why will you x x x what right or where did you get that right to use this shares.296% of the total outstanding capital stock of HLI. who were qualified beneficiaries at the time of the approval of the SDP. as indicated in the Compliance dated August 2. Your Honor.32 shares was diluted as a result of the use of man days and the hiring of additional farmworkers. 2010 submitted by HLI to the Court. As explained by HLI. if they become workers later on. All these farmworkers. 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.Worse. Why.502. to water down the shares of those who should have been benefited. if they were not workers in 1989 what land did they give up? None. become just workers of the corporation whose stockholders were already fixed. As determined earlier. unfortunately. a beneficiary needs to work for at least 37 days in a fiscal year before he or she becomes entitled to HLI shares. were given shares out of the 118. does not get any share at year end. If it falls below 37 days. Your Honor. suffered from watering down of shares. in effect. which include the original 6. and to use it as a reward system decided by the company? [142] From the above discourse. the total number of farmworkers of HLI as of said date stood at 10. such that. I was referring.

(Emphasis supplied. par.The approved stock distribution plan shall be implemented within three (3) months from receipt by the corporate landowner-applicant of the approval thereof by the PARC. 26 of RA 6657. Said Sec. payment by beneficiaries of . which is at once discernible as it is practical. and the transfer of the shares of stocks in the names of the qualified beneficiaries shall be recorded in stock and transfer books and submitted to the Securities and Exchange Commission (SEC) within sixty (60) days from the said implementation of the stock distribution plan. 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. the distribution of the shares of stock to the FWBs. there is a purpose. To the Court. 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. 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. As stated: Section 11. not merely initiate. that is. must be made within three (3) months from receipt by HLI of the approval of the stock distribution plan by PARC. 11 of DAO 10 prescribes. The argument is urged that the thirty (30)-year distribution program is justified by the fact that. under Sec. the Court is of the view and so holds that the intent is to compel the corporate landowner to complete. In fact. Implementation/Monitoring of Plan.Going into another but related matter.) It is evident from the foregoing provision that the implementation. Reinforcing this conclusion is the 60-day stock transfer recording (with the SEC) requirement reckoned from the implementation of the SDP. While neither of the clashing parties has made a compelling case of the thrust of this provision. for the three-month threshold. the transfer process of shares within that three-month timeframe. based on the said provision. 3 of the SDOA expressly providing for a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec.

the ones obliged to pay the LBP under the said provision are the beneficiaries. III. too. SEC. Consequently. Then. DAO 10 has the force and effect of law and must be duly complied with. in the instant case. 89-12-2 dated November 21. aside from the fact that what is involved is stock distribution. therefore. substantive or procedural. Evidently. . To HLI. the reason underpinning the 30-year accommodation does not apply to corporate landowners in distributing shares of stock to the qualified beneficiaries. To be sure. 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. the PARC and the DAR have the power to issue rules and regulations. quoted in part below. is obviously misplaced as the said provision clearly deals with land distribution. as the shares may be issued in a much shorter period of time. On the other hand.land distribution under CARP shall be made in thirty (30) annual amortizations. [143] The PARC is. HLIs reliance on Sec. correct in revoking the SDP. said section provides a justifying dimension to its 30-year stock distribution program.Lands awarded pursuant to this Act shall be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations x x x. the revocation of the SDP by PARC should be upheld for violating DAO 10. Being a product of such rule-making power. Payment by Beneficiaries. it is the corporate landowner who has the obligation to distribute the shares of stock among the FWBs. l989 approving the HLIs SDP is nullified and voided. the PARC Resolution No. It bears stressing that under Sec. Taking into account the above discussion. 49 of RA 6657. 26 of RA 6657. 26.

Thereafter. such as when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry.We now resolve the petitions-in-intervention which. Later on. their plea for the exclusion of that portion from PARC Resolution 2005-32-01. 44 of PD 1529 or the Property Registration Decree.[144] Accordingly. uniformly pray for the exclusion from the coverage of the assailed PARC resolution those portions of the converted land within Hacienda Luisita which RCBC and LIPCO acquired by purchase. which called for mandatory CARP acquisition coverage of lands subject of the SDP. 2006. at bottom. LIPCO purchased the entire three hundred (300) hectares of land from Centennary for the purpose of developing the land into an industrial complex. Thus. Both contend that they are innocent purchasers for value of portions of the converted farm land. Subsequently. LIPCO transferred about 184 hectares to RCBC by way of dacion en pago. the title. This principle admits of certain exceptions. as implemented by a DAR-issued Notice of Coverage dated January 2. while ceding the remaining 200-hectare portion to LRC. every registered owner receiving a certificate of title in pursuance of a decree of registration and every subsequent purchaser of registered land taking a certificate of title for value and in good faith shall hold the same free from all encumbrances except those noted on the certificate and enumerated therein. or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to . said land was subdivided into two (2) more parcels of land. To restate the antecedents. Under Sec. by virtue of which TCTs in the name of RCBC were subsequently issued. after the conversion of the 500 hectares of land in Hacienda Luisita. the TCT in Centennarys name was canceled and a new one issued in LIPCOs name. but can rely on what appears on.[145] It is settled doctrine that one who deals with property registered under the Torrens system need not go beyond the four corners of. HLI transferred the 300 hectares to Centennary. He is charged with notice only of such burdens and claims as are annotated on the title.

