1. Roxas v.
CA - Petitioner applied with DAR for
FACTS:
Petitioner Roxas & Co. is a domestic
corporation and is the registered owner of
three haciendas: Haciendas Palico, Banilad
and Caylaway, all located in the
Municipality of Nasugbu, Batangas.  appropriate value thru LBP Trust
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. President Aquino
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. 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:
- Assessed by Municipal Agrarian
Officer (MARO), subjected to
acquisition and distribution
according to CARL.
conversion of said hacienda from
agricultural to non-agricultural land.
- Application denied.
- Original TCT was replaced with
CLOA (Certificate of Land
Ownership Award, registered with
DAR) and compensated with
Accounts.
HACIENDA BANILAD:
- Same with Hacienda Palico.
HACIENDA CAYLAWAY
- Voluntarily offered to the
government.
On August 24, 1993, petitioner instituted
Case No. 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. Petitioner alleged
that the Municipality of Nasugbu, where the
haciendas are located, had been declared a
tourist zone, that the land is not suitable for
agricultural production, and that the
Sangguniang Bayan of Nasugbu had
reclassified the land to non-agricultural.
In a Resolution dated October 14, 1993,
respondent DARAB held that the case
involved the prejudicial question of whether
the property was subject to agrarian reform,
hence, this question should be submitted to
the Office of the Secretary of Agrarian
Reform for determination.
Petitioners questioned the expropriation of
its properties under the CARL and the denial
of due process in the acquisition of its
landholdings.
MARO – denied
CA – denied; MR = denied

ISSUE/S:
1. W/N the acquisition proceedings
over the three haciendas were valid
and in accordance with law; and
2. W/N SC has the power to rule on
whether the lots were reclassified
from agricultural to non-agricultural.
HELD:
1. YES. Acquisition proceedings was
against petitioner’s right to due
process.
First, there was an improper service of the
Notice of Acquisition. Notices to
corporations should be served through their
president, manager, secretary, cashier, agent,
or any of its directors or partners. Jaime
Pimintel, to whom the notice was served,
was neither of those.
2. NO. Despite all this, the court has no
jurisdiction to rule on the
reclassification of land from
agricultural to non-agricultural.
DAR’s failure to observe due process does
not give the court the power to adjudicate
over petitioner’s application for land
conversion. DAR is charged with the
mandate of approving applications for land
conversion. They have the tools and
experience needed to evaluate such
applications; hence, they are the proper
agency with which applications for land use
conversion are lodged. DAR should be given
a chance to correct their defects with regard
to petitioner’s right to due process.
Petition dismissed.

Second, there was no notice of coverage,

meaning, the parcels of land were not
properly identified before they were taken
by the DAR. Under the law, the land owner
has the right to choose 5 hectares of land he
wishes to retain. Upon receiving the Notice
of Acquisition, the petitioner had no idea
which portions of its estate were subject to
compulsory acquisition.

Third, The CLOAs were issued to farmer

beneficiaries without just compensation. The
law provides that the deposit must be made
only in cash or LBP bonds. DAR’s opening
of a trust account in petitioner’s name does
not constitute payment. Even if later, DAR
substituted the trust account with cash and
LBP bonds, such does not cure the lack of
notice, which still amounts to a violation of
the petitioner’s right to due process.

2. Hacienda Luisita, Inc. v. PARC
CASE:
This case is a SPECIAL CIVIL ACTION in
the Supreme Court. This involves a Petition
for Certiorari and Prohibition under Rule 65
with prayer for preliminary injunctive relief,
HLI seeking to question and reverse the
PARC Resolutions issued on December 22,
2005 and May 3, 2006, and the
implementing Notice of Coverage dated
January 2, 2006.
FACTS:
In 1955, Land Reform Act [RA
1400] was passed which set the
expropriation of all tenanted estates.
In 1957, the Spanish owners of the
Compañia General de Tabacos de Filipinas
(Tabacalera) sold to Tarlac Development
Corporation (TADECO) Hacienda Luisita
and their controlling interest in the sugar
mill within the hacienda, the Central
Azucarera de Tarlac (CAT), to be paid in
Philippine pesos and in US dollars.
The Philippine Government, through
the Central Bank of the Philippines, aided
the buyer to obtain a dollar loan from a US
bank. The GSIS Board of Trustees extended
on November 27, 1957 a PhP 5.911M loan
in favour of TADECO to pay the peso price
with a condition under GSIS Resolution No.
3203, later amended by Resolution No. 356,
Series of 1958, which states:
“…the lots comprising Hacienda Luisita
shall be subdivided by the applicant-
corporation and sold at cost to the tenants,
should there be any, and whenever
conditions should exist warranting such
action under the provisions of the Land
Tenure Act.”
On March 31, 1958, TADECO had
fully paid the purchase price for the
acquisition of Hacienda Luisita.
On August 8, 1963, the Agricultural
Land Reform Code (RA 3844) was enacted,
abolishing share tenancy and converting it to
leasehold tenancy. It also created the Land
Band of the Philippines (LBP). However,
the law’s application was found to be limited
to specific areas in the Central Luzon.
Subsequently, Congress passed the
Code of Agrarian Reform (RA 6389)
declaring the entire country a land reform
area and automatically converting tenancy to
leasehold tenancy in all areas and reducing
the retention limit from 75 Ha to 7 Ha.
