Republic of the Philippines (2) TO DISTRIBUTE THE CASH SALES

SUPREME COURT PROCEEDS OF THE PORTIONS OF THE LAND

Manila ASSET TO THE FWBs, WHO ARE
STOCKHOLDERS OF HLI, IS TO DISSOLVE THE
EN BANC CORPORATION AND DISTRIBUTE THE
PROCEEDS AS LIQUIDATING DIVIDENDS
G.R. No. 171101               November 22, 2011 WITHOUT EVEN PAYING THE CREDITORS OF
THE CORPORATION;
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL (3) THE DOING OF SAID ACTS WOULD
COMMERCIAL BANKING CORPORATION,Petitioners-in- VIOLATE THE STRINGENT PROVISIONS OF THE
Intervention,  CORPORATION CODE AND CORPORATE
vs. PRACTICE.
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY
NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN B
REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG
HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO IT IS NOT PROPER, EITHER IN LAW OR IN
SUNIGA1 and his SUPERVISORY GROUP OF THE HACIENDA EQUITY, TO RECKON THE PAYMENT OF JUST
LUISITA, INC. and WINDSOR ANDAYA, Respondents. COMPENSATION FROM NOVEMBER 21, 1989
WHEN THE PARC, THEN UNDER THE
RESOLUTION CHAIRMANSHIP OF DAR SECRETARY MIRIAM
DEFENSOR-SANTIAGO, APPROVED THE STOCK
VELASCO, JR., J.: DISTRIBUTION PLAN (SDP) PROPOSED BY
TADECO/HLI, BECAUSE:
For resolution are the (1) Motion for Clarification and Partial
Reconsideration dated July 21, 2011 filed by petitioner (1) THAT PARC RESOLUTION NO. 89-12-2
Hacienda Luisita, Inc. (HLI); (2) Motion for Partial DATED NOVEMBER 21, 1989 WAS NOT THE
Reconsideration dated July 20, 2011 filed by public respondents "ACTUAL TAKING" OF THE TADECO’s/HLI’s
Presidential Agrarian Reform Council (PARC) and Department AGRICULTURAL LAND;
of Agrarian Reform (DAR); (3) Motion for Reconsideration
dated July 19, 2011 filed by private respondent Alyansa ng mga (2) THE RECALL OR REVOCATION UNDER
Manggagawang Bukid sa Hacienda Luisita (AMBALA); (4) RESOLUTION NO. 2005-32-01 OF THAT SDP
Motion for Reconsideration dated July 21, 2011 filed by BY THE NEW PARC UNDER THE
respondent-intervenor Farmworkers Agrarian Reform CHAIRMANSHIP OF DAR SECRETARY NASSER
Movement, Inc. (FARM); (5) Motion for Reconsideration dated PANGANDAMAN ON DECEMBER 22, 2005 OR
July 21, 2011 filed by private respondents Noel Mallari, Julio 16 YEARS EARLIER WHEN THE SDP WAS
Suniga, Supervisory Group of Hacienda Luisita, Inc. (Supervisory APPROVED DID NOT RESULT IN "ACTUAL
Group) and Windsor Andaya (collectively referred to as TAKING" ON NOVEMBER 21, 1989;
"Mallari, et al."); and (6) Motion for Reconsideration dated July
22, 2011 filed by private respondents Rene Galang and (3) TO PAY THE JUST COMPENSATION AS OF
AMBALA.2 NOVEMBER 21, 1989 OR 22 YEARS BACK
WOULD BE ARBITRARY, UNJUST, AND
On July 5, 2011, this Court promulgated a Decision 3 in the OPPRESSIVE, CONSIDERING THE
above-captioned case, denying the petition filed by HLI and IMPROVEMENTS, EXPENSES IN THE
affirming Presidential Agrarian Reform Council (PARC) MAINTENANCE AND PRESERVATION OF THE
Resolution No. 2005-32-01 dated December 22, 2005 and PARC LAND, AND RISE IN LAND PRICES OR VALUE
Resolution No. 2006-34-01 dated May 3, 2006 with the OF THE PROPERTY.
modification that the original 6,296 qualified farmworker-
beneficiaries of Hacienda Luisita (FWBs) shall have the option On the other hand, PARC and DAR, through the Office of the
to remain as stockholders of HLI. Solicitor General (OSG), raise the following issues in their
Motion for Partial Reconsideration dated July 20, 2011:
In its Motion for Clarification and Partial Reconsideration dated
July 21, 2011, HLI raises the following issues for Our THE DOCTRINE OF OPERATIVE FACT DOES
consideration: NOT APPLY TO THIS CASE FOR THE
FOLLOWING REASONS:
A
I
IT IS NOT PROPER, EITHER IN LAW OR IN
EQUITY, TO DISTRIBUTE TO THE ORIGINAL THERE IS NO LAW OR RULE WHICH HAS BEEN
FWBs OF 6,296 THE UNSPENT OR UNUSED INVALIDATED ON THE GROUND OF
BALANCE OF THE PROCEEDS OF THE SALE OF UNCONSTITUTIONALITY; AND
THE 500 HECTARES AND 80.51 HECTARES OF
THE HLI LAND, BECAUSE: II

(1) THE PROCEEDS OF THE SALE BELONG TO THIS DOCTRINE IS A RULE OF EQUITY WHICH
THE CORPORATION, HLI, AS CORPORATE MAY BE APPLIED ONLY IN THE ABSENCE OF A
CAPITAL AND ASSETS IN SUBSTITUTION FOR LAW. IN THIS CASE, THERE IS A POSITIVE LAW
THE PORTIONS OF ITS LAND ASSET WHICH WHICH MANDATES THE DISTRIBUTION OF
WERE SOLD TO THIRD PARTY;
THE LAND AS A RESULT OF THE REVOCATION THE HONORABLE COURT, WITH DUE
OF THE STOCK DISTRIBUTION PLAN (SDP). RESPECT, ERRED IN HOLDING THAT LUISITA
INDUSTRIAL PARK CORP. (LIPCO) AND RIZAL
For its part, AMBALA poses the following COMMERCIAL BANKING CORPORATION
issues in its Motion for Reconsideration dated (RCBC) ARE INNOCENT PURCHASERS FOR
July 19, 2011: VALUE.

I In its Motion for Reconsideration dated July 21, 2011, FARM

similarly puts forth the following issues:
THE MAJORITY OF THE MEMBERS OF THE
HONORABLE COURT, WITH DUE RESPECT, I
ERRED IN HOLDING THAT SECTION 31 OF
REPUBLIC ACT 6657 (RA 6657) IS THE HONORABLE SUPREME COURT SHOULD
CONSTITUTIONAL. HAVE STRUCK DOWN SECTION 31 OF [RA
6657] FOR BEING UNCONSTITUTIONAL. THE
II CONSTITUTIONALITY ISSUE THAT WAS RAISED
BY THE RESPONDENTS-INTERVENORS IS THE
THE MAJORITY OF THE MEMBERS OF THE LIS MOTA OF THE CASE.
HONORABLE COURT, WITH DUE RESPECT,
ERRED IN HOLDING THAT ONLY THE [PARC’S] II
APPROVAL OF HLI’s PROPOSAL FOR STOCK
DISTRIBUTION UNDER CARP AND THE [SDP] THE HONORABLE SUPREME COURT SHOULD
WERE REVOKED AND NOT THE STOCK NOT HAVE APPLIED THE DOCTRINE OF
DISTRIBUTION OPTION AGREEMENT (SDOA). "OPERATIVE FACT" TO THE CASE. THE OPTION
GIVEN TO THE FARMERS TO REMAIN AS
III STOCKHOLDERS OF HACIENDA LUISITA IS
EQUIVALENT TO AN OPTION FOR HACIENDA
THE MAJORITY OF THE MEMBERS OF THE LUISITA TO RETAIN LAND IN DIRECT
HONORABLE COURT, WITH DUE RESPECT, VIOLATION OF THE COMPREHENSIVE
ERRED IN APPLYING THE DOCTRINE OF AGRARIAN REFORM LAW. THE DECEPTIVE
OPERATIVE FACTS AND IN MAKING THE STOCK DISTRIBUTION OPTION / STOCK
[FWBs] CHOOSE TO OPT FOR ACTUAL LAND DISTRIBUTION PLAN CANNOT JUSTIFY SUCH
DISTRIBUTION OR TO REMAIN AS RESULT, ESPECIALLY AFTER THE SUPREME
STOCKHOLDERS OF [HLI]. COURT HAS AFFIRMED ITS REVOCATION.

IV III

THE MAJORITY OF THE MEMBERS OF THE THE HONORABLE SUPREME COURT SHOULD
HONORABLE COURT, WITH DUE RESPECT, NOT HAVE CONSIDERED [LIPCO] AND [RCBC]
ERRED IN HOLDING THAT IMPROVING THE AS INNOCENT PURCHASERS FOR VALUE IN
ECONOMIC STATUS OF FWBs IS NOT AMONG THE INSTANT CASE.
THE LEGAL OBLIGATIONS OF HLI UNDER THE
SDP AND AN IMPERATIVE IMPOSITION BY [RA Mallari, et al., on the other hand, advance the following
6657] AND DEPARTMENT OF AGRARIAN grounds in support of their Motion for Reconsideration dated
REFORM ADMINISTRATIVE ORDER NO. 10 July 21, 2011:
(DAO 10).
(1) THE HOMELOTS REQUIRED TO BE DISTRIBUTED HAVE ALL
V BEEN DISTRIBUTED PURSUANT TO THE MEMORANDUM OF
AGREEMENT. WHAT REMAINS MERELY IS THE RELEASE OF
THE HONORABLE COURT, WITH DUE TITLE FROM THE REGISTER OF DEEDS.
RESPECT, ERRED IN HOLDING THAT THE
CONVERSION OF THE AGRICULTURAL LANDS (2) THERE HAS BEEN NO DILUTION OF SHARES. CORPORATE
DID NOT VIOLATE THE CONDITIONS OF RA RECORDS WOULD SHOW THAT IF EVER NOT ALL OF THE
6657 AND DAO 10. 18,804.32 SHARES WERE GIVEN TO THE ACTUAL ORIGINAL
FARMWORKER BENEFICIARY, THE RECIPIENT OF THE
VI DIFFERENCE IS THE NEXT OF KIN OR CHILDREN OF SAID
ORIGINAL [FWBs]. HENCE, WE RESPECTFULLY SUBMIT THAT
SINCE THE SHARES WERE GIVEN TO THE SAME "FAMILY
THE HONORABLE COURT, WITH DUE
BENEFICIARY", THIS SHOULD BE DEEMED AS SUBSTANTIAL
RESPECT, ERRED IN HOLDING THAT
COMPLIANCE WITH THE PROVISIONS OF SECTION 4 OF DAO 10.
PETITIONER IS ENTITLED TO PAYMENT OF
JUST COMPENSATION. SHOULD THE
HONORABLE COURT AFFIRM THE (3) THERE HAS BEEN NO VIOLATION OF THE 3-MONTH PERIOD
ENTITLEMENT OF THE PETITIONER TO JUST TO IMPLEMENT THE [SDP] AS PROVIDED FOR BY SECTION 11 OF
COMPENSATION, THE SAME SHOULD BE DAO 10 AS THIS PROVISION MUST BE READ IN LIGHT OF
PEGGED TO FORTY THOUSAND PESOS (PhP SECTION 10 OF EXECUTIVE ORDER NO. 229, THE PERTINENT
40,000.00) PER HECTARE. PORTION OF WHICH READS, "THE APPROVAL BY THE PARC OF A
PLAN FOR SUCH STOCK DISTRIBUTION, AND ITS INITIAL
IMPLEMENTATION, SHALL BE DEEMED COMPLIANCE WITH THE
VII
LAND DISTRIBUTION REQUIREMENT OF THE CARP."
(4) THE VALUATION OF THE LAND CANNOT BE BASED AS OF applied only in the absence of a law, and in this case, they
NOVEMBER 21, 1989, THE DATE OF APPROVAL OF THE STOCK maintain that there is a positive law which mandates the
DISTRIBUTION OPTION. INSTEAD, WE RESPECTFULLY SUBMIT distribution of the land as a result of the revocation of the stock
THAT THE "TIME OF TAKING" FOR VALUATION PURPOSES IS A distribution plan (SDP).5
FACTUAL ISSUE BEST LEFT FOR THE TRIAL COURTS TO DECIDE.
Echoing the stance of DAR and PARC, AMBALA submits that the
(5) TO THOSE WHO WILL CHOOSE LAND, THEY MUST RETURN operative fact doctrine should only be made to apply in the
WHAT WAS GIVEN TO THEM UNDER THE SDP. IT WOULD BE extreme case in which equity demands it, which allegedly is not
UNFAIR IF THEY ARE ALLOWED TO GET THE LAND AND AT THE in the instant case.6 It further argues that there would be no
SAME TIME HOLD ON TO THE BENEFITS THEY RECEIVED undue harshness or injury to HLI in case lands are actually
PURSUANT TO THE SDP IN THE SAME WAY AS THOSE WHO distributed to the farmworkers, and that the decision which
WILL CHOOSE TO STAY WITH THE SDO. orders the farmworkers to choose whether to remain as
stockholders of HLI or to opt for land distribution would result
Lastly, Rene Galang and AMBALA, through the Public Interest in inequity and prejudice to the farmworkers. 7 The foregoing
Law Center (PILC), submit the following grounds in support of views are also similarly shared by Rene Galang and AMBALA,
their Motion for Reconsideration dated July 22, 2011: through the PILC.8 In addition, FARM posits that the option
given to the FWBs is equivalent to an option for HLI to retain
I land in direct violation of RA 6657.9

