SC appoints 3 firms to audit Hacienda Luisita payment

MANILA, Philippines – Three parties have been appointed by the Supreme Court to perform a panel audit on the P1.3-billion payment to Hacienda Luisita Inc (HLI) and Centennary Holdings as part of the Comprehensive Agrarian Reform Program.

The firm of Ocampo, Mendoza, Leong and Lim (OMLL), the firm of Navarro, Amper & Co. (Deloitte), as well as Ms. Carissa May Pay-Penson, CPA, were tasked with performing the audit.

The audit will establish how much of three different sales will actually go to farmworker-beneficiaries (FWBs). Two sales involve the overall sale of 500 hectares of land in 200 and 300-hectare increments, worth P500 million and P 750 million respectively. The third folllows the appropriation of 80.51 hectares of land for the SCTEX project, worth approximately P80.5 million. (READ: Farmers to SC: Don’t allow Luisita execs to pick auditors) 

According to the resolution, the auditing panel will “determine if the P1,330,511,500 proceeds of the sale of the 3 aforementioned lots were actually used or spent for legitimate corporate purposes.” The audit will cover the time from the receipt of the payments until July 5, 2011, when the court made its decision “final and executory.”

The resolution also defines “legitimate corporate expenses” as determined by its being necessary and ordinary. The expense must be necessary, meaning it is “appropriate and helpful in the development of the taxpayer’s business.” The expenses must also be defined as ordinary, or a normal business payment related to the circumstances of the business itself or on surrounding circumstances.

If those are upheld for a particular expenditure, the auditors can determine if something spent by the company is an allowable deduction as a business expense. This is “based on the nature of the expenditure itself, which in turn depends on the extent and permanency of the work accomplished by the expenditure.”

After the panel determines what expenses are legitimate, this will show “which expenses shall be deducted from the P1,330,511,500 proceeds of the sale of the 580.51-hectare HLI property.”

The panel has 90 days to complete the audit.

On April 24, 2012, the Supreme Court ruled that farm workers were the legitimate owners of the land. The Department of Agrarian Reform (DAR) moved to distribute parcels of land among them. Land titles were distributed to 5,800 farm workers who were able to complete requirements established by the DAR by October 2013.

Despite this, petitions have been made requesting for genuine Hacienda Luisita land distribution, with farm groups citing a number of reasons – including continued land grabbing and increasing militarization in the hacienda – for calling the land distribution a hoax. – Rappler.com