GRP TAKES STEP TO REDISTRIBUTE LARGE ESTATE OWNED

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.

--------------
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.

--------------
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.

--------------
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