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"Rent-Seeking Families and the Philippine State: A History of the Lopez

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,.I 468 ALFRED W. McCoy
his daughter, a company employee, protested, he asked her: "What do you want, my
daughter, the Panay Autobus or the life of your father?" 186 Finally, in February 1938,
Borja's group accepted an offer of P565,000 for their shares in Panay Autobus from
investors led by Eugenio Lopez.187
Soon after taking control of Panay Autobus, Eugenio Lopez began transferring
corporate profits and assets to his private accounts, developing the tactics he would
employ later with such spectacular success in Manila. At a meeting of the board of
directors in October 1938, W. C. Ogan, the company's founder and board member,
moved that the account statements tendered by the Lopez group be rejected on
grounds that they contained "illegal, immoral and corrupt" transactions. Specifically,
he charged that the Lopezes had mortgaged Panay Autobus assets to obtain a
corporate credit of P250,000 from the Philippine National Bank. Then, using
company funds, they had loaned themselves P99,018; had purchased 17 /25ths of the
Iloilo Transportation Company, their own firm, at inflated prices; had acquired all of
the Iloilo Transit Company, another of their own enterprises; and had paid themselves
fees of P15,632.21 from Iloilo Transit Company funds after its acquisition. Finally,
in their capacity as corporate directors, they had awarded themselves lavish annual
salaries totaling P25,000. 188 Although Ogan filed civil cases that dragged on through
the courts for months, the Lopez group did not attempt to rebut his allegations.
Instead, they sued him for libel.189 As owners of 70 percent of the company stock,
the Lopez brothers maintained managerial control throughout the litigation, earning
'impressive profits and purchasing additional shares. 190
Business and Provincial Politics
As a public utility with competition, costs, and charges set by the state, the
Lopezes found that the profitability of Panay Autobus, once acquired, could
only be assured through active participation in politics. Thus, between 1937 and
1941, company operations became one of the main issues in Iloilo provincial
politics. Throughout, the Lopez brothers used their newspapers to good effect,
foreshadowing the sophistication of their national media management after
World War IL
In the provincial elections of 1940, the Lopez brothers were targeted by
populist candidates, the first of many such attacks that would recur over the next
half century. Governor Tomas Confessor, a formidable populist speaker, had won
a landslide victory in 1937 with the support of a unified Nacionalista Party and
the Lopez financial interests. In contrast, his 1940 reelection campaign was one
of the most divisive in the province's history. After the Panay Autobus battle,
Confesor and the Lopezes broke over a range of issues. The brothers, for example,
held Confesor responsible for blocking Fernando's appointm.ent as Iloilo City
mayor. 191 Most importantly, perhaps, Confesor refused to grant Panay Autobus
reductions in the bridge tolls that comprised almost half of the company's total
direct tax burden. 192 Financially pressed by Confesor's intransigence on this issue, the
RENT·SEEKING FAMILIES AND THE STATE 469
Lopezes began to support the rival Zulueta-faction candidate with both money
and media. 193 W hen the brothers and other leaders expressed their displeasure with
Confesor in meetings with Quezon, the president evidently pressured the governor
to withdraw for the sake of party unity. In a characteristic act of defiance, Confesor
refused and decided to run on his own. 194
Denied support from the province's elite, Confesor adopted an anti-Lopez
theme in a bid to attract lower- and middle-class voters. Although the Banwa
Boys had inaugurated the anti-Lopez rhetoric, Confesor sharpened its ideological
overtones, waxing eloquent over his mass, or tigbatas, doctrine. During his first term
he had adopted a populist position by denying the Lopez requests for reduced bridge
tolls, by supporting Panay Autobus conductors charged with theft, and by remaining
neutral in a strike at Central Santos-Lopez in Barotac Nuevo. Citing this record on
the stump, Confesor portrayed the election as a clash between rich and poor,195 and
derided the rival candidate, Mariano Consing, as a "political stooge" of the Lopez
brothers. 196 Seeking to tarnish these populist claims, opposition speakers charged
that Governor Confesor was a "Stevenot boy"-a reference to Colonel J. E. Stevenot,
the American president of the Philippine Long Distance Telephone Company and
a former resident of Iloilo City.197 Admitting his friendship with the American,
Confesor retorted that "Stevenot did not ask for lower bridge fares like the Lopez
brothers did." As the campaign intensified, Confesor charged the Lopezes with
malfeasance in their administration of Panay Autobus and demanded an accounting
of P25,000 in conductors' bonds and P40,000 in unpaid dividends. 198
Scoring a stunning upset that attracted national attention, Confesor won
reelection by a wide margin.199 The Manila Tribune gave the triumph page-one
coverage, noting that Confesor had defeated the combined forces of the Lopezes and
Jose Zulueta's formidable machine.200
After these reverses, the Lopez brothers consolidated their factional strength
and began building a machine of their own, one that would remain a force in Iloilo
politics for several decades. To cover the provincial towns beyond their economic
reach, they allied themselves with Congressman Zulueta, who had strong support in
rural areas. Drawing their own support largely from Iloilo's commercial sector, they
integrated business with politics by building their faction around wealthy friends
and family members, most notably Mayor Ramon Campos, Oscar Ledesma, and
their cousin Francisco Lopez Jison. Reflecting his close ties to the Lopez group,
President Quezon appointed Alfredo Montelibano as mayor of Bacolod City in
1938, and Oscar Ledesma as mayor of Iloilo City two years later. 201 Reinforcing this
political power with economic influence, Ledesma served three terms as president of
the Confederation of Sugarcane Planters' Associations before yielding the office to
Montelibano in 1941.202
In the 1941 elections for the legislature and the presidency, the Lopez
brothers repaired the damage they had suffered at Confesor's hands. Although he
had resigned from the governorship in favor of his ally Dr. Fermin Caram to take
a post in Manila, Confesor ran a slate of legislative candidates against the Zulueta-
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