This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 MANILA 005988 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/MTS, DRL/IL, EAP/MLS, INR/EAP 
LABOR FOR ILAB 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ELAB PHUM SOCI PINS RP
SUBJECT: GRP ORDERS LARGE SUGAR PLANTATION TO DISTRIBUTE 
LAND TO WORKERS 
 
REF: A. MANILA 5346 
     ¶B. MANILA 5096 
     ¶C. MANILA 4929 
     ¶D. MANILA 1401 
     ¶E. 04 MANILA 5552 
 
¶1.  (U) This message is Sensitive but Unclassified. 
Please handle accordingly. 
 
¶2.  (SBU) Summary:  The GRP has upheld a recommendation by 
the Department of Agrarian Reform (DAR) to expropriate the 
"Hacienda Luisita" sugar plantation located in Tarlac, north 
of Manila, and distribute it to farmers working the land. 
The estate's management plans to appeal the decision.  The 
ruling clouds the future of a December 8 agreement between 
management and unions to end a sometimes violent 
13-month-long strike.  Some observers believe that the GRP's 
decision had more to do with enmity toward former president 
Corazon Aquino, a part owner of the estate who turned against 
President Arroyo earlier this year, than any genuine support 
for land reform.  End Summary. 
 
--------------------------------------- 
GRP Orders Hacienda to Distribute Lands 
--------------------------------------- 
 
¶3.  (U) On December 20, 2005, the GRP's Presidential Agrarian 
Reform Council (PARC) voted 10-1 to uphold a recommendation 
by DAR to revoke the stock distribution option at the 
Hacienda Luisita plantation located in Tarlac Province about 
90 kilometers north of Manila.  PARC proceeded to approve the 
eventual re-distribution of the approximately 5,000-hectare 
property to the 6,000 - 8,000 farmers who work on the 
plantation.  In taking its decision, PARC backed DAR's view 
that the farmers had actionable grievances against Hacienda 
Luisita over non-payment of annual dividends from their 
shares in the proceeds of the 500-hectare portion of the farm 
that was converted into a commercial area.  (Note:  PARC is 
co-chaired by the President and the Secretary of Agrarian 
Reform, and is made up of a landowners' representative, a 
farmers' representative, and various Cabinet secretaries. 
President Arroyo recused herself from the deliberations over 
Hacienda Luisita.  The law allows for the President to review 
and possibly overturn the PARC's decision, but Malacanang 
announced on December 23 that President Arroyo had no plans 
to do so.  End Note.) 
 
¶4.  (U) Shortly after the PARC's decision, Agrarian Reform 
Secretary Nasser Pangandaman announced that the land in 
 
SIPDIS 
question will be expropriated by the GRP in January 2006 
(with eventual compensation going to the owners) and 
subsequently divided in lots among its farmers.  Prior to the 
actual distribution of land to the farmers, the 
quasi-governmental Land Bank of the Philippines will assess 
the value of the property and the exact terms of the 
compensation to be paid to Hacienda Luisita by the 
government.  In a December 27 interview, DAR Undersecretary 
for Operations Narciso Nieto estimated the value of the 
property to be approximately 870 million pesos (USD 16.4 
million), well short of the 4 billion pesos (USD 75.5 
million) hacienda owners reportedly want it to be assessed 
at.  Once the property is turned over to GRP control, the 
Provincial Office of DAR must then identify all qualified 
farmer-beneficiaries.  This process may take over a year, 
according to DAR, because of the large number of potential 
beneficiaries. 
 
------------------------------- 
Plantation Management to Appeal 
------------------------------- 
 
¶5.  (U) A Hacienda Luisita spokesman indicated in a December 
23 press release that management plans to file a motion 
asking DAR to reverse its notice of the intended 
expropriation and division of the property.  If DAR rejects 
Hacienda Luisita's motion (as is expected), the management 
may request a review by the Court of Appeals.  If the Court 
of Appeals upholds DAR's decision, the only option left would 
be an appeal to the Supreme Court.  Neither former president 
Corazon Aquino nor Eduardo "Danding" Cojuangco, Jr., a major 
stockholder in San Miquel Corporation and one of the 
country's richest men, had any public comments on the PARC's 
action.  (Note:  Hacienda Luisita management is controlled by 
the Cojuangco clan of which Aquino is a member.  End Note.) 
 
----------------------------------- 
Recent Labor Agreement Now in Doubt 
----------------------------------- 
 
¶6.  (U) PARC's order to redistribute the land clouds the 
future of an agreement recently reached by management and 
unions representing sugar mill workers and farmers.  On 
December 8, Hacienda Luisita management signed separate 
Memorandums of Agreement with the United Luisita Workers 
Union (ULWU) and the Central Azucarera de Tarlac Labor Union 
(CATLU) ending a 13-month-long labor dispute.  Hacienda 
Luisita and the unions had been in negotiations since 
February 2005 to settle the dispute which began when mill 
workers and farmers went on strike in late 2004, complaining 
of firings and pay cuts at the mill.  (Note:  Security forces 
clashed with workers and leftist demonstrators in November 
2004 resulting in the deaths of seven strikers and supporters 
- ref E.  Five additional activists and supporters of the 
striking unions have been killed in Tarlac in 2005 - ref A. 
End Note.)  Key terms of the recent agreement include payment 
of back wages and benefits to farmers and mill workers; 
rehiring of employees terminated during the strike; and a 
wage increase for sugar mill workers. 
 
¶7.  (U) Upon reaching the agreement, plantation management 
and union members had initially hoped to resume milling 
operations in 2006.  However, the planned distribution of the 
plantation's land to individual farmers makes the future of 
the agreement uncertain, and calls into serious question 
whether the plantation and mill will be ready for operations 
any time soon, given that ownership of the property will be 
in flux. 
 
------- 
Comment 
------- 
 
¶8.  (SBU) Landowners will be watching closely as the 
influential Cojuangcos battle in the courts to keep their 
property intact.  Landowners indeed have some reason to be 
concerned with the potential fallout of PARC's ruling. 
Farmers in other localities are already passing around 
resolutions at their plantations calling for redistribution 
of land.  Among many observers, however,  there is the strong 
suspicion that the PARC's move had more to do with enmity 
toward former president Aquino, who turned against President 
Arroyo during political turbulence earlier this year, than 
any genuine support for general land reform. 
 
Jones