A month after the declaration of
Martial Law in September of 1972,
President Marcos issued Presidential Decree
No. 27 which allows tenant-farmers to
purchase the land they tilled or to change
from shared-tenancy to fixed-rent leasehold
tenancy, as a way to go about the
“emancipation of the tillers from the
bondage of the soil”.
On May 7, 1980, the Martial Law
Administration filed a suit before the RTC
of Manila against TADECO to surrender
Hacienda Luisita to the Ministry of Agrarian
Reform (now the DAR) for its distribution
to farmers. The RTC ordered TADECO to
surrender the hacienda to the MAR.
Then during the time of President
Corazon C. Aquino, after Marcos was
ousted, Proclamation No. 131, Series of
1987, was issued instituting a CARP.
On July 22, 1987, EO 229 was
issued to provide for mechanisms for CARP
implementation. It also created the PARC as
its policy-making body.
On March 17, 1988, the OSG moved
to withdraw the government’s case against
TADECO, et al.
On May 18, 1988, the CA dismissed
the case the Marcos administration initially
instituted and won against TADECO, et al.
However, the dismissal was conditioned that
there be an approval of a stock distribution
plan (SDP) to be submitted, approved by
PARC, and implemented as an alternative
mode of land distribution, and failure to
comply will cause the revival of previous
decision.
On June 15, 1988, the Comprehensive
Agrarian Reform Law of 1988 (RA 6657)
took effect, providing a new process of land
classification, acquisition, and distribution.
This tested the application of the law in the
current case of Hacienda Luisita.
On August 23, 1988, HLI was
formed as a spin-off corporation to facilitate
the SDP.
On March 22, 1989, a TADECO, via
a Deed of Assignment and Conveyance,
transferred and conveyed to HLI the titles
over the lot in question, valued at PhP
196.630,000.00 (33.296% of the total asset
of PhP 590,554,220.00). In line with
accommodating such transfer, the HLI
increased its capital share to PhP
400,000,000 at PhP1/share, PhP
150,000,000 of which were to be issued only
to qualified and registered beneficiaries of
the CARP, and the remaining
PhP250,000,000 to any stockholder of the
corporation. (Obviously, the controlling
shares of FWBs are lower in this case.) HLI
guaranteed to the qualified beneficiaries of
the SDP production-sharing that “every year
they will receive, on top of their regular
compensation, an amount that approximates
3% of the total gross sale from the
production of the agricultural land, whether
it is in the form of cash dividends or
incentive bonuses or both.” The production
sharing is payable irrespective of whether
HLI makes money or not. HLI also assured
each family beneficiary to be guaranteed a
homelot of not more than 240 sq. m. in the
barrio or barangay where they reside.
On May 9, 1989, about 93% of the
FWBs accepted and signed the proposed
SDOP.
On May 11, 1989, SDOA was
entered into by TADECO/HLI and 5,848
qualified FWBs.
On October 14, 1989, the referendum
conducted by DAR showed that 5,177
FWBs out of 5,315 participants opted to
receive shares in the HLI (that’s about
97.403575% of the participants), and only
132 chose actual land distribution.
On November 6, 1989, the DAR Secretary
Mirriam Defensor-Santiago (now deceased)
proposed the revision of the SDP. On
November 14, 1989, TADECO told DAR
Sec. MDS that the proposed revision were
already in place in the SDP and MOA.
Hence, On November 21, 1989, a Resolution
No. 89-12-2 approved the SDP of
TADECO/HLI.
From 1989 to 2005, HLI claimed to have
extended the following benefits to FWBs:
(a) PhP 3 Billion worth of salaries,
wages and fringe benefits;
(b) 59 Million shares of stock
distribution for free to FWBs;
(c) PhP 150M, PhP 37.5M, PhP
2.4M, all representing 3% of the
gross produce, the sale of 500 Ha
of converted agricultural land of
Hacienda Luisita, and the sale of
80 Ha at PhP 80M for SCTEX,
respectively.
(d) 240 sq.m. homelots distributed
for free;
(e) Social service benefits
On August 15, 1995, HLI applied for
conversion of the 500 Ha land from
agricultural to industrial, which was
approved by DAR Secretary Ernesto Garilao
a year later, or on August 14, 1996,
conditioned on the payment of 3% of gross
selling price to FWBs and HLI’s continued
compliance with its undertakings under the
SDP.
On December 13, 1996, HLI ceded 200 Ha
to Luisita Realty Corp. (LRC) at PhP 250
Million each in 1997 and 1998, and 300 Ha
of its converted areas to Centennary
Holdings, Inc. (Centennary), who later sold
the same to LIPCO for PhP 750 Million, the
latter acquiring it for purpose of developing
an industrial complex.
On November 25, 2004, LIPCO transferred
portion of the lands acquired to RCBC by
way of dation en pago in payment of
LIPCO’s PhP 431,634,732.10 loan.
Another 80.51 Ha was later detached from
Hacienda Luisita and acquired by the
government as part of the SCTEX complex.
About 4,335.75 Ha out of the 4,915 Ha
remained of the original area ceded by
TADECO to HLI.
With the prevailing situation, earlier in
2003, DAR received two petitions seeking to
renegotiate, and/or revoke the SDOA for
violation by the HLI of the SDOA’s terms.
In the first petition, Jose Julio Suniga and
Windsor Andaya (Supervisory Group of
HLI) and 60 other supervisors alleged that
HLI failed to give their dividends, and their
share in the gross sales and proceeds of the
sales of the converted area 500 Ha area.
