Title
Hacienda Luisita, Inc. vs. Presidential Agrarian Reform Council
Case
G.R. No. 171101
Decision Date
Apr 24, 2012
HLI contested PARC's revocation of its Stock Distribution Plan, arguing over the date of "taking" for just compensation and distribution of land sale proceeds. The Supreme Court ruled the "taking" occurred in 1989, revoked FWBs' option to remain stockholders, and ordered land distribution with just compensation based on 1989 values.
agricultural land
stockholders
control over agricultural land

Case Summary (G.R. No. 171101)

Factual Background

The controversy arose from HLI’s adoption of a Stock Distribution Plan (SDP) under Sec. 31 of RA 6657, pursuant to which agricultural lands of Tarlac Development Corporation (TADECO) were transferred to HLI and stock was to be given to the farmworker-beneficiaries (FWBs). PARC approved the SDP by Resolution No. 89-12-2 dated November 21, 1989. Over time disputes developed concerning the legality and terms of the SDP, the actual enjoyment and control of the agricultural lands, sales and conversions of portions of the lands (including a 500-hectare converted lot and an 80.51-hectare lot affected by the SCTEX), and the distribution of homelots. PARC later recalled or revoked its approval by resolutions in 2005 and 2006, prompting judicial challenges that culminated in this Court’s July 5, 2011 Decision and subsequent November 22, 2011 Resolution.

Procedural History

In its July 5, 2011 Decision, the Court denied HLI’s petition for review and affirmed PARC Resolutions revoking the SDP while initially granting the original 6,296 qualified FWBs the option to remain as HLI stockholders. Upon motions for reconsideration, the Court by Resolution of November 22, 2011 recalled and set aside the option granted to FWBs to remain as stockholders but preserved respect for homelots and other benefits already received. HLI filed a Motion to Clarify and Reconsider the November 22, 2011 Resolution (dated December 16, 2011). Private respondents Mallari et al. filed a Motion for Reconsideration/Clarification dated December 9, 2011. The Court considered and resolved those motions by the present Resolution dated April 24, 2012.

Issues Presented

The primary questions raised in the pending motions were: (1) the correct date of taking for purposes of determining just compensation; (2) whether the Court properly revoked the option previously granted to the original FWBs to remain as HLI stockholders; (3) whether proceeds from the sale of the converted 500-hectare lot and the 80.51-hectare SCTEX lot should be retained by HLI or returned to the qualified FWBs; and (4) the status and just compensation for homelots distributed to FWBs under the SDP.

Parties’ Contentions

Hacienda Luisita, Inc. (HLI) argued that the SDP was a voluntary modality distinct from compulsory acquisition and that the FWBs could not be deemed owners or possessors at PARC’s approval in 1989; HLI urged that, at the earliest, the January 2, 2006 Notice of Coverage should be the date of taking and that HLI is entitled to interest on just compensation. HLI also contended that the option to remain as stockholders should not have been revoked and that proceeds from sales belong to the corporation and not to the FWBs.
Mallari, et al. advanced similar arguments on the timing of the taking and on the propriety of the revocation, while cautioning that immediate land distribution might harm hacienda residents; they pressed that valuation questions be left to DAR, LBP, or the Special Agrarian Court (SAC).
AMBALA took an opposing view and argued that HLI should not receive just compensation at all, or if it did, that the valuation should be pegged to PHp 40,000 per hectare as allegedly declared in 1989.

Legal Standards and Preliminary Doctrines Applied

The Court reiterated that under Sec. 4, Art. XIII of the 1987 Constitution and prevailing jurisprudence, the taking of land for agrarian reform is subject to the payment of just compensation measured by the value of the property at the time it was taken. The Court observed that the stock distribution option and compulsory acquisition are different modalities but share the same objective of equitable land distribution; where an SDP is approved by PARC the lands become officially subject to CARP coverage, and such approval functions as the equivalent of a notice of coverage. The Court invoked the prohibition against second motions for reconsideration (Sec. 2, Rule 52 of the Rules of Court and Sec. 3, Rule 15 of the Internal Rules of the Supreme Court) to constrain repetitive collateral attacks.

