Mactan-Cebu International Airport Authority and Air Transportation Office v.

Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado

G.R. No. 176625 | February 25, 2010

Doctrine: The taking of private property, consequent to the Governments exercise of

its power of eminent domain, is always subject to the condition that the property be
devoted to the specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned,
then the former owners, if they so desire, may seek the reversion of the property,
subject to the return of the amount of just compensation received.

FACTS: Respondents were the registered owners of Lot No. 88 situated in the City of
Cebu, the subject lot. The property was expropriated in favor of the Republic of the
Philippines by virtue of a decision of the CFI of Cebu in a civil case. The public purpose
for which the property was expropriated was for the expansion and improvement of
theLahugAirport. The affected landowners appealed. Pending appeal, the Air
Transportation Office (ATO) proposed a compromise settlement that the expropriated
lots would be resold at the price they were expropriated in the event that the ATO would
abandon the Lahug Airport. Because of this, Lozada did not pursue his appeal.

Then President Corazon Aquino directed the Department of Transportation and

Communication to transfer general aviation operations of the Lahug Airport to the
Mactan-Cebu International Airport Authority and to close the Lahug Airport after such
transfer, therefore, the public purpose of the said expropriation (expansion of the
airport) was never actually initiated, realized, or implemented.

Herein respondents initiated a complaint for the recovery of possession and

reconveyance of ownership of Lot No. 88. The RTC rendered judgment in their favor.
This was affirmed by the CA.

ISSUE: Whether the ownership and possession of Lot No. 88 should be restored to
respondents.

HELD:Yes, the ownership and possession of Lot No. 88 should be restored to

respondents.

The taking of private property by the Governments power of eminent domain is subject
to two mandatory requirements: (1) that it is for a particular public purpose; and (2) that
just compensation be paid to the property owner. These requirements partake of the
nature of implied conditions that should be complied with to enable the condemnor to
keep the property expropriated.

More particularly, with respect to the element of public use, the expropriator should
commit to use the property pursuant to the purpose stated in the petition for
expropriation filed, failing which, it should file another petition for the new purpose. If
not, it is then incumbent upon the expropriator to return the said property to its private
owner, if the latter desires to reacquire the same, subject to the return of the amount of
just compensation received. Otherwise, the judgment of expropriation suffers an
intrinsic flaw, as it would lack one indispensable element for the proper exercise of the
power of eminent domain, namely, the particular public purpose for which the property
will be devoted. Accordingly, the private property owner would be denied due process of
law, and the judgment would violate the property owners right to justice, fairness, and
equity.

Secretary of DPWH v. Tecson

Facts:
Spouses Heracleo are the co-owners of a land which is among the private properties
traversed by MacArthur Highway in Bulacan, a government project undertaken
sometime in 1940. The taking was taken without the requisite expropriation proceedings
and without their consent. In 1994, Heracleo demanded the payment of the fair market
value of the property. The DPWH offered to pay 0.70 centavos per sqm., as
recommended by the appraiser committee of Bulacan. Unsatisfied, Heracleo filed a
complaint for recovery of possession with damages. Favorable decisions were rendered
by the RTC and the CA, with valuation of P 1,500 per sqm and 6% interest per annum
from the time of filing of the until full payment. The SC Division reversed the CA ruling
and held that computation should be based at the time the property was taken in 1940,
which is 0.70 per sqm. But because of the contrasting opinions of the members of the
Division and transcendental importance of the issue, the case was referred to the En
Banc for resolution.

Issue 1: W/N the taking of private property without due process should be nullified
No. The governments failure to initiate the necessary expropriation proceedings prior
to actual taking cannot simply invalidate the States exercise of its eminent domain
power, given that the property subject of expropriation is indubitably devoted for public
use, and public policy imposes upon the public utility the obligation to continue its
services to the public. To hastily nullify said expropriation in the guise of lack of due
process would certainly diminish or weaken one of the States inherent powers, the
ultimate objective of which is to serve the greater good.
Thus, the non-filing of the case for expropriation will not necessarily lead to the return of
the property to the landowner. What is left to the landowner is the right of compensation.

Issue 2: W/N compensation is based on the market value of the property at the time of
taking
Yes. While it may appear inequitable to the private owners to receive an outdated
valuation, the long-established rule is that the fair equivalent of a property should be
computed not at the time of payment, but at the time of taking. This is because the
purpose of just compensation is not to reward the owner for the property taken but
to compensate him for the loss thereof. The owner should be compensated only for
what he actually loses, and what he loses is the actual value of the property at the time
it is taken.
Issue 3: W/N the principle of equity should be applied in this case
No. The Court must adhere to the doctrine that its first and fundamental duty is the
application of the law according to its express terms, interpretation being called for only
when such literal application is impossible. To entertain other formula for computing
just compensation, contrary to those established by law and jurisprudence, would open
varying interpretation of economic policies a matter which this Court has no
competence to take cognizance of. Equity and equitable principles only come into full
play when a gap exists in the law and jurisprudence.

Velasco Dissent:
The States power of eminent domain is not absolute; the Constitution is clear that no
person shall be deprived of life, liberty and property without due process of law. As
such, failure of the government to institute the necessary proceedings should lead to
failure of taking an individuals property. In this case, since the property was already
taken, the complainants must be equitably compensated for the loss thereof.

For purposes of just compensation, the value of the land should be determined from
the time the property owners filed the initiatory complaint, earning interest therefrom. To
hold otherwise would validate the States act as one of expropriation in spite of
procedural infirmities which, in turn, would amount to unjust enrichment on its part. To
continue condoning such acts would be licensing the government to continue
dispensing with constitutional requirements in taking private property.
 Hacienda Luisita Incorporated vs Presidential Agrarian Reform Council, et al.,
Case Digest G.R. No. 171101 November 22, 2011

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.

Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council (PARC), et al.,
G.R. No. 171101, July 5, 2011
DECISION

VELASCO, JR., J.:

I. THE FACTS
In 1958, the Spanish owners of Compaia General de Tabacos de Filipinas
(Tabacalera) sold Hacienda Luisita and the Central Azucarera de Tarlac, the sugar mill
of the hacienda, to the Tarlac Development Corporation (Tadeco), then owned and
controlled by the Jose Cojuangco Sr. Group. The Central Bank of the Philippines
assisted Tadeco in obtaining a dollar loan from a US bank. Also, the GSIS extended a
PhP5.911 million loan in favor of Tadeco to pay the peso price component of the sale,
with the condition that the lots comprising the Hacienda Luisita be subdivided by the
applicant-corporation and sold at cost to the tenants, should there be any, and
whenever conditions should exist warranting such action under the provisions of the
Land Tenure Act. Tadeco however did not comply with this condition.

On May 7, 1980, the martial law administration filed a suit before the Manila RTC
against Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of
Agrarian Reform (MAR) so that the land can be distributed to farmers at cost.
Responding, Tadeco alleged that Hacienda Luisita does not have tenants, besides
which sugar lands of which the hacienda consisted are not covered by existing
agrarian reform legislations(PD 27-rice and corn). The Manila RTC rendered judgment
ordering Tadeco to surrender Hacienda Luisita to the MAR. Therefrom, Tadeco
appealed to the CA.

On March 17, 1988, during the administration of President Corazon Cojuangco Aquino,
the Office of the Solicitor General moved to withdraw the governments case against
Tadeco, et al. The CA dismissed the case, subject to the PARCs approval of Tadecos
proposed stock distribution plan (SDP) in favor of its farmworkers. [Under EO 229
(Sec10) and later RA 6657(Sec31), Tadeco had the option of availing stock distribution
as an alternative modality to actual land transfer to the farmworkers.] On August 23,
1988, Tadeco organized a spin-off corporation, herein petitioner HLI, as vehicle to
facilitate stock acquisition by the farmworkers. For this purpose, Tadeco conveyed to
HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of
Hacienda Luisita in exchange for HLI shares of stock.