with safety. their business being impressed with public interest. without notice that some other person has a right to. Good faith.[147] Millena v. tangible fact that can be seen or touched. at the time LIPCO acquired said parcels of land. or before he has notice of the claim or interest of some other persons in the property. at the time LIPCO purchased the entire three hundred (300) hectares of industrial land. or the lack of it. 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. we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may. be determined. but rather a state or condition of mind which can only be judged by actual or fancied tokens or signs. Centennary.[146] A higher level of care and diligence is of course expected from banks. 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. only the following annotations appeared on the TCT in the name of Centennary: the .) In fine. 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. good faith is not a visible. such property at the time of such purchase. First. Court of Appeals describes a purchaser in good faith in this wise: x x x A purchaser in good faith is one who buys property of another. or interest in. good faith x x x refers to the state of mind which is manifested by the acts of the individual concerned. but in ascertaining the intention by which one is actuated on a given occasion.induce a reasonably prudent man to inquire into the status of the title of the property in litigation.[148] (Emphasis supplied. Truly. Otherwise stated. In fact. or that any other person has a right to or interest in such property. there are two (2) requirements before one may be considered a purchaser in good faith. there was no notice of any supposed defect in the title of its transferor. is in the final analysis a question of intention.

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. Good faith consists in the possessors belief that the person from whom he received it was the owner of the same and could convey his title. After all. 89-12-2 and. 50 of RA 6657 to . It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that were previously covered by the SDP. after going through the necessary processes. DAR. intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan. hence. granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction under Sec. DAR notified all the affected parties. limiting its use solely as an industrial estate. Good faith requires a well-founded belief that the person from whom title was received was himself the owner of the land. only the following general annotations appeared on the TCTs of LIPCO: the Deed of Restrictions. Sec. 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. At the time it acquired portions of Hacienda Luisita. To be sure.There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another. with the right to convey it.Secretarys Certificate in favor of Teresita Lopa. the Secretarys Certificate in favor of Shintaro Murai. more particularly the FWBs.[150] It is the opposite of fraud. and the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP 300 million. can be legally and validly acquired by them. and gave them the opportunity to comment or oppose the proposed conversion. Moreover. However. commercial or industrial purposes. and the conversion of the property from agricultural to industrial and residential use.[149] The same is true with respect to RCBC. as the DAR conversion order was annotated at the back of the titles of the lots they acquired. the Secretarys Certificate in favor of Koji Komai and Kyosuke Hori.

relying on the correctness of the certificate of title thus issued. The effect of such outright cancellation will be to impair public confidence in the certificate . RCBC and LIPCO acted in good faith in acquiring the subject lots. As bona fide purchasers for value. the court cannot disregard such rights and order the cancellation of the certificate.732. in a Deed of Absolute Assignment dated November 25. consistent with our pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v. Court of Appeals. it is now of no moment that some irregularity attended the issuance of the SPA. 2004. 1998. Undeniably. is inapplicable in this case as it will directly contravene the Torrens system of registration. PARC or even by this Court. to wit: x x x the general rule that the direct result of a previous void contract cannot be valid. As held in Spouses Chua v. LIPCO acquired 300 hectares of land from Centennary for the amount of PhP 750 million pursuant to a Deed of Sale dated July 30. Soriano: With the property in question having already passed to the hands of purchasers in good faith. The DAR conversion order became final and executory after none of the FWBs interposed an appeal to the CA. Where innocent third persons. acquire rights over the property. Ergo. both LIPCO and RCBC purchased portions of Hacienda Luisita for value. LIPCO conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pagoto pay for a loan of PhP 431. And second. [151] On the other hand.695. both LIPCO and RCBC have acquired rights which cannot just be disregarded by DAR. In this factual setting.determine and adjudicate agrarian reform matters and its original exclusive jurisdiction over all matters involving the implementation of agrarian reform. 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.10.

