G.R. No. 171101 - Hacienda Luisita, Inc. vs. Presidential Agrarian Reform Council

Hacienda Luisita, a mixed agricultural-industrial estate of 6,443 hectares in Tarlac, was owned by Tabacalera.
In 1958, Tarlac Development Corporation (TADECO) acquired Hacienda Luisita and Central Azucarera de Tarlac (CAT), with government-assisted loans from the Central Bank (dollar loan) and GSIS (peso loan).
GSIS Resolution No. 356 (1958) provided that the Hacienda lands “shall be subdivided … and sold at cost to the tenants … whenever conditions warrant.”

EO 229 (1987) and R.A. 6657 (“CARL,” 1988) provided two corporate compliance options: (a) direct land transfer or (b) stock distribution option (SDO).
TADECO formed Hacienda Luisita, Inc. (HLI) on August 23, 1988 as spin-off vehicle.
On March 22, 1989, TADECO transferred 4,915.75 ha. of agricultural lands and related assets to HLI in exchange for HLI shares.

On May 11, 1989, HLI, TADECO and 5,848 farmworker-beneficiaries (FWBs) signed the SDOA, under which 33.296% of HLI’s shares (118,391,976.85 shares) would be distributed free to FWBs over 30 years, based on “man-days.”
FWBs were guaranteed an annual 3% share of gross agricultural production sales plus 240 m² free homelots.
A DAR referendum (Oct. 14, 1989) showed 5,117 of 5,315 participating FWBs opted for stock distribution; 132 opted for land transfer.
PARC approved HLI’s SDP by Resolution No. 89-12-2 (Nov. 21, 1989).

HLI applied for conversion of 500 ha. to industrial use (Aug. 1995); DAR Conversion Order issued Aug. 14, 1996.
HLI sold 200 ha. to Luisita Realty Corp. (1997–1998) for ₱500 million.
HLI transferred 300 ha. to Centennary Holdings in exchange for 12 million shares; Centennary sold it to Luisita Industrial Park Corporation (LIPCO) for ₱750 million (1998).
LIPCO mortgaged and then dacion en pago’d portions (184.22 ha.) to RCBC (2004) to settle a ₱432 million loan.
The government expropriated 80.51 ha. for the SCTEX, paying ₱80 million.

Supervisory Group petitioned DAR (Oct. 14, 2003), claiming HLI breached the SDOA terms.
AMBALA (led by Galang and Mallari) filed Petisyon (Dec. 4, 2003) to revoke the SDOA and distribute lands.
DAR formed a Special Task Force (Nov. 22, 2004) to review HLI’s compliance; its Terminal Report (Sept. 22, 2005) found HLI deficient.
DAR Sec. Pangandaman recommended PARC revoke the SDP; PARC ExCom Validation Committee endorsed the recommendation.
PARC Resolution No. 2005-32-01 (Dec. 22, 2005) revoked the SDP and ordered compulsory CARP coverage.
HLI moved for reconsideration (Jan. 2, 2006); DAR issued notice of coverage Jan. 2, 2006.
PARC Resolution No. 2006-34-01 (May 3, 2006) denied reconsideration.

HLI filed a Rule 65 Petition (Feb. 1, 2006) to nullify PARC Resolutions and notice of coverage; TS O issued (June 14, 2006).
Private respondents (Supervisory Group, AMBALA, FARM) and public respondents (PARC/DAR) filed comments.
LIPCO and RCBC intervened (2007) as innocent purchasers for value of industrial lands.
Oral arguments held (Aug. 18 & 24, 2010); mediation panel formed but failed.

Do private respondents (Supervisory Group, AMBALA, FARM, ULWU) and petitioners-in-intervention (LIPCO, RCBC) have standing as real parties-in-interest?
Is the constitutionality of the stock distribution option under Section 31 of R.A. 6657 properly raised and is it the lis mota of the case?
Does PARC have the power to revoke its prior approval of HLI’s SDP?
Did HLI violate the SDOA/SDP’s terms, thus justifying its revocation and compulsory CARP coverage?
Are LIPCO and RCBC innocent purchasers for value of the converted industrial lands, and do intervening events preclude their inclusion in CARP coverage?