On May 9, 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). On May 11, 1989, 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 on October 14, 1989, in which 5,117 FWBs, out of 5,315 who
participated, opted to receive shares in HLI.
As may be gleaned from the SDOA, included as part of the distribution plan are: (a)
production-sharing equivalent to three percent (3%) of gross sales from the production
of the agricultural land payable to the FWBs in cash dividends or incentive bonus; and
(b) distribution of free homelots of not more than 240 square meters each to family-
beneficiaries. The production-sharing, as the SDP indicated, is payable "irrespective of
whether [HLI] makes money or not," implying that the benefits do not partake the nature
of dividends, as the term is ordinarily understood under corporation law. (5,117 out of
5315 = shares; 132 = land distribution)

Prior to approval, DAR Secretary Miriam Defensor-Santiago proposed that the SDP be
revised, along the following lines:
1. That over the implementation period of the [SDP], [Tadeco]/HLI shall ensure that
there will be no dilution in the shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of the
percentage shareholdings of the [FWBs], i.e., that the 33% shareholdings of the
[FWBs] will be maintained at any given time
November 21, 1989 - the PARC, under then Sec. Defensor-Santiago, issued
Resolution No. 89-12-2, approving the SDP of Tadeco/HLI.

From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 hectares
of converted agricultural land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares at 80
million pesos (P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death benefits and no interest
bearing salary/educational loans and rice sugar accounts.
Two separate groups subsequently contested this claim of HLI. (the petitions/protets)

CONVERSION PROPER
On August 15, 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 on August 14, 1996, 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 December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of
stocks of Centennary Holdings, Inc. (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. From this area was carved out 2 parcels(180 has and 4 has), for
which 2 separate titles were issued in the name of LIPCO. Later, LIPCO transferred
these 2 parcels to the Rizal Commercial Banking Corporation (RCBC) in payment of
LIPCOs PhP431,695,732.10 loan obligations to RCBC(dacion en pago). LIPCOs titles
were cancelled and new ones were issued to RCBC.
The other 200 has was transferred to Luisita Realty Corporation (LRC) in two separate
transactions in 1997 and 1998, both uniformly involving 100 hectares for PhP 250
million each.
 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.

Such, was the state of things when two separate petitions reached the DAR in the latter
part of 2003. The first was filed by the Supervisory Group of HLI (Supervisory Group),
praying for a renegotiation of the SDOA, or, in the alternative, its revocation. The
second petition, praying for the revocation and nullification of the SDOA and the
distribution of the lands in the hacienda, was filed by Alyansa ng mga Manggagawang
Bukid ng Hacienda Luisita (AMBALA). The DAR then constituted a Special Task Force
(STF) to attend to issues relating to the SDP of HLI. After investigation and evaluation,
the STF found that HLI has not complied with its obligations under RA 6657 despite the
implementation of the SDP, AND RECOMMENDED. On December 22, 2005, the PARC
issued the assailed Resolution No. 2005-32-01, recalling/revoking the SDO plan of
Tadeco/HLI. It further resolved that the subject lands be forthwith placed under the
compulsory coverage or mandated land acquisition scheme of the CARP.

From the foregoing resolution, HLI sought reconsideration. Its motion notwithstanding,
HLI also filed a petition before the Supreme Court in light of what it considers as the
DARs hasty placing of Hacienda Luisita under CARP even before PARC could rule or
even read the motion for reconsideration. PARC would eventually deny HLIs motion for
reconsideration via Resolution No. 2006-34-01 dated May 3, 2006.

II. THE ISSUES

(1) Does the PARC possess jurisdiction to recall or revoke HLIs SDP?
(2) [Issue raised by intervenor FARM (group of farmworkers)] Is Sec. 31 of RA 6657, which
allows stock transfer in lieu of outright land transfer, unconstitutional?
(3) Is the revocation of the HLIs SDP valid? [Did PARC gravely abuse its discretion in
revoking the subject SDP and placing the hacienda under CARPs compulsory
acquisition and distribution scheme?]
(4) Should those portions of the converted land within Hacienda Luisita that RCBC and
LIPCO acquired by purchase be excluded from the coverage of the assailed PARC
resolution? [Did the PARC gravely abuse its discretion when it included LIPCOs and
RCBCs respective properties that once formed part of Hacienda Luisita under the
CARP compulsory acquisition scheme via the assailed Notice of Coverage?]

III. THE RULING

HLI: PARC has no authority to revoke the SDP; it has the power to disapprove, but not
to recall its previous approval of the SDP. It is the court which has jurisdiction and
authority to order the revocation or rescission of the PARC-approved SDP
(1) YES, the PARC has jurisdiction to revoke HLIs SDP under the doctrine of
necessary implication.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the
plan for stock distribution of the corporate landowner belongs to PARC. Contrary to
petitioner HLIs posture, PARC also has the power to revoke the SDP which it
previously approved. It may be, as urged, that RA 6657 or other executive issuances on
agrarian reform do not explicitly vest the PARC with the power to revoke/recall
an approved SDP. Such power or authority, however, is deemed possessed by PARC
under the principle of necessary implication, a basic postulate that what is implied in a
statute is as much a part of it as that which is expressed.

Following the doctrine of necessary implication, it may be stated that the conferment of
express power to approve a plan for stock distribution of the agricultural land of
corporate owners necessarily includes the power to revoke or recall the approval of the
plan. To deny PARC such revocatory power would reduce it into a toothless agency of
CARP, because the very same agency tasked to ensure compliance by the corporate
landowner with the approved SDP would be without authority to impose sanctions for
non-compliance with it.

HLI: the parties to the SDOA should now look to the Corporation Code, instead of to RA
6657, in determining their rights, obligations and remedies. The Code should be the
applicable law on the disposition of the agricultural land of HLI.
SC: NO! the rights, obligations and remedies of the parties to the SDOA embodying the
SDP are primarily governed by RA 6657. It should abundantly be made clear that HLI
was precisely created in order to comply with RA 6657, which the OSG aptly described
as the "mother law" of the SDOA and the SDP. It is, thus, paradoxical for HLI to shield
itself from the coverage of CARP by invoking exclusive applicability of the Corporation
Code under the guise of being a corporate entity.
(2) NO, Sec. 31 of RA 6657 is not unconstitutional. [The Court actually
refused to pass upon the constitutional question because it was not raised at the
earliest opportunity and because the resolution thereof is not the lis mota of the
case. Moreover, the issue has been rendered moot and academic since SDO is no
longer one of the modes of acquisition under RA 9700.]

While there is indeed an actual case or controversy, intervenor FARM, composed of a

small minority of 27 farmers, has yet to explain its failure to challenge the
constitutionality of Sec. 31 of RA 6657 as early as November 21, 1989 when PARC
approved the SDP of Hacienda Luisita or at least within a reasonable time thereafter,
and why its members received benefits from the SDP without so much of a protest. It
was only on December 4, 2003 or 14 years after approval of the SDP that said plan and
approving resolution were sought to be revoked, but not, to stress, by FARM or any of
its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT
question the constitutionality of Sec. 31 of RA 6657, but concentrated on the purported
flaws and gaps in the subsequent implementation of the SDP. Even the public
respondents, as represented by the Solicitor General, did not question the
constitutionality of the provision. On the other hand, FARM, whose 27 members
formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on May 3,
2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM some
eighteen (18) years from November 21, 1989 before it challenged the constitutionality of
Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept on their
rights and even accepted benefits from the SDP with nary a complaint on the alleged
unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot
now be goaded into resolving a constitutional issue that FARM failed to assail after the
lapse of a long period of time and the occurrence of numerous events and activities
which resulted from the application of an alleged unconstitutional legal provision.

