UNIVERSITY OF THE EAST- COLLEGE OF LAW

THE VETO OF THE COCOLEVY BILL: THE JUSTIFICATIONS AND THE

PROPOSED REVISIONS

A THESIS SUBMITTED TO THE COLLEGE OF LAW OF THE UNIVERSITY OF THE

EAST, MANILA

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF

JURIS DOCTOR

ARAGONA, MELVIN P. (2013-0243-851)

URSABIA, ANGELO FRANCIS G. (2016-0156-149)

2019
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CHAPTER I

INTRODUCTION

Background of the Study

The Philippine coconut industry is a large pillar of the national, economic

and cultural heritage of the country. It is important to the national patrimony, as it
is the source of valuable commodity and renewable asset, vital in building a
strong nation.

The area currently planted to coconut is about 3.565 million hectares or 26

percent of country’s total agricultural lands. Also, 68 out of 81 provinces are
coconut-growing areas.1However, the Philippines continues to lag behind India
and Indonesia in terms of production, based from the recent study of United
Coconut Association of the Philippines (UCAP).

About 26 million Filipinos depend on coconut trees for their livelihood.

For the marginal coconut farmers, they depend mostly, if not entirely, on coconut
for their need for food, clothing, shelter and education for their children. But
while the prospects in the global market for coconut products are encouraging, the
current situation in the local coconut industry is, however, challenging, if not
alarming. The timely intervention by the government on the issues now
confronting the local coconut industry would be very crucial for its survival.
The coconut levy funds which are now worth about P100 billion upon
which coconut farmers had been pinning their hopes for salvation still remain
frozen in the national treasury. The bill pending in Congress that will finally
provide for the utilization of the funds entrusts the management of the funds with
the Philippine Coconut Authority. However, PCA’s charter will have to be
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amended and that could very well take a year, or forever, if the 45- year saga of
the Cocolevy fund is any indication.

The Supreme Court made emphasis on the importance of the said funds in
its ruling from Pambansang Koalisyon ng mga Samahang Magsasaka at
Manggagawa sa Niyugan (PKSMMN) v. Executive Secretary, that said funds
were raised pursuant to law to support a proper governmental purpose. They were
raised with the use of the police and taxing powers of the State for the benefit of
the coconut industry and its farmers in general. The COA reviewed the use of the
funds. The Bureau of Internal Revenue (BIR) treated them as public funds and the
very laws governing coconut levies recognize their public character.

In 2012, the Supreme Court also ruled in the case Eduardo Cojuanco,Jr. v.
Republic of the Philippines, that a block of shares from San Miguel, UCPB and
Oil Mills Group of Companies be given to coconut farmers; however, this has yet
to materialize. As the court ruling stressed that the agreement between the
Philippine Coconut Authority-Cojuanco Agreement as referred in Section 1 of
P.D. 755 was not reproduced or attached to the same law. And well-settled is the
rule that laws must be published in order to be valid, citing the case of Canada vs.
Tuvera.3 In this case, the Supreme Court affirms the ruling of the Sandiganbayan
in holding that the said agreement shall be treated as an ordinary transaction
between agreeing minds to be governed by contract law under the Civil Code.

Recently the Senate adopted and ratified bicameral conference committee

reports on the bill seeking to set up a P100-billion trust fund for coconut farmers
and the bill to strengthen the Philippine Coconut Authority, which will handle the
funds.

Moreover, many recommendations have been offered as a way of

increasing coconut farm productivity and farmers’ incomes with the aim of
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freeing coconut farmers from poverty. Among these are crop diversification of
coconut lands to other crops, the integration of livestock, product diversification,
and value adding. All these recommendations are useful but none provide a
solution to the problem of the very low yield of the coconut trees, which is the
major cause of the farmers’ low incomes, which lead to poverty.

Statement of the Problem

1. Whether the rejection of the bill was justified as it would be a violation of the
constitution?
2. What revisions should be made in order to address the justifications of the
vetoed bills
2.1 What is the significance of imposing safeguards in achieving the
ultimate goal of accelerating the full utilization of the coco levy assets and funds?

Significance of the Study

This section will provide brief description on the significance of the study
to different sectors such as the State, the coconut farmers, the public and the
future researchers.

To the State: This study will provide the government useful information
and considerations in enacting laws for the proper distribution of the said assets to
the coconut farmers. In effect the law making body of the government will have
additional grasp of the current impact of the delayed distribution of the fund to the
marginalized coconut farmers.

To the Coconut Farmers: This study will help them to be up to date of

the recent developments of the bill being enacted in the Congress. Furthermore,
the said topic is geared towards helping our coconut farmers in informing them of
what is due to them, which some of them were no longer taught of what they were
bound to receive as beneficiaries. Unfortunately ,even though Supreme Court
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have laid down several decisions emphasizing that said funds were special funds
allocated specifically to them, still our farmers remain empty handed.