THE HONORABLE COURT, WITH DUE (a) Operative Fact Doctrine Not Limited to
RESPECT, GRAVELY ERRED IN ORDERING THE
HOLDING OF A VOTING OPTION INSTEAD OF Invalid or Unconstitutional Laws
TOTALLY REDISTRIBUTING THE SUBJECT
LANDS TO [FWBs] in [HLI]. Contrary to the stance of respondents, the operative fact
doctrine does not only apply to laws subsequently declared
A. THE HOLDING OF A VOTING OPTION HAS unconstitutional or unlawful, as it also applies to executive acts
NO LEGAL BASIS. THE REVOCATION OF THE subsequently declared as invalid. As We have discussed in Our
[SDP] CARRIES WITH IT THE REVOCATION OF July 5, 2011 Decision:
THE [SDOA].
That the operative fact doctrine squarely applies to executive
B. GIVING THE [FWBs] THE OPTION TO acts––in this case, the approval by PARC of the HLI proposal for
REMAIN AS STOCKHOLDERS OF HLI WITHOUT stock distribution––is well-settled in our jurisprudence. In
MAKING THE NECESSARY CHANGES IN THE Chavez v. National Housing Authority, We held:
CORPORATE STRUCTURE WOULD ONLY
SUBJECT THEM TO FURTHER MANIPULATION Petitioner postulates that the "operative fact" doctrine is
AND HARDSHIP. inapplicable to the present case because it is an equitable
doctrine which could not be used to countenance an
C. OTHER VIOLATIONS COMMITTED BY HLI inequitable result that is contrary to its proper office.
UNDER THE [SDOA] AND PERTINENT LAWS
JUSTIFY TOTAL LAND REDISTRIBUTION OF On the other hand, the petitioner Solicitor General argues that
HACIENDA LUISITA. the existence of the various agreements implementing the
SMDRP is an operative fact that can no longer be disturbed or
II simply ignored, citing Rieta v. People of the Philippines.

