Hacienda Luisita vs PARC

Case Digest GR 171101 July 5 2011 Nov 22 2011

Facts:
In 1988, RA 6657 or the CARP law was passed. It is a program aimed at redistributing public
and private agricultural lands to farmers and farmworkers who are landless. One of the lands
covered by this law is the Hacienda Luisita, a 6,443-hectare mixed agricultural-industrial-
residential expanse straddling several municipalities of Tarlac. Hacienda Luisita was bought in
1958 from the Spanish owners by the Tarlac Development Corporation (TADECO), which is
owned and/or controlled by Jose Cojuanco Sr., Group. Back in 1980, the Martial Law
administration filed an expropriation suit against TADECO to surrender the Hacienda to the
then Ministry of Agrarian Reform (now DAR) so that the land can be distributed to the farmers
at cost. The RTC rendered judgment ordering TADECO to surrender Hacienda Luisita to the
MAR.
In 1988, the OSG moved to dismiss the government’s case against TADECO. The CA
dismissed it, but the dismissal was subject to the condition that TADECO shall obtain the
approval of FWB (farm worker beneficiaries) to the SDP (Stock Distribution Plan) and to
ensure its implementation.
Sec 31 of the CARP Law allows either land transfer or stock transfer as two alternative modes
in distributing land ownership to the FWBs. Since the stock distribution scheme is the
preferred option of TADECO, it organized a spin-off corporation, the Hacienda Luisita Inc.
(HLI), as vehicle to facilitate stock acquisition by the farmers.
After conducting a follow-up referendum and revision of terms of the Stock Distribution Option
Agreement (SDOA) proposed by TADECO, the Presidential Agrarian Reform Council (PARC),
led by then DAR Secretary Miriam Santiago, approved the SDP of TADECO/HLI
through Resolution 89-12-2 dated Nov 21, 1989.
From 1989 to 2005, the HLI claimed to have extended those benefits to the farmworkers.
Such claim was subsequently contested by two groups representing the interests of the
farmers – the HLI Supervisory Group and the AMBALA. In 2003, each of them wrote letter
petitions before the DAR asking for the renegotiation of terms and/or revocation of the SDOA.
They claimed that they haven’t actually received those benefits in full, that HLI violated the
terms, and that their lives haven’t really improved contrary to the promise and rationale of
the SDOA.
The DAR created a Special Task Force to attend to the issues and to review the terms of the
SDOA and the Resolution 89-12-2. Adopting the report and the recommendations of the Task
Force, the DAR Sec recommended to the PARC (1) the revocation of Resolution 89-12-2 and
(2) the acquisition of Hacienda Luisita through compulsory acquisition scheme. Consequently,
the PARC revoked the SDP of TADECO/HLI and subjected those lands covered by the SDP to
the mandated land acquisition scheme under the CARP law. These acts of the PARC was
assailed by HLI via Rule 65.
On the other hand, FARM, an intervenor, asks for the invalidation of Sec. 31 of RA 6657,
insofar as it affords the corporation, as a mode of CARP compliance, to resort to stock transfer
in lieu of outright agricultural land transfer. For FARM, this modality of distribution is an
anomaly to be annulled for being inconsistent with the basic concept of agrarian reform
ingrained in Sec. 4, Art. XIII of the Constitution.

Administrative Law

Issue 1:  W/N PARC has the authority to revoke the Stock Distribution Plan or SDP
Yes. Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan
for stock distribution of the corporate landowner belongs to PARC. It may be 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, but such power or authority is deemed possessed by PARC
under the principle of necessary implication, a basic postulate that what is implied in a statute
is as much a part of it as that which is expressed.
Following this doctrine, 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.

Constitutional Law

Issue 2:  W/N the Court may exercise its power of judicial review over the constitutionality of
Sec 31 of RA 6657
No. First, the intervenor FARM failed to challenged the constitutionality of RA 6657, Sec 31 at
the earliest possible opportunity. It should have been raised as early as Nov 21, 1989, when
PARC approved the SDP of HLI or at least within a reasonable time thereafter.
Second, the constitutionality of RA 6657 is not the very lis mota of this case. Before the SC,
the lis mota of the petitions filed by the HLI is whether or not the PARC acted with grave
abuse of discretion in revoking the SDP of HLI. With regards to the original positions of the
groups representing the interests of the farmers, their very lis mota is the non-compliance of
the HLI with the SDP so that the SDP may be revoked. Such issues can be resolved without
delving into the constitutionality of RA 6657.
Hence, the essential requirements in passing upon the constitutionality of acts of the
executive or legislative departments have not been met in this case.

Statutory Construction

Issue 3: W/N Sec 31 of RA 6657 is consistent with the Constitution’s concept of agrarian
reform
Yes. The wording of the Art XIII, Sec 4 of the Constitution is unequivocal: the farmers and
regular farmworkers have a right to own directly or collectively the lands they till.
The basic law allows two (2) modes of land distribution: direct and indirect ownership. Direct
transfer to individual farmers is the most commonly used method by DAR and widely
accepted. Indirect transfer through collective ownership of the agricultural land is the
alternative to direct ownership of agricultural land by individual farmers. Sec. 4 EXPRESSLY
authorizes collective ownership by farmers. 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.
The word collective is defined as indicating a number of persons or things considered as
constituting one group or aggregate, while collectively is defined as in a collective sense or
manner; in a mass or body.  By using the word collectively, the Constitution allows for indirect
ownership of land and not just outright agricultural land transfer. This is in recognition of the
fact that land reform may become successful even if it is done through the medium of juridical
entities composed of farmers.
The stock distribution option devised under Sec. 31 of RA 6657 hews with the agrarian reform
policy, as instrument of social justice under Sec. 4 of Article XIII of the Constitution. Albeit
land ownership for the landless appears to be the dominant theme of that policy, the Court
emphasized that Sec. 4, Article XIII of the Constitution, as couched, does not constrict
Congress to passing an agrarian reform law planted on direct land transfer to and ownership
by farmers and no other, or else the enactment suffers from the vice of unconstitutionality. If
the intention were otherwise, the framers of the Constitution would have worded said section
in a manner mandatory in character.
 
The SC, through a resolution dated Nov 21 2011 of the motion for reconsideration filed by
HLI, affirmed the revocation of HLI’s SDP and the placing of Hacienda Luisita under the
compulsory land distribution scheme of the CARP law. It was also held that the date of taking
was Nov 21 1989, when the PARC, by Resolution 89-12-2, approved the SDP of HLI. ##