To the Public: This study will serve as an eye opener to the public as to
the current situations of the coconut industry in the Philippines as well the impact
of said Cocolevy fund issue to the society’s interest towards transparency in
government’s projects in future generations to come. It will help them understand
the poor condition of the coconut farmers and its impact to the economy of the
Philippines, being one of the major producers of the coconut in the world.

To future researchers: This study will serve as a future reference to

researchers who share the same area of interest. This study can also open in the
development of this study.

Scope and Delimitation

The scope of the study is limited to discuss whether the veto of President
Duterte with regard to the proposed twin bill of the Congress that was supposed to
strengthen the Philippine Coconut Authority as well the creation of the Trust Fund
is justified and whether said rationalization made by the President was made in
order to promote the best interest of our coconut farmer.

Moreover, the researchers will discuss the composition of the committee

and how such composition will affect the entire process of disbursing the funds
and how such funds will be utilized.

Lastly, the researchers will also recommend feasible recommendations so

as to make a more viable and suitable bill taking into consideration the
justifications made by the President.
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Definition of Terms

1. Coconut Farmers - group of people engaged in planting and sowing of

coconut by products.

2. Cocolevy Assets- refers to all kinds of property, whether real or personal,

tangible and intangible, wherever situated, which have been acquired
through or otherwise funded by the Cocolevy funds,including those that
may be recovered in favor of the Government, as well as the fruits or
income derived therefrom, including those acquired in exchange and in
substitution thereof.

3. Cocolevy Funds- refers to various funds generated from levies, taxes,

charges and other fees exacted and imposed pursuant to or in connection
with the sale or copra or its equivalent in other coconut products, and
collected for the most part from the coconut farmers, planters, millers,
refiners, processors, exporters, desiccators and other end users of copra or
its equivalent.

4. Philippine Coconut Authority - is the sole 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.

5. Trustee - an individual or corporation named by an individual, who sets

aside property to be used for the benefit of another person, to manage the
property as provided by the terms of the document that created the
arrangement.

6. Beneficiary -is a person or entity who receives a profit, advantage, or

benefit.
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CHAPTER II

REVIEW AND RELATED LITERATURE

The colorful history of the Philippine coconut industry is twined to the

important chapters of history not only of the nation but also the world itself.

The five vital phases of emergence and growth of this industry are
categorized as follows: (1) the periods of emergence (2) the American Colonial
period; (3) the post-independence period; (4) the levy period and the (5) present.

Emergence of an Industry - Spanish Colonial Period (1521-1849)

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The Spanish colonial government issued edicts decreeing the planting of

coconut in the country, even stipulating the number of trees planted according to
social classes and imposing on each adult the planting in an area of at least 200
sq. ft. This period also saw the introduction of crude and oil processing, the
exportation of the husked nuts and copra and increased use of coconut in the
manufacturing of margarine and explosives.

American Colonial Period (1900-1946)

The period of world depression in the early 20th century cut back the
demand of coconut products despite its preferred position in the U.S. market,
which has acquired a taste of margarine. The two world wars ushered post-war
depressions which was most acute after the First World War. This saw the closure
of many mills as demands for coconut-based products declined. This period also
saw the imposition of a U.S. cent excise tax on the called “coconut cow,” which
was perceived to be a threat on the U.S. dairy industry.

Post-Independence Period (1946-1973)

This period saw the recovery of the industry which also saw high prices
and more processing witnessed by the proliferation of the coconut oil processing
and expansion of coconut desiccating industry. The period of import and
exchange controls also witnessed the promotion of barter trade and export
undervaluation in the face of the fixed unrealistic exchange rate.

Coco-Levy Period (1973-1986)

The early seventies saw a commodity boom that pushed up the price of the
coconut products to unprecedented heights. This prompted the imposition of
levies ostensible to float Coconut Investment Company (CIC), the fist levy
amounting to P150 million, a Coconut Consumers Stabilization Fund (CCSF), to
Coconut Industry Development Fund (CIDF) to promote a vertical integration of
the coconut industry.
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Post-Levy Period (1986-2000)

This saw the end of the levy collections and the restoration of the market
forces through the dismantling of the Unicorn monopoly. A series of litigation
and judicial decisions led the government to re-conversion of the “privatized”
fund to the government by the Supreme Court.

This also saw the proliferation of small coconut farmers’ organization and
attempts at replanting and farm rehabilitation with the support of the World Bank.

The Philippine Coconut Industry

The coconut industry is the 4th largest contributor to GVA of the

Philippine agriculture; there are about 3.5 million coconut farmers and 7,300
traders which help hand in hand in creating and keeping alive the said field.
About 26% of total agricultural lands were used to coconut farming far more
small to other lands used in other agricultural crops.

