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Without a family anchor, the succeeding generations of Cojuangcos engaged in business maneuverings, sometimes even against each other
(Seventh of 9 parts)
The Cojuangco brothers came home from the war with a feeling of unease not only towards the future but also towards one other. The war had claimed one of them; they are no longer the four brothers that people had known before. The death of Antonio had removed one of the pillars of the family’s third generation. The survivors grieved over his passing.
But the unease was not only brought about by the death of Antonio. It was also brought about by the realization that there was no one among them who could serve as the family anchor, no one who could steer the growing clan forward, as Ingkong Jose did during his lifetime and Ysidra before the war. Their aunt had become old and was no longer as active as when the family was yet starting its businesses.
As the eldest among the brothers, Jose Sr. was expected to provide the leadership. But the war had shown that he was probably not fit to fill in that role. When the Japanese invaded Manila, Jose Sr. evacuated his own immediate family to safety, in his in-laws’ territory of Rizal. While he might have worried about Ysidra and his three brothers and their families, he failed to unite and coordinate their efforts to ensure everyone’s safety and welfare.
Not long after, a discord would develop among the surviving Cojuangco brothers that would continue into the succeeding generations of the clan.
The first disagreement among the brothers arose over whom to support among the presidential candidates in the 1946 elections. Just a year after the war, a general election was called for the positions of president, vice president, senators and congressmen. Sergio Osmeña Sr., the vice president of the Commonwealth government, was running for president against Manuel Roxas, a former Speaker of the House of Representatives. Osmeña was running under the banner of the Nacionalista Party. Roxas, who was originally a member of the Nacionalista Party and a protégé of Osmeña, broke away from his mentor and founded his own party, the Partido Liberal, so he could challenge him for the presidency.
In the run-up to the elections, both camps were actively soliciting the support of the political leaders in the provinces, including the Cojuangcos who were considered political kingpins in Tarlac. Jose Sr. had committed his support to Osmeña, having run under the banner of the latter’s party-mate Manuel L. Quezon before the war. While talks were underway regarding the position that Jose Sr. would be running for, he learned that his younger brother, Eduardo Sr. or Endeng, was talking to Roxas and offering the latter his support. Endeng reportedly wanted to run for Tarlac governor, the position he abandoned during the war. But he was prevailed upon by Roxas to run for senator instead.
When Jose Sr. heard the news, he called Endeng for a talk and tried to convince him to change his mind. No one knows exactly what transpired during the meeting but a heated discussion reportedly ensued. In the end, Jose Sr. failed to convince Endeng to drop his plans. Since it would not be wise for two Cojuangcos to run for the same position in an election—and under opposing parties at that—the elder brother decided to run for representative of the first district of Tarlac, the position he held before the war, instead of senator.
In that election, Roxas won over Osmeña but the two Cojuangcos lost. Both never ran again for any elective post. Jose Sr. focused his efforts on managing the family businesses, especially the Philippine Bank of Commerce and the Paniqui Sugar Mills. Endeng established his own business, starting with the International Hardwood and Veneer Corp. or Interwood, a plywood and veneer factory based in Manila, after he was awarded a big logging concession by the government.
Endeng died six years later, on March 13, 1952. His death, however, did not end the discord that had developed within the family. It would worsen instead as the members of the fourth-generation Cojuangcos began assuming crucial roles in the management of the family businesses.
Eduardo Jr. or Danding was only 16 years old when his father died. He had just graduated from high school at the De La Salle College in Manila. He enrolled at the University of the Philippines’ College of Agriculture in Los Baños, Laguna, to prepare himself to run the family’s agricultural estates. His mother, Josephine, meanwhile took over the management of Interwood.
But according to the alumni directory of De La Salle College, Danding “often slipped back to Manila to court pretty girls, (and) his grades suffered. He decided to continue his studies at the California Polytechnic College in San Luis Obispo, California.”
While Danding was in the US, his family’s plywood and veneer business was faltering. Josephine was not skilled in running a factory and the family’s resources were dwindling. With six children to support—two more boys were born after the war, Enrique and Manuel—Josephine had to rely on their share of the profits from the businesses that were managed by Jose Sr.
“They were the poorest branch of the Cojuangco clan then,” said Liborio de Jesus, a lawyer and a childhood friend of the Cojuangco cousins. Although Eduardo Sr.’s family was still wealthy compared to most Filipinos, “Danding had to work as a gas boy in the US to earn his pocket money,” De Jesus added.
Unable to carry the burden of a losing business, Josephine asked her son to hurry home in 1956 and take over the management of the plywood and veneer factory. Danding came home from the US that same year. He immediately focused on the rehabilitation of Interwood. He also ran for public office and was elected councilor of Paniqui in 1957, at the age of 22. Four years after, he became vice mayor of the town.
