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

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.

On May 7, 1980, the martial law administration filed a suit before the Manila RTC against
Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform
(MAR) so that the land can be distributed to farmers at cost. Responding, Tadeco alleged that
Hacienda Luisita does not have tenants, besides which sugar lands – of which the hacienda
consisted – are not covered by existing agrarian reform legislations.

On March 17, 1988, during the administration of President Corazon Cojuangco Aquino,
the OSG moved to withdraw the case, by virtue of PARC’s approval of TADECO’s proposed
stock distribution plan (SDP) in favor to the farmworkers. [Under EO 229 and later RA
6657, Tadeco had the option of availing stock distribution as an alternative to actual land
transfer to the farmworkers.]

On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of

Hacienda Luisita signified in a referendum their acceptance of the proposed HLI’s Stock
Distribution Option Plan (SODP)

The SDOA (Stock Distribution Plan Agreement) embodied the basis and mechanics
of HLI’s SDP, which was eventually approved by the PARC after a follow-up referendum
(PARC Resolution No. 89-12-2) conducted by the DAR on October 14, 1989, in which 5,117
FWBs, out of 5,315 who participated, opted to receive shares in HLI.

This is the SDOA of Hacienda. From 1989 to 2005, HLI claimed to have extended the following
benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 hectares of
converted agricultural land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares at 80
million pesos (P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death benefits and no interest
bearing salary/educational loans and rice sugar accounts. 42

HLI also applied for the conversion of 500 hectares of land of the hacienda from
agricultural to industrial use, pursuant to Sec. 65 of RA 6657.
 However, Such, in short, was the state of things when two separate petitions, both
undated, reached the DAR in the latter part of 2003. Firstly, The heads of the Supervisory
Group of HLI (Supervisory Group), and 60 other supervisors sought to revoke the SDOA,
alleging that HLI had failed to give them their dividends and the one percent (1%) share in gross
sales, as well as the thirty-three percent (33%) share in the proceeds of the sale of the
converted 500 hectares of land. Secondly, Revocation and nullification of the SDOA and the
distribution of the lands in the hacienda, filed by the Alyansa ng mga Manggagawang Bukid ng
Hacienda Luisita (AMBALA).

the DAR constituted a Special Task Force to attend to issues relating to the SDP of HLI.
the Special Task Force was mandated to review the terms and conditions of the SDOA and
PARC Resolution No. 89-12-2 relative to HLI’s SDP. Hence, After investigation and evaluation,
finding that HLI has not complied with its obligations under RA 6657 despite the implementation
of the SDP

Thus, Sen. Pangandaman recommended to the PARC Executive Committee (Excom) to:
(a) the recall/revocation of PARC Resolution No. 89-12-2 dated November 21, 1989 approving
HLI’s SDP; and
(b) the acquisition of Hacienda Luisita through the compulsory acquisition scheme.

The recommendation was granted and placed under compulsory coverage or mandated land
acquisition scheme of the CARP.

ISSUE:
W/N the award of land under tenancy be granted to the Farm workers beneficiaries, although
the transfer of agricultural land by virtue of resolution of PARC is unconstitutional?

RULING:
Yes, the award of land under tenancy is granted the Farm workers beneficiaries. While
we affirm the revocation of such Resolution. the Court cannot close its eyes to certain
“operative facts” that had occurred in the interim.  Pertinently, the “operative fact” doctrine
realizes that, in declaring a law or executive action null and void, or, by extension, no longer
without force and effect, undue harshness and resulting unfairness must be avoided. This is as
it should realistically be, since rights might have accrued in favor of natural or juridical persons
and obligations justly incurred in the meantime.
The actual existence of a statute or executive act, prior to such a determination, an
operative fact and may have consequences which cannot justly be ignored; the past cannot
always be erased by a new judicial declaration.
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are
upheld, the revocation must, by application of the operative fact principle, GIVE WAY TO
THE RIGHTS of the original 6,296 qualified FWBs to choose whether they want to remain
as HLI’s stockholders or not.
The Court cannot turn a blind eye to the fact that in 1989, 93% of the FWBs agreed to
the agreement that the FWBs to have received from HLI salaries and cash benefits.