Hacienda Luisita and Land Reform

Land reform is linked to social justice. When Spain colonized the Philippines by force beginning 1521, its land was already claimed by the conquistadors in the name of Spain. The natives who were already tilling the land were put under Spanish landlords, who were given royal grant to “own” the land and exact forced labor and taxes from the natives. After the Spaniards left, the Americans took over. When the Philippines became independent in 1946, history had set right by giving the lands back to the people whose ancestors have been tilling then for centuries.

However, a new feudal system developed among Filipinos themselves, and once again drove a wedge between the tillers and their land. This paper aims to give light the concerning controversies surrounding the Hacienda Luisita and analyze how these controversies preoccupy the present administration of Pres. Benigno Simeon Cojuangco Aquino III. Before the Cojuangco family acquired Hacienda Luisita in the 1950s, the plantation belonged to the Spanish- owned Compana General de Tabacos de Filipinas (Tabacalera).

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Tabacalera acquired the land in 1882 through a royal grant from the Spanish crown, which had a self-appointed claim on the lands as the Philippines’ colonial master. Luisita was named after Luisa Bru y Lassus, the wife of the top official of Tabacalera. Tobacco used to be the main crop planted in Luisita, but in the 1920s the Spanish owners shifted to sugar. Sugar production in the Philippines had become more profitable because demand was guaranteed by the US quota. In 1927, the Spaniards built the sugar mill Central Azucarera de Tarlac to accompany their sugarcane plantation.

By the 1950s, aggravation over the Hukbalahap rebellion made the Spaniards decides to sell Hacienda Luisita and leave the Philippines. In 1957, President Ramon Magsaysay reportedly blocked the sale of the plantation o the wealthy Lopezes of Iloilo, fearing that they might become too powerful as they already owned Meralco, Negros navigation, Manila Chronicle, ABS-CBN and various hacienda in Western Visayas. So, President Ramon Magsaysay and Ninoy Aquino are said to have discussed the possibility of Ninoy’s-father-in-law, Jose Cojuangco, Sr. uying Central Azucarera de Tarlac and Hacienda Luisita from the Spaniards. Jose Cojuangco, Sr. received significant preferential treatment and assistance from the government to facilitate his takeover of Hacienda Luisita and Central Azucarera de Tarlac in 1957. To acquire a controlling interest in the Central Azucarera de Tarlac, Cojuangco had to pay the Spaniards in dollars. He turned to the Manufacturer’s Trust Company in New York for a 10-year, $ 2. 1 million loan. Dollars were tightly regulated in those times.

So, to ease the flow of foreign exchange for Cojuangco’s loan, the Central Bank of the Philippines deposited part of the country’s international reserves with the Manufacturer’s Trust Company in New York. The Central Bank did this on the condition that Cojuangco would simultaneously purchase the 6,443- hectare Hacienda Luisita, “with a view to distributing this hacienda to small farmers in line with the Administration’s social justice program. ” (Central Bank Monetary Resolution No. 1240, August 27, 1957).

To finance the purchase of Hacienda Luisita, Cojuangco turned to the Government Service Insurance System (GSIS). His application for a P7 million loan said that 4,000 hectares of the hacienda would be made available to bonafide sugar planters, while the balance 2,453 hectares would be distributed to barrio residents who will pay for them on instalment. The GSIS approved a P5. 9 million loan, on the condition that Hacienda Luisita would be “subdivided among the tenants who shall pay the cost thereof under reasonable terms and conditions. ” (GSIS Resolution No. 085, May 7, 1957; GSIS Resolution No. 3202, November 25, 1957). However, four months later, Jose Cojuangco, Sr. requested that the phrase be amended to “… shall be sold at cost to tenants, should there be any. ” (GSIS Resolution No. 356, February 5, 1958). This phrase would be cited later on as justification not to distribute the hacienda’s land. On, April 8, 1958, Jose Cojuangco’s Company the Tarlac Development Corporation (TADECO), became the new owner of Hacienda Luisita and Central Azucarera de Tarlac. Ninoy Aquino was appointed the Hacienda’s first administrator.