Ruling on Date of Taking and Just Compensation

By an 8–6 vote the Court affirmed its earlier determination that the date of taking for purposes of valuing the agricultural lands was November 21, 1989, the date of PARC’s approval of the SDP (PARC Res. No. 89-12-2). The Court reasoned that the SDP’s approval was the moment the lands officially fell under CARP coverage through the stock distribution scheme and that any doubt should be resolved in favor of the FWBs. The Court directed the DAR and the Land Bank of the Philippines (LBP) to determine the preliminary valuation of the affected lands, with the landowner’s right to seek judicial review by the RTC acting as a Special Agrarian Court (SAC) as provided under RA 6657, Sec. 57. Questions concerning interest on just compensation were left to DAR and LBP for preliminary disposition, subject to review by the SAC.

Ruling on the Option to Remain as Stockholders

The Court unanimously sustained its prior revocation of the option previously afforded to the original FWBs to remain as HLI stockholders. The Court concluded that, given the proportion of assets and the allocation of shares under the SDP, the FWBs could never obtain control of HLI because their shareholdings fell substantially short of the majority required to elect a controlling board. Consequently, the option was recalled as inconsistent with the constitutional and statutory policy that control over agricultural land should be in the hands of the farmers.

Ruling on Proceeds of Sales of Converted Lands

The Court unanimously maintained its earlier ruling ordering that proceeds from the sale of the 500-hectare converted lot and the 80.51-hectare SCTEX lot should be returned for the benefit of the qualified FWBs. The Court stressed that these parcels would have been subject to agrarian distribution but for the SDP approval; therefore, proceeds realized from their disposition should accrue to the FWBs, subject to deductions for the 3% share already paid to FWBs, applicable taxes and transfer expenses, and legitimate corporate expenditures incurred by HLI and Centennary Holdings, Inc., as prescribed in the November 22, 2011 fallo.

Ruling on Homelots

The Court unanimously held that homelots already received by FWBs shall be respected and that FWBs shall not be required to refund or return them. Because the SDP was revoked, and the homelots were conveyed by deed from TADECO to HLI (Deed of Assignment and Conveyance dated March 22, 1989), the Court ordered the government, through DAR, to pay just compensation to HLI for the 240-square-meter homelots distributed to the FWBs. DAR was directed to compute such compensation in accordance with applicable laws, rules and regulations.

Final Disposition and Executory Character

The Court denied the Motion to Clarify and Reconsider (HLI) and the Motion for Reconsideration/Clarification (Mallari, et al.) and further modified the July 5, 2011 Decision as previously modified by the November 22, 2011 Resolution by expressly ordering DAR to pay HLI just compensation for the homelots. The July 5, 2011 Decision, as modified by November 22, 2011 and further modified by the present Resolution, was declared final and executory. The entry of judgment was ordered to be made upon promulgation of this Resolution, and the Court barred further pleadings.

Implementation Mechanisms and Administrative Assignments

The Court reiterated the roles of administrative and judicial bodies in determining compensation: LBP and DAR to make preliminary valuations and determinations, and the RTC acting as SAC to exercise judicial review on just compensation pursuant to RA 6657, Sec. 57. The Court recognized DAR’s primary jurisdiction in agrarian matters and stressed that, while SACs have original jurisdiction over valuation petitions, the Court could resolve certain matters based on the record to avoid undue delay and hardship to the FWBs. The DAR and LBP were entrusted with tasks to effect valuation, computation of homelot compensation, and implementation actions with reservation of judicial review where legally warranted.

Concurring and Dissenting Views — Justice Brion

Justice Brion concurred with the majority’s principal outcome that the SDP was illegal and that the date of taking is November 21, 1989, but he dissented in part on the legal basis and the scope of consequences flowing from PARC’s revocation. He argued the SDP was null ab initio for violating DAR administrative rules (man-days scheme and implementation delays), that the illegality rendered the lands subject to compulsory coverage as of 1989, and that mutual restitution should follow. Justice Brion proposed detailed adjustments: that the proceeds of sales to third parties be turned over to FWBs less deductions for the FWBs’ received 3% shares, taxes and expenses, and indemnities due HLI for necessary and useful improvements under Articles 448, 546 and 548 of the Civil Code; that HLI be treated as a possessor in good faith entitled to retain improvements until indemnified; that no interest on just comp

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