SC backs up coconut farmers anew but will Executive and Congress follow suit?


Executive Director, Confederation of Coconut Farmers’ Organizations of the Philippines (CCFOP) National Chairman, Philippine Association of Small Coconut Farmers’ Organizations (PASCFO)

The seemingly interminable fight of the coconut farmers for justice regarding the coco levy funds and assets, roughly estimated to be some 250 billion pesos now, reached another high in the Supreme Court’s recent decision (Nov. 24, 2015) to deny the Solicitor General’s motion to have the restraining orders against privatization lifted.

The Confederation of Coconut Farmers’ Organizations of the Philippines or CCFOP that originally petitioned the court to restrain President Aquino from implementing his executive orders 179 and 180 rejoiced during this Christmas season because, at least for now, the funds could not be used for Administration and Liberal Party purposes. Agricultural Modernization Secretary Edel Guiza and Presidential Candidate Mar Roxas have been making the rounds of Philippine Coconut Authority “consultations” telling farmers that money from coconut levy funds will be in their hands soon.

While the farmers seem to be winning the fight in Court, they are not sure as yet whether they can also win the fight in Congress, where the minions of the regime are doing their utmost to enact bills substantially similar to the questioned Aquino executive orders.

In the very limited time left in the life of the present Congress the Senate leadership announced that they will approve some thirty more bills, including the Salary Standardization Law IV, the Expanded Maternity Leave Law of 2015, the Road Speed Limiters Act, the law on Foreign Ownership Restrictions, the Customs and Tariff Modernization Act (CTMA), the Public-Private Partnership Act and the proposed Bangsamoro Basic Law or the Basic Law for the Bangsamoro Autonomous Region (BLBAR).

Senator Cynthia Villar thinks she can push her committee’s draft bill on the levy-funded Coconut Industry Trust Fund Act into law even with very limited time. Senator Ferdinand Marcos, for his part, is not optimistic about the chances of having the BLBAR enacted into law during the term of President Benigno Aquino 3rd.

The CCFOP does not underestimate Senator Villar’s abilities but at the same time does not tire of pointing out two important question areas for the whole Senate’s and especially her consideration.

The first question is: Why do the farmers want a corporate structure rather than a mere committee to manage the proposed coconut industry trust fund? The other question is: Why humor the present administration’s privatization hang-up?

Why a corporate structure is needed
To the question, “Why do the farmers want a corporate structure rather than a mere committee?” the CCFOP replies:

First of all, a public trust fund of the magnitude of the coconut levy funds and assets will need not a mere committee 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 express presidential approval and desire. This is why the government is insistent on a committee entity whereas the farmers are insistent on a corporate structure.

When the “Coconut Investment Act” or R.A. 6260 was enacted on 19 June 1971 with the avowed policy of aiding the development of the coconut industry through the establishment of a Coconut Investment Fund or “CIF” it stipulated in the same law that not a passing committee but a more permanent Coconut Investment Company or “CIC” be established to manage that Fund. One could expect nothing less.

Secondly, the peculiar nature of the ownership of the present proposed Fund intrinsically demands a Corporation to manage it.

The Supreme Court ruled in COCOFED et al. vs. Republic of the Philippines, GR # 177857-58, that the coco levy funds and assets which consist primarily of the 753,848,312 San Miguel Corporation (SMC) shares and their accumulated dividends are owned by the government in trust for the coconut farmers.

It also ruled that said coco levy funds and assets are to be used exclusively for the benefit of all the coconut farmers and the development of the coconut industry.

The funds are therefore public trust funds – with government as trust owner (trustee) for the true beneficial owners (trustors) who are all the coconut farmers. There is dual ownership here. Ownership by government insofar as a levy is a tax and must result in funds that are public in character and ownership by the farmers for whose benefit and from whom government levied the tax in the first place.

However, clear as the Supreme Court decision is on the dual ownership of the levy funds, the decision did not provide for an administrative mechanism to ensure that the funds are managed prudently and properly as intended by law. The decision does not provide guidelines for the management and use of the coco levy funds for the benefit of the coconut industry and the coconut farmers.