They claimed that their lives have not
improved contrary to the guarantees of the
SDOA.
In the second petition (Petisyon), they call
for the revocation and nullification of the
SDOA and the distribution of the lands. The
Petisyon was filed by the AMBALA
(composing about 80% of the 5,339 FWBs
of Hacienda Luisita).
DAR constituted a Special Task Force to
attend to the issues relating to the SDP of
HLI and the latter found that HLI failed to
comply with their undertakings.
On December 22, 2005, PARC affirmed the
recommendation of DAR to recall/revoke
the SDOP of TADECO/HLI and the land be
placed under compulsory coverage or
mandated land acquisition.
On January 2, 2006, HLI sought
reconsideration. On the same day, DAR
issued a Notice of Coverage, which HLI
received 2 days after.
On May 3, 2006, PARC’s Resolution denied
MR by HLI.
But on June 14, 2006, the Court, acting on
HLI’s motion, issued a TRO, enjoining the
implementation of PARC’s Resolution and
the notice of coverage.
On December 2, 2006, Mallari filed a
manisfestation and motion, alleging that he
broke up with AMBALA and formed
FARM with Renato Lalic, and thus prayed
to be allowed to intervene. In this moment,
two factions were created due to shirt and
re-shift of allegiance, as Mallari would later
return to create an AMBALA-Noel Mallari
faction, leaving Renato Lalic with the rest of
the members in FARM.
On October 30, 2007, RCBC and LIPCO
intervened and alleged that the assailed
resolution effectively nullified the TCTs
under their respective names as the
properties covered in the TCTs were
included in the January 2, 2006 Notice of
Coverage. They claim that the revocation of
SDP cannot legally affect their rights as
innocent purchasers for value. They both
asserted to have acquired vested and
indefeasible rights over certain portions of
the covered properties.
On August 31, 2010, the Court created a
Mediation Panel in a bid to resolve the
dispute but no acceptable agreement was
reached.
ISSUES:
(1) Whether or not petitioners for the
revocation/nullification of SDOA
(herein respondents) are real party-
in-interests;
(2) Whether or not PARC has
jurisdiction to recall or revoke HLI’s
SDP;
(3) Whether or not Section 31 of RA
6657 is constitutional;
 (4) Whether or not such recall or
revocation is a valid or proper action;
and
(5) Whether or not the terms and
conditions of the SDP, as embodied
in the SDOA is valid.
RULINGS:
FIRST ISSUE:
YES. The Supreme Court held that
Supervisory Group, AMBALA and their
respective leaders are real parties-in-interest.
The SDOA identifies the “SDP
qualified beneficiaries” as “the
farmworkers who appears in the annual
payroll, inclusive of the permanent and
seasonal employees, who are regularly or
periodically employed by HLI.” Galang
and the Supervisory group who were
admittedly employed by HLI comes within
the definition of real party-in-interest under
Section 2, Rule 3 of the Rules of Court, as
one benefited or injured by the judgment in
a suit, and thus, entitled to sue.
Assuming arguendo that they are not
regular farmworkers, Article XIII of the
Constitution categorized them as “other
farmworkers” entitled to “receive a just
share of the fruits” of the land.
SECOND ISSUE:
YES. Although E0 229 expressly
vested PARC with such authority to approve
plan for stock distribution, without explicitly
vesting it to revoke/recall an approved SDP,
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. To simply state
it, every statutory grant of power, right or
privilege is deemed to include all incidental
power, right, or privilege. Following the said
doctrine, it may be stated that the
conferment of express power to approve
SDP of agricultural land of corporate owners
necessarily includes the power to revoke or
recall the approval of the plan, for to deny
PARC of such revocation power, as in this
case, would reduce it into a toothless agency
of CARP.
On a related issue, HLI claimed that
subjecting the landholding to compulsory
distribution after the approval of its SDP
results in the impairment of obligation and
contract, and as such, a breach of its terms
and conditions is not a PARC administrative
matter, but one that gives rise to a cause of
action cognizable by regular courts. The
Supreme Court stressed that SDOA is a
special contract imbued with public interest,
entered into pursuant to RA 6657 and
subject to the approval and administrative
adjudication of its issuing authority—
PARC.
Contrary to the view of HLI, the
rights, obligations, and remedies of the
parties to the SDOA embodying the SDP are
governed by RA 6657 and not by the
Corporation Code. HLI, as pointed by the
Court was made to comply with RA 6657,
and not to shield itself from the coverage of
CARP and supplant or circumvent the
agrarian reform program. Also as between
the Corporation Code, a general law and RA
6657, a special law, the latter prevails –
generalia specialibus non derogant. What
private respondents questioned before the
Dar was the proper implementation of SDP
and HLI’s compliance with RA 6657.
Evidently, RA 6657 was the applicable law
in this case.
Also, contrary to the view of HLI
that the inclusion of the agricultural land of
Hacienda Luisita under CARP coverage and
the eventual distribution of the land to
FWBs amounts to the dissolution of all
corporate assets of HLI, and thus the
Corporation Code apply, the Court was not
persuaded. The Court said that such
inclusion and eventual distribution will not
automatically trigger the dissolution of HLI
since the value of agricultural lands in
relation to the total assets transferred and
conveyed by TADECO to HLI comprises
only 33.296% (meaning it does not hold the
majority assets of the corporation to trigger
such dissolution).
