GR 171101

HACIENDA LUISITA, INCORPORATED vs. PRESIDENTIAL AGRARIAN

REFORM COUNCIL
Facts:
In 1988, RA 6657 or the CARP law was passed. It is a program aimed at
redistributing public and private agricultural lands to farmers and
farmworkers who are landless. One of the lands covered by this law is the
Hacienda Luisita, a 6,443-hectare mixed agricultural-industrial-residential
expanse straddling several municipalities of Tarlac. Hacienda Luisita was
bought in 1958 from the Spanish owners by the Tarlac Development
Corporation (TADECO), which is owned and/or controlled by Jose Cojuanco
Sr., Group.
In 1980, the Martial Law administration filed an expropriation suit against
TADECO to surrender the Hacienda to the then Ministry of Agrarian Reform
(now DAR) so that the land can be distributed to the farmers at cost. The RTC
rendered judgment ordering TADECO to surrender Hacienda Luisita to the
MAR.
In 1988, the OSG moved to dismiss the governments case against TADECO.
The CA dismissed it, but the dismissal was subject to the condition that
TADECO shall obtain the approval of FWB (farm worker beneficiaries) to the
SDP (Stock Distribution Plan) and to ensure its implementation.
Sec 31 of the CARP Law allows either land transfer or stock transfer as two
alternative modes in distributing land ownership to the FWBs. Since
the stock distribution scheme is the preferred option of TADECO, it organized
a spin-off corporation, the Hacienda Luisita Inc. (HLI), as vehicle to facilitate
stock acquisition by the farmers.
After conducting a follow-up referendum and revision of terms of the Stock
Distribution Option Agreement (SDOA) proposed by TADECO, the Presidential
Agrarian Reform Council (PARC), led by then DAR Secretary Miriam Santiago,
approved the SDP of TADECO/HLI through Resolution 89-12-2 dated Nov
21, 1989.
From 1989 to 2005, the HLI claimed to have extended those benefits to the
farmworkers. Such claim was subsequently contested by two groups
representing the interests of the farmers the HLI Supervisory Group and the
AMBALA. In 2003, each of them wrote letter petitions before the DAR asking
for the renegotiation of terms and/or revocation of the SDOA. They claimed
that they havent actually received those benefits in full, that HLI violated the

terms, and that their lives havent really improved contrary to the promise
and rationale of the SDOA.
The DAR created a Special Task Force to attend to the issues and to review
the terms of the SDOA and the Resolution 89-12-2. Adopting the report and
the recommendations of the Task Force, the DAR Sec recommended to the
PARC (1) the revocation of Resolution 89-12-2 and (2) the acquisition of
Hacienda
Luisita
through
compulsory
acquisition scheme.
Consequently, the PARC revoked the SDP of TADECO/HLI and subjected those
lands covered by the SDP to the mandated land acquisition scheme under
the CARP law.
On the other hand, FARM, an intervenor, asks for the invalidation of Sec. 31
of RA 6657, insofar as it affords the corporation, as a mode of CARP
compliance, to resort to stock transfer in lieu of outright agricultural land
transfer. For FARM, this modality of distribution is an anomaly to be annulled
for being inconsistent with the basic concept of agrarian reform ingrained in
Sec. 4, Art. XIII of the Constitution.
Issue:
1. WON Sec. 31 of RA 6657 impairs the fundamental right of the farmers
couched in the Article XIII, 1987 Constitution
HELD:
No. Sec. 31 of RA 6657 is constitutional as it does not impair the fundamental
right of the farmworkers under Sec.4, Article XIII of the constitution. Article
XIII, Sec. 4 of the 1987 constitution states that the State shall, by law,
undertake an agrarian reform program founded on the rights of the farmers
who are landless to own directly or collectively the lands they tillxxx
The basic law allows 2 modes of land distribution- direct and indirect
ownership; direct ownership which is widely accepted by DAR and indirect
ownership which allows collective ownership as an alternative to direct
ownership of agricultural lands by individual farmers. It is also permitted in
Sec. 29 and 30 of RA 6657. Note also the fact that the Sec. 14 Article XIII of
the 1987 constitution is not self-executing.
As defined in RA 6657, "agrarian reform" as "the redistribution of lands . . . to
farmers and regular farmworkers who are landless . . . to lift the economic
status of the beneficiaries and all other arrangements alternative to the
physical redistribution of lands, such as production or profit sharing,
labor administration and the distribution of shares of stock which will

allow beneficiaries to receive a just share of the fruits of the lands they
work." The stock distribution option devised under Sec. 31 of RA 6657 hews
with the agrarian reform policy, as instrument of social justice under Sec. 4
of Article XIII of the Constitution. The Sec. 4, Article XIII of the Constitution,
as couched, does not constrict Congress to passing an agrarian reform law
planted on direct land transfer to and ownership by farmers and no other, or
else the enactment suffers from the vice of unconstitutionality. If the
intention were otherwise, the framers of the Constitution would have worded
said section in a manner mandatory in character. CADSHI
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer
features, is not inconsistent with the State's commitment to farmers and
farmworkers to advance their interests under the policy of social justice. The
legislature, thru Sec. 31 of RA 6657, has chosen a modality for collective
ownership by which the imperatives of social justice may, in its estimation,
be approximated, if not achieved. The Court should be bound by such policy
choice.