The last but the most important requisite that the constitutional issue must be the
very lis mota of the case does not likewise obtain. The lis mota aspect is not present,
the constitutional issue tendered not being critical to the resolution of the case. If some
other grounds exist by which judgment can be made without touching the
constitutionality of a law, such recourse is favored.

The lis mota in this case, proceeding from the basic positions originally taken by
AMBALA (to which the FARM members previously belonged) and the Supervisory
Group, is the alleged non-compliance by HLI with the conditions of the SDP to support a
plea for its revocation. And before the Court, the lis mota is whether or not PARC acted
in grave abuse of discretion when it ordered the recall of the SDP for such non-
compliance and the fact that the SDP, as couched and implemented, offends certain
constitutional and statutory provisions. To be sure, any of these key issues may be
resolved without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover,
looking deeply into the underlying petitions of AMBALA, et al., it is not the said section
per se that is invalid, but rather it is the alleged application of the said provision in the
SDP that is flawed.

It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7 of RA
6657, has all but superseded Sec. 31 of RA 6657 vis--vis the stock distribution
component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: [T]hat
after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to
sell and compulsory acquisition. Thus, for all intents and purposes, the stock
distribution scheme under Sec. 31 of RA 6657 is no longer an available option under
existing law. The question of whether or not it is unconstitutional should be a moot
issue.

(3) YES, the revocation of the HLIs SDP valid. [NO, the PARC did NOT gravely
abuse its discretion in revoking the subject SDP and placing the hacienda under
CARPs compulsory acquisition and distribution scheme.]

The revocation of the approval of the SDP is valid: (1) the mechanics and timelines of
HLIs stock distribution violate DAO 10 because the minimum individual allocation of
each original FWB of 18,804.32 shares was diluted as a result of the use of man days
and the hiring of additional farmworkers; (2) the 30-year timeframe for HLI-to-FWBs
stock transfer is contrary to what Sec. 11 of DAO 10 prescribes.
In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of
stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the
SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI]
shall arrange with the FIRST PARTY [TDC] the acquisition and distribution to the
THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to
them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the FIRST PARTY, until
such time as the entire block of 118,391,976.85 shares shall have been completely
acquired and distributed to the THIRD PARTY.

[I]t is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the
time of the approval of the SDP, suffered from watering down of shares. As determined
earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got
less than the guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition
and distribution of the HLI shares were based on man days or number of days
worked by the FWB in a years time. As explained by HLI, a beneficiary needs to work
for at least 37 days in a fiscal year before he or she becomes entitled to HLI shares. If it
falls below 37 days, the FWB, unfortunately, does not get any share at year end. The
number of HLI shares distributed varies depending on the number of days the FWBs
were allowed to work in one year. Worse, HLI hired farmworkers in addition to the
original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010
submitted by HLI to the Court, the total number of farmworkers of HLI as of said date
stood at 10,502. All these farmworkers, which include the original 6,296 FWBs, were
given shares out of the 118,931,976.85 HLI shares representing the 33.296% of the
total outstanding capital stock of HLI. Clearly, the minimum individual allocation of each
original FWB of 18,804.32 shares was diluted as a result of the use of man days and
the hiring of additional farmworkers.

Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-
year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec.
11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved
stock distribution plan within three (3) months from receipt by the corporate landowner
of the approval of the plan by PARC. In fact, based on the said provision, the transfer of
the shares of stock in the names of the qualified FWBs should be recorded in the stock
and transfer books and must be submitted to the SEC within sixty (60) days from
implementation.

To the Court, there is a purpose, which is at once discernible as it is practical, for the
three-month threshold. Remove this timeline and the corporate landowner can veritably
evade compliance with agrarian reform by simply deferring to absurd limits the
implementation of the stock distribution scheme. the reason underpinning the 30-year
accommodation does not apply to corporate landowners in distributing shares of stock
to the qualified beneficiaries, as the shares may be issued in a much shorter period of
time.
Taking into account the above discussion, the revocation of the SDP by PARC should
be upheld [because of violations of] DAO 10. It bears stressing that under Sec. 49 of RA
6657, the PARC and the DAR have the power to issue rules and regulations,
substantive or procedural. Being a product of such rule-making power, DAO 10 has the
force and effect of law and must be duly complied with. The PARC is, therefore, correct
in revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated November
21, l989 approving the HLIs SDP is nullified and voided.

(4) YES, those portions of the converted land within Hacienda Luisita that RCBC
and LIPCO acquired by purchase should be excluded from the coverage of the
assailed PARC resolution.

[T]here are two (2) requirements before one may be considered a purchaser in good
faith, namely: (1) that the purchaser buys the property of another without notice that
some other person has a right to or interest in such property; and (2) that the purchaser
pays a full and fair price for the property at the time of such purchase or before he or
she has notice of the claim of another.

It can rightfully be said that both LIPCO and RCBC are purchasers in good faith for
value entitled to the benefits arising from such status.
First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial
land, there was no notice of any supposed defect in the title of its transferor,
Centennary, or that any other person has a right to or interest in such property. In fact,
at the time LIPCO acquired said parcels of land, only the following annotations
appeared on the TCT in the name of Centennary: the Secretarys Certificate in favor of
Teresita Lopa, the Secretarys Certificate in favor of Shintaro Murai, and the
conversion of the property from agricultural to industrial and residential use.
The same is true with respect to RCBC. At the time it acquired portions of Hacienda
Luisita, only the following general annotations appeared on the TCTs of LIPCO: the
Deed of Restrictions, limiting its use solely as an industrial estate; the Secretarys
Certificate in favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage in
favor of RCBC to guarantee the payment of PhP 300 million.

To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected
to CARP coverage by means of a stock distribution plan, as the DAR conversion order
was annotated at the back of the titles of the lots they acquired. However, they are of
the honest belief that the subject lots were validly converted to commercial or industrial
purposes and for which said lots were taken out of the CARP coverage subject of PARC
Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After
all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural lands
previously covered by CARP land acquisition after the lapse of five (5) years from its
award when the land ceases to be economically feasible and sound for agricultural
purposes or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes. Moreover, DAR
notified all the affected parties, more particularly the FWBs, and gave them the
opportunity to comment or oppose the proposed conversion. DAR, after going through
the necessary processes, granted the conversion of 500 hectares of Hacienda Luisita
pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and
adjudicate agrarian reform matters and its original exclusive jurisdiction over all matters
involving the implementation of agrarian reform. The DAR conversion order became
final and executory after none of the FWBs interposed an appeal to the CA. In this
factual setting, RCBC and LIPCO purchased the lots in question on their honest and
well-founded belief that the previous registered owners could legally sell and convey the
lots though these were previously subject of CARP coverage. Ergo, RCBC and LIPCO
acted in good faith in acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value.
Undeniably, LIPCO acquired 300 hectares of land from Centennary for the amount of
PhP750 million pursuant to a Deed of Sale dated July 30, 1998. On the other hand, in a
Deed of Absolute Assignment dated November 25, 2004, LIPCO conveyed portions of
Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of
PhP431,695,732.10.
In relying upon the above-mentioned approvals, proclamation and conversion order,
both RCBC and LIPCO cannot be considered at fault for believing that certain portions
of Hacienda Luisita are industrial/commercial lands and are, thus, outside the ambit of
CARP. The PARC, and consequently DAR, gravely abused its discretion when it
placed LIPCOs and RCBCs property which once formed part of Hacienda Luisita
under the CARP compulsory acquisition scheme via the assailed Notice of
Coverage.