The Cojuangco’s disputed hold over Hacienda Luisita had been tolerated by Marcos even at the height of his dictatorship. However, as Ninoy Aquino and his family were leaving for exile in the U. S. , a case was filed on May 7, 1980 by the Marcos government against the Cojuangco company TADECO for the surrender of Hacienda Luisita to the Ministry of Agrarian Reform, so the land could be distributed to the farmers at cost, in accordance with the terms of the government loans given in 1957- 1958 to the late Jose Cojuangco, Sr. , who died in 1976. Republic of the Philippines vs. TADECO, Civil Case No. 131654, Manila Regional Trial Court, Branch XLIII). The Marcos government filed this case after written follow-ups sent to the Cojuangcos over a period did not result in land distribution. In their January 10, 1981 response to the government‘s complaint, the Cojuangcos said that the Central Bank and GSIS resolutions were unenforceable because there were no tenants on Hacienda Luisita. James Putzel noted in his book that the Central Bank resolution mentioned not to tenants but to “small farmers”.

Raising the issue of tenancy thus seemed ineffective in the defense. The Cojuangcos also said in their January 10, 1981 response that there was no agrarian unrest in Luisita and the existing Marcos land reform legislation exempt sugar lands. Further, they asserted the government’s claim on Luisita had already expired since the litigation was undertaken since 1967. In the meantime, vague rumors of a planned conversion of the hacienda into a residential subdivision or airport, or both, cropped up among the farm workers, causing anxiety that they would be left with no land to till.

The Cojuangcos formed Luisita Realty Corporation in 1977 as a first step on turning the hacienda into a residential and industrial complex. The government pursued its case against the Cojuangcos, and by December 1985, the Manila Regional Trial Court ordered TADECO to surrender Hacienda Luisita to the Ministry of Agrarian Reform. According to Putzel, this decision was rendered with unusual speed and was decried by the Cojuangcos as another act of harassment, because Cory Aquino, a widow after the assassination of Ninoy Aquino in 1983, was set to run for President against Marcos in the Snap Elections.

In Aquino’s 1986 Presidential campaign, she gave land reform first priority: “Land-to-the-tiller must become a reality, instead of an empty slogan. ” But the candidate was quite clear; the land reform would apply to Hacienda Luisita as well as to other landholding. She did not actually begin to address the land reform question, however, until the issue was brought to a head in January 1987, when the military attacked a group of peasants marching to Malacanang to demand action on the Promised Land reform, killing 18 and wounding more than 100 of them. Aquino fast-tracked the passage of land reform law.

She issued Presidential Proclamation 131 and Executive Order No. 229 outlining her reform program, which covers sugar and coconut lands. The outline also included a provision for the Stock Distribution Option (SDO) - a clause in the 1988 Comprehensive Agrarian Reform Program (CARP) that allowed land owners to give farmers shares of stock in a corporation instead of land. A month after the Court of Appeals dismissed the case filled in 1980 by the Philippine government —under Marcos—against the TADECO to compel the handover of Hacienda Luisita, Aquino signed the Comprehensive Agrarian Reform Law.

Soon after, Hacienda Luisita was put under the SDO that Aquino included in the law. Through SDO, landlords could comply with the land reform law without giving land to the farmers. In August 23, 1988, TADECO established Hacienda Luisita Inc. (HLI) to implement the distribution of stocks to farmers in the hacienda. In1989, the Cojuangcos justified Luisita’s SDO by saying that 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 and Communication (now University of Asia & the Pacific) was cited to support this claim. The claimed 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 Philippine 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 Pres. Cory Aquino. In 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 in October 14, 1989, and again, the SDO won by a 96. 75% vote. 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 power in the country favoured families like the Cojuangcos. The problem was not really that the farmers were denied the right to choose… it was rather that [they] were denied on the environment that would allow them to identify what their choices were. ” When the CARP was implemented in Hacienda Luisita in 1989, the farm workers’ ownership of the plantation was pegged at 33 percent, while the Cojuangcos retained 67 percent.

Luisita’s SDO agreement spelled out a 30-year schedule for transferring the stocks to the farm workers: “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. 5 shares shall have been completely acquired and distributed to the THIRD PARTY (farm workers). ” 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. 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.

By 2003, the farm workers’ daily wage flattened at P194. 50 and work days were down to one per week. The hacienda workers then filed a petition with the DAR to have the SDO agreement revoked. Workers from the HLI supervisory group petitioned the DAR to revoke the SDO, saying they were not receiving the dividends and other benefits earlier promised to them. Two months later, a petition to revoke the SDO bearing more than 5,300 signatures was filed by union officers at the DAR to revoke the SDO and stop land conversion in Luisita. The union tried to negotiate a wage increase to P225 per day.

