GR 171101

HACIENDA LUISITA, INCORPORATED vs. PRESIDENTIAL AGRARIAN REFORM COUNCIL

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.

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.

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.

Issue:

1. WON Sec. 31 of RA 6657 impairs the fundamental right of the farmers couched in the
Article XIII, 1987 Constitution

HELD:
No. Sec. 31 of RA 6657 is constitutional as it does not impair the fundamental right of the
farmworkers under Sec.4, Article XIII of the constitution. Article XIII, Sec. 4 of the 1987
constitution states that “the State shall, by law, undertake an agrarian reform program
founded on the rights of the farmers who are landless to own directly or collectively the lands
they till…xxx”
The basic law allows 2 modes of land distribution- direct and indirect ownership; direct
ownership which is widely accepted by DAR and indirect ownership which allows collective
ownership as an alternative to direct ownership of agricultural lands by individual farmers. It is
also permitted in Sec. 29 and 30 of RA 6657. Note also the fact that the Sec. 14 Article XIII of the
1987 constitution is not self-executing.
As defined in RA 6657, "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, such as production or
profit sharing, 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." 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. The 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. CADSHI
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features, is not
inconsistent with the State's commitment to farmers and farmworkers to advance their
interests under the policy of social justice. The legislature, thru Sec. 31 of RA 6657, has chosen a
modality for collective ownership by which the imperatives of social justice may, in its
estimation, be approximated, if not achieved. The Court should be bound by such policy choice.