Meanwhile, the Jose Cojuangco Sr. branch was doing much better. A few months after the 1946 election, Jose Sr. took his entire family and the two surviving children of his brother Antonio—Ramon and Lourdes—to the US to study. Jose Sr. had six living children then: Pedro, the eldest, was 20; Josephine, 19; Teresita, 17; Corazon, 13; Jose Jr., 12; and Maria Paz, 8. They first stayed in a hotel in New York before taking the younger children to their respective schools around New York.
“Unlike Danding, Don Pepe’s (nickname of Jose Sr.) children never had to work in the US while studying,” De Jesus said.
In this period, Jose Sr. also invested in other businesses. He set up the Manila Tribune, a daily newspaper, in 1947. He invested some amount in a steamship company, was into construction and even insurance. He was also a member of President Roxas’s National Economic Council and governor of the Rehabilitation Finance Corp. (RFC) in 1952, during Elpidio Quirino’s presidency. The RFC, which later became the Development Bank of the Philippines, managed the reparations fund coming from the US to help the country recover from the ravages of war. The fund, however, was used by successive presidents of the country as their personal “pork barrel” and disbursed these to help the businesses of their families and cronies.
It was not clear why Jose Sr. sold his shares in the Paniqui Sugar Mills. According to one account, he pulled out his shares to acquire the Tabacalera Sugar Central. This could be true because after the war, the movement towards the consolidation of the milling sector that began in the 1930s picked up speed. Smaller, less efficient mills were forced out of the competition. Don Pepe may have foreseen that the family-owned mill could not survive and wanted to acquire a bigger and more efficient one to stay afloat.
His desire to acquire Tabacalera may have been reinforced by the subtle prodding of President Ramon Magsaysay who, Ninoy Aquino claimed, wanted Don Pepe to seriously consider buying the azucarera.
“One day in 1957, President Magsaysay had called me; he said he had been informed that the Spaniards in Luisita were selling out. ‘And I,’ said Magsaysay, ‘don’t want the Negros sugar people to invade you people in Tarlac.’ At that time, the Lopez interests had bought Pasumil, and Magsaysay was at loggerheads with the Lopezes. He didn’t want them getting Luisita, too. So I went to my father-in-law and asked him if he was interested in the Central Azucarera, which the Spaniards might offer for sale. Negotiations were opened with Tabacalera. In the midst of our negotiations, Magsaysay died; thus, the deal was concluded in Garcia’s time,” Ninoy recounted.
Whatever the circumstances, the purchase was widely seen to have greatly contributed to the widening rift among members of the clan, and the development of its two business factions. The ownership of Hacienda Luisita itself would be dogged by controversies in later years as its tenants assert their right to the land under various agrarian reform laws.
In 1957, Jose Sr. started negotiating for the purchase of the majority shares of the common stock of Central Azucarera de Tarlac from the Spanish owners. As the owners were foreigners, they wanted the shares to be paid for in US dollars. Consequently, Jose Sr. negotiated a loan with the Manufacturers Trust Co. of New York to finance the payment of the stocks in US dollars, to be amortized over a period of 10 years.
During that time, the Philippine peso was under foreign exchange control due to the government’s low dollar reserves. The government regulated the remittance of dollars. The shares of stocks held by the foreign stockholder could not be sold in dollars.
In this connection, Jose Sr. wrote his very good friend, Central Bank Governor Miguel Cuaderno, who was formerly the president of the Philippine Bank of Commerce. He asked for the approval of a dollar loan to be secured by him from the foreign bank in New York and for the remittance of dollars to liquidate the loan over a 10-year period.
Acting on the request, the Central Bank Monetary Board, on August 27, 1957, passed Resolution No. 1240, approving the dollar loan application of Jose Cojuangco with Manufacturers Trust. The Central Bank provided the dollar cover for the loan by depositing a part of the country’s international reserve with the said New York bank and approved the remittance of US dollars to the foreign sellers. The Central Bank, however, provided several conditions for its approval, including a provision that “there shall be a simultaneous purchase of Hacienda Luisita with the purchase of the shares, with a view to distributing this hacienda to small farmers in line with the Administration’s social justice program.”
Jose Sr. agreed with the conditions set by the Central Bank. In order to purchase Hacienda Luisita, he applied for a loan with the Government Service Insurance System (GSIS) in the amount of P7 million. The GSIS Board of Trustees passed Resolution No. 1085 approving in principle the loan application, subject to the approval of the President of the Philippines. The loan was finally approved on November 27, 1957, again subject to various conditions, including the provision that “the lots comprising the Hacienda Luisita shall be subdivided by the applicant corporation among the tenants who shall pay the cost thereof under reasonable terms and conditions.”
