US embassy cable - 05MANILA4929

UNCLAS SECTION 01 OF 02 MANILA 004929 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR DRL/IL, EAP/MTS, EAP/MLS, DRL/CRA, INR/EAP 
LABOR FOR ILAB 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, ELAB, PHUM, SOCI, PINS, RP 
SUBJECT:  GRP TAKES STEP TO REDISTRIBUTE LARGE ESTATE OWNED 
IN PART BY FORMER PRESIDENT AQUINO 
 
REF: A. MANILA 3154 
 
     B. MANILA 0887 
     C. 04 MANILA 5901 
     D. 04 MANILA 5552 
 
1.  (U) This message is Sensitive but Unclassified.  Please 
handle accordingly. 
 
2.  (SBU) Summary:  Taking steps to resolve a long-standing 
labor dispute, the Philippine government has ordered that 
the large "Hacienda Luisita" estate owned in part by former 
president Corazon Aquino be redistributed to workers living 
on the property.  The wealthy Aquino/Cojuangco clan has 
promised to challenge the ruling in court.  The case has 
potentially far-ranging implications for the landholdings of 
other wealthy families who have avoided land reform so far, 
although it is not clear whether the Arroyo administration 
is trying to send that message.  End Summary. 
 
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GRP Seeks Redistribution of Land 
-------------------------------- 
 
3.  (U) Taking steps to resolve a long-standing labor 
dispute (see background in para 8), the GRP has ordered that 
the large Hacienda Luisita estate owned in part by former 
president Corazon Aquino be redistributed to tenants living 
on the property.  On September 30, the Department of 
Agrarian Reform (DAR) released a report recommending that 
the Presidential Agrarian Reform Council (PARC) scrap 
Hacienda Luisita's Stock Distribution Option (SDO) and place 
the 6,300-hectare sugar plantation located north of Manila 
under the coverage of the Comprehensive Agrarian Reform 
Program (CARP), which would distribute the land among its 
approximately 5,000 tenant worker-farmers.  The report, 
prepared by the GRP's "Task Force Hacienda Luisita," came 
almost a year after the violent dispersal of striking 
workers at the Aquino/Cojuangco family-owned estate.  (Note: 
In the November 2004 confrontation with security forces, 
seven striking workers were killed -- see ref d.  An 
investigation into the shootings is continuing.  Due to the 
strike and tensions at the estate, a large sugar-processing 
factory on the property remains idle.  End Note). 
 
4.  (U) In releasing the report and its recommendation, DAR 
Secretary Nasser Pangandaman argued that the hacienda 
 
SIPDIS 
management committed a number of serious infractions during 
the 16-year life of the stock distribution option.  He said 
the living conditions of the plantation workers had 
deteriorated, with many farm workers earning net pay of only 
10 pesos (20 U.S. cents) a week and living in increasingly 
poor conditions.  The Secretary expressed optimism that the 
PARC would approve the Task Force's recommendation and that 
the land would be redistributed as soon as possible. 
 
5.  (U) The PARC started the deliberations on the DAR's 
recommendation on October 13.  It created an inter-agency 
committee, chaired by the Department of Justice, to validate 
the DAR report and to study the legal, budgetary and 
political implications of the DAR recommendations.  The 
inter-agency committee has 30 days from October 19 to report 
back to PARC.  The PARC, chaired by President Arroyo (though 
other Malacanang officials often sit in for her at meetings) 
and composed of representatives of farmers, landowners and 
CARP-implementing agencies, will then issue the final 
decision.  Any party to the case can file an appeal before 
the Court of Appeals within fifteen days after the issuance 
of the PARC decision. 
 
------------------- 
Political Vendetta? 
------------------- 
 
6.  (SBU) There have been accusations from Opposition 
figures that Malacanang pushed these recent developments 
forward because of former president Aquino's support for the 
anti-Arroyo camp.  (Note:  In July, Aquino came out against 
Arroyo, urging her to resign immediately.  End Note.) 
Secretary Pangandaman, however, denied allegations that the 
 
SIPDIS 
DAR decision was politically motivated, averring that the 
investigation was launched even before Aquino called for the 
resignation of President Arroyo (which is accurate).  When 
asked to comment, Aquino -- who is not involved in the 
management of the estate though she owns part of it -- has 
kept her own counsel. 
 
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Cojuangcos Promise to Appeal 
---------------------------- 
 
7.  (SBU) The management of Hacienda Luisita Inc. (HLI), 
which essentially reports to the Cojuangcos, plans to file a 
petition in court questioning the authority of DAR to issue 
its recommendation.  An HLI spokesman argued that DAR did 
not request and consider management's response to the 
allegations made by farm workers that HLI had violated the 
stock option agreement.  HLI and the Cojuangco family have 
publicly indicated that they will pursue the matter in the 
courts as far as possible.  Mission contacts have told us 
that they believe the family could postpone implementation 
of the DAR recommendation for years given the ponderous 
nature of the Philippine judicial system. 
 
---------- 
Background 
---------- 
 
8.  (U) The dispute over Hacienda Luisita stretches back to 
1957, when the Cojuangco clan -- one of the wealthiest 
families in the country -- purchased the property with the 
help of a government loan on condition that the property 
would eventually be subdivided among its workers.  This 
condition was never met, despite periodic protests from 
workers.  In 1988, implementing legislation on agrarian 
reform was passed during the administration of then- 
President Aquino.  The law made clear that the actual 
distribution of land to tenants was not required, and that 
the distribution of shares of stocks would also be legally 
sufficient.  In 1989, the Cojuangco clan utilized this 
provision to turn the hacienda into a corporation, with 
shares for owners and workers.  Tension at the estate 
continued into the 1990s, with the GRP charging -- with some 
evidence -- that extreme leftists affiliated with the 
Communist Party of the Philippines/New People's Army 
(CPP/NPA) were influencing some of the workers. 
 
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Comment 
------- 
 
9.  (SBU) Due to likely legal challenges by the Cojuangco 
family, the hacienda workers are unlikely to see any 
material change in their situation for the foreseeable 
future despite the DAR recommendation.  However, a ruling by 
PARC approving revocation of the SDO and distribution of the 
hacienda land could nonetheless have far-ranging 
implications for the large landholdings of other influential 
and wealthy families who have hitherto managed to exempt 
their estates from land reform initiatives.  Chronic, 
festering tensions on estates have only helped extreme 
leftists in the Philippines garner support.  A dynamic GRP 
policy to press forward with land reform laws already on the 
books could possibly help ameliorate this problem, although 
it is not clear whether that is the intent of the Arroyo 
administration in pressing the Hacienda Luisita matter. 
 
JONES