HACIENDA LUISITA

Note: Don’t ask if already presented by counsels in their brief.

Petitioner:

- Just to get this out of the way, under CARL, there are two alternative modalities which the corporate
landowner can comply with and these are? ANS: Direct Distribution or Stock Distribution
- And it is a fact that it is your submission that petitioners prefers the second option, correct? ANS: Yes, your
honor.
- Acting on this option, a spin of corporation – HLI was incorporated to facilitate stock corporation, correct?
ANS: Yes.
- Can you give us an overview on the SDOA entered into by the parties? ANS:

While a little bit hard to follow, given that, during the period material, the assigned value of the agricultural land
in the hacienda was PhP 196.63 million, while the total assets of HLI was PhP 590.55 million with net assets of
PhP 355.53 million, Tadeco/HLI would admit that the ratio of the land-to-shares of stock corresponds to 33.3%
of the outstanding capital stock of the HLI equivalent to 118,391,976.85 shares of stock with a par value of PhP
1/share.

- how many participated, opted to receive shares in HLI. ANS: 5315 participated; 5117 opted
- Briefly, can you give us a run down on the amount released or granted to the FWBs in the past? ANS: See
“From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs”

1. Counsel for the Petitioner, in your understanding, what is the essence of Agrarian Reform? ANS:
2. Therefore, it can be culled from your submission that the matter you bring before us is imbued with public
interest, is it not? ANS: Yes.
3. So in resolving this issue, we should address the controversy in the lens of agrarian reform being a matter
which necessarily involves matters of public concern as against ruling the matter merely as a private or
corporate dispute correct? Yes.
4. You challenge the locus standi of Galang as head of the Supervisory Group of HLI (and 60 other supervisors
sought to revoke the SDOA, correct? ANS: Yes.
5. What are the elements of a valid contract? If those are adhered to, what is the effect? ANS: Consent, Cause,
Object; if adhered to, it has a force of law between the parties.
6. Would you consider SBOA a contract? In that contract how did you defined qualified beneficiaries? ANS:
Yes. The SDP qualified beneficiaries” as “the farmworkers who appear in the annual payroll, inclusive of the
permanent and seasonal employees, who are regularly or periodically employed by [HLI]

7. Following your definition, is Galang is farmworker? does he appear in the annual payroll inclusive of the
permanent and seasonal employees? ANS: Your Honor, Galang gained HLI employment ONLY in June
1990 and, thus, could not have been a party to the SDOA executed a year earlier. As regards the Supervisory
Group, they are not regular farmworkers, 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.

8. You submit that the parties to the SDOA should now look to the Corporation Code, instead of to RA 6657,
in determining their rights, obligations and remedies. The Code, it adds, should be the applicable law on the
disposition of the agricultural land of HLI, correct: ANS: Yes. Explain.

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. HLI would add that this contingency, if ever it comes to pass, requires the
applicability of the Corporation Code provisions on corporate dissolution.

9. Is it the petitioners position that the issue on the compliance of HLI with respect to the SDP can be addressed
without discussing the constitutionality of sec 31 of RA 6657? ANS. Yes. Agrarian reform is not only about
transfer of land ownership to farmers and other qualified beneficiaries. It draws attention in this regard to
Sec. 3(a) of RA 6657 on the concept and scope of the term “agrarian reform.” The constitutionality of a law,
HLI added, cannot, as here, be attacked collaterally.

10. Hence the matter before us does not necessarily hinge on the said provision but rather on the compliance or
non-compliance of HLI in its obligation under the SDP, correct?

Respondent

Note: Don’t ask if already presented by counsels in their brief.

1. What is your submission with regard to the locus standi of Galang et. al. with respect to this case. ANS: Your
Honor, no less than the SDOA provides that Galang is qualified as an employee following the definition the
farmworkers who appear in the annual payroll, inclusive of the permanent and seasonal employees, who are
regularly or periodically employed by [HLI]

Assuming arguendo that members of the Supervisory Group are not regular farmworkers, but are in the
category of “other farmworkers” mentioned in Sec. 4, Article XIII of the Constitution, thus only entitled to a
share of the fruits of the land, as indeed Fortich teaches, this does not detract from the fact that they are still
identified as being among the “SDP qualified beneficiaries.” Further, under Sec. 50, paragraph 4 of RA 6657,
farmer-leaders are expressly allowed to represent themselves, their fellow farmers or their organizations in
any proceedings before the DAR

2. Can there be an implied jurisdiction in so far as issuance of licenses or the like is concerned? ANS: Yes.
3. What is the doctrine of necessary implication?

ANS: The power to approve a license includes by implication, even if not expressly granted, the power to
revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which it is
derived in the first place.

4. So it is your submission that the authority of PARC which includes the authority to approve the plan for stock
distribution of the corporate landowner necessarily includes the right to revoke the same and hence acquire
the jurisdiction over cases arising therefrom. ANS: Yes.
5. What is the nature of the issue in this case? ANS: The SDOA is a special contract imbued with public interest,
entered into and crafted pursuant to the provisions of RA 6657. It embodies the SDP, which requires for its
validity, or at least its enforceability, PARC’s approval.
6. Is it not correct to say that this case, which partakes of an agrarian dispute and not a corporate one? ANS:
Yes. The fact that certificate of compliance to be issued by agrarian authorities upon completion of the
distribution of stocks––is revocable by the same issuing authority supports the idea that everything about the
implementation of the SDP is, at the first instance, subject to administrative adjudication.

We now tackle the issue of constitutionality of Section 31 of RA 6657. We have discussed the matters with respect to
the standing of herein respondents. We now proceed to the other elements of Judicial Review.

1. From the perusal of evidence, the SDP was approved by PARC on Nov. 21. 1989 is that not correct? ANS:
Yes.
2. And FARM challenged the constitutionality of the same only in May 3, 2007, correct? Yes.
3. So, is it not correct to say that FARM have slept on their rights and even accepted the benefits of SDP during
those 18 years?
4. Therefore, we can conclude that the second element of judicial review, that the controversy must be raised at
the earliest possible opportunity is wanting?
5. What about the requirement of lis mota?
6. You invoke this court’s power on judicial review with respect to the issue that PARC acted with
GRADALEJ? ANS: Yes.
7. And you submit that PARC acted in grave abuse of discretion when it ordered the recall of the SDP for such
non-compliance and the fact that the SDP, as couched and implemented, offends certain constitutional and
statutory provisions ANS: Yes