The Tarlac Development Corp., the managing company for Hacienda Luisita established by Jose Cojuangco Sr., officially took over the property on April 8, 1958. Ninoy Aquino was appointed administrator of the vast hacienda.
Years passed but the new owners of the hacienda seemed to have forgotten its commitment to distribute the land to the tenants. This prompted the government, through the then Ministry of Agrarian Reform, the Central Bank and the GSIS to file a case for specific performance against the Jose Cojuangcos. The decision was rendered on December 2, 1985, requiring the family to distribute and sell at cost Hacienda Luisita to small farmers in line with the administration’s social justice policy.
Unfortunately, the decision was handed down during the time of Marcos and it was seen as an act to further persecute the family of Ninoy and Cory Aquino.
Hacienda Luisita was the biggest investment ever made by Jose Sr. but he never invited his only surviving brother, Juan, to invest. His heirs said that he invited the eldest sons of his two dead brothers to invest a maximum of 10 percent each but Danding reportedly was not interested. Ramon reportedly took an investment of 10 percent but sold it back a few years after to Jose Sr.
In a sense, Danding’s refusal to invest in Hacienda Luisita, if he was indeed offered shares in the company, raised the tension between the two families. While it would not come out into the open until five years later, there was conflict and struggle among the members. And, perhaps on the part of Danding, there was also that desire to compete with the other branch of the clan whose members, he might have thought, had always gotten the biggest part of the family pie.
What made the rift irreconcilable, however, was when Jose Sr. was booted out of the Philippine Bank of Commerce.
By 1961, Interwood was in the black again and Danding was ready to take on other business responsibilities. So in 1962, he assumed the post of vice president in the family-owned Philippine Bank of Commerce. His cousin Ramon was also becoming more interested in the bank’s operations. The young cousins brought new ideas with them, along with an impatience with their aging uncle who was running the bank. They wanted to take on bigger roles in managing the business.
But their uncle, Jose Sr., was the bank’s president and had his own ideas on how to run it. He was not ready and, in fact, had no plan to relinquish control of the bank to his nephews. He was reportedly grooming his eldest son Pedro to take over his position when he retires in a few years.
This did not sit well with the two cousins and even their Uncle Juan.
In January 1963, Juan and Danding secretly agreed to dismiss Jose Sr. as bank president during the stockholders’ meeting scheduled for the next month. Under their plan, Juan would replace him as president and chief executive officer. Danding, on the other hand, would either be the executive vice president or just vice president but with expanded responsibilities. Their problem was how to make sure that they have the votes necessary to implement their plan. Between the two of them, their shares of stocks in the bank were roughly equivalent to only half of the total. They then approached Ramon who controlled a fourth of the shares belonging to the Antonio branch, and drew him into the plan. He asked that he be given the position of executive vice president.
The talks between the two cousins and their uncle were shrouded in secrecy. But as in most secret deals done in Manila, some details of the plan leaked out and eventually Jose Sr. got wind of it. He was devastated, his heirs said, upon hearing the news. It was he who had nurtured the bank since the Cojuangcos bought out the Rufino and the Jacinto families after the war. It was he who pulled the bank out from bankruptcy to become one of the country’s largest financial institutions.
He, however, could not do anything in the face of the planned takeover by his brother and nephews. He still controlled enough shares to have himself elected to the board but it would not be enough to prevent his dismissal as the bank’s president. So to prevent an embarrassing situation, Jose Sr. sold his shares to Juan and his nephews before the scheduled stockholders’ meeting.
A few months after, Jose Sr. organized another bank, the First United Bank. He also bought into the Manila Trading and Supply Co. (Mantrade), one of the top corporations in the Philippines that handled the distribution of motor vehicles and spare parts. He likewise bought into Pantranco, a large transport company, and into other industries. His new ventures flourished, until martial law was declared in 1972.
Meanwhile, the Eduardo branch also expanded its businesses. Danding established the Northern Cement Corp. He organized agribusinesses in Negros and other parts of the country. The Antonio branch, through Ramon, bought into the Philippine Long Distance Telephone Co.
To this day, the Philippine Bank of Commerce is still controlled by the heirs of Antonio. The First United Bank, however, faltered and was eventually taken over in the 1970s by Danding. It is now called the United Coconut Planters Bank. But the rest of this story will come later.
Part 1: Marrying business and politics, Cojuangco style
Part 2: Going up the social ladder
Part 3: Riding on Paniqui’s progress
Part 4: Where did the Cojuangcos’ wealth really come from?
Part 5: Brothers, business partners
Part 6: Wealth and misfortunes during the war |
