IBON Features / November 2009
SDO and Farmers’ Misery in Luisita
Through the stock distribution option, the essence of land reform has been distorted to benefit landowners—denying the farmers of actual land redistribution.
By Xandra Bisenio
IBON Features– The massacre in Tarlac’s Hacienda Luisita five years ago—where seven farm workers were felled by government bullets and scores suffered injuries—is a tragic testament to the peasants’ continuing plight of landlessness and poverty.
Particularly in Luisita, peasants have for two decades been denied the essence of land reform—genuine land distribution. This, as the Cojuangcos persist in implementing the stock distribution option (SDO) despite justified calls for its revocation.
Just recently, Hacienda Luisita again figured in an alleged controversial deal. According to United Luisita Workers Union Chairperson Lito Bais, the national government purchased 83 hectares of Luisita for the construction of a portion of the Subic-Clark-Tarlac Expressway (SCTEX) for which farmworkers received anomalously varying amounts– from as high as P300 to only a few centavos each.
History of evading land reform
In 1957, to purchase the Central Azucarera de Tarlac (CAT) from Spanish-owned Compania General de Tabacos de Filipinas (Tabacalera), Jose Cojuangco Sr. was obliged to obtain the 6,474-hectare Hacienda Luisita, as well as seek loans. Subsequently the CAT and Hacienda Luisita were transferred to Cojuangco’s Tarlac Development Corporation (TADECO), an agricultural corporation. In line with government’s social justice program, these loans were guaranteed on the condition that the Cojuangcos will distribute the Hacienda land to small farmers.
The clan was also granted a P7-million loan in purchasing the Hacienda, on the condition that the latter will be subdivided among tenants. The case filed by the Marcos government in 1985 to compel the Cojuangcos to transfer Hacienda Luisita to the Ministry of Agrarian Reform for subdivision and sale to farmers was dismissed by the Court of Appeals in 1988 on the ground that Luisita would be covered by agrarian reform.
Fifty-two years have passed since the Cojuangcos acquired Hacienda Luisita at no cost except the promise to return the land to its rightful tillers. Yet, that promise remains unfulfilled. Under the presidency of Corazon Cojuangco-Aquino, youngest sister of Hacienda Luisita’s majority owner Jose “Peping” Cojuangco, RA 6657 or the Comprehensive Agrarian Reform Law (CARL) was enacted. Aquino made land reform her administration’s centerpiece program, and even vowed to subject Luisita to land reform “to serve as an example”.
However, both the CARL itself and Executive Order 229 signed by Aquino provided for the “transfer of shares of stocks, rather than land, to workers and other qualified beneficiaries… as the action is deemed compliance with the land distribution requirements of the Comprehensive Agrarian Reform Program (CARP)”. Subsequently, the TADECO created Hacienda Luisita Inc. (HLI) as a company specifically for this purpose.
After two rounds of referendums facilitated by then DAR Secretary Philip Juico and other Tarlac government officials in May 1989 and by former Agrarian Reform Secretary Miriam Defensor in October 1989, a Memorandum of Agreement (MOA) on the SDO was signed between TADECO, HLI and the farmers. Sentro Para sa Tunay na Repormang Agraryo (SENTRA) Executive Director and peasant lawyer Jobert Pahilga defines the SDO:
“Based on the MOA, the farm workers supposedly owned 33.296% of the outstanding capital stock of the HLI, which was P355, 531,462 or 355,531,462 shares at 1 peso per share before May 10, 1989. In the stock distribution plan 33.296% of capital stock or P118, 391,976.85 or 118,391,976.85 shares will be distributed to farmworker beneficiaries within 30 years. Thus, the P118 million worth of shares of stocks would be distributed to the farm workers not as a “one-shot deal” but for a period of thirty years at 1/30 per year.”
The SDO covers farmworkers who appear in the annual payroll including permanent and seasonal employees regularly or periodically employed by the TADECO. The farmworkers’ shares of stock are determined by the number of days of work or mandays, which is allocated by the HLI management.
In a position paper submitted to the Senate Agrarian Reform Committee in 1990, the University of the Philippines Law Center criticized the SDO as ‘unconstitutional’ because:
* it is essentially non-distributive
* it has allowed landlords to retain control over their property
* it has failed to improve the socioeconomic conditions of its beneficiaries.
Worse, studies reveal that in anticipation of the SDO, the Cojuangco clan created several agribusiness-related companies such as sugarcane production and milling, of which only the HLI dealt with agrarian reform. The Cojuangcos also declared only less than 5,000 hectares as land assets and reduced its value to only one-third of HLI’s total value. Meanwhile, the “more expensive portions” covering roads, residential, commercial areas and their peripheries were declared property of other Cojuangco corporations and were appraised up to more than 60% of the corporation’s value.
Upliftment for farmers?
Farm workers have filed petitions and launched protests against the SDO which has, for 20 years now, only pushed them deeper in misery. Pahilga wrote that the farmworkers boycotted the September 2003 elections for farmworkers’ and supervisors’ representatives to the HLI board “as a protest to the SDO and because the four board seats were useless against seven management seats.” They have neither enjoyed their rights and privileges stipulated in the MOA nor have they received their due whether in HLI’s production sales or conversion proceeds. Several home lot awardees have also not received their individual titles.
Aside from the SCTEX, the Cojuangcos have constantly pushed for the conversion of Luisita lands into non-agricultural ventures for profit– without due consultation with their ‘co-owners’, the farmworkers. These land-use conversions have reduced the hacienda’s agricultural lands to less than half its original size.
