Hacienda Luisita Incorporated vs Presidential Agrarian Reform

Council, et al., Case Digest G.R. No. 171101 November 22,

2011
Hacienda Luisita Incorporated vs Presidential Agrarian Reform Council, et al.,

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Facts:

The SC en banc voted 11-0 dismissing the petition filed by HLI Affirm with modifications the
resolutions of the Presidential Agrarian Reform Council (PARC for brevity) revoking Hacienda Luisita
Inc. (HLI for brevity) Stock Distribution Plan (SDP) and placing the subject land in HL under compulsory
coverage of the CARP of the government.

Thereafter, the SC voting 6-5 averred that there are operative facts that occurred in the
premises. The SC thereat declared that the revocation of the SDP shall, by application of the operative fact
principle, give the 5296 qualified Farmworkers Beneficiaries (FWBs for brevity) to choose whether they want
to remain as HLI stockholders or choose actual land distribution. Considering the premises, DAR immediately
scheduled a meeting regarding the effects of their choice and therefrom proceeded to secret voting of their
choice.

The parties, thereafter, filed their respective Motion for Reconsideration regarding the SCs decision.

Issue:

1) Whether or not operative fact doctrine is applicable in the said case.

2) Whether or not Sec. 31 of R.A. 6657 unconstitutional.

3) Whether or not the 10-year period prohibition on the transfer of awarded lands under RA 6657 lapsed on
May 10, 1999, since Hacienda Luisita were placed under CARP coverage through the SDOA scheme on May 11,
1989, and thus the qualified FWBs should now be allowed to sell their land interests in Hacienda Luisita to
third parties, whether they have fully paid for the lands or not?

4) Whether or not qualified FWBs shall be entitled to the option of remaining as stockholder be reconsidered.

Ruling:

1) Operative Fact Doctrine is applicable to the instant case. The court ruled that the doctrine is not limited only
to invalid or unconstitutional law but also to decisions made by the president or the administrative agencies
that have the force and effect of laws, especially if the said decisions produced acts and consequences that
must be respected. That the implementation of PARC resolution approving SDP of HLI manifested such right
and benefits favorable to the FWBs;

2) The SC said that the constitutionality of Sec. 31 of R.A. 6657 is not the lis mota of the case and it was not raised
at the earliest opportunity and did not rule on the constitutionality of the law;

3) The SC ruled that it has not yet lapsed on May 10, 1999, and qualified FWBs are not allowed to sell their land
interest in HL to third parties; That the start of the counting of the prohibitive period shall be ten years from
the issuance and registration of the Emancipation Patent (EP for brevity) or Certificate of Land Ownership
Award (CLOA for brevity), and considering that the EPs and CLOAs have not yet been issued, the prohibitive
period has not started yet.

4) The SC ruled in the affirmative, giving qualified FWBs the option to remain as stockholder

YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be given an option to remain as
stockholders of HLI should be reconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs should be given an option to remain as
stockholders of HLI, inasmuch as these qualified FWBs will never gain control [over the subject lands] given
the present proportion of shareholdings in HLI. The Court noted that the share of the FWBs in the HLI capital
stock is [just] 33.296%. Thus, even if all the holders of this 33.296% unanimously vote to remain as HLI
stockholders, which is unlikely, control will never be in the hands of the FWBs. Control means the majority of
[sic] 50% plus at least one share of the common shares and other voting shares. Applying the formula to the
HLI stockholdings, the number of shares that will constitute the majority is 295,112,101 shares (590,554,220
total HLI capital shares divided by 2 plus one [1] HLI share). The 118,391,976.85 shares subject to the SDP
approved by PARC substantially fall short of the 295,112,101 shares needed by the FWBs to acquire control
over HLI.]

The SC PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al., The 6,296 original
FWBs shall forfeit and relinquish their rights over the HLI shares of stock issued to them in favor of HLI. The
HLI Corporate Secretary shall cancel the shares issued to the said FWBs and transfer them to HLI in the stocks
and transfer book. The 4,206 non-qualified FWBs shall remain as stockholders of HLI.