96-020 dated 20 December 1996 issued in accordance with the Omnibus Investments Code of 1987. therefore. no longer CARPable are a matter of fact which cannot just be ignored by the Court and the DAR. approving LIPCOs application for a mixed ecozone and proclaiming the three hundred (300) hectares of the industrial land as a Special Economic Zone. contrary to the evident purpose of the law. approving the Final Development Permit for the Luisita Industrial Park II Project. 392 dated 11 December 1996 of the Sangguniang Bayan of Tarlac favorably endorsing the 300-hectare industrial estate project of LIPCO.of title. to borrow from Association of Small Landowners in the Philippines. legally and physically. To note. (b) BOI Certificate of Registration No.) To be sure. to be agricultural and. (d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan of Tarlac.[152] x x x (Emphasis supplied. Among the approving/endorsing issuances:[154] (a) Resolution No. the practicalities of the situation have to a point influenced Our disposition on the fate of RCBC and LIPCO. the Court. Being purchasers in good faith. everyone dealing with the property registered under the system will have to inquire in every instance as to whether the title had been regularly or irregularly issued.. the approval and issuances of both the national and local governments showing that certain portions of Hacienda Luisita have effectively ceased. . After all. (c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June 1997. otherwise. Inc.[153] is not a cloistered institution removed from the realities on the ground. the Chuas already acquired valid title to the property. The sanctity of the Torrens system must be preserved. A purchaser in good faith holds an indefeasible title to the property and he is entitled to the protection of the law.

(i) Proclamation No. 030601074764-(95) issued in 1996 by then DAR Secretary Garilao had effectively converted 500 hectares of hacienda land from agricultural to industrial/commercial use and authorized their disposition. While a mere reclassification of a covered agricultural land or its inclusion in an economic zone does not automatically allow the corporate or individual landowner to change its use. as a Special Economic Zone pursuant to Republic Act No. LIPCO has been registered as an Ecozone Developer/Operator of Luisita Industrial Park II located in San Miguel.[157] (h) License to Sell No. And if only to stress. designating the Luisita Industrial Park II consisting of three hundred hectares (300 has. DAR Conversion Order No.[156] (g) Certificate of Registration No. 0076 dated 26 December 1997 issued by the HLURB authorizing the sale of lots in the Luisita Industrial Park II. EZ-98-05 dated 07 May 1998 issued by the PEZA. Tarlac.000. 1207 dated 22 April 1998 entitled Declaring Certain Parcels of Private Land in Barangay San Miguel. . Tarlac. stating that pursuant to Presidential Proclamation No.(e) Development Permit dated 13 August 1997 for the proposed Luisita Industrial Park II Project issued by the Office of the Sangguniang Bayan of Tarlac. 7916.000) square meters.[155] (f) DENR Environmental Compliance Certificate dated 01 October 1997 issued for the proposed project of building an industrial complex on three hundred (300) hectares of industrial land. 00794 dated 26 December 1997 issued by the HLURB on the project of Luisita Industrial Park II with an area of three million (3.) of industrial land as a Special Economic Zone.[158] the reclassification process is a prima facie indicium that the land has ceased to be economically feasible and sound for agricultural uses. 7916. and (j) Certificate of Registration No. Province of Tarlac. 1207 dated 22 April 1998 and Republic Act No. Municipality of Tarlac.

in declaring a law or executive action null and void. The PARC. it is entitled to obedience and respect. this should also be excluded from the compulsory agrarian reform coverage considering that the transfer was consistent with the governments exercise of the power of eminent domain [159] and none of the parties actually questioned the transfer.In relying upon the above-mentioned approvals. Pertinently. Parties may have acted under it and may have changed their positions. Philippine National Bank[162] discussed the effect to be given to a legislative or executive act subsequently declared invalid: x x x It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos. an operative fact and may have consequences which cannot justly be ignored. proclamation and conversion order. prior to such a determination. both RCBC and LIPCO cannot be considered at fault for believing that certain portions of Hacienda Luisita are industrial/commercial lands and are. 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. As regards the 80.[161] The oft-cited De Agbayani v. in an appropriate case. or. the Court cannot close its eyes to certain operative facts that had occurred in the interim.51-hectare land transferred to the government for use as part of the SCTEX. 2005-32-01 and 2006-34-01. declares its invalidity. the past cannot always be erased by a new judicial declaration. and consequently DAR. by extension. [160] The actual existence of a statute or executive act is. This is so as until after the judiciary. This is as it should realistically be. undue harshness and resulting unfairness must be avoided. the operative fact doctrine realizes that. outside the ambit of CARP. no longer without force and effect. What could be more fitting than that in a subsequent litigation . since rights might have accrued in favor of natural or juridical persons and obligations justly incurred in the meantime. thus.