In September 1995, the Sangguniang Bayan ng Tarlac reclassified 3,290 agricultural hectares of Luisita for commercial, industrial and residential use: the Luisita Golf and Country Club, Las Haciendas Industrial Subdivision, Family Park Homes Subdivision, Don Pepe Cojuangco Subdivision and the St. Luis Subdivision. Of this, 500 hectares have been sold to two Japanese corporations namely Itutsu and Hasana. Another 500 hectares were converted into the Luisita Industrial Park in August 1996. The conversion yielded over P2 billion for the Cojuangcos, but the farmworkers had to divide among themselves only P37.5 million or only 3%– instead of 33%– of the gross sale.
The massive land-use conversion in Hacienda Luisita consequently led to lesser mandays, lower production, much lower wages and the eventual retrenchment of farmworkers. The average take home pay of farmworkers amounts only to P18 for the seasonal or P9 for the casual for a two-manday week. The production of more than 300,000 tons of sugarcane per cropping season before the implementation of the SDO went down to 290,000 tons as soon as the SDO was implemented in 1989, to 248,471 tons in 2003.
Moreover, retrenched farmworkers’ names are removed from the payroll and they no longer receive any shares of stock thereon. Meanwhile, the names of new farmworkers– even those who are non-residents of Luisita and should therefore not be beneficiaries of the SDO but are favored by the management– appear on the payroll and thereon receive shares of stock on the basis of mandays.
It appeared that more than 90% of the HLI farmworkers voted in favor of the SDO. Presidentiable candidate and HLI part-owner Benigno “Noynoy” Aquino also claims that the SDO is what the Luisita farm workers wanted. However, reports disclose that an Israeli-British-trained “Yellow Army” composed of Luisita supervisors used malicious and coercive campaign strategies to convince farm workers to vote for the scheme. These tactics involved the distribution of pamphlets that asked “prinsipyo o kaldero?” (principles or the cooking pot?); convincing farmworkers with docked rifles or pistols; threats of retrenchment; and harassment against those who expressed opposition to the SDO. In December 2003, 80% of the farmworkers filed a petition criticizing the SDO and land use conversion in the Hacienda.
Distorting land reform
Through the SDO, the Cojuangcos have distorted the essence of land reform for their benefit. It masqueraded as ‘co-ownership’ between landowners and farmers, but has rid powerful landed families the obligation of actual land redistribution.
The travails which this posed on both peasants and farmworkers caused the unrest which hacienda goons and government troops attempted to quell violently in November 2004. The following years saw more Luisita peasant and union leaders opposed to the SDO falling victims to wide-scale retrenchment, murder and harassment. Yet, no specific entity has been held culpable of this violence. Instead, those who had command responsibility over the Luisita massacre have been absolved.
To this day, the Cojuangcos have also gotten away with defying the Supreme Court’s 2006 temporary restraining order directing the Department of Agrarian Reform and Presidential Agrarian Reform Commission to implement the revocation of the SDO. They insist that the SDO is a more rational option compared to outright land distribution because the land area of Luisita is much too small to be subdivided among thousands of farm workers. On the other hand, advocates of collective farming assert that land size should not be a problem and have proven that the method is more productive and beneficial for them, citing their practice of planting palay and cash crops as an example. In an apparent bid to ultimately leave nothing to their ‘co-owners’, the HLI has recently demanded the farmworkers to register until November 15 to allegedly determine the rightful tillers of 2,000 hectares of the hacienda lands– to be planted back to sugarcane.
More stock sharing schemes
Using the ‘corporative scheme’, known Marcos crony Eduardo “Danding” Cojuangco, Jr. formed a ‘joint venture corporation’ called ECJ & Sons Agricultural Enterprises Inc. (ECJSAEI) in Negros Occidental. In 1998, Cojuangco announced the distribution of Certificates of Land Ownership Award covering 3,773.5 hectares of the property as well as the free distribution of lands worth P1.5 million. But there has not been proof that this actually transpired. In fact, farmers were directed to pay for the land and moves were made to exclude more and more farmers from the ECJSAEI, leaving in control the workers that Cojuangco brought in.
Farmers disclosed that under the agreement, they were obliged to pay Cojuangco P350,000 in 10 years with a grace period of 5 years. More than 3,000 out of the 5,000 farmers registered as Agrarian Reform Beneficiaries (ARBs) of the Cojuangco properties were excluded from the CLOAs while 1,206 ARBs named in the CLOAs were unqualified as they held managerial positions. Meanwhile, hundreds of farmers– including some CLOA holders– have been retrenched by ECJSAEI.
The Cassava Project in Isabela is another joint venture initiated by Cojuangco with then governor Faustino Dy, Jr. where a ‘cooperative scheme’ between the San Miguel Corporation (SMC) and the Valley Planters Development Cooperative (VAPDECO) covers 29,000 hectares or 15% of the province’s total land area. Under the scheme, farmers belonging to the VAPDECO were forced to plant cassava for 10 to 25 years, receive loans in kind with a high interest rate of 36% per year and comply with SMC orders which would later include flour, starch, alcohol, and even sampaguita and ilang-ilang for a transnational corporation. As a peasant desk coordinator of a diocese in Isabela lamented, the once-independent farmers in the area have been turned into SMC-controlled farm workers. The hope of 3,000 indigents to receive land titles issued by government has also been railroaded by this project.
As of December 2006, more than 35% of all agrarian reform beneficiaries in the country are not title holders but are either leaseholders or stock holders. Aside from Luisita, there are 13 more recorded SDOs, nine of which are in Negros Occidental while the rest are in Iloilo and Davao. Since the infamous Hacienda Luisita massacre in 2004, calls for the cancellation of SDOs have become even more pressing. IBON Features
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