THE HONORABLE COURT, WITH DUE The argument of the Solicitor General is meritorious.
RESPECT, GRAVELY ERRED IN HOLDING THAT
THE [RCBC] AND [LIPCO] ARE INNOCENT The "operative fact" doctrine is embodied in De Agbayani v.
PURCHASERS FOR VALUE OF THE 300- Court of Appeals, wherein it is stated that a legislative or
HECTARE PROPERTY IN HACIENDA LUISITA executive act, prior to its being declared as unconstitutional by
THAT WAS SOLD TO THEM PRIOR TO THE the courts, is valid and must be complied with, thus:
INCEPTION OF THE PRESENT CONTROVERSY.
x x x           x x x          x x x
Ultimately, the issues for Our consideration are the following:
(1) applicability of the operative fact doctrine; (2) This doctrine was reiterated in the more recent case of City of
constitutionality of Sec. 31 of RA 6657 or the Comprehensive Makati v. Civil Service Commission, wherein we ruled that:
Agrarian Reform Law of 1988; (3) coverage of compulsory
acquisition; (4) just compensation; (5) sale to third parties; (6) Moreover, we certainly cannot nullify the City Government's
the violations of HLI; and (7) control over agricultural lands. order of suspension, as we have no reason to do so, much less
retroactively apply such nullification to deprive private
We shall discuss these issues accordingly. respondent of a compelling and valid reason for not filing the
leave application. For as we have held, a void act though in law
I. Applicability of the Operative Fact Doctrine a mere scrap of paper nonetheless confers legitimacy upon
past acts or omissions done in reliance thereof. Consequently,
In their motion for partial reconsideration, DAR and PARC argue the existence of a statute or executive order prior to its being
that the doctrine of operative fact does not apply to the instant adjudged void is an operative fact to which legal consequences
case since: (1) there is no law or rule which has been are attached. It would indeed be ghastly unfair to prevent
invalidated on the ground of unconstitutionality; 4(2) the private respondent from relying upon the order of suspension
doctrine of operative fact is a rule of equity which may be in lieu of a formal leave application.
The applicability of the operative fact doctrine to executive acts Nonetheless, the minority is of the persistent view that the
was further explicated by this Court in Rieta v. People, thus: applicability of the operative fact doctrine should be limited to
statutes and rules and regulations issued by the executive
Petitioner contends that his arrest by virtue of Arrest Search department that are accorded the same status as that of a
and Seizure Order (ASSO) No. 4754 was invalid, as the law upon statute or those which are quasi-legislative in nature. Thus, the
which it was predicated — General Order No. 60, issued by minority concludes that the phrase "executive act" used in the
then President Ferdinand E. Marcos — was subsequently case of De Agbayani v. Philippine National Bank 11 refers only to
declared by the Court, in Tañada v. Tuvera, 33 to have no force acts, orders, and rules and regulations that have the force and
and effect. Thus, he asserts, any evidence obtained pursuant effect of law. The minority also made mention of the
thereto is inadmissible in evidence. Concurring Opinion of Justice Enrique Fernando in Municipality
of Malabang v. Benito,12 where it was supposedly made explicit
We do not agree. In Tañada, the Court addressed the possible that the operative fact doctrine applies to executive acts, which
effects of its declaration of the invalidity of various presidential are ultimately quasi-legislative in nature.
issuances. Discussing therein how such a declaration might
affect acts done on a presumption of their validity, the Court We disagree. For one, neither the De Agbayani case nor the
said: Municipality of Malabang case elaborates what "executive act"
mean. Moreover, while orders, rules and regulations issued by
". . .. In similar situations in the past this Court had taken the the President or the executive branch have fixed definitions
pragmatic and realistic course set forth in Chicot County and meaning in the Administrative Code and jurisprudence, the
Drainage District vs. Baxter Bank to wit: phrase "executive act" does not have such specific definition
under existing laws. It should be noted that in the cases cited
by the minority, nowhere can it be found that the term
‘The courts below have proceeded on the theory that the Act of
"executive act" is confined to the foregoing. Contrarily, the
Congress, having been found to be unconstitutional, was not a
term "executive act" is broad enough to encompass decisions
law; that it was inoperative, conferring no rights and imposing
of administrative bodies and agencies under the executive
no duties, and hence affording no basis for the challenged
department which are subsequently revoked by the agency in
decree. . . . It is quite clear, however, that such broad
question or nullified by the Court.
statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The
actual existence of a statute, prior to [the determination of its A case in point is the concurrent appointment of Magdangal B.
invalidity], is an operative fact and may have consequences Elma (Elma) as Chairman of the Presidential Commission on
which cannot justly be ignored. The past cannot always be Good Government (PCGG) and as Chief Presidential Legal
erased by a new judicial declaration. The effect of the Counsel (CPLC) which was declared unconstitutional by this
subsequent ruling as to invalidity may have to be considered in Court in Public Interest Center, Inc. v. Elma. 13 In said case, this
various aspects — with respect to particular conduct, private Court ruled that the concurrent appointment of Elma to these
and official. Questions of rights claimed to have become offices is in violation of Section 7, par. 2, Article IX-B of the 1987
vested, of status, of prior determinations deemed to have Constitution, since these are incompatible offices. Notably, the
finality and acted upon accordingly, of public policy in the light appointment of Elma as Chairman of the PCGG and as CPLC is,
of the nature both of the statute and of its previous without a question, an executive act. Prior to the declaration of
application, demand examination. These questions are among unconstitutionality of the said executive act, certain acts or
the most difficult of those which have engaged the attention of transactions were made in good faith and in reliance of the
courts, state and federal, and it is manifest from numerous appointment of Elma which cannot just be set aside or
decisions that an all-inclusive statement of a principle of invalidated by its subsequent invalidation.
absolute retroactive invalidity cannot be justified.’
In Tan v. Barrios,14 this Court, in applying the operative fact
x x x           x x x          x x x doctrine, held that despite the invalidity of the jurisdiction of
the military courts over civilians, certain operative facts must
be acknowledged to have existed so as not to trample upon the
"Similarly, the implementation/ enforcement of presidential
rights of the accused therein. Relevant thereto, in Olaguer v.
decrees prior to their publication in the Official Gazette is ‘an
Military Commission No. 34, 15it was ruled that "military
operative fact which may have consequences which cannot be
tribunals pertain to the Executive Department of the
justly ignored. The past cannot always be erased by a new
Government and are simply instrumentalities of the executive
judicial declaration . . . that an all-inclusive statement of a
power, provided by the legislature for the President as
principle of absolute retroactive invalidity cannot be justified.’"
Commander-in-Chief to aid him in properly commanding the
army and navy and enforcing discipline therein, and utilized
The Chicot doctrine cited in Tañada advocates that, prior to the under his orders or those of his authorized military
nullification of a statute, there is an imperative necessity of representatives."16
taking into account its actual existence as an operative fact
negating the acceptance of "a principle of absolute retroactive
Evidently, the operative fact doctrine is not confined to statutes
invalidity." Whatever was done while the legislative or the
and rules and regulations issued by the executive department
executive act was in operation should be duly recognized and
that are accorded the same status as that of a statute or those
presumed to be valid in all respects. The ASSO that was issued
which are quasi-legislative in nature.
in 1979 under General Order No. 60 — long before our Decision
in Tañada and the arrest of petitioner — is an operative fact
that can no longer be disturbed or simply ignored. (Citations Even assuming that De Agbayani initially applied the operative
omitted; emphasis in the original.) fact doctrine only to executive issuances like orders and rules
and regulations, said principle can nonetheless be applied, by
analogy, to decisions made by the President or the agencies
Bearing in mind that PARC Resolution No. 89-12-2 10––an
under the executive department. This doctrine, in the interest
executive act––was declared invalid in the instant case, the
of justice and equity, can be applied liberally and in a broad
operative fact doctrine is clearly applicable.
sense to encompass said decisions of the executive branch. In
keeping with the demands of equity, the Court can apply the
operative fact doctrine to acts and consequences that resulted variously expressed by different courts." 18 Remarkably, it is
from the reliance not only on a law or executive act which is applied only in the absence of statutory law and never in
quasi-legislative in nature but also on decisions or orders of the contravention of said law.19
executive branch which were later nullified. This Court is not
unmindful that such acts and consequences must be In the instant case, respondents argue that the operative fact
recognized in the higher interest of justice, equity and fairness. doctrine should not be applied since there is a positive law,
particularly, Sec. 31 of RA 6657, which directs the distribution
Significantly, a decision made by the President or the of the land as a result of the revocation of the SDP. Pertinently,
administrative agencies has to be complied with because it has the last paragraph of Sec. 31 of RA 6657 states:
the force and effect of law, springing from the powers of the
President under the Constitution and existing laws. Prior to the If within two (2) years from the approval of this Act, the land or
nullification or recall of said decision, it may have produced stock transfer envisioned above is not made or realized or the
acts and consequences in conformity to and in reliance of said plan for such stock distribution approved by the PARC within
decision, which must be respected. It is on this score that the the same period, the agricultural land of the corporate owners
operative fact doctrine should be applied to acts and or corporation shall be subject to the compulsory coverage of
consequences that resulted from the implementation of the this Act. (Emphasis supplied.)
PARC Resolution approving the SDP of HLI.
Markedly, the use of the word "or" under the last paragraph of
More importantly, respondents, and even the minority, failed Sec. 31 of RA 6657 connotes that the law gives the corporate
to clearly explain how the option to remain in HLI granted to landowner an "option" to avail of the stock distribution option
individual farmers would result in inequity and prejudice. We or to have the SDP approved within two (2) years from the
can only surmise that respondents misinterpreted the option as approval of RA 6657. This interpretation is consistent with the
a referendum where all the FWBs will be bound by a majority well-established principle in statutory construction that "[t]he
vote favoring the retention of all the 6,296 FWBs as HLI word or is a disjunctive term signifying disassociation and
stockholders. Respondents are definitely mistaken. The fallo of independence of one thing from the other things enumerated;
Our July 5, 2011 Decision is unequivocal that only those FWBs it should, as a rule, be construed in the sense in which it
who signified their desire to remain as HLI stockholders are ordinarily implies, as a disjunctive word." 20 In PCI Leasing and
entitled to 18,804.32 shares each, while those who opted not Finance, Inc. v. Giraffe-X Creative Imaging, Inc., 21 this Court
to remain as HLI stockholders will be given land by DAR. Thus, held:
referendum was not required but only individual options were
granted to each FWB whether or not they will remain in HLI. Evidently, the letter did not make a demand for the payment of
the P8,248,657.47 AND the return of the equipment; only
The application of the operative fact doctrine to the FWBs is either one of the two was required. The demand letter was
not iniquitous and prejudicial to their interests but is actually prepared and signed by Atty. Florecita R. Gonzales, presumably
beneficial and fair to them. First, they are granted the right to petitioner’s counsel. As such, the use of "or" instead of "and" in
remain in HLI as stockholders and they acquired said shares the letter could hardly be treated as a simple typographical
without paying their value to the corporation. On the other error, bearing in mind the nature of the demand, the amount
hand, the qualified FWBs are required to pay the value of the involved, and the fact that it was made by a lawyer. Certainly
land to the Land Bank of the Philippines (LBP) if land is awarded Atty. Gonzales would have known that a world of difference
to them by DAR pursuant to RA 6657. If the qualified FWBs exists between "and" and "or" in the manner that the word was
really want agricultural land, then they can simply say no to the employed in the letter.
option. And second, if the operative fact doctrine is not applied
to them, then the FWBs will be required to return to HLI the 3% A rule in statutory construction is that the word "or" is a
production share, the 3% share in the proceeds of the sale of disjunctive term signifying dissociation and independence of
the 500-hectare converted land, and the 80.51-hectare Subic- one thing from other things enumerated unless the context
Clark-Tarlac Expressway (SCTEX) lot, the homelots and other requires a different interpretation.22
benefits received by the FWBs from HLI. With the application of
the operative fact doctrine, said benefits, homelots and the 3%
In its elementary sense, "or", as used in a statute, is a
production share and 3% share from the sale of the 500-
disjunctive article indicating an alternative. It often connects a
hectare and SCTEX lots shall be respected with no obligation to
series of words or propositions indicating a choice of either.
refund or return them. The receipt of these things is an
When "or" is used, the various members of the enumeration
operative fact "that can no longer be disturbed or simply
are to be taken separately.23
ignored."
The word "or" is a disjunctive term signifying disassociation and
(b) The Operative Fact Doctrine as Recourse in Equity
independence of one thing from each of the other things
enumerated.24 (Emphasis in the original.)
As mentioned above, respondents contend that the operative
fact doctrine is a rule of equity which may be applied only in
Given that HLI secured approval of its SDP in November 1989,
the absence of a law, and that in the instant case, there is a
well within the two-year period reckoned from June 1988 when
positive law which mandates the distribution of the land as a
RA 6657 took effect, then HLI did not violate the last paragraph
result of the revocation of the SDP.
of Sec. 31 of RA 6657. Pertinently, said provision does not bar
Us from applying the operative fact doctrine.
Undeniably, the operative fact doctrine is a rule of equity. 17 As
a complement of legal jurisdiction, equity "seeks to reach and
Besides, it should be recognized that this Court, in its July 5,
complete justice where courts of law, through the inflexibility
2011 Decision, affirmed the revocation of Resolution No. 89-12-
of their rules and want of power to adapt their judgments to
2 and ruled for the compulsory coverage of the agricultural
the special circumstances of cases, are incompetent to do so.
lands of Hacienda Luisita in view of HLI’s violation of the SDP
Equity regards the spirit and not the letter, the intent and not
and DAO 10. By applying the operative fact doctrine, this Court
the form, the substance rather than the circumstance, as it is
merely gave the qualified FWBs the option to remain as
stockholders of HLI and ruled that they will retain the homelots not likewise obtain. The lis mota aspect is not present, the
and other benefits which they received from HLI by virtue of constitutional issue tendered not being critical to the resolution
the SDP. of the case. The unyielding rule has been to avoid, whenever
plausible, an issue assailing the constitutionality of a statute or
It bears stressing that the application of the operative fact governmental act. If some other grounds exist by which
doctrine by the Court in its July 5, 2011 Decision is favorable to judgment can be made without touching the constitutionality
the FWBs because not only were the FWBs allowed to retain of a law, such recourse is favored. Garcia v. Executive Secretary
the benefits and homelots they received under the stock explains why:
distribution scheme, they were also given the option to choose
for themselves whether they want to remain as stockholders of Lis Mota — the fourth requirement to satisfy before this Court
HLI or not. This is in recognition of the fact that despite the will undertake judicial review — means that the Court will not
claims of certain farmer groups that they represent the pass upon a question of unconstitutionality, although properly
qualified FWBs in Hacienda Luisita, none of them can show that presented, if the case can be disposed of on some other
they are duly authorized to speak on their behalf. As We have ground, such as the application of the statute or the general
mentioned, "To date, such authorization document, which law. The petitioner must be able to show that the case cannot
would logically include a list of the names of the authorizing be legally resolved unless the constitutional question raised is
FWBs, has yet to be submitted to be part of the records." determined. This requirement is based on the rule that every
law has in its favor the presumption of constitutionality; to
II. Constitutionality of Sec. 31, RA 6657 justify its nullification, there must be a clear and unequivocal
breach of the Constitution, and not one that is doubtful,
FARM insists that the issue of constitutionality of Sec. 31 of RA speculative, or argumentative.
6657 is the lis mota of the case, raised at the earliest
opportunity, and not to be considered as moot and academic. 25 The lis mota in this case, proceeding from the basic positions
originally taken by AMBALA (to which the FARM members
This contention is unmeritorious. As We have succinctly previously belonged) and the Supervisory Group, is the alleged
discussed in Our July 5, 2011 Decision: non-compliance by HLI with the conditions of the SDP to
support a plea for its revocation. And before the Court, the lis
mota is whether or not PARC acted in grave abuse of discretion
While there is indeed an actual case or controversy, intervenor
when it ordered the recall of the SDP for such non-compliance
FARM, composed of a small minority of 27 farmers, has yet to
and the fact that the SDP, as couched and implemented,
explain its failure to challenge the constitutionality of Sec. 3l of
offends certain constitutional and statutory provisions. To be
RA 6657, since as early as November 21, l989 when PARC
sure, any of these key issues may be resolved without plunging
approved the SDP of Hacienda Luisita or at least within a
into the constitutionality of Sec. 31 of RA 6657. Moreover,
reasonable time thereafter and why its members received
looking deeply into the underlying petitions of AMBALA, et al.,
benefits from the SDP without so much of a protest. It was only
it is not the said section per se that is invalid, but rather it is the
on December 4, 2003 or 14 years after approval of the SDP via
alleged application of the said provision in the SDP that is
PARC Resolution No. 89-12-2 dated November 21, 1989 that
flawed.
said plan and approving resolution were sought to be revoked,
but not, to stress, by FARM or any of its members, but by
petitioner AMBALA. Furthermore, the AMBALA petition did It may be well to note at this juncture that Sec. 5 of RA 9700,
NOT question the constitutionality of Sec. 31 of RA 6657, but amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of
concentrated on the purported flaws and gaps in the RA 6657 vis-à-vis the stock distribution component of said Sec.
subsequent implementation of the SDP. Even the public 31. In its pertinent part, Sec. 5 of RA 9700 provides: "[T]hat
respondents, as represented by the Solicitor General, did not after June 30, 2009, the modes of acquisition shall be limited
question the constitutionality of the provision. On the other to voluntary offer to sell and compulsory acquisition." Thus, for
hand, FARM, whose 27 members formerly belonged to all intents and purposes, the stock distribution scheme under
AMBALA, raised the constitutionality of Sec. 31 only on May 3, Sec. 31 of RA 6657 is no longer an available option under
2007 when it filed its Supplemental Comment with the Court. existing law. The question of whether or not it is
Thus, it took FARM some eighteen (18) years from November unconstitutional should be a moot issue. (Citations omitted;
21, 1989 before it challenged the constitutionality of Sec. 31 of emphasis in the original.)
RA 6657 which is quite too late in the day. The FARM members
slept on their rights and even accepted benefits from the SDP Based on the foregoing disquisitions, We maintain that this
with nary a complaint on the alleged unconstitutionality of Sec. Court is NOT compelled to rule on the constitutionality of Sec.
31 upon which the benefits were derived. The Court cannot 31 of RA 6657. In this regard, We clarify that this Court, in its
now be goaded into resolving a constitutional issue that FARM July 5, 2011 Decision, made no ruling in favor of the
failed to assail after the lapse of a long period of time and the constitutionality of Sec. 31 of RA 6657. There was, however, a
occurrence of numerous events and activities which resulted determination of the existence of an apparent grave violation
from the application of an alleged unconstitutional legal of the Constitution that may justify the resolution of the issue
provision. of constitutionality, to which this Court ruled in the negative.
Having clarified this matter, all other points raised by both
It has been emphasized in a number of cases that the question FARM and AMBALA concerning the constitutionality of RA 6657
of constitutionality will not be passed upon by the Court unless deserve scant consideration.
it is properly raised and presented in an appropriate case at the
first opportunity. FARM is, therefore, remiss in belatedly III. Coverage of Compulsory Acquisition
questioning the constitutionality of Sec. 31 of RA 6657. The
second requirement that the constitutional question should be FARM argues that this Court ignored certain material facts
raised at the earliest possible opportunity is clearly wanting. when it limited the maximum area to be covered to 4,915.75
hectares, whereas the area that should, at the least, be covered
The last but the most important requisite that the is 6,443 hectares,26 which is the agricultural land allegedly
constitutional issue must be the very lis mota of the case does
covered by RA 6657 and previously held by Tarlac Development approval of the conversion to non-agricultural uses of 500
Corporation (Tadeco).27 hectares of the hacienda. In not too many words, the Report
and the resolution view the conversion as an infringement of
We cannot subscribe to this view. Since what is put in issue Sec. 5(a) of DAO 10 which reads: "a. that the continued
before the Court is the propriety of the revocation of the SDP, operation of the corporation with its agricultural land intact
which only involves 4,915.75 has. of agricultural land and not and unfragmented is viable with potential for growth and
6,443 has., then We are constrained to rule only as regards the increased profitability."
4,915.75 has. of agricultural land.
The PARC is wrong.
Moreover, as admitted by FARM itself, this issue was raised for
the first time by FARM in its Memorandum dated September In the first place, Sec. 5(a)––just like the succeeding Sec. 5(b) of
24, 2010 filed before this Court.28 In this regard, it should be DAO 10 on increased income and greater benefits to qualified
noted that "[a]s a legal recourse, the special civil action of beneficiaries––is but one of the stated criteria to guide PARC in
certiorari is a limited form of review." 29 The certiorari deciding on whether or not to accept an SDP. Said Sec. 5(a)
jurisdiction of this Court is narrow in scope as it is restricted to does not exact from the corporate landowner-applicant the
resolving errors of jurisdiction and grave abuse of discretion, undertaking to keep the farm intact and unfragmented ad
and not errors of judgment. 30 To allow additional issues at this infinitum. And there is logic to HLI’s stated observation that the
stage of the proceedings is violative of fair play, justice and due key phrase in the provision of Sec. 5(a) is "viability of corporate
process.31 operations": "[w]hat is thus required is not the agricultural land
remaining intact x x x but the viability of the corporate
Nonetheless, it should be taken into account that this should operations with its agricultural land being intact and
not prevent the DAR, under its mandate under the agrarian unfragmented. Corporate operation may be viable even if the
reform law, from subsequently subjecting to agrarian reform corporate agricultural land does not remain intact or
other agricultural lands originally held by Tadeco that were [un]fragmented."38
allegedly not transferred to HLI but were supposedly covered
by RA 6657. It is, of course, anti-climactic to mention that DAR viewed the
conversion as not violative of any issuance, let alone
DAR, however, contends that the declaration of the area 32 to be undermining the viability of Hacienda Luisita’s operation, as the
awarded to each FWB is too restrictive. It stresses that in DAR Secretary approved the land conversion applied for and its
agricultural landholdings like Hacienda Luisita, there are roads, disposition via his Conversion Order dated August 14, 1996
irrigation canals, and other portions of the land that are pursuant to Sec. 65 of RA 6657 which reads:
considered commonly-owned by farmworkers, and this may
necessarily result in the decrease of the area size that may be Sec. 65. Conversion of Lands.¾After the lapse of five years from
awarded per FWB.33 DAR also argues that the July 5, 2011 its award when the land ceases to be economically feasible and
Decision of this Court does not give it any leeway in adjusting sound for agricultural purposes, or the locality has become
the area that may be awarded per FWB in case the number of urbanized and the land will have a greater economic value for
actual qualified FWBs decreases.34 residential, commercial or industrial purposes, the DAR upon
application of the beneficiary or landowner with due notice to
The argument is meritorious. In order to ensure the proper the affected parties, and subject to existing laws, may authorize
distribution of the agricultural lands of Hacienda Luisita per the x x x conversion of the land and its dispositions. x x x
qualified FWB, and considering that matters involving strictly
the administrative implementation and enforcement of Moreover, it is worth noting that the application for conversion
agrarian reform laws are within the jurisdiction of the DAR, 35 it had the backing of 5,000 or so FWBs, including respondents
is the latter which shall determine the area with which each Rene Galang, and Jose Julio Suniga, then leaders of the
qualified FWB will be awarded. AMBALA and the Supervisory Group, respectively, as evidenced
by the Manifesto of Support they signed and which was
(a) Conversion of Agricultural Lands submitted to the DAR.39 If at all, this means that AMBALA
should be estopped from questioning the conversion of a
AMBALA insists that the conversion of the agricultural lands portion of Hacienda Luisita, which its leader has fully
violated the conditions of RA 6657 and DAO 10, stating that supported.
"keeping the land intact and unfragmented is one of the
essential conditions of [the] SD[P], RA 6657 and DAO 10." 36 It (b) LIPCO and RCBC as Innocent Purchasers for Value
asserts that "this provision or conditionality is not mere
decoration and is intended to ensure that the farmers can The AMBALA, Rene Galang and the FARM are in accord that
continue with the tillage of the soil especially since it is the only Rizal Commercial Banking Corporation (RCBC) and Luisita
occupation that majority of them knows." 37 Industrial Park Corporation (LIPCO) are not innocent purchasers
for value. The AMBALA, in particular, argues that LIPCO, being a
We disagree. As We amply discussed in Our July 5, 2011 wholly-owned subsidiary of HLI, is conclusively presumed to
Decision: have knowledge of the agrarian dispute on the subject land and
could not feign ignorance of this fact, especially since they have
Contrary to the almost parallel stance of the respondents, the same directors and stockholders.40 This is seconded by Rene
keeping Hacienda Luisita unfragmented is also not among the Galang and AMBALA, through the PILC, which intimate that a
imperative impositions by the SDP, RA 6657, and DAO 10. look at the General Information Sheets of the companies
involved in the transfers of the 300-hectare portion of
Hacienda Luisita, specifically, Centennary Holdings, Inc.
The Terminal Report states that the proposed distribution plan
(Centennary), LIPCO and RCBC, would readily reveal that their
submitted in 1989 to the PARC effectively assured the intended
directors are interlocked and connected to Tadeco and
stock beneficiaries that the physical integrity of the farm shall
HLI.41 Rene Galang and AMBALA, through the PILC, also allege
remain inviolate. Accordingly, the Terminal Report and the
that "with the clear-cut involvement of the leadership of all the
PARC-assailed resolution would take HLI to task for securing
corporations concerned, LIPCO and RCBC cannot feign question on their honest and well-founded belief that the
ignorance that the parcels of land they bought are under the previous registered owners could legally sell and convey the
coverage of the comprehensive agrarian reform program lots though these were previously subject of CARP coverage.
[CARP] and that the conditions of the respective sales are Ergo, RCBC and LIPCO acted in good faith in acquiring the
imbued with public interest where normal property relations in subject lots. (Emphasis supplied.)
the Civil Law sense do not apply."42
In the second place, the allegation that the converted lands
Avowing that the land subject of conversion still remains remain undeveloped is contradicted by the evidence on record,
undeveloped, Rene Galang and AMBALA, through the PILC, particularly, Annex "X" of LIPCO’s Memorandum dated
further insist that the condition that "[t]he development of the September 23, 2010,45 which has photographs showing that the
land should be completed within the period of five [5] years land has been partly developed.46 Certainly, it is a general rule
from the issuance of this Order" was not complied with. that the factual findings of administrative agencies are
AMBALA also argues that since RCBC and LIPCO merely stepped conclusive and binding on the Court when supported by
into the shoes of HLI, then they must comply with the substantial evidence.47However, this rule admits of certain
conditions imposed in the conversion order.43 exceptions, one of which is when the findings of fact are
premised on the supposed absence of evidence and
In addition, FARM avers that among the conditions attached to contradicted by the evidence on record.48
the conversion order, which RCBC and LIPCO necessarily have
knowledge of, are (a) that its approval shall in no way amend, In the third place, by arguing that the companies involved in
diminish, or alter the undertaking and obligations of HLI as the transfers of the 300-hectare portion of Hacienda Luisita
contained in the [SDP] approved on November 21, 1989; and have interlocking directors and, thus, knowledge of one may
(b) that the benefits, wages and the like, received by the FWBs already be imputed upon all the other companies, AMBALA and
shall not in any way be reduced or adversely affected, among Rene Galang, in effect, want this Court to pierce the veil of
others.44 corporate fiction. However, piercing the veil of corporate
fiction is warranted "only in cases when the separate legal
The contentions of respondents are wanting. In the first place, entity is used to defeat public convenience, justify wrong,
there is no denying that RCBC and LIPCO knew that the protect fraud, or defend crime, such that in the case of two
converted lands they bought were under the coverage of CARP. corporations, the law will regard the corporations as merged
Nevertheless, as We have mentioned in Our July 5, 2011 into one."49 As succinctly discussed by the Court in Velarde v.
Decision, this does not necessarily mean that both LIPCO and Lopez, Inc.:50
RCBC already acted in bad faith in purchasing the converted
lands. As this Court explained: Petitioner argues nevertheless that jurisdiction over the
subsidiary is justified by piercing the veil of corporate fiction.
It cannot be claimed that RCBC and LIPCO acted in bad faith in Piercing the veil of corporate fiction is warranted, however,
acquiring the lots that were previously covered by the SDP. only in cases when the separate legal entity is used to defeat
Good faith "consists in the possessor’s belief that the person public convenience, justify wrong, protect fraud, or defend
from whom he received it was the owner of the same and crime, such that in the case of two corporations, the law will
could convey his title. Good faith requires a well-founded belief regard the corporations as merged into one. The rationale
that the person from whom title was received was himself the behind piercing a corporation’s identity is to remove the barrier
owner of the land, with the right to convey it. There is good between the corporation from the persons comprising it to
faith where there is an honest intention to abstain from taking thwart the fraudulent and illegal schemes of those who use the
any unconscientious advantage from another." It is the corporate personality as a shield for undertaking certain
opposite of fraud. proscribed activities.