THIRD ISSUE:
In this issue on constitutionality of
Section 31 of RA 6657, FARM seeks to
invalidate the said provision of the law
because it allows corporations to use stock
distribution as its mode of distribution or
transfer instead of an outright agricultural
land transfer, which they believe impairs the
fundamental right of farmers and
farmworkers envisioned under Section 4,
Article XIII of the Constitution. HLI
counters this matter by saying that agrarian
reform is not only about transfer of land
ownership to farmers and other qualified
beneficiaries.
Accordingly, the challenge on the
constitutionality of Section 31 of RA 6657
and its counterpart provision in EO 229
failed.
The essential requisites for the
exercise of its power of judicial review
include the following:
(1) There is an actual case or
controversy
(2) That the constitutional question is
raised at the earliest possible
opportunity by the proper party or
one with locus standi; and
(3) The issue of constitutionality must be
the very lis mota of the case. [Garcia
vs. Executive Secretary, 415 SCRA
44 (2009)]
The Supreme Court reasoned that the
reason it failed was because of failure of the
intervenors to question its constitutionality
in the earliest opportunity, and instead, slept
on their rights and received benefits derived
from the same. As early as November 21,
1989 when PARC approved the SDP of
Hacienda Luisita or at least within a
reasonable time thereafter, its members
received benefits from the SDP without so
much protest. It was only on December 4,
2003 or 14 years after approval of the SDP
via PARC Resolution No. 89-12-2 dated
November 21, 1989 that said plan and
approving resolution was sought to be
revoked. Furthermore, AMBALA did NOT
question the constitutionality of said
provision but focused on the flaws and gaps
in the subsequent implementation of the
SDP. Even the public respondent Sol. Gen.
did not question it, and such question was
only raised on May 3, 2007 when it filed its
Supplemental Comment with the Court.
It has been stressed by the Supreme
Court that the question on constitutionality
will not passed upon by the Court unless it is
raised at the first or earliest possible
opportunity by the proper party.
In terms of the lis mota of the case,
the invalidity of the provision was not
alleged, but rather it is the alleged
application in the SDP that is flawed was
raised.
The Supreme Court also noted that
Section 5 of RA 9700 superseded Section 31
of RA 6657 vis-à-vis the stock distribution
component of said provision, where Section
5 of RA 9700 provides: “That after June
30, 2009, the mode of acquisition shall be
limited to voluntary offer to sell and
compulsory acquisition.” Thus, stock
distribution is no longer an available option
under existing law. The issue has become
moot and academic.
The Supreme Court ruled that there
appeared to have been no breach of the
fundamental law. Section 4, Article XIII of
the 1987 Constitution reads:
“The State shall, by law, undertake an
agrarian reform program founded on the
right of the farmers and regular
farmworkers, who are landless, to OWN
directly or COLLECTIVELY THE LANDS
THEY TILL or, in the case of other
farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall
encourage and undertake the just distribution
of all agricultural lands, subject to such
priorities and reasonable retention limits as
the Congress may prescribe, taking into
account ecological, developmental, or equity
considerations, and subject to the payment
of just compensation.  In determining
retention limits, the State shall respect the
right of small landowners.  The State shall
further provide incentives for voluntary
land-sharing.”
The law is clear – farmers and
regular farmworkers have a right to OWN
DIRECTLY OR COLLECTIVELY THE
LANDS THEY TILL. The basic law allows
two modes of land distribution—direct and
indirect ownership. No language is 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 term “collectively” is said to
allow 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.
Even in the definition of agrarian
reform itself in RA 6657 allows stock
distribution— “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 physical redistribution of
land, such as production or profit sharing,
labour management and the distribution of
shares of stock which allow beneficiaries to
receive a just share of the fruits of the land
they work.”
The SC believed that Sec. 31 of RA
6657 is NOT inconsistent with the State’s
commitment to farmers and farmworkers to
advance their interests under the policy of
social justice. This is believed to be the
modality of the legislature for collective
ownership by which the imperatives of
social justice may be approximated, if not
achieved.
Also as contended by FARM that
stock certificates do not equate to land
ownership, still, the Corporation Code is
clear that the FWB becomes a stockholder
who acquires an equitable interest in the
assets of the corporation, which includes the
agricultural lands. A share of stock typifies
an aliquot part of the corporation’s property,
or right to share in its proceeds to the 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.
However, the FWBs will ultimately own the
agricultural lands owned by the corporation
when the latter is eventually dissolved and
liquidated.
The policy of agrarian reform is that
control over the agricultural land must
always be in the hands of the farmers. The
Court also reasoned that there can be no
guarantee of a successful implementation of
agrarian reform, whether there is actual
distribution or not. Accordingly, the
principle of “land to the tiller and the old
pastoral model of ownership were non-
human juridical persons were prohibited
from owning agricultural lands are no longer
realistic under existing conditions.
FOURTH ISSUE:
On the determination of the propriety
of such revocation or recall of HLI’s SDP by
PARC for violating the agrarian reform
policy under Sec. 2 of RA 6657, as said plan
fail to enhance the dignity and improve the
quality of lives of the FWBs through greater
productivity of agricultural lands, the SC
disagreed.
The SC reasoned that Section 2 of
RA 6657 states that improving the economic
status of FWBs is neither among the legal
obligations of HLI under the SDP nor an
imperative imposition by RA 6657 and
DAO 10, a violation of which would justify
discarding the stock distribution option.
