Last July 11, the Sandiganbayan declared as publicly owned the funds used in acquiring 72.2 percent stake in United Coconut Planters Bank (UCPB), effectively forfeiting the stewardship claims of the group led by Eduardo "Danding" Cojuangco Jr.
The UCPB shares were ruled to have come from a coconut levy of P15 to P100 per 100 kilo imposed on coconut farmers on every first sale of coconut products. The decree issued by Marcos established the Coconut Consumers Stabilization Fund, and accumulated about P9.695 billion through its life, from August 1973 to 1982, and is believed to now be worth at least P150 billion.
Refund for coconut farmers?
The Sandiganbayan decision raises a very controversial question: Will coconut farmers get back what they were "taxed" in nine years during the coconut industry’s heyday, more so now that the country’s position in world copra and coconut production is being surpassed by other countries?
The verdict on the UCPB shares comes at the heels of the Supreme Court’s Meralco refund ruling. But while the high appellate was very explicit about ordering a refund to all Meralco consumers, the Sandiganbayan – though it recognized the farmers‚ ownership of the UCPB shares – was not as forthright.
Instead, the graft court declared the UCPB shares as "conclusively owned by the plaintiff Republic of the Philippines," thereby setting in motion two executive orders signed by Ramos that directed the management and disposal of the coconut levy by government.
The intent was to use the money to fund programs that would resuscitate a beleaguered industry, formerly considered as one of the country’s major pillars in employment generation and foreign exchange earnings.
Today, the coconut industry is bugged by declining local production problems, competing countries that have increased productivity of their plantation acreages, and biotechnology researches that have upgraded other crops as a suitable replacement for coconut by-products.
Contingent benefits such as life insurance, educational scholarships, and a cooking oil subsidy have actually trickled down to only very few farmers. Likewise, several sweeping reform programs that were announced purported to improve the industry have been poorly implemented or in some instances, cancelled or not fully pursued.
In the early ’70s, for example, the Philippine Coconut Authority – under the helm of Cojuangco – announced a replanting program utilizing an improved coconut hybrid plant. Some 60,0000 trees were pledged to be replaced every year with these new fast-growing palms; the targets were never met.
Aside from grand plans, the administration of the levy funds was redirected to "investment opportunities" supposedly on behalf of the coconut farmers. Through the Philippine Coconut Authority – already controlled by the Philippine Coconut Producers Federation and its officers – majority share of the First United Bank (later renamed UCPB) was acquired.
After the UCPB was nominated as sole administrator of the coconut levy funds, the buying binges began. When coconut prices began to drop in the early 80s, the farmers in effect were dumped with non-performing assets. In 1985, the Philippine government agreed to dismantle Unicom as part of an agreement with the IMF to bail out the Philippine economy.
The most controversial "investment" of the coco levy remains the acquisition of 33 million shares in San Miguel Corp., representing 27 percent share. While the Sandiganbayan decision is specific to the UCPB shares, its ruling is expected to influence the ongoing sequestration bid of the Presidential Commission on Good Government (PCGG).
The 27 percent stake is worth about $1 billion – or P54 billion – based on the acquisition share price paid for by Japanese brewer Kirin when it acquired 15 percent stake in the country’s largest food and beverage conglomerate last year.
Considering that UCPB has been suffering from capital deficiency for the past three years, not to mention potential investors’ aversion towards companies mired by political sensitivities, the government does not expect to get premium pricing for these shares.
However, the pressure to sell these shares even at fire sale prices is expected to mount. Already rumors are rife with all kinds of negotiations, with all interested parties already salivating for those big, fat, juicy commissions.
And by the way, it is also just ten months to go before national elections.
Refund forthcoming?
What about the farmers who are expecting their refund from the levy? Well, the promise of a bonanza from the P150-billion fund is an attractive carrot come election day. As for the actual receipt of refund, having waited for 17 years, what’s another 17 years? Anyway, by this time, many of these farmers will have realized that control of the funds may change hand as political fortunes shift, but getting back their money will almost be impossible.
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