To be sure, intervenor RCBC and LIPCO knew that the lots they In applying the doctrine of piercing the veil of corporate fiction,
bought were subjected to CARP coverage by means of a stock the following requisites must be established: (1) control, not
distribution plan, as the DAR conversion order was annotated merely majority or complete stock control; (2) such control
at the back of the titles of the lots they acquired. However, must have been used by the defendant to commit fraud or
they are of the honest belief that the subject lots were validly wrong, to perpetuate the violation of a statutory or other
converted to commercial or industrial purposes and for which positive legal duty, or dishonest acts in contravention of
said lots were taken out of the CARP coverage subject of PARC plaintiff’s legal rights; and (3) the aforesaid control and breach
Resolution No. 89-12-2 and, hence, can be legally and validly of duty must proximately cause the injury or unjust loss
acquired by them. After all, Sec. 65 of RA 6657 explicitly allows complained of. (Citations omitted.)
conversion and disposition of agricultural lands previously
covered by CARP land acquisition "after the lapse of five (5) Nowhere, however, in the pleadings and other records of the
years from its award when the land ceases to be economically case can it be gathered that respondent has complete control
feasible and sound for agricultural purposes or the locality has over Sky Vision, not only of finances but of policy and business
become urbanized and the land will have a greater economic practice in respect to the transaction attacked, so that Sky
value for residential, commercial or industrial purposes." Vision had at the time of the transaction no separate mind, will
Moreover, DAR notified all the affected parties, more or existence of its own. The existence of interlocking directors,
particularly the FWBs, and gave them the opportunity to corporate officers and shareholders is not enough justification
comment or oppose the proposed conversion. DAR, after going to pierce the veil of corporate fiction in the absence of fraud or
through the necessary processes, granted the conversion of other public policy considerations.
500 hectares of Hacienda Luisita pursuant to its primary
jurisdiction under Sec. 50 of RA 6657 to determine and Absent any allegation or proof of fraud or other public policy
adjudicate agrarian reform matters and its original exclusive considerations, the existence of interlocking directors, officers
jurisdiction over all matters involving the implementation of and stockholders is not enough justification to pierce the veil of
agrarian reform. The DAR conversion order became final and corporate fiction as in the instant case.
executory after none of the FWBs interposed an appeal to the
CA. In this factual setting, RCBC and LIPCO purchased the lots in
And in the fourth place, the fact that this Court, in its July 5, claim. Since the SDP approved by PARC Resolution No. 89-12-2
2011 Decision, ordered the payment of the proceeds of the sale has been nullified, then all the lands subject of the SDP will
of the converted land, and even of the 80.51-hectare land sold automatically be subject of compulsory coverage under Sec. 31
to the government, through the Bases Conversion of RA 6657. Since the Court excluded the 500-hectare lot
Development Authority, to the qualified FWBs, effectively fulfils subject of the August 14, 1996 Conversion Order and the 80.51-
the conditions in the conversion order, to wit: (1) that its hectare SCTEX lot acquired by the government from the area
approval shall in no way amend, diminish, or alter the covered by SDP, then HLI and its subsidiary, Centennary, shall
undertaking and obligations of HLI as contained in the SDP be liable to the FWBs for the price received for said lots. HLI
approved on November 21, 1989; and (2) that the benefits, shall be liable for the value received for the sale of the 200-
wages and the like, received by the FWBs shall not in any way hectare land to LRC in the amount of PhP 500,000,000 and the
be reduced or adversely affected, among others. equivalent value of the 12,000,000 shares of its subsidiary,
Centennary, for the 300-hectare lot sold to LIPCO for the
A view has also been advanced that the 200-hectare lot consideration of PhP 750,000,000. Likewise, HLI shall be liable
transferred to Luisita Realty Corporation (LRC) should be for PhP 80,511,500 as consideration for the sale of the 80.51-
included in the compulsory coverage because the corporation hectare SCTEX lot.
did not intervene.
We, however, note that HLI has allegedly paid 3% of the
We disagree. Since the 200-hectare lot formed part of the SDP proceeds of the sale of the 500-hectare land and 80.51-hectare
that was nullified by PARC Resolution 2005-32-01, this Court is SCTEX lot to the FWBs. We also take into account the payment
constrained to make a ruling on the rights of LRC over the said of taxes and expenses relating to the transfer of the land and
lot. Moreover, the 500-hectare portion of Hacienda Luisita, of HLI’s statement that most, if not all, of the proceeds were used
which the 200-hectare portion sold to LRC and the 300-hectare for legitimate corporate purposes. In order to determine once
portion subsequently acquired by LIPCO and RCBC were part of, and for all whether or not all the proceeds were properly
was already the subject of the August 14, 1996 DAR Conversion utilized by HLI and its subsidiary, Centennary, DAR will engage
Order. By virtue of the said conversion order, the land was the services of a reputable accounting firm to be approved by
already reclassified as industrial/commercial land not subject to the parties to audit the books of HLI to determine if the
compulsory coverage. Thus, if We place the 200-hectare lot proceeds of the sale of the 500-hectare land and the 80.51-
sold to LRC under compulsory coverage, this Court would, in hectare SCTEX lot were actually used for legitimate corporate
effect, be disregarding the DAR Conversion Order, which has purposes, titling expenses and in compliance with the August
long attained its finality. And as this Court held in Berboso v. 14, 1996 Conversion Order. The cost of the audit will be
CA,51 "Once final and executory, the Conversion Order can no shouldered by HLI. If after such audit, it is determined that
longer be questioned." Besides, to disregard the Conversion there remains a balance from the proceeds of the sale, then
Order through the revocation of the approval of the SDP would the balance shall be distributed to the qualified FWBs.
create undue prejudice to LRC, which is not even a party to the
proceedings below, and would be tantamount to deprivation of HLI, however, takes exception to the above-mentioned ruling
property without due process of law. and contends that it is not proper to distribute the unspent or
unused balance of the proceeds of the sale of the 500-hectare
Nonethess, the minority is of the adamant view that since LRC converted land and 80.51-hectare SCTEX lot to the qualified
failed to intervene in the instant case and was, therefore, FWBs for the following reasons: (1) the proceeds of the sale
unable to present evidence supporting its good faith purchase belong to the corporation, HLI, as corporate capital and assets
of the 200-hectare converted land, then LRC should be given in substitution for the portions of its land asset which were sold
full opportunity to present its case before the DAR. This to third parties; (2) to distribute the cash sales proceeds of the
minority view is a contradiction in itself. Given that LRC did not portions of the land asset to the FWBs, who are stockholders of
intervene and is, therefore, not a party to the instant case, then HLI, is to dissolve the corporation and distribute the proceeds
it would be incongruous to order them to present evidence as liquidating dividends without even paying the creditors of
before the DAR. Such an order, if issued by this Court, would the corporation; and (3) the doing of said acts would violate the
not be binding upon the LRC. stringent provisions of the Corporation Code and corporate
practice.52
Moreover, LRC may be considered to have waived its right to
participate in the instant petition since it did not intervene in Apparently, HLI seeks recourse to the Corporation Code in
the DAR proceedings for the nullification of the PARC order to avoid its liability to the FWBs for the price received for
Resolution No. 89-12-2 which approved the SDP. the 500-hectare converted lot and the 80.51-hectare SCTEX lot.
However, as We have established in Our July 5, 2011 Decision,
(c) Proceeds of the sale of the 500-hectare converted land the rights, obligations and remedies of the parties in the instant
case are primarily governed by RA 6657 and HLI cannot shield
itself from the CARP coverage merely under the convenience of
and of the 80.51-hectare land used for the SCTEX
being a corporate entity. In this regard, it should be
underscored that the agricultural lands held by HLI by virtue of
As previously mentioned, We ruled in Our July 5, 2011 Decision the SDP are no ordinary assets. These are special assets,
that since the Court excluded the 500-hectare lot subject of the because, originally, these should have been distributed to the
August 14, 1996 Conversion Order and the 80.51-hectare SCTEX FWBs were it not for the approval of the SDP by PARC. Thus,
lot acquired by the government from compulsory coverage, the government cannot renege on its responsibility over these
then HLI and its subsidiary, Centennary, should be liable to the assets. Likewise, HLI is no ordinary corporation as it was formed
FWBs for the price received for said lots. Thus: and organized precisely to make use of these agricultural lands
actually intended for distribution to the FWBs. Thus, it cannot
There is a claim that, since the sale and transfer of the 500 shield itself from the coverage of CARP by invoking the
hectares of land subject of the August 14, 1996 Conversion Corporation Code. As explained by the Court:
Order and the 80.51-hectare SCTEX lot came after compulsory
coverage has taken place, the FWBs should have their HLI also parlays the notion that the parties to the SDOA should
corresponding share of the land’s value. There is merit in the now look to the Corporation Code, instead of to RA 6657, in
determining their rights, obligations and remedies. The Code, it audit to reduce the burden on the part of the FWBs.
adds, should be the applicable law on the disposition of the Concomitantly, the legitimate corporate expenses incurred by
agricultural land of HLI. HLI and Centennary, as will be determined by a reputable
accounting firm to be engaged by DAR, shall be among the
Contrary to the view of HLI, the rights, obligations and allowable deductions from the proceeds of the sale of the 500-
remedies of the parties to the SDOA embodying the SDP are hectare land and the 80.51-hectare SCTEX lot.
primarily governed by RA 6657. It should abundantly be made
clear that HLI was precisely created in order to comply with RA We, however, find that the 3% production share should not be
6657, which the OSG aptly described as the "mother law" of deducted from the proceeds of the sale of the 500-hectare
the SDOA and the SDP.53 It is, thus, paradoxical for HLI to converted land and the 80.51-hectare SCTEX lot. The 3%
shield itself from the coverage of CARP by invoking exclusive production share, like the homelots, was among the benefits
applicability of the Corporation Code under the guise of being received by the FWBs as farmhands in the agricultural
a corporate entity. enterprise of HLI and, thus, should not be taken away from the
FWBs.
Without in any way minimizing the relevance of the
Corporation Code since the FWBs of HLI are also stockholders, Contrarily, the minority is of the view that as a consequence of
its applicability is limited as the rights of the parties arising the revocation of the SDP, the parties should be restored to
from the SDP should not be made to supplant or circumvent their respective conditions prior to its execution and approval,
the agrarian reform program. subject to the application of the principle of set-off or
compensation. Such view is patently misplaced.
Without doubt, the Corporation Code is the general law
providing for the formation, organization and regulation of The law on contracts, i.e. mutual restitution, does not apply to
private corporations. On the other hand, RA 6657 is the special the case at bar. To reiterate, what was actually revoked by this
law on agrarian reform. As between a general and special law, Court, in its July 5, 2011 Decision, is PARC Resolution No. 89-12-
the latter shall prevail—generalia specialibus non 2 approving the SDP. To elucidate, it was the SDP, not the
derogant.54 Besides, the present impasse between HLI and the SDOA, which was presented for approval by Tadeco to
private respondents is not an intra-corporate dispute which DAR.56 The SDP explained the mechanics of the stock
necessitates the application of the Corporation Code. What distribution but did not make any reference nor correlation to
private respondents questioned before the DAR is the proper the SDOA. The pertinent portions of the proposal read:
implementation of the SDP and HLI’s compliance with RA 6657.
Evidently, RA 6657 should be the applicable law to the instant MECHANICS OF STOCK DISTRIBUTION PLAN
case. (Emphasis supplied.)
Under Section 31 of Republic Act No. 6657, a corporation
Considering that the 500-hectare converted land, as well as the owning agricultural land may distribute among the qualified
80.51-hectare SCTEX lot, should have been included in the beneficiaries such proportion or percentage of its capital stock
compulsory coverage were it not for their conversion and valid that the value of the agricultural land actually devoted to
transfers, then it is only but proper that the price received for agricultural activities, bears in relation to the corporation’s
the sale of these lots should be given to the qualified FWBs. In total assets. Conformably with this legal provision, Tarlac
effect, the proceeds from the sale shall take the place of the Development Corporation hereby submits for approval a stock
lots. distribution plan that envisions the following: 57 (Terms and
conditions omitted; emphasis supplied)
The Court, in its July 5, 2011 Decision, however, takes into
account, inter alia, the payment of taxes and expenses relating xxxx
to the transfer of the land, as well as HLI’s statement that most,
if not all, of the proceeds were used for legitimate corporate The above stock distribution plan is hereby submitted on the
purposes. Accordingly, We ordered the deduction of the taxes basis of all these benefits that the farmworker-beneficiaries of
and expenses relating to the transfer of titles to the Hacienda Luisita will receive under its provisions in addition to
transferees, and the expenditures incurred by HLI and their regular compensation as farmhands in the agricultural
Centennary for legitimate corporate purposes, among others. enterprise and the fringe benefits granted to them by their
collective bargaining agreement with management. 58
On this note, DAR claims that the "[l]egitimate corporate
expenses should not be deducted as there is no basis for it, Also, PARC Resolution No. 89-12-2 reads as follows:
especially since only the auditing to be conducted on the
financial records of HLI will reveal the amounts to be offset
RESOLUTION APPROVING THE STOCK
between HLI and the FWBs."55
DISTRIBUTION PLAN OF TARLAC
DEVELOPMENT COMPANY/HACIENDA
The contention is unmeritorious. The possibility of an offsetting LUISITA INCORPORATED (TDC/HLI)
should not prevent Us from deducting the legitimate corporate
expenses incurred by HLI and Centennary. After all, the Court
NOW THEREFORE, on motion duly seconded,
has ordered for a proper auditing "[i]n order to determine once
and for all whether or not all the proceeds were properly
RESOLVED, as it is hereby resolved, to
utilized by HLI and its subsidiary, Centennary." In this regard,
approve the stock distribution plan of
DAR is tasked to "engage the services of a reputable accounting
TDC/HLI.
firm to be approved by the parties to audit the books of HLI to
determine if the proceeds of the sale of the 500-hectare land
and the 80.51-hectare SCTEX lot were actually used for UNANIMOUSLY APPROVED.59 (Emphasis
legitimate corporate purposes, titling expenses and in supplied)
compliance with the August 14, 1996 Conversion Order." Also,
it should be noted that it is HLI which shall shoulder the cost of
Clearly, what was approved by PARC is the SDP and not the function to put every effort to arrive at an equitable solution
SDOA. There is, therefore, no basis for this Court to apply the for all parties concerned: the jural postulates of social justice
law on contracts to the revocation of the said PARC Resolution. cannot shield illegal acts, nor do they sanction false sympathy
towards a certain class, nor yet should they deny justice to the
IV. Just Compensation landowner whenever truth and justice happen to be on her
side. In the occupation of the legal questions in all agrarian
In Our July 5, 2011 Decision, We stated that "HLI shall be paid disputes whose outcomes can significantly affect societal
just compensation for the remaining agricultural land that will harmony, the considerations of social advantage must be
be transferred to DAR for land distribution to the FWBs." We weighed, an inquiry into the prevailing social interests is
also ruled that the date of the "taking" is November 21, 1989, necessary in the adjustment of conflicting demands and
when PARC approved HLI’s SDP per PARC Resolution No. 89-12- expectations of the people, and the social interdependence of
2. these interests, recognized. (Emphasis supplied.)