Nothing in that option agreement, law or
department order indicates otherwise.
Also SC said that it’s a matter of
common business sense that no corporation
could guarantee a profitable run all the time.
As such being the case, SDP cannot also
guarantee, as indeed the SDOA does not
guarantee, a comfortable life for the FWBs.
The onerous condition of the FWBs’
economic status and hardships can hardly be
attributed to HLI and its SDP and provide a
valid ground for the plan’s revocation.
On the Conversion of Lands
In this issue of the conversion of 500
Ha to non-agricultural uses as an
infringement of Sec. 5 (a) of DAO 10, which
reads: “a. that the continued operation of the
corporation with its agricultural land intact
and unfragmented is viable with potential
for growth and increased profitability”, the
SC said that the PARC is wrong.
Said Sec. 5 (a) of DAO 10 does not exact
from the corporate landowner-applicant the
undertaking to keep the farm intact and
unfragmented ad infinitum (forever). What
is required is viability of the corporate
operations with or without its corporate land
remaining intact or unfragmented.”
On the 3% Production Share
On the matter of whether HLI
complied with its undertaking to give 3%
shares of the gross production sales of the
land, the SC ruled that the Special Task
Force was silent as to 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, since some FWBs admits to
have received their share in the gross
production of the sales and in the sale of
SCTEX lot while the others claimed
otherwise. The Court found this as a slight
breach that would not justify rescission of
the contract.
On Titles to Homelots
Under RA 6657, the distribution of
homelots is required only for corporations or
other business associations owning or
operating farms which opted for land
distribution, and not for corporations which
opted for stock distribution under Sec. 31 of
RA 6657. Concomitantly, said corporation
are not obliged to provide it, EXCEPT by
stipulation, as in this case.
Under the SDP, HLI subdivided and
allocated for free to qualified family-
beneficiaries 240 sq. m. homelots in the
barrio or barangay where they actually
reside. The Court opined that 16 years have
elapse from the time the SDP was approved
by PARC, and yet FWBs alleged that not all
were afforded homelots. Hence, SC ruled
that HLI has not yet fully complied with its
undertaking to distribute homelots to FWBs
under the SDP.
On “Man Days” and the Mechanics of
Stock Distribution
 The SC found that the SDOA
violated two provisions of DAO 10.
In Par. 3 of the SDOA, the distribution of
the shares of stock to the FWBs is contigent
on the number of days FWBs have worked
during the year. This deviates from Sec. 4,
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 Section 21 of
RA 6657.
Accordingly, Section 4 of DAO 10
gives two sets of shares of stocks which a
qualified beneficiary can acquire from the
corporation under the SDP. The first one is
the mandatory ratio of equal number of
shares of stocks to be distributed to the
FWBs which contemplates “proportion of
the capital stock of the corporation that
the agricultural land, actually devoted to
agricultural activities, bears in relation to
the company’s total asset.”
The second partakes a gratuitous
extra grant or an augmentation share/s that
the corporate landowner may give under an
additional stock distribution scheme, taking
into account the rank, seniority, salary,
position, and like factors which the
management, in the exercise of its sound
discretion, may deem desirable.
However, the Court found that by
providing that number of shares of the
original 1989 FWBs to depend on the
number of “man days”, HLI violated the rule
on stock distribution and effectively
deprived the FWBs of equal shares of stock
in the corporation notwithstanding the fact
that these FWBs have given up their right to
the land that could have been distributed to
them instead of suffering such dilution
regarding their due share entitlement.
Each of the 6,296 original FWBs is
entitled to 18,804.32 HLI shares. The
original FWBs got less than the guaranteed
18,804.32 HLI shares per beneficiary,
because the acquisition and distribution of
the HLI share per beneficiary needs to work
at least 37 days in a fiscal year before the
latter becomes entitled to HLI shares. If it
falls below 37 days, the FWB gets no share
at year end. The number of HLI shares
distributed varies depending on the number
of days the FWBs were allowed to work in
one year. Worst is they even hired additional
farmworkers which reached a number of
10,502 which eventually diluted the
18,804.32 shares as a result of the use of
“man days” and hiring additional
farmworkers (as ‘kahati’ in the share
obviously).
Another sub-issue pointed is the
reliance of HLI to Section 26 of RA 6657
which suggests that land awarded “shall be
paid to by the beneficiaries to the LBP in 30
annual amortizations.” To simply put it, the
beneficiaries are the ones obliged to pay the
LBP (which would really make it impossible
for them to own it) and it is the HLI who is
obliged to distribute the shares of stocks
among FWBs.
Exclusion from the coverage of land
purchased by RCBC and LIPCO (III)
On resolving the issue of whether the
converted farm land (allegedly) innocently
purchased for value by RCBC and LIPCO
should be excluded from the PARC
Resolution 2005-32-01, as implemented by
the DAR-issued Notice of Coverage dated
January 2, 2006, which called for a
mandatory CARP acquisition of the lands
subject of the SDP, the SC opined that
although Section 44 of PD 1529 gives the
principle that one need not look at the four
corners of the title and may rely on what
appears on it, the rule admits to some
exceptions, as when the party had
knowledge of the facts and circumstances
that would impel a reasonably cautious man
to make inquiry, or when the purchaser has
knowledge of the defect of lack of title, or
sufficient facts to make inquiry into the
status of the title of the property in litigation.