[The Court went on to apply the operative fact doctrine to determine what should be
done in the aftermath of its disposition of the above-enumerated issues:
While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC
Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to certain
operative facts that had occurred in the interim. Pertinently, the operative fact
doctrine realizes that, in declaring a law or executive action null and void, or, by
extension, no longer without force and effect, undue harshness and resulting unfairness
must be avoided. This is as it should realistically be, since rights might have accrued in
favor of natural or juridical persons and obligations justly incurred in the meantime. The
actual existence of a statute or executive act is, prior to such a determination, an
operative fact and may have consequences which cannot justly be ignored; the past
cannot always be erased by a new judicial declaration.
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are
upheld, the revocation must, by application of the operative fact principle, give
way to the right of the original 6,296 qualified FWBs to choose whether they want
to remain as HLI stockholders or not. The Court cannot turn a blind eye to the fact
that in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the
basis of the SDP approved by PARC per its Resolution No. 89-12-2 dated November
21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI salaries
and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the
gross produce from agricultural lands, and 3% of the proceeds of the sale of the 500-
hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling
118,391,976.85 were distributed as of April 22, 2005. On August 6, 20l0, HLI and
private respondents submitted a Compromise Agreement, in which HLI gave the FWBs
the option of acquiring a piece of agricultural land or remain as HLI stockholders, and as
a matter of fact, most FWBs indicated their choice of remaining as stockholders. These
facts and circumstances tend to indicate that some, if not all, of the FWBs may actually
desire to continue as HLI shareholders. A matter best left to their own discretion.]

The dissents in the July 5, 2011 decision

The dissents of the minority justices were on the other fine points of the decision.
Chief Justice Corona dissented insofar as the majority refused to declare Sec. 31 of RA
6657 unconstitutional. The provision grants to corporate landowners the option to
give qualified FWBs the right to own capital stock of the corporation in lieu of actual land
distribution. The Chief Justice was of the view that by allowing the distribution of capital
stock, and not land, as compliance with agrarian reform, Sec. 31 of RA 6657
contravenes Sec. 4, Article XIII of the Constitution, which, he argued, requires that the
law implementing the agrarian reform program should employ [actual] land
redistribution mechanism. Under Sec. 31 of RA 6657, he noted, the corporate
landowner remains to be the owner of the agricultural land. Qualified beneficiaries are
given ownership only of shares of stock, not [of] the lands they till. He concluded that
since an unconstitutional provision cannot be the basis of a constitutional act, the SDP
of petitioner HLI based on Section 31 of RA 6657 is also unconstitutional.
Justice Mendoza fully concurred with Chief Justice Coronas position that Sec. 31 of RA
6657 is unconstitutional. He however agreed with the majority that the FWBs be given
the option to remain as shareholders of HLI. He also joined Justice Brions proposal that
that the reckoning date for purposes of just compensation should be May 11, 1989,
when the SDOA was executed by Tadeco, HLI and the FWBs. Finally, he averred that
considering that more than 10 years have elapsed from May 11, 1989, the qualified
FWBs, who can validly dispose of their due shares, may do so, in favor of LBP or other
qualified beneficiaries. The 10-year period need not be counted from the issuance of the
Emancipation Title (EP) or Certificate of Land Ownership Award CLOA) because, under
the SDOA, shares, not land, were to be awarded and distributed.
Justice Brions dissent centered on the consequences of the revocation of HLIs
SDP/SDOA. He argued that that the operative fact doctrine only applies in considering
the effects of a declaration of unconstitutionality of a statute or a rule issued by the
Executive Department that is accorded the status of a statute. The SDOA/SDP is
neither a statute nor an executive issuance but a contract between the FWBs and the
landowners; hence, the operative fact doctrine is not applicable. A contract stands on a
different plane than a statute or an executive issuance. When a contract is contrary to
law, it is deemed void ab initio. It produces no legal effects whatsoever. Thus, Justice
Brion questioned the option given by the majority to the FWBs to remain as
stockholders in an almost-bankrupt corporation like HLI. He argued that the nullity of
HLIs SDP/SDOA goes into its very existence, and the parties to it must generally revert
to their respective situations prior to its execution. Restitution, he said, is therefore in
order. With the SDP being void, the FWBs should return everything they are proven to
have received pursuant to the terms of the SDOA/SDP. Justice Brion then proposed
that all aspects of the implementation of the mandatory CARP coverage be determined
by the DAR by starting with a clean slate from [May 11,] 1989, the point in time when
the compulsory CARP coverage should start, and proceeding to adjust the relations of
the parties with due regard to the events that intervened [thereafter]. He also held that
the time of the taking (when the computation of just compensation shall be reckoned)
shall be May 11, 1989, when the SDOA was executed by Tadeco, HLI and the FWBs.
Justice Sereno dissented with respect to how the majority modified the questioned
PARC Resolutions (i.e., no immediate land distribution, give first the original qualified
FWBs the option to either remain as stockholders of HLI or choose actual land
distribution) and the applicability of the operative fact doctrine. She would instead order
the DAR to forthwith determine the area of Hacienda Luisita that must be covered by
the compulsory coverage and monitor the land distribution to the qualified FWBs.
Erroneous interpretation of the Courts decision
The High Tribunal actually voted unanimously (11-0) to DISMISS/DENY the petition of
HLI and to AFFIRM the PARC resolutions. This is contrary to media reports that the
Court voted 6-4 to dismiss the HLI petition. The five (not four) minority justices (Chief
Justice Corona, and Justices Brion, Villarama, Mendoza, and Sereno) only partially
dissented from the decision of the majority of six (Justice Velasco Jr., Leonardo-De
Castro, Bersamin, Del Castillo, Abad, and Perez). Justice Antonio Carpio took no part in
the deliberations and in the voting, while Justice Diosdado Peralta was on official leave.
The 14th and 15th seats in the Court were earlier vacated by the retirements of Justices
Eduardo Antonio Nachura (June 13, 2011) and Conchita Carpio-Morales (June 19,
2011).
Another misinterpretation came from no less than the Supreme Court administrator and
spokesperson, Atty. Midas Marquez. In a press conference called after the promulgation
of the Courts decision, Marquez initially used the term referendum in explaining the
High Courts ruling. This created confusion among the parties and the interested public
since a referendum implies that the FWBs will have to vote on a common mode by
which to pursue their claims over Hacienda Luisita. The decision was thus met with
cries of condemnation by the misinformed farmers and the various peoples
organizations and militant groups supportive of their cause.
Marquez would later correct himself in a subsequent press briefing. But since by then
the parties had already filed their respective motions for reconsideration, he called upon
everyone to just wait for the final resolution of the motion[s], which is forthcoming
anyway. The resolution of the consolidated motions for reconsideration came relatively
early on November 22, 2011, or less than five months from the promulgation of the
decision.

