A.

Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council (PARC),

et al., G.R. No. 171101, July 5, 2011

VELASCO, JR., J 

FACTS:

Spanish owners of Compañia General de Tabacos de Filipinas (Tabacalera —now more

known for their Tobaccos) sold Hacienda Luisita and the Central Azucarera de Tarlac, its

sugar mill, to the Tarlac Development Corporation (Tadeco) in 1958. Although this was

started around November 27, 1957, it became perfected only in 1958. Tadeco was

owned by Jose Cojuangco Sr. Group. Tabacelra’s sugar mill then became part

of Tadeco. The Central Bank of the Philippines was the one who helped Tadeco in attain a

dollar loan from a foreign bank in order to further develop the hacienda.

Not long after, GSIS gave Tadeco a 5.91 peso million loan with a resulatory

condition that “the lots comprising the Hacienda Luisita 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.” Basically, the land that was bought by Tadeco was supposed to me nurtured

and then sold back to the farmers. Tadeco did not push through with what it

promised with GSIS.

 

May 1980, the Marcos administration (then during the time of martial law) filed a

suit before the Manila RTC against Tadeco, et al., for failure of pushing through with

their promise or condition and ordered for Tadeco to surrender Hacienda Lusita to the

then Ministry of Agrarian Reform (MAR). This was so that the land could be distributed

back to the farmers as it was supposed to be. In response to this order, Tadeco

insisted that Hacienda Luisita does not enclose any tenant within their territory. They

even said that the land was composed of a sugar mill, something that is not yet in the

law of the current legislature. It is not covered by any act or law. Regardless, Manila

RTC ordered for Tadeco to uphold the condiotion of selling it back to the farmers. Thus,

Tadeco appealed to the CA. On March 17, 1988, the Office of the Solicitor General

(OSG) moved to withdraw the government’s case against Tadeco, et al. By Resolution

of May 18, 1988, the CA dismissed the case the Marcos government initially instituted

and won against Tadeco, et al. The dismissal action was, however, made subject to the

obtention by Tadeco of the PARC’s approval of a stock distribution plan (SDP) that must

initially be implemented after such approval shall have been secured.

 A year later, farmers then agreed to a stock distribution scheme instead of them

buying the land. Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose

Cojuangco, Jr., and Paz C. Teopaco were the incorporators of HLI. 93% of the

farmworker-beneficiaries (FWBs) complement of Hacienda Luisita signified in a

referendum therefrom accepting the proposed HLI’s Stock Distribution Option Plan

(SODP). On May 11, 1989, the SDOA was formally entered into by Tadeco, HLI, and
 the 5,848 qualified FWBs. The SDOA embodied the basis and mechanics of HLI’s SDP,

which was eventually approved by the PARC. Subsequently, HLI submitted to DAR its

SDP, designated as “Proposal for Stock Distribution under C.A.R.P.  

On December 1996, HLI gave up 300 hectares of the converted area to

Centennary Holdings, Inc. (Centennary) for subscription of 12,000,000 shares of stocks

of the latter. Later, Centennary sold the entire 300 hectares for PhP750 million

to Luisita Industrial Park Corporation (LIPCO). LIPCO in turned used it to develop an

industrial complex. They took 2 parcels of the land and issued it under the name of LIPCO.

Later, LIPCO reassigned these 2 parcels to the Rizal Commercial Banking

Corporation (RCBC) in payment of LIPCO’s PhP431,695,732.10 loan to RCBC.  LIPCO’s

titles were cancelled and new ones were issued to RCBC. Apart from that, another

80.51 hectares were later detached from Hacienda Luisita and acquired by the

government as part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. Only

4,335.75 hectares remained of the original 4,915 hectares Tadeco relinquished to HLI.

