Rodney D.

Atibula Law II-A

Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council (PARC), et al., G.R. No. 171101, November 22, 2011 Facts: On July 5, 2011, the Supreme Court en banc voted unanimously (11-0) to DISMISS/DENY the petition filed by HLI and AFFIRM with MODIFICATIONS the resolutions of the PARC revoking HLIs Stock Distribution Plan (SDP) and placing the subject lands in Hacienda Luisita under compulsory coverage of the Comprehensive Agrarian Reform Program (CARP) of the government. The Court however did not order outright land distribution. Voting 6-5, the Court noted that there are operative facts that occurred in the interim and which the Court cannot validly ignore. Thus, the Court declared that the revocation of the SDP must, by application of the operative fact principle, give way to the right of the original 6,296 qualified farmworkers-beneficiaries (FWBs) to choose whether they want to remain as HLI stockholders or [choose actual land distribution]. It thus ordered the Department of Agrarian Reform (DAR) to 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. The parties thereafter filed their respective motions for reconsideration of the Court decision.

Issues: 1. Whether or not is the Operative fact doctrine Available in this case. 2. Whether or not the court should rule on the constitutionality of Sec. 31 of RA 6657 or the Comprehensive Agrarian Reform Law of 1988. 3. Whether or not the Court can order that DARs compulsory acquisition of Hacienda Lusita cover the full 6,443 hectares allegedly covered by RA 6657 and previously held by Tarlac Development Corporation (Tadeco), and not just the 4,915.75 hectares covered by HLIs SDP

4. Whether or not November 21, 1989 be the reckoning date of "taking", when PARC approved HLIs SDP, for purposes of computing just compensation. 5. Whether or not the FWBs should now be allowed to sell their land interests in Hacienda Luisita to third parties.

Held 1. Yes. Contrary to the stance of DAR, PARC and AMBALA, the Court rules that the operative fact doctrine does not only apply to laws subsequently declared unconstitutional or unlawful, as it also applies to executive acts subsequently declared as invalid. A decision made by the President or the administrative agencies has to be complied with because it has the force and effect of law. Bearing in mind that PARC Resolution No. 89-12-2 pertaining to approval of HLI's SDP, an executive act, was declared invalid in the instant case, the operative fact doctrine is clearly applicable. The majority stressed that the application of the operative fact doctrine by the Court in its July 5, 2011 decision was in fact favorable to the FWBs because not only were they allowed to retain the benefits and home lots they received under the stock distribution scheme, they were also given the option to choose for themselves whether they want to remain as stockholders of HLI or not. 2. The Court maintained that the Court is NOT compelled to rule on the constitutionality of Sec. 31 of RA 6657, reiterating that it was not raised at the earliest opportunity and that the resolution thereof is not the lis mota of the case. It took 18 years for FARM to raise the constitutionality of Sec. 31 of RA 6657 and the lis mota or the Gist of the case was the alleged non-compliance by HLI with the conditions of the SDP to support a plea for its revocation. moreover, Sec. 5 of RA 9700 (superseded Sec 31 of RA 6657) provides: [T]hat after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell and compulsory acquisition. Thus, for all intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional should be a moot and academic. 3. Since what is put in issue before the Court is the propriety of the revocation of the SDP, which only involves 4,915.75 has. of agricultural land and not 6,443 has., then the Court are constrained to rule only as regards the 4,915.75 has. of agricultural land. Nonetheless, it should be taken into account that this should not

prevent the DAR, under its mandate under the agrarian reform law, from subsequently subjecting to agrarian reform other agricultural lands originally held by Tadeco that were allegedly not transferred to HLI but were supposedly covered by RA 6657. 4. For the purpose of determining just compensation, the date of taking is November 21, 1989 (the date when PARC approved HLIs SDP) since this is the time that the FWBs were considered to own and possess the agricultural lands in Hacienda Luisita. To be precise, these lands became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP, that is, on November 21, 1989. Such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition. On the contention of the minority (Justice Sereno) that the date of the notice of coverage [after PARCs revocation of the SDP], that is, January 2, 2006, is determinative of the just compensation that HLI is entitled to receive, the Court majority noted that none of the cases cited to justify this position involved the stock distribution scheme. Thus, said cases do not squarely apply to the instant case. The foregoing notwithstanding, it bears stressing that the DAR's land valuation is only preliminary and is not, by any means, final and conclusive upon the landowner. The landowner can file an original action with the RTC acting as a special agrarian court to determine just compensation. The court has the right to review with finality the determination in the exercise of what is admittedly a judicial function. 5. The Court ruled that the proposition that since the agricultural lands in Hacienda Luisita were placed under CARP coverage through the SDOA scheme on May 11, 1989, then the 10-year period prohibition on the transfer of awarded lands under RA 6657 lapsed on May 10, 1999, and, consequently, the qualified FWBs should already be allowed to sell these lands with respect to their land interests to third parties, including HLI, regardless of whether they have fully paid for the lands or not, is erroneous.Under RA 6657 and DAO 1, the awarded lands may only be transferred or conveyed after 10 years from the issuance and registration of the emancipation patent (EP) or certificate of land ownership award (CLOA). Considering that the EPs or CLOAs have not yet been issued to the qualified FWBs in the instant case, the 10-year prohibitive period has not even started. Significantly, the reckoning point is the issuance of the EP or CLOA, and not the placing of the agricultural lands under CARP coverage. Moreover, should the FWBs be immediately allowed the option to sell or convey their interest in the subject lands, then all efforts at agrarian reform would be rendered nugatory, since, at the end of the day, these lands will just be transferred to persons not entitled to land distribution under CARP.