Workers also asked that the work days be increased to 2-3 days per week, instead of just once a week. The management disagreed, claiming that the company was losing money. So, the Management retrenched 327 farm workers, including union officers. Almost all 5,000 members of the United Luisita Workers Union (ULWU) and 700 members of Central Azucarera de Tarlac Labor Union (CATLU) staged a protest against the mass retrenchment. Violence erupted between the protesters, the police and military forces. At least seven people were killed and 121 were injured, 32 from gunshot wounds.

This incident eventually became known as the “Luisita massacre. ” Then, the DAR’s Task Force Luisita conducted an investigation and focus group discussions among the farm workers. Task Force Luisita submitted the findings and recommendations from its investigation, which became the government’s basis for revoking Luisita’s Stock Distribution Option (SDO) and ordering the distribution of the hacienda’s land to the farmers a few months later. In August 2005, a special legal team was formed by the DAR to review the report submitted by Task Force Luisita.

Task Force Luisita recommended the revocation of the stock distribution agreement forged in May 1989, saying the SDO failed to fulfill the objectives of the Comprehensive Agrarian Reform Law about promoting social justice and improving the lives of the farmers. So, PARC issued Resolution No. 2005-32-01, ordering the revocation of Luisita’s SDO agreement and the distribution of the hacienda’s land to farmer beneficiaries. But, HLI asked the Supreme Court to prevent the PARC from enforcing the resolution.

The Supreme Court granted HLI’s petition and issued a temporary restraining order, preventing the PARC from cancelling the SDO agreement. Disregarding its own petition, a compromise agreement was initiated by the Cojuangco-Aquino family in connivance with some hacienda workers to influence the schedule oral argument of the case filed in the Supreme Court. The so-called “Compromise Agreement” that was signed by the farm workers of Hacienda Luisita gave them a choice either remaining as shareholders of the corporation (HLI) or getting their land.

Quite apart from the legal issue that the SDO may no longer be valid because the new CARP law disallows it. Under the terms of the agreement, the land available for available for distribution would only be one-third of the remaining land they had contributed. On the premise that they owned, one-third of the corporation, they were therefore entitled to either 1,333 sq. m. or 2,170 sq. m. depending on whether using 10,250 or 6,296 shareholders, and assuming that they each held the same amount of shares. In 1989, if they had chosen the land, they ould have received 7,800 sq. m. each. If they choose the land now, it would mean that they have nothing to show for their 21 years of work except ending up with much less than they originally could have owned. Hacienda Luisita could be redistributed if the Cojuangcos would voluntarily allow the redistribution of land to the farm workers and if the Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita (AMBALA) prevail and the Supreme Court will reject the “compromised agreement,” then this would effectively invalidate the SDO.

Conversely, HLI has been asserting to withhold the land from the farm workers because the debts were incurred by HLI Management. PNoy said that the clan’s main concern was the debt-free transfer of Luisita’s assets to farmer worker beneficiaries. Thus, this hinders the land distribution of Hacienda Luisita. Indeed, the Hacienda Luisita is the largest single piece of contiguous land in the Philippines. And this is where it could haunt President Benigno Simeon Aquino Cojuangco III for the rest of his presidency.

As soon as PNoy’s mother, Corazon Cojuangco-Aquino, became president, her family managed to escape the issues by using the CARP’s non-land transfer provisions, particularly the SDO scheme, ignoring what she promised during her campaign to distribute Hacienda Luisita. The Cojuangcos had taken advantage of the powers of the presidency to circumvent land reform and stay control of the hacienda. This is the reason why Hacienda Luisita remains a taint in the legacy of the Icon of Democracy.

If President-elect Noynoy Aquino wants to demonstrate that his new government represents generational change, he should convince his family to abandon efforts to hold onto Hacienda Luisita and finally allow it to be covered by the agrarian reform law. The expressed intention of Aquino to allow the distribution of land to farm worker-beneficiaries to be dragged out until some indeterminate moment before 2014 is simply the latest in a long line of efforts by the Aquino-Cojuangco family to avoid redistributing the land as mandated by the law.

The longer Hacienda Luisita remains exempt from the land redistribution provisions of the Comprehensive Agrarian Reform Law, the less credibility the new president’s government will have among the rural poor and the more vulnerable will be his government to charges of hypocrisy and the protection of family and elite interests and privileges by opponents of all political hues.