In its Motion for Clarification and Partial Reconsideration, HLI The minority contends that it is the date of the notice of
disagrees with the foregoing ruling and contends that the coverage, that is, January 2, 2006, which is determinative of the
"taking" should be reckoned from finality of the Decision of this just compensation HLI is entitled to for its expropriated lands.
Court, or at the very least, the reckoning period may be tacked To support its contention, it cited numerous cases where the
to January 2, 2006, the date when the Notice of Coverage was time of the taking was reckoned on the date of the issuance of
issued by the DAR pursuant to PARC Resolution No. 2006-34-01 the notice of coverage.
recalling/revoking the approval of the SDP.60
However, a perusal of the cases cited by the minority would
For their part, Mallari, et al. argue that the valuation of the land reveal that none of them involved the stock distribution
cannot be based on November 21, 1989, the date of approval scheme. Thus, said cases do not squarely apply to the instant
of the SDP. Instead, they aver that the date of "taking" for case. Moreover, it should be noted that it is precisely because
valuation purposes is a factual issue best left to the the stock distribution option is a distinctive mechanism under
determination of the trial courts.61 RA 6657 that it cannot be treated similarly with that of
compulsory land acquisition as these are two (2) different
modalities under the agrarian reform program. As We have
At the other end of the spectrum, AMBALA alleges that HLI
stated in Our July 5, 2011 Decision, RA 6657 "provides two (2)
should no longer be paid just compensation for the agricultural
alternative modalities, i.e., land or stock transfer, pursuant to
land that will be distributed to the FWBs, since the Manila
either of which the corporate landowner can comply with
Regional Trial Court (RTC) already rendered a decision ordering
CARP."
"the Cojuangcos to transfer the control of Hacienda Luisita to
the Ministry of Agrarian Reform, which will distribute the land
to small farmers after compensating the landowners P3.988 In this regard, it should be noted that when HLI submitted the
million."62 In the event, however, that this Court will rule that SDP to DAR for approval, it cannot be gainsaid that the stock
HLI is indeed entitled to compensation, AMBALA contends that distribution scheme is clearly HLI’s preferred modality in order
it should be pegged at forty thousand pesos (PhP 40,000) per to comply with CARP. And when the SDP was approved, stocks
hectare, since this was the same value that Tadeco declared in were given to the FWBs in lieu of land distribution. As aptly
1989 to make sure that the farmers will not own the majority observed by the minority itself, "[i]nstead of expropriating
of its stocks.63 lands, what the government took and distributed to the FWBs
were shares of stock of petitioner HLI in proportion to the value
of the agricultural lands that should have been expropriated
Despite the above propositions, We maintain that the date of
and turned over to the FWBs." It cannot, therefore, be denied
"taking" is November 21, 1989, the date when PARC approved
that upon the approval of the SDP submitted by HLI, the
HLI’s SDP per PARC Resolution No. 89-12-2, in view of the fact
agricultural lands of Hacienda Luisita became subject of CARP
that this is the time that the FWBs were considered to own and
coverage. Evidently, the approval of the SDP took the place of a
possess the agricultural lands in Hacienda Luisita. To be precise,
notice of coverage issued under compulsory acquisition.
these lands became subject of the agrarian reform coverage
through the stock distribution scheme only upon the approval
of the SDP, that is, November 21, 1989. Thus, such approval is Also, it is surprising that while the minority opines that under
akin to a notice of coverage ordinarily issued under compulsory the stock distribution option, "title to the property remains
acquisition. Further, any doubt should be resolved in favor of with the corporate landowner, which should presumably be
the FWBs. As this Court held in Perez-Rosario v. CA: 64 dominated by farmers with majority stockholdings in the
corporation," it still insists that the just compensation that
should be given to HLI is to be reckoned on January 2, 2006, the
It is an established social and economic fact that the escalation
date of the issuance of the notice of coverage, even after it
of poverty is the driving force behind the political disturbances
found that the FWBs did not have the majority stockholdings in
that have in the past compromised the peace and security of
HLI contrary to the supposed avowed policy of the law. In
the people as well as the continuity of the national order. To
effect, what the minority wants is to prejudice the FWBs twice.
subdue these acute disturbances, the legislature over the
Given that the FWBs should have had majority stockholdings in
course of the history of the nation passed a series of laws
HLI but did not, the minority still wants the government to pay
calculated to accelerate agrarian reform, ultimately to raise the
higher just compensation to HLI. Even if it is the government
material standards of living and eliminate discontent. Agrarian
which will pay the just compensation to HLI, this will also affect
reform is a perceived solution to social instability. The edicts of
the FWBs as they will be paying higher amortizations to the
social justice found in the Constitution and the public policies
government if the "taking" will be considered to have taken
that underwrite them, the extraordinary national experience,
place only on January 2, 2006.
and the prevailing national consciousness, all command the
great departments of government to tilt the balance in favor of
the poor and underprivileged whenever reasonable doubt The foregoing notwithstanding, it bears stressing that the DAR's
arises in the interpretation of the law. But annexed to the great land valuation is only preliminary and is not, by any means,
and sacred charge of protecting the weak is the diametric 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 1. Those executed by the original landowner in favor of the
to review with finality the determination in the exercise of qualified beneficiary from among those certified by DAR.
what is admittedly a judicial function.65
2. Those in favor of the government, DAR or the Land Bank of
A view has also been advanced that HLI should pay the the Philippines.
qualified FWBs rental for the use and possession of the land up
to the time it surrenders possession and control over these 3. Those covering lands retained by the landowner under
lands. What this view fails to consider is the fact that the FWBs Section 6 of R.A. 6657 duly certified by the designated DAR
are also stockholders of HLI prior to the revocation of PARC Provincial Agrarian Reform Officer (PARO) as a retention area,
Resolution No. 89-12-2. Also, the income earned by the executed in favor of transferees whose total landholdings
corporation from its possession and use of the land ultimately inclusive of the land to be acquired do not exceed five (5)
redounded to the benefit of the FWBs based on its business hectares; subject, however, to the right of pre-emption and/or
operations in the form of salaries, benefits voluntarily granted redemption of tenant/lessee under Section 11 and 12 of R.A.
by HLI and other fringe benefits under their Collective 3844, as amended.
Bargaining Agreement. That being so, there would be unjust
enrichment on the part of the FWBs if HLI will still be required xxxx
to pay rent for the use of the land in question.
4. Those executed by beneficiaries covering lands acquired
V. Sale to Third Parties under any agrarian reform law in favor of the government,
DAR, LBP or other qualified beneficiaries certified by DAR.
There is a view that since the agricultural lands in Hacienda
Luisita were placed under CARP coverage through the SDOA 5. Those executed after ten (10) years from the issuance and
scheme on May 11, 1989, then the 10-year period prohibition registration of the Emancipation Patent or Certificate of Land
on the transfer of awarded lands under RA 6657 lapsed on May Ownership Award.
10, 1999, and, consequently, the qualified FWBs should already
be allowed to sell these lands with respect to their land
B. The following transactions are not valid:
interests to third parties, including HLI, regardless of whether
they have fully paid for the lands or not.
1. Sale, disposition, lease management contract or transfer of
possession of private lands executed by the original landowner
The proposition is erroneous. Sec. 27 of RA 6657 states:
prior to June 15, 1988, which are registered on or before
September 13, 1988, or those executed after June 15, 1988,
SEC. 27. Transferability of Awarded Lands. - Lands acquired by covering an area in excess of the five-hectare retention limit in
beneficiaries under this Act may not be sold, transferred or violation of R.A. 6657.
conveyed except through hereditary succession, or to the
government, or to the LBP, or to other qualified beneficiaries
2. Those covering lands acquired by the beneficiary under R.A.
for a period of ten (10) years: Provided, however, That the
6657 and executed within ten (10) years from the issuance and
children or the spouse of the transferor shall have a right to
registration of an Emancipation Patent or Certificate of Land
repurchase the land from the government or LBP within a
Ownership Award.
period of two (2) years. Due notice of the availability of the
land shall be given by the LBP to the Barangay Agrarian Reform
3. Those executed in favor of a person or persons not qualified
Committee (BARC) of the barangay where the land is situated.
to acquire land under R.A. 6657.
The Provincial Agrarian Coordinating Committee (PARCCOM),
as herein provided, shall, in turn, be given due notice thereof
by the BARC. 4. Sale, transfer, conveyance or change of nature of the land
outside of urban centers and city limits either in whole or in
part as of June 15, 1988, when R.A. 6657 took effect, except as
If the land has not yet been fully paid by the beneficiary, the
provided for under DAR Administrative Order No. 15, series of
right to the land may be transferred or conveyed, with prior
1988.
approval of the DAR, to any heir of the beneficiary or to any
other beneficiary who, as a condition for such transfer or
conveyance, shall cultivate the land himself. Failing compliance 5. Sale, transfer or conveyance by beneficiary of the right to use
herewith, the land shall be transferred to the LBP which shall or any other usufructuary right over the land he acquired by
give due notice of the availability of the land in the manner virtue of being a beneficiary, in order to circumvent the law.
specified in the immediately preceding paragraph.
x x x x (Emphasis supplied.)
In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the amounts Without a doubt, under RA 6657 and DAO 1, the awarded lands
the latter has already paid, together with the value of may only be transferred or conveyed after ten (10) years from
improvements he has made on the land. (Emphasis supplied.) the issuance and registration of the emancipation patent (EP)
or certificate of land ownership award (CLOA). Considering that
To implement the above-quoted provision, inter alia, DAR the EPs or CLOAs have not yet been issued to the qualified
issued Administrative Order No. 1, Series of 1989 (DAO 1) FWBs in the instant case, the 10-year prohibitive period has not
entitled Rules and Procedures Governing Land Transactions. even started. Significantly, the reckoning point is the issuance
Said Rules set forth the rules on validity of land transactions, to of the EP or CLOA, and not the placing of the agricultural lands
wit: under CARP coverage.

