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Hacienda Luisita vs PARC

Facts:

The SC en banc voted 11-0 dismissing the petition filed by HLI Affirm with
modifications the resolutions of the Presidential Agrarian Reform Council (PARC for brevity)
revoking Hacienda Luisita Inc. (HLI for brevity) Stock Distribution Plan (SDP) and placing the
subject land in HL under compulsory coverage of the CARP of the government.

Thereafter, the SC voting 6-5 averred that there are operative facts that occurred in the
premises. The SC thereat declared that the revocation of the SDP shall, by application of the
operative fact principle, give the 5296 qualified Farmworkers Beneficiaries (FWBs for brevity)
to choose whether they want to remain as HLI stockholders or choose actual land distribution.
Considering the premises, DAR immediately scheduled a meeting regarding the effects of their
choice and therefrom proceeded to secret voting of their choice.

The parties, thereafter, filed their respective Motion for Reconsideration regarding the
SCs decision.

Issue:

1) Whether or not operative fact doctrine is applicable in the said case.

2) Whether or not Sec. 31 of R.A. 6657 unconstitutional.

3) Whether or not the 10-year period prohibition on the transfer of awarded lands under RA
6657 lapsed on May 10, 1999, since Hacienda Luisita were placed under CARP coverage
through the SDOA scheme on May 11, 1989, and thus the qualified FWBs should now be
allowed to sell their land interests in Hacienda Luisita to third parties, whether they have fully
paid for the lands or not?

4) Whether or not qualified FWBs shall be entitled to the option of remaining as stockholder be
reconsidered.

Ruling:

1) Operative Fact Doctrine is applicable to the instant case. The court ruled that the doctrine is
not limited only to invalid or unconstitutional law but also to decisions made by the president
or the administrative agencies that have the force and effect of laws, especially if the said
decisions produced acts and consequences that must be respected. That the implementation of
PARC resolution approving SDP of HLI manifested such right and benefits favorable to the
FWBs;

2) The SC said that the constitutionality of Sec. 31 of R.A. 6657 is not the lis mota of the case and it
was not raised at the earliest opportunity and did not rule on the constitutionality of the law;

3) The SC ruled that it has not yet lapsed on May 10, 1999, and qualified FWBs are not allowed to
sell their land interest in HL to third parties; That the start of the counting of the prohibitive
period shall be ten years from the issuance and registration of the Emancipation Patent (EP for
brevity) or Certificate of Land Ownership Award (CLOA for brevity), and considering that the
EPs and CLOAs have not yet been issued, the prohibitive period has not started yet.

4) The SC ruled in the affirmative, giving qualified FWBs the option to remain as stockholder

YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be given an option to
remain as stockholders of HLI should be reconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs should be given an option
to remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control
[over the subject lands] given the present proportion of shareholdings in HLI. The Court noted
that the share of the FWBs in the HLI capital stock is [just] 33.296%. Thus, even if all the
holders of this 33.296% unanimously vote to remain as HLI stockholders, which is unlikely,
control will never be in the hands of the FWBs. Control means the majority of [sic] 50% plus at
least one share of the common shares and other voting shares. Applying the formula to the HLI
stockholdings, the number of shares that will constitute the majority is 295,112,101 shares
(590,554,220 total HLI capital shares divided by 2 plus one [1] HLI share). The 118,391,976.85
shares subject to the SDP approved by PARC substantially fall short of the 295,112,101 shares
needed by the FWBs to acquire control over HLI.]

The SC PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al., 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 the shares issued to the said
FWBs and transfer them to HLI in the stocks and transfer book. The 4,206 non-qualified FWBs
shall remain as stockholders of HLI.