THE LETTER TO PNOY… the coconut tax part II

March 21, 2012

President of the Philippines


Dear Mr. President:

Allow us to introduce ourselves to Your Excellency as a majority network of peasant associations who are not just for the farmers but of and by the farmers themselves; our leaders are democratically chosen by farmer members (who have names and faces and addresses). We are farmer organizations, not NGOs, and down the years we have perseveringly banded together in ever-stronger self-organization.[i]


Mr. President, we write you in the well-known context that vast sums of money commonly referred to as the coconut levy funds have been rightly declared by the Judiciary as “owned by the government to be used only for the benefit of all coconut farmers and for the development of   the coconut industry, and ordered reconveyed to the government.” [ii]

The beneficial owners of the coco levy funds are, thus, clearly “all coconut farmers,” and the funds may not be considered private but public, i.e. they are “owned by the government.”  The purpose of the funds is not general in nature but particular, namely, “the development of   the coconut industry.”

The dual character of these coco levy funds (owned by both government and farmers, with the latter as beneficial owners or trustors of funds for which the government is trustee) poses a challenge to your Administration and our organizations in that neither government nor we coconut farmers may at any time be considered absolute owners of these funds. Indeed, these funds are precisely what the Judiciary has called them: “public trust funds” whose ownership is in the nature of stewardship or trusteeship.

Thus, because of the public character of these funds, the same must be reconveyed to the government for its control. At the same time, however, because the funds rightly belong to all the coconut farmers themselves, the latter must be allowed greater say in their disposition lest it be discovered again too late that there was all along massive abuse of trust by the trustee that did not use the funds according to the will nor for the benefit of the beneficial owners, namely, the coconut farmers.

We therefore submit, Mr. President, what we have concluded in many conferences and consultations among ourselves and with both government officials and moral leaders[ii] down the years, namely, that these two essential features characterizing the funds are best ascertained and guaranteed through the establishment of a Foundation that is both government-controlled and participated in by the elected representatives of all the coconut farmers.

The Foundation to be established shall be organized as a non-stock, non-profit corporation under the laws of the Philippines for the benefit of the coconut industry and its farmers. . All assets, resources, enterprises and corporations that had been funded by coco levy funds shall be controlled by this Foundation through its nominees to the various Boards, or, absent such Boards, through the appointed Managers.

More urgently, the 24% SMC-CIIF Series I preferred Shares registered in the names of the 14 CIIF Holding Companies as well as all the dividends accruing thereto are among the assets acquired with the use of the coconut levy funds. These SMC shares should be sold at a public auction under the most favorable terms and in compliance with all relevant laws on bidding. The sale shall be administered by the Republic of the Philippines through the Department of Finance (DOF), with a representative from the coconut farmers as an observer to the proceedings.

The proceeds of this proposed auction sale of subject SMC shares must be considered as Special Funds — to prevent them from being remitted/placed in the General Funds and/or DAR Funds. They shall be remitted to the Bureau of Treasury (BTr) and treated as Special Accounts in the General Funds. These Funds in the Special Accounts should then be invested by the BTr in the highest yielding stable securities and/or other income generating placements in accordance with prudent investment principles.

Needless to reiterate, Your Excellency, the proceeds from this Special Account including all its assets/dividends/interests/earnings shall not be reverted to the General Fund and shall not be used for any purpose other than the purpose for which said Special Funds in the Special Account has been established until such time as the proposed government-coconut farmers-and-workers’ Foundation shall have been established.

Out of the aforementioned proposed sale of the SMC proceeds, Mr. President, Ten Billion Pesos (PhP 10, Philippine currency from the Special Account should be made available and transferred to the Foundation as its seed money. Being a government-controlled foundation, the proposed Foundation will submit to the Department of Budget and Management (DBM) its annual budgetary requirements, which will automatically be appropriated and released to it (the Foundation) from the Special Account with the BTr, and, needless to say, said Foundation’s budget shall be subject to the auditing rules and regulations of the Commission on Audit (COA). This automatic appropriation provision, however, will be limited only to the Special Funds in the Special Account.

Your Excellency, we trust that your government shall ensure the participation, finally,  of the coconut farmers in policy formulation. As such, the governing Board of the Foundation should be composed of fifteen (15) Trustees to be appointed by Your Excellency — eight (8) of the Trustees to come from the government sector; and, seven (7) Trustees to be nominated by the coconut farmers sector in accordance with the procedure that may be adopted by them.

We strongly urge that in the soonest possible time, Your Excellency, a nation-wide census be conducted of all the coconut farmers of the Philippines as defined by relevant Administrative Orders of the Philippine Coconut Authority (PCA). The PCA shall assist the NSO or National Statistics Office to conduct such census using funds allowed by Your Excellency to come from the proceeds of the sale of the SMC-CIIF preferred shares of stock or from any other funds you may deem appropriate for the purpose.

