HACIENDA LUISITA INC vs LUISITA INDUSTRIAL PARK CORP, GR.

171101

FACTS:

On 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda

Luisita signified in a referendum their acceptance of the proposed HLIs Stock Distribution Option
Plan (SODP). The SDOA was formally entered into by Tadeco, HLI, and the 5,848 qualified
FWBs. This attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and
mechanics of HLIs SDP, which was eventually approved by the PARC after a follow-up
referendum conducted by the DAR, in which 5,117 FWBs, out of 5,315 who participated, opted to
receive shares in HLI.
On 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural
to industrial use, pursuant to Sec. 65 of RA 6657. The DAR approved the application subject to
payment of three percent (3%) of the gross selling price to the FWBs and to HLIs continued
compliance with its undertakings under the SDP, among other conditions.

On 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary, ceded
300 hectares of the converted area to the latter. Subsequently, Centennary sold the entire 300
hectares for PhP750 million to Luisita Industrial Park Corporation (LIPCO), which used it in
developing an industrial complex. Later, LIPCO transferred these 2 parcels to RCBC in payment
of LIPCOs PhP431,695,732.10 loan obligations. LIPCOs titles were cancelled and new ones
were issued to RCBC. Apart from the 500 hectares, another 80.51 hectares were later detached
from Hacienda Luisita and acquired by the government as part of the Subic-Clark-Tarlac
Expressway (SCTEX) complex. Thus, 4,335.75 hectares remained of the original 4,915 hectares
Tadeco ceded to HLI.

ISSUE:

Whether or not Sec. 31 of RA 6657, which allows stock transfer in lieu of outright land transfer,
unconstitutional?

HELD:

There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural land must always be in the hands of the
farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers should always
own majority of the common shares entitled to elect the members of the board of directors to
ensure that the farmers will have a clear majority in the board. Before the SDP is approved, strict
scrutiny of the proposed SDP must always be undertaken by the DAR and PARC, such that the
value of the agricultural land contributed to the corporation must always be more than 50% of the
total assets of the corporation to ensure that the majority of the members of the board of directors
are composed of the farmers. The PARC composed of the President of the Philippines and
cabinet secretaries must see to it that control over the board of directors rests with the farmers by
rejecting the inclusion of non-agricultural assets which will yield the majority in the board of
directors to non-farmers. Any deviation, however, by PARC or DAR from the correct application
of the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not make said
provision constitutionally infirm. Rather, it is the application of said provision that can be
challenged. Ergo, Sec. 31 of RA 6657 does not trench on the constitutional policy of ensuring
control by the farmers.
Roxas & Co. Inc. v CA

Facts: Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three
haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of
Nasugbu, Batangas. On May 6, 1988, petitioner filed with respondent DAR a voluntary offer to
sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad
were later placed under compulsory acquisition by respondent DAR in accordance with the CARL.
Petitioner tried to withdraw the VOS of Hacienda Caylaway but the sane was denied. Thereafter,
petitioner sought the conversion of the three haciendas from agricultural to other use but the
petition was likewise denied.

Issue: Whether or not process of land acquisition under CARL should observe due process

Held: For a valid implementation of the CAR Program, two notices are required: (1) the Notice of
Coverage and letter of invitation to a preliminary conference sent to the landowner, the
representatives of the BARC, LBP, farmer beneficiaries and other interested parties; and (2) the
Notice of Acquisition sent to the landowner under Section 16 of the CARL. They are steps
designed to comply with the requirements of administrative due process. The taking contemplated
in Agrarian Reform is not a mere limitation of the use of the land. What is required is the surrender
of the title to and physical possession of the said excess and all beneficial rights accruing to the
owner in favour of the farmer beneficiary. The Bill of Rights provides that no person shall be
deprived of life, liberty or property without due process of law. The CARL was not intended to take
away property without due process of law. The exercise of the power of eminent domain requires
that due process be observed in the taking of private property.

Association of Small Landowners v DAR Secretary

Facts: These are 3 cases consolidated questioning the constitutionality of the Agrarian Reform
Program. The contention of the petitioners in G.R. No. 79777 is that the provision of RA 6657
regarding the modes of payment of just compensation is unconstitutional insofar as it requires the
owners of the expropriated properties to accept just compensation therefor in less than money,
which is the only medium of payment allowed. RA 6657 allows the payment of just compensation
by means of LBP Bonds, Shares of Stocks in government-owned or controlled corporations, and
tax credits.

Issue: Whether or not payment of just compensation other than money is allowed

Held: It cannot be denied that the traditional medium for the payment of just compensation is
money and no other. However, we do not deal here with the traditional exercise of the power of
eminent domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local
purpose. What we deal with here is a revolutionary kind of expropriation. Agrarian Reform
program will involve not mere millions of pesos. The cost will be tremendous. Considering the
vast areas of land subject to expropriation under the laws before us, we estimate that hundreds
of billions of pesos will be needed, far more indeed than the amount of P50 billion initially
appropriated, which is already staggering as it is by our present standards. Such amount is in fact
not even fully available at this time. It is assumed that the framers of the Constitution were aware
of this difficulty when they called for agrarian reform as a top priority project of the government. It
is a part of this assumption that when they envisioned the expropriation that would be needed,
they also intended that the just compensation would have to be paid not in the orthodox way but
a less conventional if more practical method.