A view. and the reliance by the FWBs on the legality and validity of the PARC-approved SDP. have to be respected pursuant to the application in a general way of the operative fact doctrine.regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. perforce. private and official. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects. for this view failed to consider is that it is NOT the SDOA dated May 11. It would be to deprive the law of its quality of fairness and justice then. is an operative fact and may have consequences which cannot justly be ignored. 1989. a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. if there be no recognition of what had transpired prior to such adjudication. and not of a declaration of nullity of a contract. and particular conduct. Tadeco. more particularly the FWBs. 1989 which was revoked in the instant case. This is incorrect. This is merely to reflect awareness that precisely because the judiciary is the government organ which has the final say on whether or not a legislative or executive measure is valid. certain rights of the parties. A recall of the antecedent events would show that on May 11. however. The past cannot always be erased by a new judicial declaration. HLI. in conjunction with numerous activities performed in good faith by HLI. In the language of an American Supreme Court decision: The actual existence of a statute. It is now accepted as a doctrine that prior to its being nullified. it is PARCs approval of the HLIs Proposal for Stock Distribution under CARP which embodied the SDP that was nullified. This agreement provided the basis and mechanics of the SDP that was subsequently proposed and submitted to . has been advanced that the operative fact doctrine is of minimal or altogether without relevance to the instant case as it applies only in considering the effects of a declaration of unconstitutionality of a statute. prior to such a determination of [unconstitutionality]. x x x Given the above perspective and considering that more than two decades had passed since the PARCs approval of the HLIs SDP. Rather. and the qualified FWBs executed the SDOA. its existence as a fact must be reckoned with.with respect to particular relations. individual and corporate.

On the other hand.DAR for approval. it is the approval of the SDP under the PARC Resolution No. thus: xxx xxx xxx . 89-12-2 that gave it its validity. and these recommendations were referred to in the assailed Resolution No. issued the assailed Resolution No. is valid and must be complied with. National Housing Authority. Defensor-Santiago. citing Rieta v. Court of Appeals. through then Sec. Pangandamans recommendation to the PARC Excom. it is not the SDOA which was made the basis for the implementation of the stock distribution scheme. The above conclusion is bolstered by the fact that in Sec. That the operative fact doctrine squarely applies to executive actsin this case. Considerably. 89-12-2 approving the SDP. In Chavez v. 2005-32-01. the petitioner Solicitor General argues that the existence of the various agreements implementing the SMDRP is an operative fact that can no longer be disturbed or simply ignored. 89-12-2 approving HLIs SDP. it is not the SDOA which gave legal force and effect to the stock distribution scheme but instead. Sec. wherein it is stated that a legislative or executive act. People of the Philippines. Clearly. what he proposed is the recall/revocation of PARC Resolution No.[163] We held: Petitioner postulates that the operative fact doctrine is inapplicable to the present case because it is an equitable doctrine which could not be used to countenance an inequitable result that is contrary to its proper office. The operative fact doctrine is embodied in De Agbayani v. and not the revocation of the SDOA. It was only after its review that the PARC. the approval by PARC of the HLI proposal for stock distributionis wellsettled in our jurisprudence. prior to its being declared as unconstitutional by the courts. Pangandamans recommendation was favorably endorsed by the PARC Validation Committee to the PARC Excom. The argument of the Solicitor General is meritorious.

wherein we ruled that: Moreover. any evidence obtained pursuant thereto is inadmissible in evidence.For as we have held. having been found to be unconstitutional. Consequently. the Court addressed the possible effects of its declaration of the invalidity of various presidential issuances. a void act though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions done in reliance thereof. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. much less retroactively apply such nullification to deprive private respondent of a compelling and valid reason for not filing the leave application. in Taada v. the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached. 4754 was invalid. Emphasis supplied.[164] thus: Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. We do not agree. In Taada. Discussing therein how such a declaration might affect acts done on a presumption of their validity. People. Civil Service Commission. as we have no reason to do so. 33 to have no force and effect. Marcos was subsequently declared by the Court. Tuvera. 60. Baxter Bank to wit: The courts below have proceeded on the theory that the Act of Congress. the Court said: . he asserts. was not a . we certainly cannot nullify the City Government's order of suspension. . (Citations omitted. Thus.. issued by then President Ferdinand E. . as the law upon which it was predicated General Order No.This doctrine was reiterated in the more recent case of City of Makati v.) The applicability of the operative fact doctrine to executive acts was further explicated by this Court in Rieta v. It would indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a formal leave application.

. . that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. prior to the nullification of a statute. Questions of rights claimed to have become vested. xxx xxx xxx Similarly. of prior determinations deemed to have finality and acted upon accordingly. . conferring no rights and imposing no duties. that it was inoperative. demand examination. . and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified. The past cannot always be erased by a new judicial declaration . The past cannot always be erased by a new judicial declaration. however. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects with respect to particular conduct. . there is an imperative necessity of taking into account its actual existence as an operative fact negating the acceptance . These questions are among the most difficult of those which have engaged the attention of courts. of status. state and federal. that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified. It is quite clear. of public policy in the light of the nature both of the statute and of its previous application. private and official. the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is an operative fact which may have consequences which cannot be justly ignored. is an operative fact and may have consequences which cannot justly be ignored. The actual existence of a statute.law. and hence affording no basis for the challenged decree. The Chicot doctrine cited in Taada advocates that. prior to [the determination of its invalidity].