Following the results of this census, Mr. President, and to ensure that no “Wang Wang” group be allowed to take over the farmers’ voice in that foundation,  nationwide elections should be conducted democratically and honestly among tall he coconut farmers of the Philippines to nominate to Your Excellency seven persons to represent them and be appointed by you to the Board of the proposed foundation.

The farmers side, Mr. President, commits to organize all the farmers of the Philippines in the coconut industry for their self-empowerment and benefit and in order to give Government greater facility in assisting Philippine society’s all-important coconut sub sector. We bring to the table so many provisional programs formulated down the years by farmers’ consultations for the reform and greater prosperity of the coconut industry. We hope that we will have the opportunity to present these programs at the proper time to the proper forum.

Thank you so very much, and may God bless you, Mr. President!

iKACOFINCO (Kaginhawaan Coconut Farmers Integrated Cooperative) President, Mr. Rustico M. Lintua, Jr.; COPRA- (Coconut Peasant Reform Alliance) President, Mao K. Andong, Jr.;
MAGSASAKANG NAGKAISA Chairman, Ricardo J. Dequina;
KOMMMPAK (Kongreso ng mga Manggagawa, Magsasaka at Mangingisda Para sa Kaulnaran, Inc.) Chairperson, Fe S. Diabordo;
HUSGAMACA (Hugpong Gawasnong Mag-uuma sa Cambagang Multi-Purpose Cooperative). Chairman – Pedro A. Nacario;
BASCOFA (Bayanihan Small Coconut Farmers’ Association) President, Victor T. Garilao;
COFFRA (Coconut Farmers’ Federation for Rural Advancement) President, Cesar Sargento;
KAAGAPMUCO (KAAGAP Development Multi-Purpose Cooperative) Chairman PAFC Maximino T. Robles, Jr.;
 LMP (Lakas ng Magsasakang Pilipino) National President, Alejandro D. Asis;
ATIMAN-MINDANAO (Alyansa sa mga Timawang Mag-uuugmad sa Amihang Mindanao). Chairman – Oscar C. Solidor;
FARMERS Alternative for Self-Reliance Multi-Purpose Cooperative Chairman, George C. Ballongay;
HIMANBAN (Higaonon, Manobo, Banwa-on Tribal Farmers’ Association) Tribal Chairman, Datu Teodoro S. Denoyan;
TSCFIDFI (Tagoloan Small Coconut Farmers Industry Development Foundation) President, Mr. Dhara T. Mamacol;
FFAP (Federation of Farmers’ Associations of the Philippines) President, William S. Salutillo, Jr.;
 PASCFO (Philippine Association of Small Coconut Farmers’ Organizations – formerly NFSCFO – National Federation of…representing SCFO’s of all Regions, Provinces, Districts and Municipalities) President, Rodolfo A. Vargas, Chairman Charlie Avila;
SIPAG Samar Island Peasant Alliance Group, Inc.) Secretary General, Edwin G. Giray;
NORTHERN Samar Pacific Area Coco-Farmers Association, Inc. President, Nicanor R. Orante;
CARAGA Small Coconut Farmers’ Organizations President, Samuel R. Roculas;
KIWA (Kinatian Women’s Association) President, Patricia Onde;
NAGAMATA (Nagkahiusang Gagmayung Mananagat sa Tagabebe) Secretary General, Luciana Buhawi;
BUTIKA (Barangay Upper Tibanban Kaginhawaan Association) President, Eddie Corpuz; NEHOTASA ( New Hope of Tandang Sora Association) President, Reynaldo C. Nazareth; MASIPAG ( Masipag Rice Planters’ Association) President, Tomas Pandia;
BAKAMAFAS (Banahaw Kaginhawaan Masipag Farmers’ Association) President, Emma Dongiapon;
PKSMMN (Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan) Efren Villasenor, President;
ANIBAN ng Magsasaska at Mangagawa sa Niyugan, Joanne Edward Labay, Secretary General;
BUKLOD ng  Malayang Magbubukid, Guillermo Palomera, Chairman;
ARBA – Agrarian Reform Beneficiaries Association, Oscar T. Piolago, National President; KATIPUNAN ng Samahan ng Maralita sa Kanayunan, Victorino Ujano, National President;
PAMBANSANG Kilusan  ng mga Samahang Magsasaka, Protacio Naga, Representative; KALIPUNAN ng mga Malilit na Magniniyog ng Pilipinas, Romulo C. Tapayan, Secretary General;
MINDANAO Coalition of Coconut Farmers and Farmworkers, Datu Cons Mamontuan, Chairman;
PASALEY– Peasant Alliance of Samar and Leyte, Teodoro Amor, Chairman; SAMAR Island Peasant Alliance Group – Sergio Leonida, Chairman;
ALYANSA ng mga Samahan sa Timog Katagalogan Para sa Kaunlaran, Benedicta S. Angeles, Chairperson;
CARAGA Coconut Peasant Alliance, Federico Mortola, Chairman;
NAGKAHIUSANG Maguuma sa Habagatang Mindanao, Angel S. Regidor, Secretary General;
FFF Federation of Free Farmers, Dioscoro Granada, Vice President;

[ii] January 24th 2012 Supreme Court Decision in G.R. Nos. 177857-58 and G.R. No.178193, in the dispositive portion.