G.R. No. 171101 November 22, 2011

(1) Motion for Clarification and Partial Reconsideration dated July 21, 2011 filed by
petitioner Hacienda Luisita, Inc. (HLI);
 - it is not proper to distribute the proceeds of the conversion sale to the FWBs the
proceeds of the sale belong to the corporation for having sold its asset, and the
distribution would be considered dissolution of HLI
- the actual taking is NOT November 21, 1989, but should be reckoned from finality
of the Decision of this Court, or at the very least, the reckoning period may be
tacked to January 2, 2006, the date when the Notice of Coverage was issued by the
DAR
(2) Motion for Partial Reconsideration dated July 20, 2011 filed by PARC and DAR
- Doctrine of Operative fact does not apply because no law was declared void.
(3) Motion for Reconsideration dated July 19, 2011 filed by AMBALA
- RA 6657 is unconstitutional
- "operative fact doctrine" does not apply. the option given to the farmers to remain
as stockholders of HLI is equivalent to an option for HLI to retain land in direct
violation of the CARL, the SDP having been revoked. It should not apply if it would
result to inequity
- CA erred in holding that improving the economic status of FWBs is not among the
legal obligations of HLI under the SDP and an imperative imposition by RA 6657
and DAO 10
- CA erred in holding that LIPCO and RCBC were purchasers for value
(4) Motion for Reconsideration dated July 21, 2011 filed by respondent-intervenor
Farmworkers Agrarian Reform Movement, Inc. (FARM);
- same with AMBALA
- issue of constitutionality is the lis mota of the case which must be decided upon
(5) Motion for Reconsideration dated July 21, 2011 filed by private respondents Noel
Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. (Supervisory
Group) and Windsor Andaya (collectively referred to as "Mallari, et al."); and
(6) Motion for Reconsideration dated July 22, 2011 filed by private respondents
Rene Galang and

ISSUES:
(1) applicability of the operative fact doctrine;
(2) constitutionality of Sec. 31 of RA 6657 or the Comprehensive Agrarian Reform Law
of 1988;
(3) coverage of compulsory acquisition;
(4) just compensation;
(5) sale to third parties;
(6) the violations of HLI; and
(7) control over agricultural lands (revocation of SDP)

OPERATIVE FACT DOCTRINE (not much related)

Bearing in mind that PARC Resolution No. 89-12-2 an executive actwas declared
invalid in the instant case, the operative fact doctrine is clearly applicable.
it should be recognized that SC, in its July 5, 2011 Decision, affirmed the revocation of
Resolution No. 89-12-2 and ruled for the compulsory coverage of the agricultural lands
of Hacienda Luisita in view of HLIs violation of the SDP and DAO 10. By applying the
doctrine, this Court merely gave the qualified FWBs the option to remain as
stockholders of HLI and ruled that they will retain the homelots and other benefits which
they received from HLI by virtue of the SDP.
The application of the doctrine is favorable to the FWBs because not only were the
FWBs allowed to retain the benefits and homelots they received under the stock
distribution scheme, they were also given the option to choose for themselves whether
they want to remain as stockholders of HLI or not.

CONSTITUTIONALITY
(Upheld previous ruling)
FARM is, therefore, remiss in belatedly questioning the constitutionality of Sec. 31 of RA
6657. The second requirement that the constitutional question should be raised at the
earliest possible opportunity is clearly wanting.
The last but the most important requisite that the constitutional issue must be the very
lis mota of the case does not likewise obtain. The lis mota aspect is not present, the
constitutional issue tendered not being critical to the resolution of the case.

COVERAGE OF COMPULSORY ACQUISITION

FARM argues that this Court ignored certain material facts when it limited the maximum
area to be covered to 4,915.75 hectares, whereas the area that should, at the least, be
covered is 6,443 hectares, which is the agricultural land allegedly covered by RA 6657
and previously held by Tarlac Development Corporation (Tadeco).
We cannot subscribe to this view. Since what is put in issue before the Court is the
propriety of the revocation of the SDP, which only involves 4,915.75 has. of agricultural
land and not 6,443 has., then We are constrained to rule only as regards the 4,915.75
has. of agricultural land.
DAR, however, contends that the declaration of the area to be awarded to each FWB is
too restrictive. It stresses that in agricultural landholdings like Hacienda Luisita, there
are roads, irrigation canals, and other portions of the land that are considered
commonly-owned by farmworkers, and this may necessarily result in the decrease of
the area size that may be awarded per FWB. DAR also argues that the July 5, 2011
Decision does not give it any leeway in adjusting the area that may be awarded per
FWB in case the number of actual qualified FWBs decreases.
The argument is meritorious. In order to ensure the proper distribution of the agricultural
lands of Hacienda Luisita per qualified FWB, and considering that matters involving
strictly the administrative implementation and enforcement of agrarian reform laws are
within the jurisdiction of the DAR, it is the latter which shall determine the area with
which each qualified FWB will be awarded.

500 HECTARES
RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by
means of a stock distribution plan, as the DAR conversion order was annotated at the
back of the titles of the lots they acquired. However, they are of the honest belief that
the subject lots were validly converted to commercial or industrial purposes and for
which said lots were taken out of the CARP coverage subject of PARC Resolution No.
89-12-2 and, hence, can be legally and validly acquired by them.

PROCEEDS OF SALE
Considering that the 500-hectare converted land, as well as the 80.51-hectare SCTEX
lot, should have been included in the compulsory coverage were it not for their
conversion and valid transfers, then it is only but proper that the price received for the
sale of these lots should be given to the qualified FWBs. In effect, the proceeds from the
sale shall take the place of the lots.

JUST COMPENSATION - TAKING

In Our July 5, 2011 Decision, We stated that "HLI shall be paid just compensation for
the remaining agricultural land that will be transferred to DAR for land distribution to the
FWBs." We also ruled that the date of the "taking" is November 21, 1989, when PARC
approved HLIs SDP per PARC Resolution No. 89-12-2.
Mallari, et al. argued that the valuation of the land cannot be based on November 21,
1989. Instead, they aver that the date of "taking" for valuation purposes is a factual
issue best left to the determination of the trial courts.
AMBALA alleged that HLI should no longer be paid just compensation for the
agricultural land that will be distributed to the FWBs, since the RTC already rendered a
decision ordering "the Cojuangcos to transfer the control of Hacienda Luisita to the
Ministry of Agrarian Reform, which will distribute the land to small farmers after
compensating the landowners P3.988 million." In the event, however, that this Court will
rule that HLI is indeed entitled to compensation, AMBALA contended that it should be
pegged at forty thousand pesos (PhP 40,000) per hectare, since this was the same
value that Tadeco declared in 1989 to make sure that the farmers will not own the
majority of its stocks.
SC: the date of "taking" is November 21, 1989, the date when PARC approved HLIs
SDP in view of the fact that this is the time that the FWBs were considered to own and
possess the agricultural lands in Hacienda Luisita. To be precise, these lands became
subject of the agrarian reform coverage through the stock distribution scheme only upon
the approval of the SDP, that is, November 21, 1989. Thus, such approval is akin to a
notice of coverage ordinarily issued under compulsory acquisition. Further, any doubt
should be resolved in favor of the FWBs.

SALE TO THIRD PARTIES

There is a view that since the agricultural lands in Hacienda Luisita were placed under
CARP coverage through the SDOA scheme on May 11, 1989, then the 10-year period
prohibition on the transfer of awarded lands under RA 6657 lapsed on May 10, 1999,
and, consequently, the qualified FWBs should already be allowed to sell these lands
with respect to their land interests to third parties, including HLI, regardless of whether
they have fully paid for the lands or not.

The proposition is erroneous. If the land has not yet been fully paid by the beneficiary,
the right to the land may be transferred or conveyed, with prior approval of the DAR, to
any heir of the beneficiary or to any other beneficiary who, as a condition for such
transfer or conveyance, shall cultivate the land himself. Failing compliance herewith, the
land shall be transferred to the LBP which shall give due notice of the availability of the
land in the manner specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall compensate the beneficiary in
one lump sum for the amounts the latter has already paid, together with the value of
improvements he has made on the land.
Without a doubt, under RA 6657 and DAO 1, the awarded lands may only be
transferred or conveyed after ten (10) years from the issuance and registration of the
emancipation patent (EP) or certificate of land ownership award (CLOA). Considering
that the EPs or CLOAs have not yet been issued to the qualified FWBs in the instant
case, the 10-year prohibitive period has not even started. Significantly, the reckoning
point is the issuance of the EP or CLOA, and not the placing of the agricultural lands
under CARP coverage.
if We maintain the position that the qualified FWBs should be immediately allowed the
option to sell or convey the agricultural lands in Hacienda Luisita, then all efforts at
agrarian reform would be rendered nugatory by this Court, since, at the end of the day,
these lands will just be transferred to persons not entitled to land distribution under
CARP.

