hli case digest

8/12/2019 HLI Case Digest

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Arden Kim B. Sia Law II-A

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Republic of the Philippines

DON VICENTE ORESTES ROMUALDEZ EDUCATIONAL FOUNDATION

Calanipawan, Tacloban City

G.R. No. 171101 November 22, 2011

Hacienda Luisita Incorporated vs Presidential Agrarian Reform

Council, et al.,

Facts:

The SC en banc voted 11-0 dismissing the petition filed by HLIAffirm 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 forbrevity) 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 saidcase.

2)Whether or not Sec. 31 of R.A. 6657 unconstitutional.3)Whether or not the 10-year period prohibition on the transfer of

awarded lands under RA 6657 lapsed on May 10, 1999, since

Hacienda Luisita were placed under CARP coverage through the

SDOA scheme on May 11, 1989, and thus the qualified FWBs

should now be allowed to sell their land interests in Hacienda

Luisita to third parties, whether they have fully paid for the lands

or not?


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4)Whether or not qualified FWBs shall be entitled to the option ofremaining as stockholder be reconsidered.

Ruling:

1)Operative Fact Doctrine is applicable to the instant case. The courtruled 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 notthe 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, andqualified 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 LandOwnership 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 optionto 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 bereconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs

should be given an option to remain as stockholders of HLI, inasmuch as

these qualified FWBs will never gain control [over the subject lands]

given the present proportion of shareholdings in HLI. The Court noted

that the share of the FWBs in the HLI capital stock is [just] 33.296%.

Thus, even if all the holders of this 33.296% unanimously vote to

remain as HLI stockholders, which is unlikely, control will never be in

the hands of the FWBs. Control means the majority of [sic] 50% plus at

least one share of the common shares and other voting shares. Applying

the formula to the HLI stockholdings, the number of shares that will


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constitute the majority is 295,112,101 shares (590,554,220 total HLI

capital shares divided by 2 plus one [1] HLI share). The 118,391,976.85

shares subject to the SDP approved by PARC substantially fall short of

the 295,112,101 shares needed by the FWBs to acquire control overHLI.]

The SC PARTIALLY GRANTED the motions for reconsideration of

respondents PARC, et al., The 6,296 original FWBs shall forfeit and

relinquish their rights over the HLI shares of stock issued to them in

favor of HLI. The HLI Corporate Secretary shall cancel the shares issued

to the said FWBs and transfer them to HLI in the stocks and transfer

book. The 4,206 non-qualified FWBs shall remain as stockholders of

HLI.

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