II. RULES ON VALIDITY OF LAND TRANSACTIONS Moreover, if We maintain the position that the qualified FWBs
should be immediately allowed the option to sell or convey the
agricultural lands in Hacienda Luisita, then all efforts at agrarian
A. The following transactions are valid:
reform would be rendered nugatory by this Court, since, at the
end of the day, these lands will just be transferred to persons legislation. For whether a statute is wise or expedient is not for
not entitled to land distribution under CARP. As aptly noted by the courts to determine. Courts must administer the law, not as
the late Senator Neptali Gonzales during the Joint they think it ought to be but as they find it and without regard
Congressional Conference Committee on the Comprehensive to consequences.71 (Emphasis supplied.)
Agrarian Reform Program Bills:
And as aptly stated by Chief Justice Renato Corona in his
SEN. GONZALES. My point is, as much as possible let the said Dissenting Opinion in Ang Ladlad LGBT Party v. COMELEC: 72
lands be distributed under CARP remain with the beneficiaries
and their heirs because that is the lesson that we have to learn Regardless of the personal beliefs and biases of its individual
from PD No. 27. If you will talk with the Congressmen members, this Court can only apply and interpret the
representing Nueva Ecija, Pampanga and Central Luzon Constitution and the laws. Its power is not to create policy but
provinces, law or no law, you will find out that more than one- to recognize, review or reverse the policy crafted by the
third of the original, of the lands distributed under PD 27 are no political departments if and when a proper case is brought
longer owned, possessed or being worked by the grantees or before it. Otherwise, it will tread on the dangerous grounds of
the awardees of the same, something which we ought to avoid judicial legislation.
under the CARP bill that we are going to enact. 66 (Emphasis
supplied.) Considerably, this Court is left with no other recourse but to
respect and apply the law.
Worse, by raising that the qualified beneficiaries may sell their
interest back to HLI, this smacks of outright indifference to the VI. Grounds for Revocation of the SDP
provision on retention limits67 under RA 6657, as this Court, in
effect, would be allowing HLI, the previous landowner, to own
AMBALA and FARM reiterate that improving the economic
more than five (5) hectares of agricultural land, which We
status of the FWBs is among the legal obligations of HLI under
cannot countenance. There is a big difference between the
the SDP and is an imperative imposition by RA 6657 and DAO
ownership of agricultural lands by HLI under the stock
10.73 FARM further asserts that "[i]f that minimum threshold is
distribution scheme and its eventual acquisition of the
not met, why allow [stock distribution option] at all, unless the
agricultural lands from the qualified FWBs under the proposed
purpose is not social justice but a political accommodation to
buy-back scheme. The rule on retention limits does not apply to
the powerful."74
the former but only to the latter in view of the fact that the
stock distribution scheme is sanctioned by Sec. 31 of RA 6657,
Contrary to the assertions of AMBALA and FARM, nowhere in
which specifically allows corporations to divest a proportion of
the SDP, RA 6657 and DAO 10 can it be inferred that improving
their capital stock that "the agricultural land, actually devoted
the economic status of the FWBs is among the legal obligations
to agricultural activities, bears in relation to the company’s
of HLI under the SDP or is an imperative imposition by RA 6657
total assets." On the other hand, no special rules exist under RA
and DAO 10, a violation of which would justify discarding the
6657 concerning the proposed buy-back scheme; hence, the
stock distribution option. As We have painstakingly explained in
general rules on retention limits should apply.
Our July 5, 2011 Decision:
Further, the position that the qualified FWBs are now free to
In the Terminal Report adopted by PARC, it is stated that the
transact with third parties concerning their land interests,
SDP violates the agrarian reform policy under Sec. 2 of RA 6657,
regardless of whether they have fully paid for the lands or not,
as the said plan failed to enhance the dignity and improve the
also transgresses the second paragraph of Sec. 27 of RA 6657,
quality of lives of the FWBs through greater productivity of
which plainly states that "[i]f the land has not yet been fully
agricultural lands. We disagree.
paid by the beneficiary, the right to the land may be transferred
or conveyed, with prior approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who, as a condition for Sec. 2 of RA 6657 states:
such transfer or conveyance, shall cultivate the land himself.
Failing compliance herewith, the land shall be transferred to SECTION 2. Declaration of Principles and Policies.¾It is the
the LBP x x x." When the words and phrases in the statute are policy of the State to pursue a Comprehensive Agrarian Reform
clear and unequivocal, the law is applied according to its Program (CARP). The welfare of the landless farmers and farm
express terms.68 Verba legis non est recedendum, or from the workers will receive the highest consideration to promote
words of a statute there should be no departure.69 social justice and to move the nation towards sound rural
development and industrialization, and the establishment of
The minority, however, posits that "[t]o insist that the FWBs’ owner cultivatorship of economic-sized farms as the basis of
rights sleep for a period of ten years is unrealistic, and may Philippine agriculture.
seriously deprive them of real opportunities to capitalize and
maximize the victory of direct land distribution." By insisting To this end, a more equitable distribution and ownership of
that We disregard the ten-year restriction under the law in the land, with due regard to the rights of landowners to just
case at bar, the minority, in effect, wants this Court to engage compensation and to the ecological needs of the nation, shall
in judicial legislation, which is violative of the principle of be undertaken to provide farmers and farm workers with the
separation of powers.70 The discourse by Ruben E. Agpalo, in his opportunity to enhance their dignity and improve the quality of
book on statutory construction, is enlightening: their lives through greater productivity of agricultural lands.

Where the law is clear and unambiguous, it must be taken to The agrarian reform program is founded on the right of farmers
mean exactly what it says and the court has no choice but to and regular farm workers, who are landless, to own directly or
see to it that its mandate is obeyed. Where the law is clear and collectively the lands they till or, in the case of other farm
free from doubt or ambiguity, there is no room for construction workers, to receive a share of the fruits thereof. To this end,
or interpretation. Thus, where what is not clearly provided in the State shall encourage the just distribution of all agricultural
the law is read into the law by construction because it is more lands, subject to the priorities and retention limits set forth in
logical and wise, it would be to encroach upon legislative this Act, having taken into account ecological, developmental,
prerogative to define the wisdom of the law, which is judicial and equity considerations, and subject to the payment of just
compensation. The State shall respect the right of small a farmworker beneficiary has been awarded with an
landowners and shall provide incentives for voluntary land- agricultural land, he just subsequently sells it and is eventually
sharing. left with nothing in the end.