give way to the right of the original 6. the operative fact doctrine is applicable. therefore. 89-12-2 dated November 21. PARC Resolution No. 20l0. 240-square meter homelots. 1989.296 qualified FWBs to choose whether they want to remain as HLI stockholders or not. and as a matter of fact. 89-122. most FWBs indicated their choice of remaining as stockholders. Whatever was done while the legislative or the executive act was in operation should be duly recognized and presumed to be valid in all respects. The ASSO that was issued in 1979 under General Order No.51hectare lot sold to SCTEX. 3% of the gross produce from agricultural lands.[166] On August 6. and 3% of the proceeds of the sale of the 500-hectare converted land and the 80. The Court cannot turn a blind eye to the fact that in 1989. the revocation must. which became the basis of the SDP approved by PARC per its Resolution No. wrong to say that it was the SDOA which was annulled in the instant case. in which HLI gave the FWBs the option of acquiring a piece of agricultural land or remain as HLI stockholders. It is. 93% of the FWBs agreed to the SDOA (or the MOA). what it actually revoked or recalled was the PARCs approval of the SDP embodied in Resolution No. 60 long before our Decision in Taada and the arrest of petitioner is an operative fact that can no longer be disturbed or simply ignored.of a principle of absolute retroactive invalidity. While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld. 2005-32-01 states that it revokes or recalls the SDP. 2005.[165] and not a contract (SDOA). IV.391. HLI and private respondents submitted a Compromise Agreement.) To reiterate. These facts and . HLI shares totaling 118. Consequently.85 were distributed as of April 22. hospital and medical benefits. by application of the operative fact principle. the FWBs were said to have received from HLI salaries and cash benefits. although the assailed Resolution No. (Citations omitted. From 1989 to 2005. Evidently.976. Emphasis supplied. 89-12-2. what was actually declared null and void was an executive act.

1996 Conversion Order and the 80.75 hectares covered by the SDP but were taken from the 120. Centennary. the HLI shall assign additional shares to said FWBs to complete said minimum number of shares at no cost to said FWBs.296 original FWBs and 4. There is a claim that. 2005-32-01 was issued. 1996 Conversion Order and the 80. 31 of RA 6657.32 HLI shares per FWB. continue as HLI stockholders. then all the lands subject of the SDP will automatically be subject of compulsory coverage under Sec. With regard to the homelots already awarded or earmarked. the FWBs are not obliged to return the same to HLI or pay for its value since this is a benefit granted under the SDP.51-hectare SCTEX lot came after compulsory coverage has taken place. of the FWBs may actually desire to continue as HLI shareholders. 2005 when PARC Resolution No. With respect to the other FWBs who were not listed as qualified beneficiaries as of November 21. 2010 shall be respected with no obligation to refund or return them since the benefits (except the homelots) were received by the FWBs as farmhands in the agricultural enterprise of HLI and other fringe benefits were granted to them pursuant to the existing collective bargaining agreement with Tadeco. Thus. will no longer be entitled to homelots. 89-12-2 has been nullified. A matter best left to their own discretion. however.9234 hectare residential lot owned by Tadeco. The homelots do not form part of the 4. shall be liable to the FWBs for the price received for said lots. then HLI and its subsidiary. HLI .206 non-qualified FWBs) listed as HLI stockholders as of August 2.915. Since the Court excluded the 500-hectare lot subject of the August 14. All the benefits and homelots[167] received by the 10. Since the SDP approved by PARC Resolution No. the FWBs should have their corresponding share of the lands value. Those who did not receive the homelots as of the revocation of the SDP on December 22. they are not accorded the right to acquire land but shall.502 FWBs (6. the aggregate area of the homelots will no longer be deducted. since the sale and transfer of the 500 hectares of land subject of the August 14.circumstances tend to indicate that some. If the number of HLI shares in the names of the original FWBs who opt to remain as HLI stockholders falls below the guaranteed allocation of 18.51-hectare SCTEX lot acquired by the government from the area covered by SDP. in the determination of the ultimate agricultural land that will be subjected to land distribution. There is merit in the claim. 1989 when the SDP was approved. if not all.804.

