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 Compaia General de Tabacos de Filipinas (Tabacaleranow 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. Tabacelras 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 governments 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 PARCs 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 HLIs 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 HLIs 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 LIPCOs PhP431,695,732.10 loan to RCBC. LIPCOs 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. 200532-01 revoking the SDO plan of Tadeco/HLI.

ISSUES

1. Does the PARC possess jurisdiction to recall or revoke HLIs SDP?

2. Is Sec. 31 of RA 6657 unconstitutional?

3. Is the revocation of the HLIs 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. 2005-3201 dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLIs 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 HLIs 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 HLIs SDP valid. Reasons for its validity are 1. The mechanics of HLIs 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 of DAO 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

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