CONTROL OVER AGRICULTURAL LANDS

SC realized that the FWBs will never have control over these agricultural lands for as
long as they remain as stockholders of HLI.
bearing in mind that with the revocation of the approval of the SDP, HLI will no longer
be operating under SDP and will only be treated as an ordinary private corporation; the
FWBs who remain as stockholders of HLI will be treated as ordinary stockholders and
will no longer be under the protective mantle of RA 6657.
In addition to the foregoing, in view of the operative fact doctrine, all the benefits and
homelots80 received by all the FWBs shall be respected with no obligation to refund or
return them, since, as We have mentioned in our July 5, 2011 Decision, "the benefits x x
x were received by the FWBs as farmhands in the agricultural enterprise of HLI and
other fringe benefits were granted to them pursuant to the existing collective bargaining
agreement with Tadeco."
One last point, the HLI land shall be distributed only to the 6,296 original FWBs. The
remaining 4,206 FWBs are not entitled to any portion of the HLI land, because the rights
to said land were vested only in the 6,296 original FWBs pursuant to Sec. 22 of RA
6657. With these, PARC/DARs, AMBALAs, and FARMs Motions GRANTED.
The order giving option to the FWBs to choose whether or not to stay as shareholders
was thereby recalled.

G.R. No. 171101 April 24, 2012

Before the Court are the Motion to Clarify and Reconsider Resolution of November 22,
2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI) and the
Motion for Reconsideration/Clarification dated December 9, 2011 filed by private
respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and
Windsor Andaya (collectively referred to as "Mallari, et al.").
Basically, the issues raised by HLI and Mallari, et al. boil down to the following: (1)
determination of the date of "taking"; (2) propriety of the revocation of the option on the
part of the original FWBs to remain as stockholders of HLI; (3) propriety of distributing to
the qualified FWBs the proceeds from the sale of the converted land and of the 80.51-
hectare Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just compensation for
the homelots given to the FWBs.

PAYMENT OF JUST COMPENSATION

HLI contends that since the SDP is a modality which the agrarian reform law gives the
landowner as alternative to compulsory coverage, then the FWBs cannot be considered
as owners and possessors of the agricultural lands of Hacienda Luisita at the time the
SDP was approved by PARC. It further claims that the approval of the SDP is not akin
to a Notice of Coverage in compulsory coverage situations because stock distribution
option and compulsory acquisition are two (2) different modalities with independent and
separate rules and mechanisms. Concomitantly, HLI maintains that the Notice of
Coverage issued on January 2, 2006 may, at the very least, be considered as the date
of "taking" as this was the only time that the agricultural lands of Hacienda Luisita were
placed under compulsory acquisition in view of its failure to perform certain obligations
under the SDP.
UPHELD PREVIOUS DECISION: taking was effected on November 21, 1989
What is notable, however, is that the divestment by Tadeco of the agricultural lands of
Hacienda Luisita and the giving of the shares of stock for free is nothing but an
enticement or incentive for the FWBs to agree with the stock distribution option scheme
and not further push for land distribution. And the stubborn fact is that the "man days"
scheme of HLI impelled the FWBs to work in the hacienda in exchange for such shares
of stock.
When the agricultural lands of Hacienda Luisita were transferred by Tadeco to HLI in
order to comply with CARP through the stock distribution option scheme, sealed with
the imprimatur of PARC under PARC Resolution No. 89-12-2 dated November 21,
1989, Tadeco was consequently dispossessed of the afore-mentioned attributes of
ownership. Notably, Tadeco and HLI are two different entities with separate and distinct
legal personalities. Ownership by one cannot be considered as ownership by the other.
Corollarily, it is the official act by the government, that is, the PARCs approval of the
SDP, which should be considered as the reckoning point for the "taking" of the
agricultural lands of Hacienda Luisita. Although the transfer of ownership over the
agricultural lands was made prior to the SDPs approval, it is this Courts consistent
view that these lands officially became subject of the agrarian reform coverage through
the stock distribution scheme only upon the approval of the SDP. And as We have
mentioned in Our November 22, 2011 Resolution, such approval is akin to a notice of
coverage ordinarily issued under compulsory acquisition.

FWBS ENTITLED TO PROCEEDS OF SALE

HLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51
hectares of the land as corporate owner and argues that the return of said proceeds to
the FWBs is unfair and violative of the Corporation Code.
This claim is bereft of merit.
UPHELD PREVIOUS RULING - were it not for the approval of the SDP by PARC, these
large parcels of land would have been distributed and ownership transferred to the
FWBs, subject to payment of just compensation, given that, as of 1989, the subject
4,915 hectares of Hacienda Luisita were already covered by CARP.

HOMELOTS
In the present recourse, HLI also harps on the fact that since the homelots given to the
FWBs do not form part of the 4,915.75 hectares covered by the SDP, then the value of
these homelots should, with the revocation of the SDP, be paid to Tadeco as the
landowner.
We disagree. As We have explained in Our July 5, 2011 Decision, the distribution of
homelots is required under RA 6657 only for corporations or business associations
owning or operating farms which opted for land distribution. This is provided under Sec.
30 of RA 6657.
Since none of the provisions made reference to corporations which opted for stock
distribution under Sec. 31 of RA 6657, then it is apparent that said corporations are not
obliged to provide for homelots. Nonetheless, HLI undertook to "subdivide and allocate
for free and without charge among the qualified family-beneficiaries x x x residential or
homelots of not more than 240 sq. m. each, with each family beneficiary being assured
of receiving and owning a homelot in the barrio or barangay where it actually resides."
In fact, HLI was able to distribute homelots to some if not all of the FWBs.
Thus, in our November 22, 2011 Resolution, We declared that the homelots already
received by the FWBs shall be respected with no obligation to refund or to return them.
However, since the SDP was already revoked with finality, the Court directs the
government through the DAR to pay HLI the just compensation for said homelots in
consonance with Sec. 4, Article XIII of the 1987 Constitution that the taking of land for
use in the agrarian reform program is "subject to the payment of just compensation."
To recapitulate, the Court voted on the following issues in this manner:
1) In determining the date of "taking," the Court voted 8-6 to maintain the ruling fixing
November 21, 1989 as the date of "taking," the value of the affected lands to be
determined by the LBP and the DAR;
2) On the propriety of the revocation of the option of the FWBs to remain as HLI
stockholders, the Court, by unanimous vote, agreed to reiterate its ruling in its
November 22, 2011 Resolution that the option granted to the FWBs stays revoked;
3) On the propriety of returning to the FWBs the proceeds of the sale of the 500-hectare
converted land and of the 80.51-hectare SCTEX land, the Court unanimously voted
to maintain its ruling to order the payment of the proceeds of the sale of the said land
to the FWBs less the 3% share, taxes and expenses specified in the fallo of the
November 22, 2011 Resolution;
4) On the payment of just compensation for the homelots to HLI, the Court, by
unanimous vote, resolved to amend its July 5, 2011 Decision and November 22,
2011 Resolution by ordering the government, through the DAR, to pay to HLI the just
compensation for the homelots thus distributed to the FWBS.
the government, through DAR, is ordered to pay Hacienda Luisita, Inc. the just
compensation for the 240-square meter homelots distributed to the FWBs.