while the agricultural lands valued at PhP 196. In order to determine once and for all whether or not all the proceeds were properly utilized by HLI and its subsidiary. and other fringe benefits under the CBA. for the 300-hectare lot sold to LIPCO for the consideration of PhP 750.000 with an original area of 4.51-hectare SCTEX lot were actually used for legitimate corporate purposes.915. note that HLI has allegedly paid 3% of the proceeds of the sale of the 500-hectare land and 80. If after such audit. We disagree. Likewise. It should not be forgotten that the FWBs are also stockholders of HLI.500 as consideration for the sale of the 80. then the balance shall be distributed to the qualified FWBs. however. 1996 Conversion Order. The non-agricultural assets amounting to PhP 393.51-hectare SCTEX lot to the FWBs.000.220 shall remain with HLI. it is determined that there remains a balance from the proceeds of the sale.shall be liable for the value received for the sale of the 200-hectare land to LRC in the amount of PhP 500.000. HLI will still exist as a corporation even after the revocation of the SDP although it will no longer be operating under the SDP. We. 1996 Conversion Order. Centennary.511.000 and the equivalent value of the 12.51-hectare SCTEX lot. For sure.51- .924.000. We also take into account the payment of taxes and expenses relating to the transfer of the land and HLIs statement that most.000 shares of its subsidiary. HLI shall be liable for PhP 80. of the proceeds were used for legitimate corporate purposes. Centennary. DAR will engage the services of a reputable accounting firm to be approved by the parties to audit the books of HLI to determine if the proceeds of the sale of the 500-hectare land and the 80. The cost of the audit will be shouldered by HLI. the 80. To be deducted from said area are the 500-hectare lot subject of the August 14. titling expenses and in compliance with the August 14. if not all.630. A view has been advanced that HLI must pay the FWBs yearly rent for use of the land from 1989.To still require HLI to pay rent to the FWBs will result in double compensation.000.75 hectares shall be turned over to DAR for distribution to the FWBs. but pursuant to the Corporation Code as a private stock corporation. and the benefits acquired by the corporation from its possession and use of the land ultimately redounded to the FWBs benefit based on its business operations in the form of salaries.

are hereby AFFIRMED with the MODIFICATION that the original 6.804. Other FWBs who do not belong to the original 6. 3% production share and 3% share in the proceeds of the sale of the 500-hectare converted land and the 80.296 FWBs. 2005 and Resolution No.296 qualified FWBs shall have the option to remain as stockholders of HLI.32 shares. benefits. since it was the SDP.296 qualified beneficiaries are not entitled to land distribution and shall remain as HLI shareholders. in secret voting. the instant petition is DENIED.32 HLI shares. We cannot use May 11. placing the lands subject of HLIs SDP under compulsory coverage on mandated land acquisition scheme of the CARP. DAR shall immediately schedule meetings with the said 6. 2005-3201 dated December 22.296 FWBs and explain to them the effects. after which the FWBs will be asked to manifest. 2006-34-01 dated May 3. consequences and legal or practical implications of their choice. WHEREFORE. signing their signatures or placing their thumbmarks. Of the 6. over their printed names. in case the HLI shares already given to him or her is less than 18. and the total area of 6. 1989. HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR for land distribution to the FWBs. that was approved by PARC. 1989 when the SDOA was executed. he or she who wishes to continue as an HLI stockholder is entitled to 18. All salaries. and.hectare SCTEX lot.886.5 square meters of individual lots that should have been distributed to FWBs by DAR had they not opted to stay in HLI. The instant petition is treated pro hac vice in view of the peculiar facts and circumstances of the case. 89-12-2. as the case may be. 2006.804. not the SDOA. the HLI is ordered to issue or distribute additional shares to complete said prescribed number of shares at no cost to the FWB within thirty (30) days from finality of this Decision. when PARC approved HLIs SDP per PARC Resolution No.51-hectare SCTEX lot and homelots already received by . their choices in the ballot. DAR shall coordinate with LBP for the determination of just compensation. We find that the date of the taking is November 21. PARC Resolution No.

5-square meter lots allotted to the FWBs who stayed with the corporation shall form part of the HLI assets. From the total amount of PhP 1.000 received by its owned subsidiary. the consideration of PhP 750. The aforementioned area composed of 6.500 (PhP 500.500) shall be deducted the 3% of the total gross sales from the production of the agricultural land and the 3% of the proceeds of said transfers that were paid to the FWBs. for the sale of the remaining 300 hectares of the aforementioned 500-hectare lot to Luisita Industrial Park Corporation.330. 1996 Conversion Order. the taxes and expenses relating to the transfer of titles to the transferees.886. Within thirty (30) days after determining who from among the original FWBs will stay as stockholders. for legitimate corporate purposes.330. Centennary Holdings.000.511. composed of 6.296 original FWBs and 4. Inc.206 non-qualified FWBs. HLI is directed to pay the 6. for the sale to the latter of 200 hectares out of the 500 hectares covered by the August 14. l996 Conversion Order.000 + PhP 80.296 FWBs the consideration of PhP 500.511.000. and the price of PhP 80.500 proceeds of the sale of the three (3) aforementioned lots were used or spent for legitimate corporate . shall be respected with no obligation to refund or return them. and the expenditures incurred by HLI and Centennary Holdings.330. or acquired by.915. Inc.000.511.000 received by it from Luisita Realty. (b) the 80.the 10. is done. Inc.886. DAR shall segregate from the HLI agricultural land with an area of 4. as indicated.51-hectare lot sold to.500 = PhP 1. 89-12-2 the following: (a) the 500-hectare lot subject of the August 14. and (c) the aggregate area of 6.75 hectares subject of PARCs SDP-approving Resolution No.51-hectare lot used for the construction of the SCTEX road network. After the segregation process.5 square meters of individual lots that each FWB is entitled to under the CARP had he or she not opted to stay in HLI as a stockholder.511.000 + PhP 750.500 paid by the government through the Bases Conversion Development Authority for the sale of the 80. Inc.511. the remaining area shall be turned over to DAR for immediate land distribution to the original qualified FWBs who opted not to remain as HLI stockholders. DAR is ordered to engage the services of a reputable accounting firm approved by the parties to audit the books of HLI and Centennary Holdings.000. the government as part of the SCTEX complex.502 FWBs. For this purpose. to determine if the PhP 1.

