Arden Kim B.

Sia Law II-A

Republic of the Philippines

DON VICENTE ORESTES ROMUALDEZ EDUCATIONAL FOUNDATION
Calanipawan, Tacloban City

G.R. No. 171101 November 22, 2011

Hacienda Luisita Incorporated vs Presidential Agrarian Reform

Council, et al.,

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 SC’s 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?

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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

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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.

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