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Stock Distribution Scheme Consistent with

the Constitutions Agrarian Reform
(Hacienda Luisita vs PARC, 2011)
Hacienda Luisita vs PARC
Case Digest GR 171101 July 5 2011 Nov 22 2011
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. Back 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.
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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. These acts of the PARC was assailed by
HLI via Rule 65.
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.

Administrative Law
Issue 1: W/N PARC has the authority to revoke the Stock Distribution Plan or SDP

Constitutional Law
Issue 2: W/N the Court may exercise its power of judicial review over the constitutionality of Sec 31 of
RA 6657

Statutory Construction
Issue 3: W/N Sec 31 of RA 6657 is consistent with the Constitutions concept of agrarian reform

* The SC, through a resolution dated Nov 21 2011 of the motion for reconsideration filed by HLI,
affirmed the revocation of HLIs SDP and the placing of Hacienda Luisita under the compulsory land
distribution scheme of the CARP law. It was also held that the date of taking was Nov 21 1989, when
the PARC, by Resolution 89-12-2, approved the SDP of HLI. ##