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 VESTING IN THE LAND BANK OF THE PHILIPPINES THE PRIMARY
Hacienda Luisita, Inc. (HLI) vs.
Presidential Agrarian Reform
Council (PARC), et al. –
GR No. 171101
BY: EVA ROSE P. VILLARUEL
FACTS:
 In 1958, the Spanish owners of Compañia General de
Tabacos de Filipinas (Tabacalera) sold Hacienda Luisita
and the Central Azucarera de Tarlac, the sugar mill of the
hacienda, to the Tarlac Development Corporation
(Tadeco), then owned and controlled by the Jose
Cojuangco Sr. Group. The Central Bank of
the Philippines assisted Tadeco in obtaining a dollar loan
from a US bank. Also, the GSIS extended a PhP5.911
million loan in favor of Tadeco to pay the peso price
component of the sale, with the 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.” Tadeco however did not comply with
this condition.
RESPONSIBILITY TO DETERMINE THE LAND VALUATION AND
COMPENSATION FOR ALL LANDS COVERED UNDER REPUBLIC ACT NO.
6657, KNOWN AS THE COMPREHENSIVE AGRARIAN REFORM LAW OF
1988 WHEREAS, Republic Act No. 6657, Chapter VI, provides in part
that:
 "Sec. 17. Determination of Just Compensation. — In determining
just compensation, the cost of acquisition of the land, the
current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations
and the assessment made by the government assessors shall be
considered. The social and economic benefits contributed by the
farmers and the farm-workers and by the Government to the
property as well as the nonpayment of taxes or loans secured
from any government financing institution on the said land shall
be considered as additional factors to determine its valuation.”
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
HLI’s 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 AND RULING:
 (1) Is the operative fact doctrine available in this case?
 YES, the operative fact doctrine is applicable in this case.
 [The Court maintained its stance that the operative fact doctrine is applicable in
this case since, contrary to the suggestion of the minority, the doctrine is not
limited only to invalid or unconstitutional laws but also applies to decisions
made by the President or the administrative agencies that have the force and
effect of laws. Prior to the nullification or recall of said decisions, they may
have produced acts and consequences that must be respected.
(3) Can’t the Court order that DAR’s 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 HLI’s SDP?
3. NO, the Court CANNOT order that DAR’s compulsory acquisition of
Hacienda Lusita cover the full 6,443 hectares and not just the 4,915.75
hectares covered by HLI’s SDP.
[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 is constrained to rule only as regards the 4,915.75 has. of
agricultural land.Nonetheless, 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.
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(2) Is Sec. 31 of RA 6657 unconstitutional?
2. NO, Sec. 31 of RA 6657 NOT unconstitutional.
[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. Moreover, the issue has been
rendered moot and academic since SDO is no longer one of
the modes of acquisition under RA 9700. The majority
clarified that in its July 5, 2011 decision, it made no ruling
in favor of the constitutionality of Sec. 31 of RA 6657, but
found nonetheless that there was no apparent grave
violation of the Constitution that may justify the resolution
of the issue of constitutionality.]
(4) Is the date of the “taking” (for purposes of
determining the just compensation payable to HLI)
November 21, 1989, when PARC approved HLI’s SDP?
 YES, the date of “taking” is November 21, 1989, when PARC approved
HLI’s SDP.
 [For the purpose of determining just compensation, the date of “taking” is
November 21, 1989 (the date when PARC approved HLI’s 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.

(5) Has 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?
. NO, the 10-year period prohibition on the transfer of awarded
lands under RA 6657 has NOT lapsed on May 10, 1999; thus, the
qualified FWBs should NOT yet be allowed to sell their land interests
in Hacienda Luisita to third parties.
[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).
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(6) THE CRUCIAL ISSUE: Should the ruling in the
July 5, 2011 Decision that the qualified FWBs be
given an option to remain as stockholders of HLI be
reconsidered?
 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, in as much 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.]