Obviously, a higher level of care and
diligence is expected from banks, their
business being impressed with public
interest.
But the Court ruled that facts prove that
RCBC and LIPCO cannot be claimed to
have acted in bad faith to have acquired the
lots that were previously covered by SDP.
The Court said that RCBC and LIPCO
honestly believed that the subject lots were
validly converted to commercial or
industrial purposes and for which said lots
were taken out of the CARP coverage of
PARC Resolution No. 89-12-2 and hence,
can be legally and validly acquired by them,
and since Section 65 of RA 6657 allows
conversion and disposition of agricultural
lands previously covered by CARP. Also
DAR notified all affected parties, especially
the FWBs but the order became final and
executory after failure to interpose an
appeal. Since RCBC and LIPCO believed in
good faith that the previous registered
owners could legally sell and convey the lot
though these were previously subject of
CARP coverage. Ergo, RCBC and LIPCO
acted in good faith in acquiring the subject
lots. This fact cannot be disregarded by
DAR, PARC, or even the SC.
As regards to the 80.51 ha land transferred
to the government for use as part of SCTEX,
this is excluded from the compulsory
coverage considering that the transfer was
made via the government’s power of
eminent domain.
As to the actual existence of a statute or
executive act is, prior to such a
determination, an operative fact and may
have consequences which cannot justly be
ignored; the past cannot always be erased by
a new judicial declaration.
In this case, it is not the SDOA dated May
11, 1989 which was revoked, but rather, it is
the PARC’s approval of the HLI’s Proposal
for Stock Distribution under CARP which
embodied the SDP that was nullified. It is
the SDP that gave legal force an effect to the
stock distribution scheme under PARC
Resolution No. 89-12-2 that gave it its
validity, and not the SDOA which merely
gave its basis and mechanics.
On PARC’s Resolutions effectively
nullifying the Hacienda Luisita’s SDP
(IV)
The Court upheld the revocation of the
questioned PARC resolutions. The Court
also recognized the rights of the original
6,296 qualified FWBs to choose whether
they want to remain as HLI stockholders or
not. The Court reasoned that it cannot turn a
blind eye to the fact that the FWBs were said
to have received benefits from the said
agreement. Also on August 6, 2010, HLI
and private respondents submitted a
Compromise Agreement, in which HLI gave
the FWBs the option of acquiring a piece of
agricultural lands or remain as HLI
stockholders, and which most FWBs chose
the latter.
With regards to the homelots already
awarded, the FWBs are not obliged to return
it to HLI or pay for its value since it is part
of the SDP’s benefit granted to them.
However, for those who did not receive the
homelot as of the revocation of the SDP on
December 22, 2005 when PARC Resolution
No. 2005-32-01 was issued, will no longer
be entitled to homelots. In case of
distribution, the homelots would then not be
deducted.
In terms of the 3% proceeds of the 500-ha
land and 80.51 ha SCTEX lot to FWBs,
DAR will move for the auditing of HLI’s
books to determine if the proceeds where
utilized fof legitimate corporate purpose and
the remaining balance from the proceeds of
the sale shall be distributed to the qualified
beneficiaries.
In view of HLI’s payment of rent to FWBs
for the use of the land from 1989, the Court
said that this cannot be done as the FWBs
are also stockholders of HLI (a seemingly
elite title), 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, and other fringe
benefits under the CBA. To allow payment
of rent would tantamount to double
compensation.
HLI will continue to exist, not functioning
under the SDP, as the same was revoked
already, but pursuant to the Corporation
Code as a private stock corporation.
HLI shall also be paid just compensation for
the remaining agricultural lands that will be
transferred to DAR for land distribution to
the FWBs. The date of taking considered
by the SC is November 21, 1989, when
PARC approved the HLI’s SDP per PARC
Resolution No. 89-12-2. DAR shall
coordinate with LBP for the determination
of just compensation, and NOT May 11,
1989, when the SDOA was approved by
PARC.
The petition is treated as pro hac vice
(means for this case only) in view of the
peculiar facts and circumstances of the case.
THE INSTANT PETITION IS DENIED.
PARC Resolution No. 2005-32-01 dated
December 22, 2005 (wherein PARC
affirmed the recommendation of DAR to
recall/revoke the SDOP of TADECO/HLI
and the land be placed under compulsory
coverage or mandated land acquisition) and
May 3, 2006 (wherein PARC denied MR by
HLI) are AFFIRMED with
MODIFICATION that the original 6,296
qualified FWBs shall have the option to
remain as stockholders of HLI. Other FWBs
who do not belong to the said original
qualified beneficiaries are NOT entitled to
land distribution and shall remain as HLI
stockholders. HLI is directed to pay the
FWBs the cconsiderations received from the
500 Ha converted land sale and 80.51 ha
SCTEX lot, wherein the 3% gross sales from
the production of agricultural land, including
expenditures for legitimate corporate
purpose, such as taxes and title transfer
payments, shall be deducted from the total
amount of PhP 1,330,511,500 (3 comas!).
Any unspent or unused balance will be
distributed to the original FWBs.
HLI is entitled to just compensation for the
agricultural land that will be transferred to
DAR to be reckoned from November 21,
1989 and LBP are ordered to determine the
compensation due to HLI.
DAR’s compliance report is ordered to be
submitted six months from finality of
judgment. TRO is lifted.