[iii] Particularly the BUPPFALUC or the Bishops-Ulama-Priests-Pastors-Farmers-Lumad Conference


How much? The coco levy collection of the 1970s amounted to a Gross Total of  Php 9,695,439,749.67. It was used for setting up oil mills, trading companies, insurance corporations, scholarship funds, support for various agencies of the government dealing with coconut farmers, and various other investments such as in San Miguel Corporation, the beer company.At this Davao confab the farmers said: Let it be known for the first time that the dividends alone from the farmers’ investments in San Miguel Corporation now amount to P20, 682,311,143.00 or almost twenty-one billion pesos. Not that they had any say on how these investments would be placed in the first place. During the administration of President Cory, the dividends declared for the CIIF-SMC shares (Coconut Industry Investment Fund – San Miguel Corporation shares) came up  to P147, 211,457 pesos. In the Ramos administration, it was P1, 694,853,250.61; under Estrada it amounted to P1, 534,315,394.60; with Macapagal-Arroyo, the dividends flew to a whopping P10,521,293,232.90.

In the short period under PNoy, the dividends have already reached P6,784,634,808. The coconut farmer is emphatic that after he agreed to convert his shares from common to preferred, his dividends from the converted shares have now reached P7, 915,407,276. By the end of last year another P1,130,772,468.00 was declared in dividends for these farmers’ SMC preferred shares – bringing up the total of dividends from preferred to an exact P9,046,179,744.00. –  a figure poetically almost equal to the original amount levied on him in the martial law years. Quarter by quarter this year the amounts will only get bigger.
For what?

So, the coconut farmer wanted to announce in the Davao conference that he has the investment capital needed to agro-industrialize the whole Philippine coconut industry, disperse integrated coconut plants all over the archipelago, each of which can produce 5 to 6 marketable food  and non-food products,  modernize the ports to accommodate coco terminals rather than have these in Europe and America as they are now, make the country the oleo chemical capital of the world, attend to the nutrient support and proper fertilization of some hundreds of millions of coconut trees bearing billions of nuts a year, replace-replant 35 million trees a year and inter-crop three million of those coco hectares with high value crops like cacao, produce coco fiber for the production of anti-erosion mats, medicines for easing degenerative diseases of all sorts, make coco sugar and coco flour of glycemic indices low enough to be diabetic-friendly and, yes, sure have virgin oil and coco water available at affordable prices, too,  to Filipino and foreigner alike.

Angry, cheated

But the farmer also wanted to say that he continues to feel cheated. He cannot use the money that he owns. In 2009, the government asked him to convert his common shares to preferred although this clearly meant loss of voting power in the San Miguel Corporation. He believed the promise of much bigger dividends, which came about, and the chance to use part of these dividends as seed money for the proposed  Coconut Farmers’ and Workers’ Foundation, which has not come about yet. That foundation, although to be shared with the government on an initial 51-49 voting rights ratio, would nonetheless already give farmers and workers a big say in the funds of which they were beneficial owners – with increasing control as they got better organized and more productive.

But what did the government do instead – on September 2009 right after the conversion of shares happened? The government through the Solicitor General asked the Supreme Court that “the net dividend earnings and proceeds from the redemption/sale whether whole or in part from the Series I Preferred Shares be deposited in an escrow account.” The most surprising thing is that the Sol-Gen did this in violation of the wishes of its client, the PCGG then, which had explicitly favored the use of the dividends to establish the foundation for the benefit of the coconut farmers. It is still a question whether the new PCGG will continue to favor the speedy establishment of such a foundation rather than give in to the temptation of sitting on the boards of the coco-levy funded corporations themselves.

The Supreme Court quite speedily accommodated the Sol-Gen and denied any motion to have that decision reconsidered. So, nine billion plus of the farmers’ money are locked up in escrow– but what about the remainder of almost eleven billion more? Pnoy might still want to know what happened to these.

Anyway, the farmer is angry. He has so much money but he cannot use it. If Pnoy can’t help him in this, it just may be advisable not even to think of allowing the Pepsi-colonization of the coconut industry because the farmer will make sure that coconut water will rhyme with that of the Ancient Mariner: water, water everywhere but not a drop to spare. It will not be easy to stop the farmer from flouting the government law against coconut tree-cutting in favor of following the law of survival, having now probably identified the coconut as the Tree of Knowledge of Good and Evil. Help him, PNoy, because you can, to recognize the coconut as the Tree of Life that it is, the Tree of Life that he has always known it to be.    FINIS

Charles Avila -The Gardener
The Gardener’s Tales


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