Paragraph 2 of the above-quoted provision specifically In all then, the onerous condition of the FWBs’ economic
mentions that "a more equitable distribution and ownership of status, their life of hardship, if that really be the case, can
land x x x shall be undertaken to provide farmers and farm hardly be attributed to HLI and its SDP and provide a valid
workers with the opportunity to enhance their dignity and ground for the plan’s revocation. (Citations omitted; emphasis
improve the quality of their lives through greater productivity in the original.)
of agricultural lands." Of note is the term "opportunity" which
is defined as a favorable chance or opening offered by This Court, despite the above holding, still affirmed the
circumstances. Considering this, by no stretch of imagination revocation by PARC of its approval of the SDP based on the
can said provision be construed as a guarantee in improving the following grounds: (1) failure of HLI to fully comply with its
lives of the FWBs. At best, it merely provides for a possibility or undertaking to distribute homelots to the FWBs under the SDP;
favorable chance of uplifting the economic status of the FWBs, (2) distribution of shares of stock to the FWBs based on the
which may or may not be attained. number of "man days" or "number of days worked" by the FWB
in a year’s time; and (3) 30-year timeframe for the
Pertinently, improving the economic status of the FWBs is implementation or distribution of the shares of stock to the
neither among the legal obligations of HLI under the SDP nor an FWBs.
imperative imposition by RA 6657 and DAO 10, a violation of
which would justify discarding the stock distribution option. Just the same, Mallari, et al. posit that the homelots required
Nothing in that option agreement, law or department order to be distributed have all been distributed pursuant to the
indicates otherwise. SDOA, and that what merely remains to be done is the release
of title from the Register of Deeds. 76 They further assert that
Significantly, HLI draws particular attention to its having paid its there has been no dilution of shares as the corporate records
FWBs, during the regime of the SDP (1989-2005), some PhP 3 would show that if ever not all of the 18,804.32 shares were
billion by way of salaries/wages and higher benefits exclusive of given to the actual original FWB, the recipient of the difference
free hospital and medical benefits to their immediate family. is the next of kin or children of said original FWB. 77 Thus, they
And attached as Annex "G" to HLI’s Memorandum is the submit that since the shares were given to the same "family
certified true report of the finance manager of Jose Cojuangco beneficiary," this should be deemed as substantial compliance
& Sons Organizations-Tarlac Operations, captioned as with the provisions of Sec. 4 of DAO 10. 78 Also, they argue that
"HACIENDA LUISITA, INC. Salaries, Benefits and Credit Privileges there has been no violation of the three-month period to
(in Thousand Pesos) Since the Stock Option was Approved by implement the SDP as mandated by Sec. 11 of DAO, since this
PARC/CARP," detailing what HLI gave their workers from 1989 provision must be read in light of Sec. 10 of Executive Order No.
to 2005. The sum total, as added up by the Court, yields the 229, the pertinent portion of which reads, "The approval by the
following numbers: Total Direct Cash Out (Salaries/Wages & PARC of a plan for such stock distribution, and its initial
Cash Benefits) = PhP 2,927,848; Total Non-Direct Cash Out implementation, shall be deemed compliance with the land
(Hospital/Medical Benefits) = PhP 303,040. The cash out distribution requirement of the CARP." 79
figures, as stated in the report, include the cost of homelots;
the PhP 150 million or so representing 3% of the gross produce Again, the matters raised by Mallari, et al. have been
of the hacienda; and the PhP 37.5 million representing 3% from extensively discussed by the Court in its July 5, 2011 Decision.
the proceeds of the sale of the 500-hectare converted lands. As stated:
While not included in the report, HLI manifests having given the
FWBs 3% of the PhP 80 million paid for the 80 hectares of land On Titles to Homelots
traversed by the SCTEX. On top of these, it is worth
remembering that the shares of stocks were given by HLI to the
Under RA 6657, the distribution of homelots is required only
FWBs for free. Verily, the FWBs have benefited from the SDP.
for corporations or business associations owning or operating
farms which opted for land distribution. Sec. 30 of RA 6657
To address urgings that the FWBs be allowed to disengage from states:
the SDP as HLI has not anyway earned profits through the
years, it cannot be over-emphasized that, as a matter of
SEC. 30. Homelots and Farmlots for Members of
common business sense, no corporation could guarantee a
Cooperatives.¾The individual members of the cooperatives or
profitable run all the time. As has been suggested, one of the
corporations mentioned in the preceding section shall be
key features of an SDP of a corporate landowner is the
provided with homelots and small farmlots for their family use,
likelihood of the corporate vehicle not earning, or, worse still,
to be taken from the land owned by the cooperative or
losing money.
corporation.

The Court is fully aware that one of the criteria under DAO 10
The "preceding section" referred to in the above-quoted
for the PARC to consider the advisability of approving a stock
provision is as follows:
distribution plan is the likelihood that the plan "would result in
increased income and greater benefits to [qualified
SEC. 29. Farms Owned or Operated by Corporations or Other
beneficiaries] than if the lands were divided and distributed to
Business Associations.¾In the case of farms owned or operated
them individually." But as aptly noted during the oral
by corporations or other business associations, the following
arguments, DAO 10 ought to have not, as it cannot, actually
rules shall be observed by the PARC.
exact assurance of success on something that is subject to the
will of man, the forces of nature or the inherent risky nature of
business.75 Just like in actual land distribution, an SDP cannot In general, lands shall be distributed directly to the individual
guarantee, as indeed the SDOA does not guarantee, a worker-beneficiaries.
comfortable life for the FWBs. The Court can take judicial
notice of the fact that there were many instances wherein after
In case it is not economically feasible and sound to divide the This formula deviates from Sec. 1 of DAO 10, which decrees the
land, then it shall be owned collectively by the worker- distribution of equal number of shares to the FWBs as the
beneficiaries who shall form a workers’ cooperative or minimum ratio of shares of stock for purposes of compliance
association which will deal with the corporation or business with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10:
association. Until a new agreement is entered into by and
between the workers’ cooperative or association and the Section 4. Stock Distribution Plan.¾The [SDP] submitted by the
corporation or business association, any agreement existing at corporate landowner-applicant shall provide for the
the time this Act takes effect between the former and the distribution of an equal number of shares of the same class and
previous landowner shall be respected by both the workers’ value, with the same rights and features as all other shares, to
cooperative or association and the corporation or business each of the qualified beneficiaries. This distribution plan in all
association. cases, shall be at least the minimum ratio for purposes of
compliance with Section 31 of R.A. No. 6657.
Noticeably, the foregoing provisions do not make reference to
corporations which opted for stock distribution under Sec. 31 On top of the minimum ratio provided under Section 3 of this
of RA 6657. Concomitantly, said corporations are not obliged to Implementing Guideline, the corporate landowner-applicant
provide for it except by stipulation, as in this case. may adopt additional stock distribution schemes taking into
account factors such as rank, seniority, salary, position and
Under the SDP, HLI undertook to "subdivide and allocate for other circumstances which may be deemed desirable as a
free and without charge among the qualified family- matter of sound company policy.
beneficiaries x x x residential or homelots of not more than 240
sq. m. each, with each family beneficiary being assured of The above proviso gives two (2) sets or categories of shares of
receiving and owning a homelot in the barrio or barangay stock which a qualified beneficiary can acquire from the
where it actually resides," "within a reasonable time." corporation under the SDP. The first pertains, as earlier
explained, to the mandatory minimum ratio of shares of stock
More than sixteen (16) years have elapsed from the time the to be distributed to the FWBs in compliance with Sec. 31 of RA
SDP was approved by PARC, and yet, it is still the contention of 6657. This minimum ratio contemplates of that "proportion of
the FWBs that not all was given the 240-square meter homelots the capital stock of the corporation that the agricultural land,
and, of those who were already given, some still do not have actually devoted to agricultural activities, bears in relation to
the corresponding titles. the company’s total assets." It is this set of shares of stock
which, in line with Sec. 4 of DAO 10, is supposed to be allocated
During the oral arguments, HLI was afforded the chance to "for the distribution of an equal number of shares of stock of
refute the foregoing allegation by submitting proof that the the same class and value, with the same rights and features as
FWBs were already given the said homelots: all other shares, to each of the qualified beneficiaries."

Justice Velasco: x x x There is also an allegation that the farmer On the other hand, the second set or category of shares
beneficiaries, the qualified family beneficiaries were not given partakes of a gratuitous extra grant, meaning that this set or
the 240 square meters each. So, can you also [prove] that the category constitutes an augmentation share/s that the
qualified family beneficiaries were already provided the 240 corporate landowner may give under an additional stock
square meter homelots. distribution scheme, taking into account such variables as rank,
seniority, salary, position and like factors which the
Atty. Asuncion: We will, your Honor please. management, in the exercise of its sound discretion, may deem
desirable.
Other than the financial report, however, no other substantial
proof showing that all the qualified beneficiaries have received Before anything else, it should be stressed that, at the time
homelots was submitted by HLI. Hence, this Court is PARC approved HLI’s SDP, HLI recognized 6,296individuals as
constrained to rule that HLI has not yet fully complied with its qualified FWBs. And under the 30-year stock distribution
undertaking to distribute homelots to the FWBs under the SDP. program envisaged under the plan, FWBs who came in after
1989, new FWBs in fine, may be accommodated, as they
appear to have in fact been accommodated as evidenced by
On "Man Days" and the Mechanics of Stock Distribution
their receipt of HLI shares.
In our review and analysis of par. 3 of the SDOA on the
Now then, by providing that the number of shares of the
mechanics and timelines of stock distribution, We find that
original 1989 FWBs shall depend on the number of "man days,"
it violates two (2) provisions of DAO 10. Par. 3 of the SDOA
HLI violated the afore-quoted rule on stock distribution and
states:
effectively deprived the FWBs of equal shares of stock in the
corporation, for, in net effect, these 6,296 qualified FWBs, who
3. At the end of each fiscal year, for a period of 30 years, the theoretically had given up their rights to the land that could
SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] have been distributed to them, suffered a dilution of their due
the acquisition and distribution to the THIRD PARTY [FWBs] on share entitlement. As has been observed during the oral
the basis of number of days worked and at no cost to them of arguments, HLI has chosen to use the shares earmarked for
one-thirtieth (1/30) of 118,391,976.85 shares of the capital farmworkers as reward system chips to water down the shares
stock of the SECOND PARTY that are presently owned and held of the original 6,296 FWBs. Particularly:
by the FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely acquired
Justice Abad: If the SDOA did not take place, the other thing
and distributed to the THIRD PARTY.
that would have happened is that there would be CARP?
Based on the above-quoted provision, the distribution of the
Atty. Dela Merced: Yes, Your Honor.
shares of stock to the FWBs, albeit not entailing a cash out from
them, is contingent on the number of "man days," that is, the
number of days that the FWBs have worked during the year.
Justice Abad: That’s the only point I want to know x x x. Now, explained by HLI, a beneficiary needs to work for at least 37
but they chose to enter SDOA instead of placing the land under days in a fiscal year before he or she becomes entitled to HLI
CARP. And for that reason those who would have gotten their shares. If it falls below 37 days, the FWB, unfortunately, does
shares of the land actually gave up their rights to this land in not get any share at year end. The number of HLI shares
place of the shares of the stock, is that correct? distributed varies depending on the number of days the FWBs
were allowed to work in one year. Worse, HLI hired
Atty. Dela Merced: It would be that way, Your Honor. farmworkers in addition to the original 6,296 FWBs, such that,
as indicated in the Compliance dated August 2, 2010 submitted
Justice Abad: Right now, also the government, in a way, gave by HLI to the Court, the total number of farmworkers of HLI as
up its right to own the land because that way the government of said date stood at 10,502. All these farmworkers, which
takes own [sic] the land and distribute it to the farmers and pay include the original 6,296 FWBs, were given shares out of the
for the land, is that correct? 118,931,976.85 HLI shares representing the 33.296% of the
total outstanding capital stock of HLI. Clearly, the minimum
individual allocation of each original FWB of 18,804.32 shares
Atty. Dela Merced: Yes, Your Honor.
was diluted as a result of the use of "man days" and the hiring
of additional farmworkers.
Justice Abad: And then you gave thirty-three percent (33%) of
the shares of HLI to the farmers at that time that numbered x x
Going into another but related matter, par. 3 of the SDOA
x those who signed five thousand four hundred ninety eight
expressly providing for a 30-year timeframe for HLI-to-FWBs
(5,498) beneficiaries, is that correct?
stock transfer is an arrangement contrary to what Sec. 11 of
DAO 10 prescribes. Said Sec. 11 provides for the
Atty. Dela Merced: Yes, Your Honor. implementation of the approved stock distribution plan within
three (3) months from receipt by the corporate landowner of
Justice Abad: But later on, after assigning them their shares, the approval of the plan by PARC. In fact, based on the said
some workers came in from 1989, 1990, 1991, 1992 and the provision, the transfer of the shares of stock in the names of
rest of the years that you gave additional shares who were not the qualified FWBs should be recorded in the stock and transfer
in the original list of owners? books and must be submitted to the SEC within sixty (60) days
from implementation. As stated:
Atty. Dela Merced: Yes, Your Honor.
Section 11. Implementation/Monitoring of Plan.¾The approved
Justice Abad: Did those new workers give up any right that stock distribution plan shall be implemented within three (3)
would have belong to them in 1989 when the land was months from receipt by the corporate landowner-applicant of
supposed to have been placed under CARP? the approval thereof by the PARC, and the transfer of the
shares of stocks in the names of the qualified beneficiaries shall
Atty. Dela Merced: If you are talking or referring… (interrupted) be recorded in stock and transfer books and submitted to the
Securities and Exchange Commission (SEC) within sixty (60)
Justice Abad: None! You tell me. None. They gave up no rights days from the said implementation of the stock distribution
to land? plan.

