How the Cojuangcos got majority control of Hacienda Luisita

Posted on | January 26, 2010 | No Comments

When the Comprehensive Agrarian Reform Program (CARP) was implemented in Hacienda Luisita in 1989, the farm workers’ ownership of the hacienda was pegged at 33%, while 67% was retained by the Cojuangcos.

The 33-67 split was based on the valuation of the capital each party injected into the new company. The farm workers’ capital, made up of the hacienda’s 4,915.75 hectares of land, was valued at P197 million (P40,000 per hectare). The Cojuangcos’ capital, made up of non-land assets, was valued at P394 million. The ratio of P197 million to P394 million is 33:67.

Those who have studied HLI’s books say the non-land assets seem to have been overvalued to increase the Cojuangcos’ share, while the land assets were undervalued to limit the farm workers’ share.

In his 1992 book A Captive Land: The Politics of Agrarian Reform in the Philippines, American development studies expert Dr. James Putzel showed how the non-land assets were inflated.

(Dr. James Putzel did extensive research on agrarian reform in the Philippines in the 1980s and 1990s. He is currently a Professor of Development Studies at the London School of Economics.)

Hacienda Luisita Inc. balance sheet (1988-1989)

First, the “standing crop” of P103 million, comprising 18% of HLI’s total assets, was counted as a non-land asset.

“If this item alone was counted as part of the value of the land, which the law should arguably have required, then the workers would have been able to gain majority control of the company,” Putzel wrote.

Putzel said standing crop was a highly variable item of an agricultural company’s balance sheet that changed every year depending on weather and market conditions. It was therefore a questionable basis to use for determining the permanent share of the farm workers in HLI.

Second, “accounts due from affiliates” and “long-term notes receivable” worth P8.5 million and P28 million respectively were plugged into HLI’s balance sheet to further increase the value of the non-land assets. These items were payments HLI was due to receive from other Cojuangco companies. The P28 million represented the sale of part of Hacienda Luisita’s land to the Cojuangcos’ Central Azucarera de Tarlac.

Third, Putzel noted that two items under “other assets” were assigned inflated amounts to raise the value of the non-land assets:

* The 120.9 hectares of “residential land” were valued at P60 million, or P500,000 per hectare, almost 10 times their valuation of P55,000 per hectare in the balance sheet of Cojuangco company TADECO just one year before (June 30, 1988).

* The 265.7 hectares of “land improvements” were valued at P58 million, more than 10 times their value of P5.6 million in the balance sheet of TADECO one year before.

These two items, along with the land transferred to Central Azucarera de Tarlac, were among the portions of Hacienda Luisita that were excluded from the Comprehensive Agrarian Reform Program (CARP).

The excluded areas are the reason why only 4,915.75 out of Luisita’s 6,443 hectares were subjected to land reform. – GMANews.TV

STEPHANIE DYCHIU

http://www.gmanews.tv/story/182212/how-the-cojuangcos-got-majority-control-of-hacienda-luisita

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