89-122. . Any unspent or unused balance as determined by the audit shall be distributed to the 6. HLI is entitled to just compensation for the agricultural land that will be transferred to DAR to be reckoned from November 21. DAR and LBP are ordered to determine the compensation due to HLI.purposes. quarterly reports on the execution of this judgment to be submitted within the first 15 days at the end of each quarter. DAR shall submit a compliance report after six (6) months from finality of this judgment. It shall also submit. until fully implemented. 1989 per PARC Resolution No. after submission of the compliance report. The temporary restraining order is lifted.296 original FWBs.

103302 August 12. The Solicitor General for respondents. applied for and was granted preliminary approval and locational clearances by the Human Settlements Regulatory Commission. No. 6657. was issued sometime in 1982. J. Inc. On 18 April 1979.9793 hectares. BENJAMIN T. which consisted of the remaining 31.2371 hectares. Since private landowners were allowed to develop their properties into low-cost housing subdivisions within the reservation. Presidential Proclamation No. for brevity). commercial or industrial use. Rizal. SEC. DAR REGION IV. as developer of NATALIA properties. DEPARTMENT OF AGRARIAN REFORM. LEONG and DIR. went into effect. for brevity) is the owner of three (3) contiguous parcels of land located in Banaba. (NATALIA.A. Patajo for petitioners. for brevity). WILFREDO LEANO. The NATALIA properties are situated within the areas proclaimed as townsite reservation. 1637 set aside 20. 2 covered by R. respondents. issued on 22 November 1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly 90. R. which consisted of 13. vs. with an area of 80. 6 Petitioner were likewise issued development permits 7 after complying with the requirements. Petitioner Natalia Realty. petitioner Estate Developers and Investors Corporation (EDIC.000 hectares. respondent Department of Agrarian Reform (DAR. 1. 5 and for Phase III.. and embraced in Transfer Certificate of Title No. BELLOSILLO. as approved by the Housing and Land Use Regulatory Board and its precursor agencies 1 prior to 15 June 1988. 4 for Phase II. Conformably therewith. for brevity).7080 hectares. petitioners.7707 hectares. otherwise known as the Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this petition for certiorari assailing the Notice of Coverage 3 of the Department of Agrarian Reform over parcels of land already reserved as townsite areas before the enactment of the law. .3307 hectares. On 15 June 1988. Thus the NATALIA properties later became the Antipolo Hills Subdivision. NATALIA immediately registered its objection to the notice of Coverage.312 hectares of land located in the Municipalities of Antipolo. San Mateo and Montalban as townsite areas to absorb the population overspill in the metropolis which were designated as the Lungsod Silangan Townsite. 6657.3205 hectares and 2. The necessary permit for Phase I of the subdivision project. through its Municipal Agrarian Reform Officer. or a total of 125. AND ESTATE DEVELOPERS AND INVESTORS CORP. with areas of 120. Antipolo..A. Lino M. 1993 NATALIA REALTY. on 25 April 1986. INC.: Are lands already classified for residential. on 13 October 1983. otherwise known as the "Comprehensive Agrarian Reform Law of 1988" (CARL.R.0078 hectares. 31527 of the Register of Deeds of the Province of Rizal.

that petitioners failed to fully exhaust administrative remedies available to them before coming to court.D. Instead. NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL. Petitioners first secured favorable recommendations from the Lungsod Silangan Development Corporation.EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice wrote him requesting the cancellation of the Notice of Coverage. Rules and Regulations of P. otherwise known as "The Subdivision and Condominium Buyers Protective Decree. filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to restrain petitioners from developing areas under cultivation by SAMBA members. as a consequence. In other words. (SAMBA. before applying for the necessary permits from the Human Settlements Regulatory Commission. They maintain that the permits granted petitioners were not valid and binding because they did not comply with the implementing Standards. it was denied. 10 And. there was no valid conversion. NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set aside the Notice of Coverage. however." in that no application for conversion of the NATALIA lands from agricultural residential was ever filed with the DAR. The NATALIA properties were within the areas set aside for the Lungsod Silangan .D. Inc. there was even no need for petitioners to secure a clearance or prior approval from DAR. II and III of the Antipolo Hills Subdivision reveals that contrary to the claim of public respondents. Petitioners then moved to dismiss the complaint. The petition is impressed with merit. public respondents allege that the instant petition was prematurely filed because the case instituted by SAMBA against petitioners before the DAR Regional Adjudicator has not yet terminated. on 16 December 1991 the DARAB merely remanded the case to the Regional Adjudicator for further proceedings. A cursory reading of the Preliminary Approval and Locational Clearances as well as the Development Permits granted petitioners for Phases I. Rules and Regulations of P. 9 In the interim. the agency tasked to oversee the implementation of the development of the townsite reservation. for the brevity). As a matter of fact. Neither respondent Secretary nor respondent Director took action on the protest-letters. 957. the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction. Moreover. Respondents conclude. 957. They argue that NATALIA properties already ceased to be agricultural lands when they were included in the areas reserved by presidential fiat for the townsite reservation. 8 The Regional Adjudicator temporarily restrained petitioners from proceeding with the development of the subdivision. the argument of public respondents that not all of the requirements were complied with cannot be sustained. On 17 January 1991. in all permits granted to petitioners. the Commission stated invariably therein that the applications were in "conformance" 11 or "conformity" 12 or "conforming" 13 with the implementing Standards. Public respondents through the Office of the Solicitor General dispute this contention. Hence. members of the Samahan ng Magsasaka sa Bundok Antipolo. Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB). petitioners NATALIA and EDIC did in fact comply with all the requirements of law. thus compelling petitioners to institute this proceeding more than a year thereafter.