The Judiciary, however, did its job by proclaiming the spirit of the true ownership of the funds and assets. It is now up to the Legislature to give that spirit a functioning body in the farmers’ proposed Corporation.

Why humor the hang-up for privatization?

To the other question, “Why humor the present administration’s privatization hang-up?” CCFOP replies:

The House and Senate both tend to propose mere clones of the Aquino’s assailed E.O.’s 179 and 180, whose essential thrust is the privatization of certain key coco levy funds and assets such as the United Coconut Planters Bank and some coconut oil establishments.

It is right to have an inventory of all coco-levy funded assets and investments but it is wrong to make a mockery of what the Court had just declared public trust funds by rushing to privatize them allegedly “pursuant to the national policy on the efficient and transparent privatization of government assets which are unnecessary or inappropriate to maintain (Sec.5, E.O.179).”

For who will make such a determination in the case of the coco levy funds unless the farmers themselves, the true beneficial owners, participate in such a judgment, not in a context of neo-cronyism but in a truly democratic, stable and enlightened setting such as through a Corporation set up by law for the purpose?

Most important of all, since when has government obtained the right to include trust assets in its privatization program? This privatization hang-up of government is a complete abandonment of government’s duties as trustee of the coco levy assets whose clear intention was not merely the benefit of the coconut farmers but the development of the coconut industry, a process that requires, inter alia, an agribank for the farmers and the financial needs of the industry.

In their study and interpretation of the original laws, the Court is quite clear that “the coconut industry is one of the great economic pillars of our nation, and coconuts and their byproducts occupy a leading position among the country’s export products,” and therefore levy funds were being raised not so much to raise revenues for the government but “to provide means for the rehabilitation and the stabilization of a threatened industry, which is so affected with public interest as to be within the police power of the State.” (

For that twin purpose, viz. the development of the coconut industry and the benefit of the coconut farmers, many assets government wants to privatize in a hurry should rather remain in government-for-farmers’ hands more efficiently through the establishment of a Corporation and more equitably through ensured farmers’ participation.

There may be a need to recapitalize the UCPB to be in line with the requirements of the Bangko Sentral ng Pilipinas (BSP) following the Basel protocol. But UCPB can be recapitalized by the fund now about to come out of Congress.

To sell (to privatize) UCPB just when it is already doing very well, making a net of more than three and a half billion pesos per annum, makes no sense at all as far as the farmers are concerned. Of course UCPB, which already has quite a history, is really quite attractive for privatization. But, to reiterate the farmers’ view, UCPB can be recapitalized if need be with government-for-farmers’ funds, viz. the coco levy funds, and at the same time be brought around to becoming, at least in part, the agribank that it has never been but which it was intended to be by the original law creating it.

Lastly, and more significantly, the Confederation of Coconut Farmers’ Organizations of the Philippines agrees that “savings” of the coco levy funds not immediately utilized for development initiatives must be put in a “Sovereign Wealth Fund” structure instead of wallowing in the very low returns of age-old traditional Treasury Bonds of the Government. This would be a better exercise of stewardship over time, as many other countries have already shown. The government-farmers corporation would then have more funds to use to ensure the coconut sector’s total development and the farmers’ prosperity.


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1 Comment

  1. Dominador D. Canastra on

    I see. from looking at the Front Page, that this very very very very very significant commentary on behalf of us coconut farmers and growers, was on Page 1 and at the very top of the page. But in this Times website–which is what people all over the world, especially OFWs from the provinces who are either also children of coconut farming families or owners of oppressed and disregarded coconut farms or children of coconut tillers–this article by Mr. Avila has been hidden in the Opinion Section of your paper.

    Binayaran ba kayo ng mga Conjuangcos at ni Mr. Ramon Ang?
    Kamag-anak by ang mga ASng na may-ari ng Manila Times si Ramon Ang?