DISSENTING OPINION
Corona, C.J.:
One of the nice points given by the
late CJ Corona (ousted in the PNoy
Administration) states, to wit:
“Agrarian reform is an essential element of
social justice under the 1987 Constitution. It
mandates that farmers and farmworkers have
the right to own the land they till,
individually and collectively, through
cooperative or similar organizations. It aims
to liberate farmers and farmworkers from
bondage to the soil, to ensure that they do
not remain slaves of the land but stewards
thereof.”
He also opined that “unless there is land
distribution, there can be no agrarian reform.
Any program that gives farmers or
farmworkers anything less than ownership
of land fails to conform to the mandate of
the Constitution. In other words, a program
that gives qualified beneficiaries stock
certificates instead of land is not agrarian
reform.”
He believed that “actual land distribution
is the essential characteristic of a
constitutional agrarian reform program.”
Accordingly, the “polar star” in land reform
is that ‘the farmer has a right to the land
he tills”.
In the APRIL 24, 2012 RESOLUTION
involving the same Hacienda Luisita Case
On November 22, 2011, the Court
recalled and set aside the option to remain as
stockholders of HLI, while maintaining that
all benefits received shall be respected with
no obligation to refund or return them.
On December 9, 2011, a Motion for
Reconsideration/Clarification by private
respondents Mallari, Suniga, Supervisory
Group of HLI, and Andaya (Mallari, et al.
On December 16, 2011, a Motion to Clarify
and Reconsider Resolution of November 22,
2011 was filed by HLI.
HLI and Mallari, et al., invokes the
following grounds:
A. WON SC erred in determining
just compensation by considering
the date of taking as November
21, 1989 when PARC approved
the SDP (already revoked) since
the Notice of Coverage of
January 2, 2006 may be
considered as time FWBs owned
and possess the agricultural lands
of Hacienda Luisita because it
was the only time when the latter
was placed under Compulsory
Acquisition in view of failure to
perform their obligations under
the SDP, or SDOA, when the
owner is ACTUALLY deprived
or dispossessed of his property,
and considering taking from
November 21, 1989 is a
deprivation of landowner’s
property WITHOUT due process
of law; and HLI is entitled to be
paid interest on the just
compensation.
B. WON SC erred in reversing the
decision of giving the FWBs
option to remain as stockholders
or not since (1) it has been
decided; (2) that neither the
Constitution nor the CARL
requires that FWBs should have
control over the agricultural
lands; and (3) that the option is
not shown to be detrimental to
FWBs, but rather found
beneficial by the SC.
C. The proprietary of distributing
the proceeds from the sale of the
500ha and 80.51 SCTEX lot
cannot be retained by HLI but
returned to the FWBs and that
HLI is using the Corporation
Code to avoid liability to the
FWBs because: (1) the proceeds
belongs to the corporation and
not to either the HLI/TADECO
or FWBs; and (2) to allow return
or proceeds to FWBs.
D. Just Compensation for the
Homelots given to FWBs as it
does not form part of the
4,915.75 hectares covered by the
SDP, and hence, the value of
these homelots should, with the
revocation of the SDP, be paid to
Tadeco as the landowner.
ON JUST COMPENSATION:
The Court stressed that “just compensation
has been defined as the full and fair
equivalent of the property taken from its
owner by the expropriator. The measure is
not the takers gain, but the owner’s loss.
Hence, in determining just compensation,
the price or value of the property at the time
it was taken from the owner and
appropriated by the government shall be the
basis. If the government takes possession of
the land before the institution of
expropriation proceedings, the value should
be fixed as of the time of the taking of said
possession, not of the filing of the
complaint.”
The SC, citing Land Bank of the Philippines
v. Livioc, said that taking is when the
landowner was deprived of the use and
benefit of his property, such as when the title
is transferred to the Republic. It also noted
that taking also occurs when agricultural
lands are voluntarily offered by a landowner
and approved by PARC for CARP coverage
through the stock distribution scheme, as in
the case of HLI earlier decided. Thus, HLI
submitting its SDP for approval is an
acknowledgment on its part that the
agricultural lands of Hacienda Luisita are
covered by CARP. However, the PARC
approval should be considered as the
effective date of taking because it was only
during that time that the government
officially confirmed the CARP coverage of
these lands.
Accordingly, Stock distribution and
compulsory acquisition are two modalities
sharing the same end goal of having a more
equitable distribution of land ownership,
without ignoring such right to just
compensation. Also, since it is only upon the
approval of the SDP that the agricultural
lands actually came under CARP coverage,
such approval operates and takes the place
of a notice of coverage ordinarily issued
under compulsory acquisition.
What the SC found notable, however, is that
the divestment by Tadeco of the agricultural
lands of Hacienda Luisita and the giving of
the shares of stock for free is nothing but an
enticement or incentive for the FWBs to
agree with the stock distribution option
scheme and not further push for land
distribution. And the stubborn fact is that the
“man days” scheme of HLI impelled the
FWBs to work in the hacienda in exchange
for such shares of stock.
The Court ruled that taking only when the
landowner is deprived of the use and benefit
of his property is not incompatible with the
earlier conclusion that taking took place on
November 21, 1989, and since even from the
start, TADECO seemed to already favour
Stock Distribution Scheme when complying
with the CARP when it organized the HLI as
its spin-off corporation which
facilitated stock acquisition of FWBs.
