Make clean break with previous illegal practices, coco farmers ask Digong


A RECENT gathering of regional leaders belonging to the Confederation of Coconut Farmers’ Organizations of the Philippines (CCFOP) asked President Duterte to veer away from the criminal habit of the previous administration regarding the disposal of coco levy funds. What the Aquino regime did on Oct. 5, 2012 was unabashed criminal hijacking of P56.4 billion of coco levy funds into the general funds, according to Ka Charlie Avila of CCFOP. He said that the new government should really have an in-depth look into this.

The Supreme Court had ordered a month earlier that the net dividend earnings and redemption proceeds from the farmers’ investments in San Miguel Corp. shall be deposited with the Land Bank of the Philippines or the Development Bank of the Philippines or the United Coconut Planters Bank as an escrow account in the name of “PCGG in trust for CIIF 14 Holding Companies” (GR 178193, Sept. 4, 2012). CIIF refers to Coconut Industry Investment Funds.

Instead of following the SC order, the Aquino government caused the transfer of the San Miguel checks away from any of the aforementioned three banks’ trust departments to the Bureau of Treasury (BTr). The instruction, so audaciously countermanding the SC order, was signed by Andres D. Bautista, then PCGG chairman. For what reason—only his informal boss, the finance secretary, and he knew. Later developments would give more than a hint.

A second hijacking of coco levy money into the general funds occurred on April 30, 2015. It was noted that at that time some of the coco levy funds were with: BTr – P56.4 billion and UCPB – P14.2 billion, for a subtotal of P70.6 billion, and with earnings, would come up to a grand total in cash of P74.3 billion. Deputy Treasurer Christine L. Sanchez confirmed the amounts with BTr and so did the UCPB with theirs.

After the CCFOP announced that they would seek help from the SC to halt the implementation of two Aquino executive orders dealing with the privatization of coco levy funds and assets, PCGG’s Bautista rushed an order to UCPB, with particular reference to the latter’s Trust Banking Group, “to release, transfer and deposit to the Bureau of the Treasury all monies pertaining to SMC dividends and all interests, income, profits, and earnings derived therefrom,” emphasizing “prompt action” on the matter because they had a “limited period of time,” obviously due to the high probability of the Court’s granting the farmers’ petition for a restraining order—which, in fact, happened. Thus, government again succeeded against the farmers in a second hijack operation.

What later events or developments gave more than a hint of a reason for the hijack operations? For one, as of Sept. 2015, the budget deficit—which indicates more revenues spent than earned—stood at P25.5 billion, below the P283.7-billion target for the year. This was reported in the major dailies on Nov. 27, 2015. Broken down, revenues collected by the Bureau of Internal Revenue (BIR) accounted for 11.28 percent of the economy. The goal for that year was pegged at 12 percent. The Bureau of Customs, meanwhile, recorded a tax effort of 2.82 percent, still lower than its 3.1-percent target for the year. A government, such as the previous regime, which could resist anything but temptation, and had very little sensitivity to the rule of law, looked in the direction of the coco levy funds and—bingo! the problem was “solved.” There certainly was more than enough funds to cover up a mere P25.5-billion deficit. But, sad to say, the funds representing the blood, sweat and tears of the coconut farmers would now no longer be with the government-for-farmers’ special world (CIIF’s 14 holding companies) but with the government’s larger universe or general fund (the BTr): the farmers’ capital became most vulnerable to misuse, abuse and outright magical diversion—which is most probably what happened.

In fact, in the immediate, should not the new government direct COA or the Commission on Audit to audit the funds that were transferred to the BTr? Should it not hold accountable the government officials involved in the illegal transfer of the P56.4-billion coco levy funds to the BTr and the additional P14.2-billion and P7.6-billion earnings thereafter? In the very least, the new government should direct the PCGG to release in various national newspapers the complete list of coco levy assets and the updated statements from BTr of the hijacked coco levy funds.

This was the farmers’ big problem with the past administration—a government that could not understand or accept the precise nature of the coconut levy funds. The precise nature of the ownership of these funds is not absolute ownership but its very opposite, namely, trust ownership.

Given their origins and alleged purposes, the funds must be regarded as public trust funds: “public,” not private, because they were the result of taxation; “trust” ownership, not absolute ownership, because they were levied for certain purposes and could not be disposed of in any which way, except for the attainment of those ends or purposes. The rush to privatization of coco levy assets by the previous government expressed in Aquino’s EOs 179 and 180 was fortunately stopped in its tracks by the SC. The new government may appreciate this fact that if there are any funds left, it is because the farmers did what they had to do—assail and restrain the illegal, unconstitutional, immoral and anti-farmer Aquino EOs. With the help of some senators they likewise prevented the passage of draft bills in the legislature that were essentially mere clones of the assailed executive orders.

Secondly, amplifying on the first, the precise nature of the ownership of these funds is, therefore, one of “dual ownership”—not single absolute ownership. They do not have one owner but two. The government that collected the funds “owns” them as trustee. The government is merely “trust” owner. The real beneficial owners or “trustors” are all the coconut farmers whose class and no other were especially taxed by the state for certain purposes.

In truth, only the recognition of the dual “ownership” of the funds can guarantee that the funds will be utilized according to its purposes—the development of the coconut industry to the benefit of all the coconut farmers.

Hence, the national coconut farmers’ organizations have all said there is a great need to constitute by law the coconut levy funds and assets more explicitly into a Coconut Industry Trust Fund (CITF), and provide, also by law, the administrative structure that will manage the trust funds and ensure that its use will develop the coconut industry to the benefit of coconut farmers. That structure should not be a mere committee but a corporation to be called the Philippine Coconut Farmers Welfare and Industry Development Corp. (the “corporation” or “PHILCOFARM”).

The two essential features characterizing the levy funds and assets (“public” and “trust”) are best ascertained and guaranteed through the establishment of such a corporation, namely one that is both government-controlled and participated in by the elected representatives of all the coconut farmers.

A public trust fund of the magnitude of the coconut levy funds and assets will surely need not a mere committee, which is what the previous government wanted, but a full-fledged government-owned corporation that has the requisite characteristics of stability, flexibility, autonomy, transparency, accountability and, therefore, the capacity for good and effective governance. A mere committee can never exhibit the properties of such a corporation but can easily be subject to the politics and vagaries of partisan desire and approval.

[Next articles: What for are these funds? How are they best utilized? What kind of revamp and reforms should we expect or desire in the PCA, the UCPB, the CIIF oil mills? How about the job of Ombudsman and COA in the immediate?]


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1 Comment

  1. Benjamin Falqueza on

    Thanks to the CONFED. If not for them, the coco levy funds could have been devoured by the. wolves.