Hacienda Luisita v PARC

G.R. No. 171101

Facts:

The Tarlac Development Corporation (TADECO) bought Hacienda Luisita and Central
Azucarera De Tarlac from their Spanish owners. Through a loan awarded to TADECO through the
assistance of the Philippine Government, the landholdings were obtained. Under PD 27, TADECO was
compelled to distribute parts of Hacienda Luisita to its beneficiaries. Thus, TADECO, through the
mechanism of Hacienda Luisita, Inc. (HLI), entered a Stock Distribution Option Agreement among the
beneficiaries.

After a series of redistribution and conversion of portions of the land, the Presidential Agrarian
Reform Council (PARC) revoked the Stock Distribution Plan and placed Hacienda Luisita under the
compulsory coverage of the agrarian reform law.

ISSUE/S:

Whether or not PARC was correct in revoking the Stock Distribution plan

HELD:

YES. HLI has not fully complied with its undertaking to distribute homelots to the beneficiaries
under the Stock Distribution Plan despite the lapse of 16 years. Furthermore, the plan violated the
provisions of DAO 10. The distribution of the shares of stock although not entailing a cash out from the
beneficiaries, is contingent upon the number of “man days” that is the number of days that the
beneficiaries have worked during the year. By providing that the number of shares of the original 1989
beneficiaries shall depend on the number of man days, HLI violated the rule on stock distribution and
effectively deprived the beneficiaries of equal shares of stock in the corporation. HLI has chosen to use
the shares earmarked for farmworkers as reward system chips to water down the shares of the original
6,296 beneficiaries. It is clear that the original beneficiaries, who were qualified at the time of the
approval of the plan, suffered from the watering down of shares.