January 22, 2010
The struggle between farmers and landowners of Hacienda Luisita is now being seen as the first real test of character of presidential candidate Noynoy Cojuangco Aquino, whose family has owned the land since 1958. Our research shows that the problem began when government lenders obliged the Cojuangcos to distribute the land to small farmers by1967, a deadline that came and went. Pressure for land reform on Luisita since then reached a bloody head in 2004 when seven protesters were killed near the gate of the sugar mill in what is now known as the Luisita massacre. This is the story of the hacienda and its farmers, an issue that is likely to haunt Aquino as he travels the campaign trail for the May 2010 elections. Part one is here,part three is here and part four is here.
Second of a series
“Hindi ka nag-iisa (You are not alone)," sing the ghosts of Luisita to Senator Noynoy Aquino. They won’t even leave his music video alone.
Noynoy Aquino's Campaign Music Video (2009)
A little-known fact about the Hacienda Luisita controversy is the haunting resemblance of Senator Aquino’s “Hindi Ka Nag-Iisa" music video to a real-life, torch-lit march of Luisita’s workers amid the sugarcane fields at night days before the November 16, 2004 massacre.
Sa Ngalan ng Tubo documentary about Hacienda Luisita (video recorded November 2004) (Torch scenes from 1:17 - 1:29)
What could be worth all the blood that has been spilled? And why is everyone looking at Senator Aquino?
The answer lies in another little-known fact—a contentious 30-year stock distribution scheme that was implemented in lieu of land distribution on his family’s plantation that seriously complicates the campaign theme “good vs. evil."
The dark side of the Aquino legacy
Part Two of this series on Hacienda Luisita begins in 1989, the year the Stock Distribution Option (SDO) was introduced at the hacienda after the Comprehensive Agrarian Reform Program (CARP) took effect in 1988.
(The SDO was a clause in CARP that allowed landowners to give farmers shares of stock in a corporation instead of land. It was abolished in the updated land reform law CARPER, or CARP with Extensions and Revisions, that was passed in August 2009.)
Aquino’s abrogation left such a deep scar that even the New York Times, in its announcement of her passing on August 1, 2009, did not let it slip: “Born into one of the country’s wealthy land-owning families, the Cojuangcos of Tarlac, Mrs. Aquino did not lead the social revolution that some had hoped for. She failed to institute effective land reform or to address the country’s fundamental structural ailment, the oligarchic control of power and politics."
Cojuangcos give stocks instead of land
In 1989, the Cojuangcos justified Luisita’s SDO by saying it was impractical to divide the hacienda’s 4,915.75 hectares of land among 6,296 farm workers, as this would result in less than one hectare each (0.78). A study by the private group Center for Research & Communication (now University of Asia & the Pacific) was cited to support this claim.
The claim was contradicted by a study of the National Economic Development Authority (NEDA), which stated that the farm workers could still earn more with 0.78 hectares of land each than stocks. But the NEDA study was ignored by the Presidential Agrarian Reform Council (PARC), according to Eduardo Tadem, a member of the technical working group of PARC who spoke out in an October 20, 1989 report of the Philippine Daily Inquirer. The PARC was chaired by President Cory Aquino.
In 2005, after its investigation into the Luisita massacre, the Department of Agrarian Reform (DAR) also debunked the claim that economies of scale justified Luisita’s SDO. The DAR said the issue of economies of scale could have been addressed under Section 29 of CARP, which states that workers’ cooperatives should be created in cases where dividing land was not feasible.
In the column of Domini Torrevillas in the Philippine Star last Jan. 19, however, Noynoy declared: “Neither I nor the farmers are satisfied with the government’s land reform program. We have seen in Hacienda Luisita that this does not work. Luisita, which was then called Tabacalera Land, used to be 12,000 hectares. The company voluntarily gave half or 6,000 hectares for the Land Tenure Act. That is why Luisita today is only an approximate 5,500 hectares. However, the people who were provided land ended up losing or selling their property. Most of them returned to their lives as Luisita workers.
“This shows that mere land distribution is not beneficial to farmers. We cannot just transfer land to a farmer and say, ‘I am done with you.’ We need to teach him until he becomes a manager, becomes the agriculture business planner, the cooperative member. We must help him find means to buy biological pest control, natural fertilizers, pesticides and farm implements."
On May 9, 1989, Luisita’s farm workers were asked to choose between stocks or land in a referendum. The SDO won 92.9% of the vote. A second referendum and information campaign were held on October 14, 1989, and again the SDO won, this time by a 96.75% vote.