A. The implementing Standards. Agricultural lands refers to those devoted to agricultural activity as defined in R. the predecessor agency of HLURB noted that petitioners NATALIA and EDIC complied with all the requirements prescribed by P. and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential. On the other hand. And. commercial or industrial use. The applications for the developed and undeveloped portions of subject subdivision were similarly situated. Even in their applications for the development of the Antipolo Hills Subdivision.Reservation. They ceased to be agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation." 16 The deliberations of the Constitutional Commission confirm this limitation. there was compliance with all relevant rules and requirements. the areas in question continued to be developed as a low-cost housing subdivision. the Office of the Solicitor General does not contest the conversion of portions of the Antipolo Hills Subdivision which have already been developed." These lots were intended for residential use. We now determine whether such lands are covered by the CARL. in the case at bar. this is contrary to its earlier position that there was no valid conversion." As to what constitutes "agricultural land. regardless of tenurial arrangement and commodity produced. .A. It is a basic tenet in statutory construction that between a general law and a special law. . it in effect converted for residential use what were erstwhile agricultural lands provided all requisites were met. all public and private agricultural lands. 14 Interestingly. forest. Section 4 of R. industrial and residential lands. both did not need prior DAR approval. which makes it a special law. lands not devoted to agricultural activity are outside the coverage of CARL. This can readily be gleaned from the fact that SAMBA members even instituted an action to restrain petitioners from continuing with such development. 18 DAR itself defined "agricultural land" thus — . residential. Indeed. 957 applied to all subdivisions and condominiums in general. 6657 provides that the CARL shall "cover. Presidential Proclamation No. Since Presidential Proclamation No. "Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and "do not include commercial. it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any language be considered as "agricultural lands. albeit at a snail's pace. 1637 created the townsite reservation for the purpose of providing additional housing to the burgeoning population of Metro Manila. The enormity of the resources needed for developing a subdivision may have delayed its completion but this does not detract from the fact that these lands are still residential lands and outside the ambit of the CARL. commercial or industrial land." 17 Based on the foregoing. 1637 referred only to the Lungsod Silangan Reservation. the latter prevails. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses. Rules and Regulations of P.D. 957. Consequently.D. . Even today. 15 Of course. These include lands previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than respondent DAR." it is referred to as "land devoted to agricultural activity as defined in this Act and not classified as mineral. 6657 and not classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies.

noted in an Opinion 19 that lands covered by Presidential Proclamation No. petitioners were not supposed to wait until public respondents acted on their letter-protests. having been reserved for townsite purposes "to be developed as human settlements by the proper land and housing agency. which under the circumstances could have continued forever. the Secretary of Justice. WHEREFORE.A. petitioners had to act to assert and protect their interests." are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R. this after sitting it out for almost a year. suffice it to say that the issues raised in the case filed by SAMBA members differ from those of petitioners. It was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of CARL. 6657. the propriety of including under the operation of CARL lands already converted for residential use prior to its effectivity." they are outside the coverage of CARL. Be that as it may. the petition for Certiorari is GRANTED. . responding to a query by the Secretary of Agrarian Reform. respondent DAR is bound by such conversion.Since the NATALIA lands were converted prior to 15 June 1988. of which the NATALIA lands are part. " Not being deemed "agricultural lands. Anent the argument that there was failure to exhaust administrative remedies in the instant petition. The former involve possession. 1637. Given the official indifference. Besides. No. the latter. we rule for petitioners and hold that public respondents gravely abused their discretion in issuing the assailed Notice of Coverage of 22 November 1990 by of lands over which they no longer have jurisdiction. The Notice of Coverage of 22 November 1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision were placed under CARL coverage is hereby SET ASIDE. SO ORDERED. inter alia. 20 In fine.