Atty. Dela Merced: They did not do the same thing as we did in It is evident from the foregoing provision that the
1989, Your Honor. implementation, that is, the distribution of the shares of stock
to the FWBs, must be made within three (3) months from
Justice Abad: No, if they were not workers in 1989 what land receipt by HLI of the approval of the stock distribution plan by
did they give up? None, if they become workers later on. PARC. While neither of the clashing parties has made a
compelling case of the thrust of this provision, the Court is of
the view and so holds that the intent is to compel the corporate
Atty. Dela Merced: None, Your Honor, I was referring, Your
landowner to complete, not merely initiate, the transfer
Honor, to the original… (interrupted)
process of shares within that three-month timeframe.
Reinforcing this conclusion is the 60-day stock transfer
Justice Abad: So why is it that the rights of those who gave up recording (with the SEC) requirement reckoned from the
their lands would be diluted, because the company has chosen implementation of the SDP.
to use the shares as reward system for new workers who come
in? It is not that the new workers, in effect, become just
To the Court, there is a purpose, which is at once discernible as
workers of the corporation whose stockholders were already
it is practical, for the three-month threshold. Remove this
fixed. The TADECO who has shares there about sixty six percent
timeline and the corporate landowner can veritably evade
(66%) and the five thousand four hundred ninety eight (5,498)
compliance with agrarian reform by simply deferring to absurd
farmers at the time of the SDOA? Explain to me. Why, why will
limits the implementation of the stock distribution scheme.
you x x x what right or where did you get that right to use this
shares, to water down the shares of those who should have
been benefited, and to use it as a reward system decided by The argument is urged that the thirty (30)-year distribution
the company? program is justified by the fact that, under Sec. 26 of RA 6657,
payment by beneficiaries of land distribution under CARP shall
be made in thirty (30) annual amortizations. To HLI, said section
From the above discourse, it is clear as day that the original
provides a justifying dimension to its 30-year stock distribution
6,296 FWBs, who were qualified beneficiaries at the time of the
program.
approval of the SDP, suffered from watering down of shares. As
determined earlier, each original FWB is entitled to 18,804.32
HLI shares. The original FWBs got less than the guaranteed HLI’s reliance on Sec. 26 of RA 6657, quoted in part below, is
18,804.32 HLI shares per beneficiary, because the acquisition obviously misplaced as the said provision clearly deals with land
and distribution of the HLI shares were based on "man days" or distribution.
"number of days worked" by the FWB in a year’s time. As
SEC. 26. Payment by Beneficiaries.¾Lands awarded pursuant to of Sec. 31 of RA 6675 does not make said provision
this Act shall be paid for by the beneficiaries to the LBP in thirty constitutionally infirm. Rather, it is the application of said
(30) annual amortizations x x x. provision that can be challenged. Ergo, Sec. 31 of RA 6657 does
not trench on the constitutional policy of ensuring control by
Then, too, the ones obliged to pay the LBP under the said the farmers. (Emphasis supplied.)
provision are the beneficiaries. On the other hand, in the
instant case, aside from the fact that what is involved is stock In line with Our finding that control over agricultural lands must
distribution, it is the corporate landowner who has the always be in the hands of the farmers, We reconsider our ruling
obligation to distribute the shares of stock among the FWBs. that the qualified FWBs should be given an option to remain as
stockholders of HLI, inasmuch as these qualified FWBs will
Evidently, the land transfer beneficiaries are given thirty (30) never gain control given the present proportion of
years within which to pay the cost of the land thus awarded shareholdings in HLI.
them to make it less cumbersome for them to pay the
government. To be sure, the reason underpinning the 30-year A revisit of HLI’s Proposal for Stock Distribution under CARP and
accommodation does not apply to corporate landowners in the Stock Distribution Option Agreement (SDOA) upon which
distributing shares of stock to the qualified beneficiaries, as the the proposal was based reveals that the total assets of HLI is
shares may be issued in a much shorter period of time. PhP 590,554,220, while the value of the 4,915.7466 hectares is
PhP 196,630,000. Consequently, the share of the farmer-
Taking into account the above discussion, the revocation of the beneficiaries in the HLI capital stock is 33.296% (196,630,000
SDP by PARC should be upheld for violating DAO 10. It bears divided by 590,554.220); 118,391,976.85 HLI shares represent
stressing that under Sec. 49 of RA 6657, the PARC and the DAR 33.296%. Thus, even if all the holders of the 118,391,976.85 HLI
have the power to issue rules and regulations, substantive or shares unanimously vote to remain as HLI stockholders, which
procedural. Being a product of such rule-making power, DAO is unlikely, control will never be placed in the hands of the
10 has the force and effect of law and must be duly complied farmer-beneficiaries.1awp++i1 Control, of course, means the
with. The PARC is, therefore, correct in revoking the SDP. majority of 50% plus at least one share of the common shares
Consequently, the PARC Resolution No. 89-12-2 dated and other voting shares. Applying the formula to the HLI
November 21, l989 approving the HLI’s SDP is nullified and stockholdings, the number of shares that will constitute the
voided. (Citations omitted; emphasis in the original.) majority is 295,112,101 shares (590,554,220 divided by 2 plus
one [1] HLI share). The 118,391,976.85 shares subject to the
Based on the foregoing ruling, the contentions of Mallari, et al. SDP approved by PARC substantially fall short of the
are either not supported by the evidence on record or are 295,112,101 shares needed by the FWBs to acquire control
utterly misplaced. There is, therefore, no basis for the Court to over HLI. Hence, control can NEVER be attained by the FWBs.
reverse its ruling affirming PARC Resolution No. 2005-32-01 and There is even no assurance that 100% of the 118,391,976.85
PARC Resolution No. 2006-34-01, revoking the previous shares issued to the FWBs will all be voted in favor of staying in
approval of the SDP by PARC. HLI, taking into account the previous referendum among the
farmers where said shares were not voted unanimously in favor
of retaining the SDP. In light of the foregoing consideration, the
VII. Control over Agricultural Lands
option to remain in HLI granted to the individual FWBs will have
to be recalled and revoked.
After having discussed and considered the different
contentions raised by the parties in their respective motions,
Moreover, bearing in mind that with the revocation of the
We are now left to contend with one crucial issue in the case at
approval of the SDP, HLI will no longer be operating under SDP
bar, that is, control over the agricultural lands by the qualified
and will only be treated as an ordinary private corporation; the
FWBs.
FWBs who remain as stockholders of HLI will be treated as
ordinary stockholders and will no longer be under the
Upon a review of the facts and circumstances, We realize that protective mantle of RA 6657.
the FWBs will never have control over these agricultural lands
for as long as they remain as stockholders of HLI. In Our July 5,
In addition to the foregoing, in view of the operative fact
2011 Decision, this Court made the following observations:
doctrine, all the benefits and homelots80 received by all the
FWBs shall be respected with no obligation to refund or return
There is, thus, nothing unconstitutional in the formula them, since, as We have mentioned in our July 5, 2011
prescribed by RA 6657. The policy on agrarian reform is that Decision, "the benefits x x x were received by the FWBs as
control over the agricultural land must always be in the hands farmhands in the agricultural enterprise of HLI and other fringe
of the farmers. Then it falls on the shoulders of DAR and PARC benefits were granted to them pursuant to the existing
to see to it the farmers should always own majority of the collective bargaining agreement with Tadeco."
common shares entitled to elect the members of the board of
directors to ensure that the farmers will have a clear majority
One last point, the HLI land shall be distributed only to the
in the board. Before the SDP is approved, strict scrutiny of the
6,296 original FWBs. The remaining 4,206 FWBs are not entitled
proposed SDP must always be undertaken by the DAR and
to any portion of the HLI land, because the rights to said land
PARC, such that the value of the agricultural land contributed
were vested only in the 6,296 original FWBs pursuant to Sec. 22
to the corporation must always be more than 50% of the total
of RA 6657.
assets of the corporation to ensure that the majority of the
members of the board of directors are composed of the
farmers. The PARC composed of the President of the In this regard, DAR shall verify the identities of the 6,296
Philippines and cabinet secretaries must see to it that control original FWBs, consistent with its administrative prerogative to
over the board of directors rests with the farmers by rejecting identify and select the agrarian reform beneficiaries under RA
the inclusion of non-agricultural assets which will yield the 6657.81
majority in the board of directors to non-farmers. Any
deviation, however, by PARC or DAR from the correct WHEREFORE, the Motion for Partial Reconsideration dated July
application of the formula prescribed by the second paragraph 20, 2011 filed by public respondents Presidential Agrarian
Reform Council and Department of Agrarian Reform, the ordered to engage the services of a reputable accounting firm
Motion for Reconsideration dated July 19, 2011 filed by private approved by the parties to audit the books of HLI and
respondent Alyansa ng mga Manggagawang Bukid sa Hacienda Centennary Holdings, Inc. to determine if the PhP
Luisita, the Motion for Reconsideration dated July 21, 2011 1,330,511,500 proceeds of the sale of the three (3)
filed by respondent-intervenor Farmworkers Agrarian Reform aforementioned lots were actually used or spent for legitimate
Movement, Inc., and the Motion for Reconsideration dated July corporate purposes. Any unspent or unused balance and any
22, 2011 filed by private respondents Rene Galang and disallowed expenditures as determined by the audit shall be
AMBALA are PARTIALLY GRANTED with respect to the option distributed to the 6,296 original FWBs.
granted to the original farmworker-beneficiaries of Hacienda
Luisita to remain with Hacienda Luisita, Inc., which is hereby HLI is entitled to just compensation for the agricultural land
RECALLED and SET ASIDE. The Motion for Clarification and that will be transferred to DAR to be reckoned from November
Partial Reconsideration dated July 21, 2011 filed by petitioner 21, 1989 which is the date of issuance of PARC Resolution No.
HLI and the Motion for Reconsideration dated July 21, 2011 89-12-2. DAR and LBP are ordered to determine the
filed by private respondents Noel Mallari, Julio Suniga, compensation due to HLI.
Supervisory Group of Hacienda Luisita, Inc. and Windsor
Andaya are DENIED. DAR shall submit a compliance report after six (6) months from
finality of this judgment. It shall also submit, after submission
The fallo of the Court’s July 5, 2011 Decision is hereby amended of the compliance report, quarterly reports on the execution of
and shall read: this judgment within the first 15 days after the end of each
quarter, until fully implemented.
PARC Resolution No. 2005-32-01 dated December 22, 2005 and
Resolution No. 2006-34-01 dated May 3, 2006, placing the The temporary restraining order is lifted.
lands subject of HLI’s SDP under compulsory coverage on
mandated land acquisition scheme of the CARP, are hereby SO ORDERED.
AFFIRMED with the following modifications:
PRESBITERO J. VELASCO, JR. 
All salaries, benefits, the 3% of the gross sales of the production Associate Justice
of the agricultural lands, the 3% share in the proceeds of the
sale of the 500-hectare converted land and the 80.51-hectare
WE CONCUR:
SCTEX lot and the homelots already received by the 10,502
FWBs composed of 6,296 original FWBs and the 4,206 non-
RENATO C. CORONA
qualified FWBs shall be respected with no obligation to refund
Chief Justice
or return them. 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 TERESITA J. LEONARDO-
the shares issued to the said FWBs and transfer them to HLI in ANTONIO T. CARPIO
DE CASTRO
the stocks and transfer book, which transfers shall be exempt Associate Justice
Associate Justice
from taxes, fees and charges. The 4,206 non-qualified FWBs
shall remain as stockholders of HLI.
ARTURO D. BRION DIOSDADO M. PERALTA
Associate Justice Associate Justice
DAR shall segregate from the HLI agricultural land with an area
of 4,915.75 hectares subject of PARC’s SDP-approving
Resolution No. 89-12-2 the 500-hectare lot subject of the MARIANO C. DEL
LUCAS P. BERSAMIN
August 14, l996 Conversion Order and the 80.51-hectare lot CASTILLO
Associate Justice
sold to, or acquired by, the government as part of the SCTEX Associate Justice
complex. After the segregation process, as indicated, is done,
the remaining area shall be turned over to DAR for immediate MARTIN S. VILLARAMA,
ROBERTO A. ABAD
land distribution to the original 6,296 FWBs or their successors- JR.
Associate Justice
in-interest which will be identified by the DAR. The 4,206 non- Associate Justice
qualified FWBs are not entitled to any share in the land to be
distributed by DAR.1âwphi1 JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA
Associate Justice Associate Justice
HLI is directed to pay the original 6,296 FWBs the consideration
of PhP 500,000,000 received by it from Luisita Realty, Inc. for MARIA LOURDES P. A.
the sale to the latter of 200 hectares out of the 500 hectares BIENVENIDO L. REYES
SERENO
covered by the August 14, 1996 Conversion Order, the Associate Justice
Associate Justice
consideration of PhP 750,000,000 received by its owned
subsidiary, Centennary Holdings, Inc., for the sale of the
remaining 300 hectares of the aforementioned 500-hectare lot ESTELA M. PERLAS-BERNABE
to Luisita Industrial Park Corporation, and the price of PhP Associate Justice
80,511,500 paid by the government through the Bases
Conversion Development Authority for the sale of the 80.51- CERTIFICATION
hectare lot used for the construction of the SCTEX road
network. From the total amount of PhP 1,330,511,500 (PhP Pursuant to Section 13, Article VIII of the Constitution, it is
500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP hereby certified that the conclusions in the above Resolution
1,330,511,500) shall be deducted the 3% of the proceeds of had been reached in consultation before the case was assigned
said transfers that were paid to the FWBs, the taxes and to the writer of the opinion of the Court.
expenses relating to the transfer of titles to the transferees,
and the expenditures incurred by HLI and Centennary Holdings,
Inc. for legitimate corporate purposes. For this purpose, DAR is
RENATO C. CORONA
Chief Justice