In his 1992 book A Captive Land: The Politics of Agrarian Reform in the Philippines, London-based development studies expert James Putzel expressed doubt that the farmers understood the choice that was presented to them. “The outcome of the vote was entirely predictable," he wrote. “The balance of power in the country favored families like the Cojuangcos. The problem was not really that the farm workers were denied the right to choose . . . it was rather that [they] were denied an environment that would allow them to identify what their choices were."
(Dr. James Putzel did extensive research on agrarian reform in the Philippines between the late 1980s to the early 1990s. He is currently a Professor of Development Studies at the London School of Economics.)
UP Center of Law calls Luisita SDO illegal
A year after Father Bernas spoke out, the University of the Philippines Law Center also called Luisita’s SDO illegal in a paper it submitted to the Senate Committee on Agrarian Reform in June 1990. The paper questioned the morality, propriety, and constitutionality of a plan that allowed the landlord to retain controlling interest at the expense of farmer beneficiaries.
President Cory Aquino replied that the paper was just the opinion of one professor. But she said she would look into it.
The Department of Justice then issued a legal opinion affirming the constitutionality of the SDO, saying an act of the legislature, approved by the executive, was presumed valid within the limits of the Constitution unless nullified in court.
The legislature back then was dominated by landlords, including President Aquino’s brother, Tarlac Rep. Jose “Peping" Cojuangco, Jr., the top decision-maker in Hacienda Luisita.
Cojuangco was “at the head of the landlord juggernaut" in Congress, according to a June 13, 1993 report of writer Antonio Ma. Nieva in the Philippine Daily Inquirer.
Meanwhile, the Secretary of Justice who issued the legal opinion saying Luisita’s SDO was constitutional was Aquino stalwart Franklin Drilon.
Drilon is currently chairman of the Liberal Party, whose standard-bearer is Senator Noynoy Aquino.
Corporation formed before vote
In his book A Captive Land, Putzel also noted that Hacienda Luisita, Inc (HLI), the company formed by the Cojuangcos to operationalize Luisita’s SDO, was incorporated in August 1988—nine months before the farm workers were first asked to choose between stocks or land in May 1989.
Aquino appointees in charge of DAR
Adding to the cloud of doubt was President Aquino’s perceived influence over the Department of Agrarian Reform (DAR) because she had the power to appoint the department’s head.
The Agrarian Reform Secretary who oversaw the farmers’ vote in Luisita in May 1989 was Philip Juico, the husband of Margie Juico, a close friend of President Aquino who also served as her Appointments Secretary.
In July 1989, Aquino replaced Phillip Juico with “graft buster" Miriam Defensor-Santiago after Juico’s name was dragged into the Garchitorena land scam.
The implementation of CARP during the term of President Cory Aquino was rocked by a number of scandals, one of them the Garchitorena land scam. See how the land scam was linked to President Aquino.
Two months later, Aquino replaced Santiago. Many years later, Santiago said Aquino removed her because of something she said about Luisita.
Abad is currently the campaign manager of Senator Noynoy Aquino.
Cojuangcos assume majority control
In 1989, the farm workers’ ownership of Hacienda Luisita was pegged at 33%, while 67% was retained by the Cojuangcos.
When the Comprehensive Agrarian Reform Program was implemented in Luisita in 1989, the farm workers’ ownership of the hacienda was pegged at 33%, while 67% was retained by the Cojuangcos. See how the Cojuangcos were able to gain control of the corporation.
“At the end of each fiscal year, for a period of 30 years, the SECOND PARTY (HLI) shall arrange with the FIRST PARTY (TADECO) the acquisition and distribution to the THIRD PARTY (farm workers) 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 (HLI) that are presently owned and held by the FIRST PARTY (TADECO), until such time as the entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY (farm workers)."
The impact of this provision was far-reaching.
The stocks representing the farm workers’ full 33% share were not transferred to them in 1989, but were spread over “a period of 30 years" with only “one-thirtieth (1/30)" released every year. At this rate, it would take until 2019 for the farm-worker beneficiaries to receive their complete set of stocks. While their shares remained undistributed, these were “owned and held" by the Cojuangco company TADECO (Tarlac Development Corporation).
Thus, the common belief that 33% of Hacienda Luisita has been owned by farm workers since CARP was implemented in 1989 is not entirely accurate, because the full transfer of stocks did not happen in 1989.
Farmers asked to work for “free" stocks
The farm workers also had to continuously render labor to receive shares, because distribution was based “on the number of days worked". If a worker quit or if management fired him, he no longer got the undistributed portion of his shares. If management cut work days, distribution of shares was also affected.