Two separate petitions were filed before DAR on 2003. The first was filed by the

Supervisory Group of HLI (Supervisory Group) for the revocation.The second petition

was filed by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA)

praying for the nullification of the SDOA and the distribution of the lands in the

hacienda,. On December 22, 2005, the PARC issued the assailed Resolution No. 2005-

32-01 revoking the SDO plan of Tadeco/HLI.

  

ISSUES 

1. Does the PARC possess jurisdiction to recall or revoke HLI’s SDP? 

2. Is Sec. 31 of RA 6657 unconstitutional?

3. Is the revocation of the HLI’s SDP valid? 

4. Should those portions of the converted land within Hacienda Luisita that

RCBC and LIPCO acquired by purchase be excluded from the coverage of the assailed

PARC resolution?

HELD

The Court denied the petition of HLI and affirmed the PARC resolution. It also 

excluded from the mandatory CARP coverage that part of Hacienda Luisita that was 

purchased by RCBC and LIPCO.

[WHEREFORE  , the instant petition is DENIED . PARC Resolution No. 2005-32- 

01 dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006,

placing the lands subject of HLI’s SDP under compulsory coverage on mandated land 
 acquisition scheme of the CARP, are hereby  AFFIRMED with 

the MODIFICATION that the original 6,296 qualified FWBs shall have the option to 

remain as stockholders of HLI. DAR shall immediately schedule meetings with the said 

6,296 FWBs and explain to them the effects, consequences and legal or practical 

implications of their choice, after which the FWBs will be asked to manifest, in secret 

voting, their choices in the ballot, signing their signatures or placing their thumbmarks,

as the case may be, over their printed names.] 

1.   YES,  the PARC has jurisdiction to revoke HLI’s SDP under the doctrine of 

necessary implication. 

Under Sec. 31 of RA 6657, the authority to approve the plan for

stock distribution of the corporate landowner belongs to PARC. PARC also has the power to

revoke the SDP which it previously approved.

2. NO, Sec. 31 of RA 6657 is not unconstitutional.

When the Court is called upon to exercise its power of judicial review over, acts

of the executive or legislative departments, it does so only when the following requisites:

(1) there is an actual case or controversy; (2) that the constitutional question is raised at

the earliest possible opportunity by a proper party or one with locus standi  ; and (3) the

issue of constitutionality must be the very lis mota of the case.

Not all of the pre requisites were satisfied during the pendency of the case.
  

3.   YES, the revocation of the HLI’s SDP vdai.lR

  easonsfor its validity are
1. The mechanics of HLI’s stock distribution violate DAO 10 because the minimum

individual allocation of each original FWB of 18,804.32 shares was diluted.

2. The 30-year timeframe for HLI-to-FWBs stock transfer is contrary to what Sec. 11 oD
 fAO 10 prescribes.

4. YES, those portions of the converted land within Hacienda Luisita that RCBC and LIPCO

 purchased should be excluded from the coverage of the assailed PARC resolution . 

CONCURRING JUSTICES

PRESBITERO J. VELASCO, JR.

TERESITA J. LEONARDO-DE CASTRO
 ARTURO D. BRION
LUCAS P. BERSAMIN
MARIANO C. DEL CASTILLO
ROBERTO A. ABAD
MARTIN S. VILLARAMA, JR.
JOSE PORTUGAL PEREZ
JOSE CATRAL MENDOZA

DISSENTING JUSTICES

RENATO C. CORONA
MARIA LOURDES P. A. SERENO

SEPARATE OPINIONS

 ARTURO D. BRION
MARTIN S. VILLARAMA, JR.
 
Section 31 of Republic Act No. 6657

Section 27 of the Republic Act No. 6657

, Republic Act No. 6657

Land Reform Act (Republic Act No. [RA] 1400)

Republic Act No. 7916

DAR Administrative Order No. 10, series of 198

C Chicot County Drainage District vs. Baxter Bank 

F Association of Small Landowners in the Philippines, Inc. v. Secretary of

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F Salmorin v. Zaldivar 

F Consumido v. Ros 

F Atienza v. Villarosa