Tadeco assigned and conveyed 4,915.75 has
to HLI the agricultural lands of Hacienda
Luisita. These agricultural lands constituted
as the capital contribution of the FWBs in
HLI. This, in effect, deprived TADECO
itself of the ownership over these lands
when it transferred the same to HLI.
When the agricultural lands of Hacienda
Luisita were transferred by Tadeco to HLI in
order to comply with CARP through the
stock distribution option scheme under
PARC Resolution No. 89-12-2 dated
November 21, 1989, Tadeco was
consequently dispossessed of the ownership
of the same.
Furthermore, adherence to the suggestion of
HLI that the Notice of Coverage issued on
January 2, 2006 should be considered as
date of taking would in effect penalize the
qualified FWBs twice for acceding to the
Stock Distribution Scheme, (1) depriving
them of the agricultural lands they should
have gotten earlier, if it were not for this
SDP and (2) making them pay higher
amortization for the agricultural lands that
should have been given to them decades
ago.
The SC maintained that, as it has in fact
already ruled on its reckoning date, that is,
November 21, 1989, the date of issuance of
PARC Resolution No. 89-12-2, based on the
above-mentioned disquisitions.
On side note, the SC added that “even
though the compensation due to HLI will
still be preliminarily determined by DAR
and LBP, subject to review by the RTC
acting as a SAC, the fact that the reckoning
point of taking is already fixed at a certain
date should already hasten the proceedings
and not further cause undue hardship on the
parties, especially the qualified FWBs.”
Option will not ensure control over
agricultural lands
The Court agreed that the option given to the
qualified FWBs whether to remain as
stockholders of HLI or opt for land
distribution is neither iniquitous nor
prejudicial to the FWBs. However, the Court
is noted the policy on agrarian reform that
control over the agricultural land must
always be in the hands of the farmers.
Contrary to the stance of HLI, both the
Constitution and RA 6657 intended the
farmers, individually or collectively, to have
control over the agricultural lands of HLI;
otherwise, all these rhetoric about agrarian
reform will be rendered for naught.
Sec. 4, Art. XIII of the 1987 Constitution
provides:
Section 4. The State shall, by law, undertake
an agrarian reform program founded on the
right of farmers and regular farmworkers
who are landless, to own directly or
collectively the lands they till or, in the
case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the
State shall encourage and undertake the just
distribution of all agricultural lands, subject
to such priorities and reasonable retention
limits as the Congress may prescribe, taking
into account ecological, developmental, or
equity considerations, and subject to the
payment of just compensation. In
determining retention limits, the State shall
respect the right of small landowners. The
State shall further provide incentives for
voluntary land-sharing. (Emphasis supplied.)
Sec. 2 of RA 6657 also states:
SECTION 2. Declaration of Principles and
Policies. - It is the policy of the State to
pursue a Comprehensive Agrarian Reform
Program (CARP). 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, and the establishment of
owner cultivatorship of economic-sized
farms as the basis of Philippine agriculture.
The agrarian reform program is founded
on the right of farmers and regular farm
workers, who are landless, to own directly
or collectively the lands they till or, in the
case of other farm workers, to receive a
share of the fruits thereof.
As discussed by the SC, there is collective
ownership as long as there is a concerted
group work by the farmers on the land,
regardless of whether the landowner is a
cooperative, association or corporation
composed of farmers. However, the
definition of collective ownership should be
read in light of the clear policy of the law on
agrarian reform, which is to emancipate the
tiller from the bondage of the soil and
empower the common people.
“HLI’s insistent view that control need not
be in the hands of the farmers translates
to allowing it to run roughshod against
the very reason for the enactment of
agrarian reform laws and leave the
farmers in their shackles with sheer lip
service to look forward to.” (quotable 2011 Resolution which ordered the
phrase) government, through the DAR, to pay just
compensation for the 240 sq. m. homelots
FWBs Entitled to Proceeds of Sale distributed to FWBs. This RESOLUTION is
The proceeds realized from the sale should now declared FINAL and EXECUTORY.
accrue for the benefit of the FWBs, minus
deductions of the 3% of the proceeds of said
transfers that were paid to the FWBs, the
taxes and expenses relating to the transfer of
titles to the transferees, and the expenditures
incurred by HLI and Centennary Holdings,
Inc. for legitimate corporate purposes, as
prescribed in our November 22, 2011
Resolution.

HOMELOTS

The SC agreed to DISAGREE.

As reiterated in the earlier decision, the
distribution of homelots is required under
RA 6657 only for corporations or business
associations owning or operating farms
which opted for land distribution.
Corporations are not obliged to provide for
homelots. Nonetheless, HLI undertook to
subdivide and allocate for free and without
charge among the qualified family-
beneficiaries 240 sq. m. of homelots to
some, if not all of the qualified beneficiaries.
The Supreme Court, by a unanimous vote,
resolved to maintain its ruling that the FWBs
shall retain ownership of the homelots given
to them with no obligation to pay for the
value of said lots. Also, since the SDP was
already revoked with finality in th earlier
discussion of the decision, the Court directs
the government through the DAR to pay
HLI the just compensation for said homelots
in consonance with Sec. 4, Article XIII of
the 1987 Constitution that the taking of land
for use in the agrarian reform program is
subject to the payment of just compensation.

The Motions of both parties were DENIED

with qualification. The July 5, 2011,
Decision was modified by the November 21,