REPUBLIC OF THE PH, represented by the NAPOCOR v.

HEIRS OF SATURNINO Q. BORBON and CA

GR No. 165354 12 January 2015

By Kylie Dado

FACTS:

NAPOCOR entered a property in Brgy. San Isidro, Batangas

In order to construct and maintain transmission lines for the 230 KV

MahabangParang-Pinamucan Power Transmission Project
o The heirs owned the propery (14, 257 sq. m.)

NAPOCOR filed a COMPLAINT in the RTC-Batangas

Seeking - acquisition of an easement of right of way over a portion of the

property involving an area of only 6,326 square meters, more or less
Allegation:
 o It had negotiated w/ the respondents but they failed to reach any
agreement
o It was willing to deposit P9,790.00 representing the assessed value of the
portion sought to be expropriated
Prayer:
o Issuance of a writ of possession upon deposit to enable it to:
1. Enter and take possession and control of the affected portion of the
property
2. Demolish all improvements existing
3. Commence construction of the transmission line project
4. Appointment of 3 commissioners to determine just compensation

Heirs ANSWER:

NAPOCOR had not negotiated with them before entering the property (Entry w/o
consent), destroying some fruit trees without payment, and installing 5
woodpoles for its project
Area being expropriated only covered the portion directly affected by the
transmission lines
Remaining portion of the property was also affected because the transmission
line passed through the center of the land, thereby dividing the land into 3 lots
Presence of the high tension transmission line had rendered the entire property
inutile for any future use and capabilities
NONETHELESS, they tendered no objection provided it would pay just
compensation not only for the portion sought to be expropriated but for the entire
property whose potential was greatly diminished, if not totally lost, due to the
project;
Their property is an industrial land
Sought:
o Dismissal of the complaint
o Payment of P1K/sq. m. & attorneys fees
o To be allowed to nominate their representative to the panel of
commissioners to be appointed by the trial court

PRE-TRIAL was conducted and the parties stipulated on the location, number of heirs,
names of the person upon whom title to the property was issued, and the ownership &
possession of the property.

RTC directed the parties to submit names of their nominees to sit in the panel of
commissions within 10 days from the date of pre-trial

RTC constituted the panel of 3 commissioners.

 2 commissioners submitted a joint report, and found:
o property was classified industrial land located within the Industrial 2 Zone
o although it is used to be an agricultural land, it was reclassified to
industrial for appraisal/taxation purposes
o Reclassification was made on the basis of a certification issued by the
Zoning Administrator
2 commissioners appraised the value @ P550/sq. m.
3rd commissioner filed a separate report
o Recommended the payment of easement fee of at least 10% of the
assessed value indicated in the tax declaration + damages +
improvements affected + tower occupancy

Parties submitted their OBJECTIONS:

HEIRS - NAPOCOR should compensate them for the entire property at the rate
of P550.00/ sq. m. because the the property was already classified as industrial
land at the time NAPOCOR entered it
NAPOCOR insisted that the property was classified as agricultural land at the
time of its taking, and only seeking an easement of right of way over a portion of
the property, not the entire area so, it should only pay 10% of the assessed value
of the portion

RTC DECISION:

Price to be paid value at the time of taking, which is the date of entry to the
property or the date of the filing of the complaint
o There is no evidence as to when NAPOCOR entered so the reference
point should be the date of filing May 5, 1995
Gave more weight to the Joint Report of the 2 commissioners
o NOTE: the 2 commissioners who submitted the Joint Report are govt EE,
while the one who has a separate report is a private lawyer representing
the plaintiff
Ordered NAPOCOR to pay:
1. Just compen for the whole area (14K sq. m.) @ the rate of P550/sqm
2. Legal rate of interest from May 5 until full payment
3. Costs of suit

CA DECISION: Affirmed but modified the area to be covered 6,326 sqm

NAPOCOR appealed.
During the pendency of the appeal, NAPOCOR filed a Motion to Defer Proceedings
stating that the negotiations were going on with a view of amicable settlement.

HOWEVER, a year after, NAPOCOR filed a Manifestation and Motion to

DISCONTINUE Expropriation Proceedings as:
o they failed to reach an agreement
o property is no longer necessary for public purpose because of the
intervening retirement of the transmission lines installed on the heirs
property
o public purpose ceased to exist
o prayedthat the compensation be reduced by the equivalent of the benefit
they received from the land during the time of its occupation
o Basis in dismissing the proceedings: Metropolitan Water District vs. De
Los Angeles,land sought to be expropriated was no longer indispensably
necessary in the maintenance and operation of petitioners waterworks
system

ISSUE: W/N THE EXPROPRIATTION PROCEEDINGS SHOULD BE

DISCONTINUED/DISMISSED PENDING APPEAL

SC: YES

Public use is the fundamental basis for the action for expropriation; hence, NAPOCORs
motion to discontinue the proceedings is warranted and should be granted.

As discussed in the case of Metropolitan Water District vs. De Los Reyes:

The fundamental basis then of all actions brought for the expropriation of lands, under
the power of eminent domain, is public use. That being true, the very moment that it
appears at any stage of the proceedings that the expropriation is not for a public
use, the action must necessarily fail and should be dismissed, for the reason that
the action cannot be maintained at all except when the expropriation is for some
public use. That must be true even during the pendency of the appeal or at any
other stage of the proceedings.

It is notable in that case that it was made subject to several conditions in order to
address the dispossession of the defendants of their land, and the
inconvenience, annoyance and damages suffered by the defendants on account
of the proceedings. Accordingly, the Court remanded the case to the trial court
 for the issuance of a writ of possession ordering Metropolitan Water District to
immediately return possession of the land to the defendants, and for the
determination of damages in favor of the defendants, the claims for which must
be presented within 30 days from the return of the record to the court of origin
and notice thereof.

In this case, NAPOCOR seeks to discontinue the expropriation proceedings on the

ground that the transmission lines constructed on the respondents property had already
been retired.

Verily, the retirement of the transmission lines necessarily stripped the

expropriation proceedings of the element of public use. To continue with the
expropriation proceedings despite the definite cessation of the public purpose of the
project would result in the rendition of an invalid judgment in favor of the expropriator
due to the absence of the essential element of public use.

No board resolution to discontinue the proceedings

Despite the lack of the board resolution, therefore, the Court now considers the
documents (such as the Memorandum &Certificate of Inspection/Accomplishment)
attached to NAPOCORs Manifestation and Motion to Discontinue Expropriation
Proceedings to be sufficient to establish that the expropriation sought is no longer for
some public purpose.

NAPOCORs entry without the owners consent

NAPOCOR entered the property without the owners consent and without paying just
compensation to the respondents. Neither did it deposit any amount as required by law
prior to its entry.

It would be unfair for NAPOCOR not to be made liable to the respondents for the
disturbance of their property rights from the time of entry until the time of
restoration of the possession of the property

Liability of NAPOCOR; Reckoning Point

There is sufficient showing that NAPOCOR entered into and took possession of the
property as early as in March 1993 without the benefit of first filing a petition for eminent
domain.
 For all intents and purposes, therefore, March 1993 is the reckoning point of
NAPOCORs taking of the property, instead of May 5, 1995, the time NAPOCOR
filed the petition for expropriation. (Basis: Ansaldo vs. Tantuico)

No just compensation, only damages

In view of the discontinuance of the proceedings and the eventual return of the property
to the respondents, there is no need to pay just compensation to them because their
property would not be taken by NAPOCOR.