Complicating things further was a separate provision that set the annual payroll as the basis for deciding who could get shares at the end of each year. As names on the payroll changed every year when workers left or joined the company, the list of shareholders grew longer and longer, diluting the entitlement of the original beneficiaries. In 1989, there were 6,296 farm-worker beneficiaries in Luisita. By 2005, there were 11,955 names on the HLI stockholder list. Not all of the 11,955 remained employed with HLI, or were part of the original 6,296 beneficiaries.
After the November 2004 massacre and subsequent investigation by the DAR, HLI announced on June 9, 2005 that it had given out all undistributed stocks “in one supreme act of good faith," about 15 years ahead of the 30-year schedule.
It is believed this was done because the 30-year distribution period was a loophole. Way back in 1995, Dr. Jeffrey M. Riedinger, currently Dean of International Studies at Michigan State University, already said the 30-year distribution period seemed “without basis in the law" in his book Agrarian Reform in the Philippines: Democratic Transitions and Redistributive Reform.
(Section 11 of DAR Administrative Order No. 10, Series of 1988 states that stocks should be transferred to beneficiaries within 60 days after the SDO is implemented. HLI had not yet been issued a Certificate of Compliance by the DAR since 1989 because the full transfer of stocks had not happened.)
Like Father Bernas in 1989 and the UP Center of Law in 1990, Riedinger also said the SDO “appears to violate the constitutional mandate that ownership of agricultural lands be redistributed to the regular farm workers cultivating them."
3% production share and home lots
Under the SDO, Luisita’s farm workers were entitled to two new perks: they were allotted a 3% share in the gross production output of the hacienda, and some were given home lots inside the plantation. The farm workers make clear, however, that these were mandated by law under Section 30 and Section 32 of CARP, not voluntary acts of generosity of the Cojuangcos.
The 3% production share never went beyond P1,120 per farm worker per year. The titles of the home lots also have problems, which this report will not get into now.
About 5 years after the SDO was implemented, management began to claim that HLI was losing money. The farm workers’ wages plateaued and their work days were cut.
Meanwhile, a mall and industrial park were sprouting on the portion of the hacienda closest to McArthur Highway.
Conversion—the real plan
On September 1, 1995, the Sangguniang Bayan of Tarlac passed a resolution reclassifying 3,290 out of Luisita’s 4,915 hectares from agricultural to commercial, industrial, and residential. The governor of Tarlac province at that time was Margarita “Tingting" Cojuangco, wife of Jose “Peping" Cojuangco, Jr. Out of the 3,290 reclassified hectares, 500 were approved for conversion by the DAR.
As land was being converted, the area left for farming grew smaller and smaller. More work days were cut, and wages were practically frozen. Mechanization also reduced the need for manual labor.
The farm workers began to fear for their jobs, without any assurances of receiving their 33% equity share in the sale of the converted land.
By 2003, the farm workers’ daily wage was down to P194.50 (P9.50 after deductions for salary loans and other items), and work days were down to 1 per week.
They finally saw the futility of having four board seats against management’s seven (the SDO agreement allotted 4 board seats to the farm workers ahead of the 30-year waiting period for their stocks). They were always going to be outvoted.
The SDO had to go, they concluded.
The union leaders put together a petition to revoke the SDO and stop land conversion in Luisita. It was signed by 5,339 farm workers and filed at the Department of Agrarian Reform on December 4, 2003. In July 2004, the union tried to negotiate a wage increase to P225 per day. They also asked for an increase in work days to 2-3 days per week. Management said no, saying the company was losing money.
Management then issued notices retrenching 327 farm workers effective October 1, 2004. A month later came the workers’ strike, then the massacre.
TO BE CONTINUED IN PART THREE
Source: GMA News
The issues surrounding Hacienda Luisita are being seen as the first real test of character of presidential hopeful Noynoy Cojuangco Aquino, whose family has owned the land since 1958. Our research shows that the problem began when government lenders obliged the Cojuangcos to distribute the land to small farmers by 1967, a deadline that came and went.
As Sen. Noynoy Aquino campaigns for the presidency, new attention has been focused on events of five years ago when labor strife on his family's sugar estate left seven dead. This is the third of a series that examines the tortured history of Hacienda Luisita, an issue that would face another Aquino administration.
After the massacre of 2004, eight more people who were either leaders or supporters of the Luisita strike were murdered in Tarlac. A GMANews.TV investigation reveals that a survivor of one shooting testified in 2005 that Sen. Noynoy Aquino had appealed to him about a "superhighway", which turned out to be the now controversial SCTex.
Since 2006, Hacienda Luisita and its farmer-beneficiaries have been locked in a stalemate after the Supreme Court temporarily stopped the implementation of a government order revoking the stock distribution option of the hacienda. In the fifth and last part of this series, presidential candidate Noynoy Aquino speaks on the range of Luisita-related issues that could hound his administraiton if he wins.