PRESIDENTIAL DECREE No. 27 October 21, 1972

DECREEING THE EMANCIPATION OF TENANTS FROM THE BONDAGE OF THE SOIL,

TRANSFERRING TO THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING
THE INSTRUMENTS AND MECHANISM THEREFOR

In as much as the old concept of land ownership by a few has spawned valid and legitimate
grievances that gave rise to violent conflict and social tension,

The redress of such legitimate grievances being one of the fundamental objectives of the New
Society,

Since Reformation must start with the emancipation of the tiller of the soil from his bondage,

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the
Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972, and General
Order No. 1 dated September 22, 1972, as amended do hereby decree and order the
emancipation of all tenant farmers as of this day, October 21, 1972:

This shall apply to tenant farmers of private agricultural lands primarily devoted to rice and corn
under a system of sharecrop or lease-tenancy, whether classified as landed estate or not;

The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of
a portion constituting a family-size farm of five (5) hectares if not irrigated and three (3) hectares
if irrigated;

In all cases, the landowner may retain an area of not more than seven (7) hectares if such
landowner is cultivating such area or will now cultivate it;

For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant
to this Decree, the value of the land shall be equivalent to two and one-half (2 1/2) times the
average harvest of three normal crop years immediately preceding the promulgation of this
Decree;

The total cost of the land, including interest at the rate of six (6) per centum per annum, shall be
paid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations;

In case of default, the amortization due shall be paid by the farmers' cooperative in which the
defaulting tenant-farmer is a member, with the cooperative having a right of recourse against him;

The government shall guaranty such amortizations with shares of stock in government-owned
and government-controlled corporations;
No title to the land owned by the tenant-farmers under this Decree shall be actually issued to a
tenant-farmer unless and until the tenant-farmer has become a full-fledged member of a duly
recognized farmer's cooperative;

Title to land acquired pursuant to this Decree or the Land Reform Program of the Government
shall not be transferable except by hereditary succession or to the Government in accordance
with the provisions of this Decree, the Code of Agrarian Reforms and other existing laws and
regulations;

The Department of Agrarian Reform through its Secretary is hereby empowered to promulgate
rules and regulations for the implementation of this Decree.

All laws, executive orders, decrees and rules and regulations, or parts thereof, inconsistent with
this Decree are hereby repealed and or modified accordingly.

Done in the City of Manila, this 21st day of October, in the year of Our Lord, nineteen hundred
and seventy-two.

> Presidential Decree 27 was anchored upon the fundamental objective of addressing valid and
legitimate grievances of land ownership giving rise to violent conflict and social tension in the
countryside

> Recognized the necessity to encourage a more productive agricultural base to the countrys
economy

> The certificate of land transfer under Presidential Decree 27 provides that the tenant farmer is
deemed to be the owner of the agricultural land subject to the conditions that the cost of the
portion transferred to him, including the interest, shall be paid in 15 equal annual amortizations,
and that he must be a member of a barrio association upon organization of such association in
his legality

DISTINCTIVE FEATURES OF PD27 AND RA6657, EXEMPTION DISTINGUISHED FROM

RETENTION

> PD27 implemented the Operation Land Transfer Programcovers tenanted rice and corn lands

> The requisites for coverage under the Operation Land Transfer program are the following
o The land must be devoted to rice or corn crops
o There must be a system of share-crop or lease-tenancy
obtaining therein

> If either is absent, the landowner may apply for exemption

> PD27 grants each tenant of covered lands a 5 hectare lot, or in case the lot is irrigated, 3
hectares constituting the family size farm. However, said law allows a covered landowner to retain
not more than 7 hectares of his land if his aggregate landholding doesnt exceed 24 hectares

> Consequently, a landowner may keep his whole covered land if its aggregate size doesnt
exceed the retention limit of 7 hectares

> An application for exemption is different from that of retention. They are distinct remedies and
thus, judgment in one doesnt preclude the subsequent institution of the other

> The right to retention is a constitutionally guaranteed right which is subject to the qualifications
by the legislature

> Landowners who havent exercised their retention rights under PD27 may exercise their
retention rights under RA 6657

> The right to retention may be exercised over tenanted land despite the issuance of the certificate
of land transfer to farmerbeneficiaries. What must be protected, however, is the right of the tenants
to opt to stay on the land chosen to be retained by the landowner or be a beneficiary in another
agricultural land with similar or comparable features

> Land awards made pursuant to a governments agrarian reform program are subject to the
exercise of the landowner who is qualified to the right of retention

> The issuance of emancipation patents or certificates of land transfers doesnt absolutely bar the
landowner from retaining the area covered thereby

WAIVER OF RIGHT OF RETENTION

1. Executing an affidavit or any other document duly attested by the MARO, Provincial Agrarian
Reform Officer, or Regional Director, indicating that he is expressly waiving his right of retention

2. Signing of the landowner-tenant production agreement and farmers undertaking or application

for purchase and farmers undertaking, covering subject property

3. Entering into a voluntary land transfer/direct payment scheme agreement

4. Offering the subject landholding under VOS scheme and failure to indicate his retained area
5. Signing or submission of other documents indicating consent to have the entire property
covered, such as the form letter of the LBP on the disposition of the case and bond portions of a
land transfer claim for payment, and the Deed of Assignment, warranties and undertaking and
undertaking executed in favor of the LBP

6. Performing acts which constitute estoppel by laches

7. Doing such act or acts as would amount to a valid waiver in accordance with applicable laws
and jurisprudence