Instead of full market value, NAPOCOR should compensate the respondents for
the disturbance of their property rights from the time of entry in March 1993 until
the time of restoration of the possession by paying to them actual or other
compensatory damages. (Basis: Mactan-Cebu International Airport Authority v.
Lozada, Sr.)

Basis of damages

Basis would be the actual lost as a result and by reason of their dispossession of the
property and of its use, including the value of the fruit trees, plants and crops destroyed
by NAPOCORs construction of the transmission lines

Conversion of the proceedings: Expropriation Proceedings Action for Damages

Court remands the case to the court of origin for further proceedings, with instruction
toenable the parties to fully litigate the action for damages.

NATIONAL POWER CORPORATION vs HEIRS OF MACABANGKIT SANGKAY

G.R. No. 165828 August 24, 2011

BERSAMIN, J.

FACTS:

Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising the Charter of
the National Power Corporation), NPC undertook the Agus River Hydroelectric Power
Plant Project in the 1970s to generate electricity for Mindanao. The project included the
construction of several underground tunnels to be used in diverting the water flow from
the Agus River to the hydroelectric plants.[2]
1997: Respondents sued NPC in the RTC for the recovery of damages and of the
property, with the alternative prayer for the payment of just compensation
Allegations: that one of the underground tunnels of NPC that diverted the water flow of
the Agus River for the operation of the Hydroelectric Project in Agus V, Agus VI and Agus
VII traversed their land
that the underground tunnel had been constructed without their knowledge and
consent; that the presence of the tunnel deprived them of the agricultural, commercial,
industrial and residential value of their land
NPCs Answer: the Heirs of Macabangkit had no right to compensation under section 3(f)
of Republic Act No. 6395, under which a mere legal easement on their land was
established; that their cause of action, should they be entitled to compensation, already
prescribed due to the tunnel having been constructed in 1979; and that by reason of the
tunnel being an apparent and continuous easement, any action arising from such
easement prescribed in five years
RTC ruled in favor of the plaintiffs finding that an underground tunnel was constructed
therein
Ordered NPC to pay P113,532,500.00 as actual damages or just compensation
NPC to pay rental fees
the RTC issued a supplemental decision stating that respondents land or properties are
condemned in favor of defendant National Power Corporation, upon payment of the
aforesaid sum
the Heirs of Macabangkit filed an urgent motion for execution of judgment pending
appeal.[9]
The RTC granted the motion and issued a writ of execution
NPC assailed such decision by filing a writ by petition for certiorari in the CA
CA: affirmed the decision of the RTC
Rationale:
the testimonies of NPCs witness Gregorio Enterone and of the respondents witness Engr.
Pete Sacedon, the topographic survey map, the sketch map, and the ocular inspection
report sufficiently established the existence of the underground tunnel traversing the
land of the Heirs of Macabangkit
Section 3(i) of R.A. No. 6395, being silent about tunnels, did not apply to the present case
Contention of NPC: the CA should have applied Section 3(i) of Republic Act No. 6395,
which provided a period of only five years from the date of the construction within which
the affected landowner could bring a claim against it; and that even if Republic Act No.
 6395 should be inapplicable, the action of the Heirs of Macabangkit had already
prescribed due to the underground tunnel being susceptible to acquisitive prescription
after the lapse of 10 years pursuant to Article 620 of the Civil Code due to its being a
continuous and apparent legal easement under Article 634 of the Civil Code.
National Power Corporation (NPC) seeks the review on certiorari of the decision of the CA

ISSUE: WON NPC is liable for payment of just compensation?

RULING: Yes.

Factual findings of the RTC are binding since it was affirmed by the RTC
the evidence on the tunnel was substantial, for the significance of the topographic survey
map and the sketch map (as indicative of the extent and presence of the tunnel
construction) to the question on the existence of the tunnel was strong
These two (2) pieces of documentary evidence readily point the extent and presence of
the tunnel construction coming from the power cavern near the small man-made lake
which is the inlet and approach tunnel, or at a distance of about two (2) kilometers away
from the land of the plaintiffs-appellees, and then traversing the entire and the whole
length of the plaintiffs-appellees property, and the outlet channel of the tunnel is
another small man-made lake
The ocular inspection done by the RTC actually confirmed the existence of the tunnel
Five-year prescriptive period under Section 3(i) of Republic Act No. 6395 does not apply
to claims for just compensation
prescription did not bar the present action to recover just compensation
Section 3(i) includes no limitation except those enumerated after the term works.
Accordingly, the term works is considered as embracing all kinds of constructions,
facilities, and other developments that can enable or help NPC to meet its objectives of
developing hydraulic power expressly provided under paragraph (g) of Section 3.[23] The
CAs restrictive construal of Section 3(i) as exclusive of tunnels was obviously
unwarranted, for the provision applies not only to development works easily discoverable
or on the surface of the earth but also to subterranean works like tunnels
the prescriptive period provided under Section 3(i) of Republic Act No. 6395 is applicable
only to an action for damages, and does not extend to an action to recover just
compensation like this case
 JUST COMPENSATION (inverse
condemnation)
has the objective to recover the
value of property taken in fact by
the governmental defendant,
even though no formal exercise
of the power of eminent domain
has been attempted by the taking
agency.
Just compensation is the full and
fair equivalent of the property
taken from its owner by the
expropriator. The measure is not
the takers gain, but the owners
loss. The word just is used to
intensify the meaning of the
word compensation in order to
convey the idea that the
equivalent to be rendered for the
property to be taken shall be real,
substantial, full, and ample
Basis: Constitution
DAMAGES
seeks to vindicate a legal
wrong through damages,
which may be actual, moral,
nominal, temperate,
liquidated, or exemplary
When a right is exercised in a
manner not conformable with
the norms enshrined in Article
19[28] and like provisions on
human relations in the Civil
Code, and the exercise results
to the damage of another, a
legal wrong is committed and
the wrongdoer is held
responsible
statutory enactments

arises from the exercise by the emanates from the

State of its power of eminent transgression of a right
domain against private property
for public use

Due to the need to construct the underground tunnel, NPC should have first moved to
acquire the land from the Heirs of Macabangkit either by voluntary tender to purchase or
through formal expropriation proceedings. In either case, NPC would have been liable to
pay to the owners the fair market value of the land, for Section 3(h) of Republic Act No.
6395 expressly requires NPC to pay the fair market value of such property at the time of
the taking
The construction constitutes taking of the land as to entitle the owners to just
compensation
there was a full taking on the part of NPC, notwithstanding that the owners were not
completely and actually dispossessed.
It is settled that the taking of private property for public use, to be compensable, need not
be an actual physical taking or appropriation.[36] Indeed, the expropriators action may be
short of acquisition of title, physical possession, or occupancy but may still amount to a
taking
As a result, NPC should pay just compensation for the entire land
Just compensation was based on the valuation of the OIC of the City Assessors Office who
testified that, within that area, that area is classified as industrial and residential. That
plaintiffs land is adjacent to many subdivisions and that is within the industrial
classification. He also issued a certificate stating that the appraised value of plaintiffs land
ranges fromP400.00 to P500.00 per square meter
the fixing of just compensation must be based on the prevailing market value at the time of
the filing of the complaint, instead of reckoning from the time of the taking pursuant to
Section 3(h) of Republic Act No. 6395
Compensation that is reckoned on the market value prevailing at the time either when
NPC entered or when it completed the tunnel, as NPC submits, would not be just, for it
would compound the gross unfairness already caused to the owners by NPCs entering
without the intention of formally expropriating the land, and without the prior
knowledge and consent of the Heirs of Macabangkit
NPCs entry denied elementary due process of law to the owners since then until the
owners commenced the inverse condemnation proceedings