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The Coconut Levy Fund Essay

Cocos Nucifera, better known as the coconut, has been with the Filipinos since the earliest forebears first inhabited the archipelago. When the first western adventures stumbled into the Philippine shores, their scribes recorded encounters with brown-skinned natives who derived their basic needs in life from a single source they called the “Tree of Life”.

This remained true for the Filipinos until the imposition of the Coconut Levies during the Marcos regime dated 1971-1983. Coconut farmers were taxed thereon for the purpose of elevating the lives of the coconut farmers and increase the potentials of the coconut industry.

Four decades passed by and six presidencies have governed over the Philippines, still, the tillers of the coconut farmlands are in the state of drought for the benefits they were told to achieve several decades ago. For forty-one long years, Filipino coconut farmers have been struggling for the right over the sought after “Coconut Levy Fund”. Their battle against other claimers never ended. For some, there still is a very long way to go. They are still in hopes in answering the then and until now being questioned “To whom does Coconut Levy Fund belong?”

This research work aims to provide clarifications and to look at the different sides of the dispute over the coco planters, private individuals and the government about the coco levy fund. Throughout the paper, the following questions will be answered.

* What is the Coconut levy fund? * Who are the people involved in the controversy? * How did the coco fund affect the coconut farmer’s lives? * What is the stand of the government over the matter?

Significance of the study Taxation is the life-blood of the nation, being one of the three inherent powers of the state- Taxation, Police power and Eminent domain. Its primary purpose is the generation of the revenue to defray government expenditures and for the instillations of the government programs. The Coconut Levy Fund, on the other hand, is a special kind of tax. This kind is imposed for a special purpose regardless of whether revenue is raised or not. It is intended to achieve some social or economic end- the improvement of the coconut industry in the Philippines.

With the influences of some gluttonous people, the fund collected was doomed out of its proper range. Instead of financing the amelioration of the coconut industry of the country, the billions-worth fund was used for personal profit of some; leaving the coco farmer beneficiaries just in their great anticipation over the fund. Needless to say, it became the sprouting of the coconut levy fund scam.

The public was of little knowledge that all these controversies rooted from an accounting manipulation and improper handling of special tax. In accordance to the accounting principles and discipline, this paper will give the people the information and knowledge about the transactions dealing with the coconut levies in precision. This study will also serve as a model for handling of special tax activities so that discrepancies and disputes between the government and the people could be prevented.

Theoretical framework , Scope and Limitations

Php 130 billion , the amount of assets that has been collected from the coconut levies imposed by Republic Act 6260 of 1971 known as Coconut Investment fund (Cocofund) and Presidential Decree 276 on every first sale coconut products nationwide from 1973-1983- otherwise known as Coconut Levy Fund. A huge amount… “for whom?” Through the years, this has been the problem that remained to be unsolved. This is what the research will tackle. The study is organized in a manner of answering the questions presented earlier in this paper.

Chapter 2 will discuss what the Coconut Levy Fund is about- its legal beginnings and history. The people who are involved in the creation and promulgation of the law on the Coco Levy fund and in the controversies will be tackled in the same chapter. The next chapter deals on how the levy affected the lives of the coconut farmers then until now. On the last part, the side of the government over the issue of the coconut levy fund will be cited and discerned in Chapter 4.

Hypothesis The Coconut Levy Fund should benefit the economy of the Philippines in general and the stakeholders in particular.

Definition of Terms BIR ( Bureau of Internal Revenue) : attached agency of Department of Finance. It collects more than one- half of the total revenues of the government. CIIF oil mills group ( Coconut Industry Investment Fund) : constitutes the biggest and the most integrated conglomerate in the Philippine Coconut industry. CocoFed : Philippine Coconut Federation Inc. is a private , non-stock, non-profit organization founded by coconut planters and politicians in Southern Luzon in 1947. Leadership was taken over by landlords, businessmen and politicians. Common Stock: shares of ownership in a corporation.

For publicly-held firms, the stock typically trades on an exchange; for closely-held firms, the founders and managers own most of the stock. Executive Order 313: modifying the nomenclature and rates of import duty on certain imported articles under Section 104 of the Tariff and Customs Code of 1978 (Presidential Decree No. 1464), as amended. Levy: a special kind of tax collected by force or authority PCGG (Presidential Commission on Good Governance): a quasi-judicial agency created by the president Corazon Aquino to recover ill-gotten wealth accumulated during the Marcos regime.

Philippine Coconut Administration (PCA): was named National Coconut Corporation (NACOCO) which was promulgated to promote the growth and development of coconut industry. Philippine Coconut Authority: the government agency that is tasked to develop the industry to its full potential in line with the new vision of a united, globally competitive and efficient coconut industry. Preferred stock: a type of stock on which a fixed dividend must be paid before holdings or holders of common stock are issued their share of the issuing corporation’s earnings. Preferred stock is less risky than the common stock.

Presidential Decree 1468 Article III Section 5: otherwise known as Revised Coconut Industry Code substituting the United Coconut Planters Bank for NDC as administrator trustee of CIDF. Presidential Decree 276: establishing a Coconut Consumers Stabilization Fund San Miguel Corporation: South East Asia’s largest publicly-listed food, beverage and packaging corporation with over 17000 employees in over 100 major facilities throughout the Asia-Pacific region. UCPB( United Coconut Planters Bank): one of the largest bank in the country. The bank caters coconut farmers, but also serves a wide-ranging clientele.

Review of Related Literature and Studies Much has been said about the Coconut Levy Fund controversy but none of those clearly satisfy and answer the fund’s ownership. After its explosion and expose made by Virgilio M. David, a former General of the Armed Forces of the Philippines, in his Masteral thesis for MBA in Ateneo dated 1977, lots of twists and turns happened in the Coco Levy controversy-making it the longest telenovela in the country.

The Coconut Levy controversy was said to be a scheme successfully hatched by Marcos crony Eduardo “ Danding” Cojuangco Jr. in the study made by David, he said that the levy paid by coconut farmers whenever they sell copra the 1970s was funneled into various companies owned by Cojuangco. Instead of being used for the industry’s development, the levy went to various private companies headed by Cojuangco. Through this, from being a public fund, the levy became a private asset controlled by Danding Cojuangco. The funds were used to buy 47 percent of San Miguel Corporation in Mid-eighties. Total shares bought by the coco levy funds were divided into two, which is 20 percent under Cojuangco and 27 percent under the Coconut Industry Investment Fund.

In December 2001, the Supreme Court ruled that the 27 percent shares in SMC are public funds. This was followed by a May 2004 decision from Sandiganbayan which said that 27 percent of SMC shares were acquired using coco levy fund. But things screw up again for the coconut farmers. It was on September 2009 when the Supreme Court approved the conversion of the 27 percent SMC shares to be preferred from being common stock. This made the coco farmers lose their claim over the shares using their own money.

To date, Danding Cojuangco still claims of owning the said shares in SMC- basing this to the Supreme Court decision. The said common shares in SMC was valued at Php 58 099 047 832 based on the share price of Php117.40 per share on January of the year 2012.

Research design and Methods The researcher made use of the Historical and Descriptive research methods in conducting the studies about the Coconut Levy fund. The Historical Research thrives and focuses on the past events that emerged and resulted to the present condition of the Coconut Levy Fund and issues. This too, will deal on the roots and causes of the controversies and the effects it has made nowadays.

The descriptive research is also used to note on some events that occur on present days and interpreted and analyze them according to how those events can affect the topic and how can those events resolve the issues. The use of both historical and descriptive researches are necessary so that every angle of the controversy can be analyzed from the past up to the present day conditions.


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