SC Justices Demolish Cojuangco-Aquinos’ Justifications for Giving Farmers ‘Pieces of Paper’ Instead of Land

Under the conditions of the loans provided by the GSIS and facilitated by the central bank to the Cojuangco-Aquinos in 1957, Hacienda Luisita should be distributed to the farmers after 10 years under the country’s social justice program. But the Cojuangco-Aquinos allegedly changed the language of the loan agreement to say that the lands should be distributed to “tenants, if there are any.”

In their subsequent attempts to retain control of the land, the Cojuangco-Aquinos insisted that there were no tenants on the hacienda when they bought it and after the 10 year period elapsed. They insisted that all the hacienda had were workers. Even President Benigno S. Aquino III, who co-owns the hacienda with his family, insisted on this claim during the campaign, to explain why his family had not distributed the land.

Error in “Philosophical Approach”

“There might have been an error in your philosophical approach,” new associate justice Maria Lourdes Sereno told HLI lawyer Asuncion, as she noted that the HLI seemed to have designed an “SDO more akin to that in a corporate setup rather than as alternative to land reform.”

Sereno echoed the other justices’ request for more data on the HLI’s implementation of SDO in Luisita. Specifically, she asked Asuncion to expound on the “safeguards” put in place “to ensure valuation given to farm workers’ stocks are proportionate to those of HLI.”

She asked the HLI lawyer to chart also the farm workers’ shares in 1989 vis-à-vis shares in 2004 or 2010, to gauge the theory that “there was a dilution of their shares,” and that “the stocks have been virtually useless.”

This followed exchanges between the justices and HLI lawyer Asuncion and corporate secretary Eufrocino dela Merced Jr. Among others, the discussions revealed that while the HLI was created and incorporated in 1988 to implement a memorandum of agreement that became the SDO agreement, the farm workers were practically left out in the crucial task of determining the value of the properties transferred to HLI.

For example, the farm workers were not a party in choosing the appraiser. They were also not apprised that the liabilities of the Tarlac Development Corporation (Tadeco), which remains as the majority stockholder in HLI, were transferred to HLI and not deducted first from Tadeco’s, as should have happened. Tadeco is owned and controlled by the Cojuangco-Aquinos and it reportedly owns 66 percent of the shares of HLI. President Aquino’s shares are also reportedly in Tadeco, not directly in HLI.

“Tadeco assets transferred to HLI should have been reduced if their liabilities were deducted first,” Velasco pointed out, adding that the farm workers’ shares of stocks would then have been 55 percent, not 33 percent as stipulated in the SDO.

Long Period of Stock Distribution Illegal

Aside from the dubious method used to compute the farm workers’ shares, the justices also found the length of stock distribution, at 30 years, questionable. “The law gave you two years. Why take 30 years to distribute shareholdings?” asked Associate Justice Roberto A. Abad.

Initially pegged at 30 years, the distribution of stocks to the farm workers was later “accelerated,” in 2004, to just 15 years, said Asuncion. Still, the justices said it is “in violation of the law.”

Asuncion’s explanation for the long period of stock distribution — because the number of farm workers-beneficiaries keep changing every year, so that HLI now has up to 10,502 farm workers-beneficiaries even if from 1989 to 2004, they “constantly” used the service of only 6,000 farm workers – did not help. This meant the farm workers’ shares have been diluted, as the shares pegged by HLI at 33 percent of total stocks (by the end of 30 or 15 years) were initially earmarked for distribution only to some 6,000-plus farm workers-beneficiaries at the beginning of the SDO implementation.

“An increase in the number of workers means a reduction in their benefits and value of shares,” said Associate Justice Teresita Leonardo-de Castro.

One of the justices, Associate Justice Roberto Abad, pointed out that if not for the SDO, Hacienda Luisita should have been distributed in 1989. But the farmers, he added, gave up their shares in land in exchange for shares in stocks. So, he said, HLI should have retained the original number of beneficiaries in its stock distribution and not give new shares to new workers, many of them are not even from Tarlac and obviously were not listed as beneficiaries as the SDO was crafted in 1989.