Throughout the Philippines, the coconut is consumed and utilized in a

variety of ways. Coconut leaves are often used to wrap rice for cooking and used
in its subsequent storage in packets known as “puso.” Coconut milk, coconut jam
and so-called coconut sport fruits, sweetened meat of the copra that is sliced and
severed in strings, are all popular forms of consuming coconuts.

Although the Philippines produced an impressive 15.2 billion-nut

equivalent and 2.5 million metric tonnes of coconuts (in copra terms) during
2011, according to the PCA, the organization noted that the output is only 30 per
cent of potential capacity which gives more reason to create solutions to this
recurring problems of the coconut farmers.
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There were several laws and organization/s created such as:

1. COCOFED

Historically the Philippines is an agrarian society in which traditional

social and economic status has long been dominated and affected by its political
system. A group of coconut hacienderos in Southern Mindanao were able to
organized COCOFED Group which was able to solicit barter privileges from the
government, which lucrative business in the period of export and import were
made. The COCOFED and its allies worked hard to push the first coconut levy in
1971.

2. Republic Act No. 6260

The first of the levy is the so-called Cocofund Levy mandated by Republic
Act No. 6260, known as the Cocofund Law. This law provided for the collection
of a levy of P 0.55 per 100 kilos of copra produced to be imposed for 10 years
starting 1972. The collections made were to be used to establish Coconut
Investment Fund. The CIC was envisioned as a company owned, capitalized and
administered by those deriving their livelihood from the coconut industry. Under
Cocofund Law, the CIC shares of stock were distributed to coconut farmers /
landowners in exchange for Cocofund Receipts.

3. Presidential Decree No. 276

P.D. 276 established the Coconut Consumers Stabilization Fund (CCSF)

which imposed on every first sale a levy of P 15 per 100 kilos of copra or its
equivalent on other coconut producers. This was promulgated on August 20, 1973
because of dislocation in price and supply caused by abnormal situation in the
world market.

4. Presidential Decree No. 414

On April 19, 1974 PD 414 was created which later created Coconut
Consumers Stabilization Fund, the proceeds of which were deposited to
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Philippine National Bank. Said funds were utilized to provide a subsidy to

coconut farmers.

5. Presidential Decree No. 582

PD 582 was created to establish another fund, the Coconut Industry

Development Fund. The fund was intended to finance the establishment and
operation of hybrid seed farms. The law authorizes the National Investment and
Development Center to negotiate to any private person to ensure the country shall
have the earliest possible time a continuous supply of seeds.

6. Presidential Decree No. 755

This law improved the implementation of the agreement for the

acquisition of commercial bank for the benefit of the coconut farmers.

7. Presidential Decree No. 1468

This was established to reimpose the two levies (1) CCSF Levy and (2)
CIDF Levy.

8. S.N. 1913

An act authored by Senator Cynthia Villar to further strengthen the

Philippine Coconut Authority which repealed P.D. No. 1468. Its purpose is
expressed in its explanatory note which provides that it is to make PCA
responsive to the needs of the coconut farmers by making coconut industry more
competitive and most importantly to safeguard the P100 Billion Cocolevy fund in
the national treasury.

Levy-Funded Projects

The levies were supposed to address the following problems:

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1. The under-productivity and inefficiencies in the production and

processing;

2. the marketing system and,

3. the gaps in the financial system which forces the farmers into high cost
money lending of credit institutions.

Given these problems, forms of intervention were made such as the

Bugsuk Island development to take care of the hybridization and replanting
program. The creation of United Coconut Planters Bank (UCPB) to answer for
farmers’ credit needs and the CIF to provide long-term funds to accelerate
capitalization of the industry.

Recent Supreme Court Rulings

1. Republic vs. COCOFED, G.R. No. 147062-64, December 14, 2001

In this case, the pivotal issue discussed by the Supreme Court is whether the
PCGG can vote the sequestered UCPB shares. The Supreme Court ruled that the
Sandiganbayan committed grave abuse of discretion in grossly contradicting and
effectively reversing existing jurisprudence, and in depriving the government of
its right to vote the sequestered UCPB shares which are prima facie public in
character. As the coconut levy funds are not only affected with public interest, but
are in fact prima facie public funds, the Court believes that the government should
be allowed to vote the questioned shares, because they belong to it as the prima
facie beneficial and true owner.

2. Eduardo Cojuanco Jr. vs. Republic of the Philippines, G.R. No. 180705,
November 27, 2012
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The Supreme Court made emphasis that publication is an indispensable

condition for the effectivity of the law. That the PCA-Cojuanco Agreement was
not reproduced or attached as an annex to the law. Furthermore, PD 755 did not in
any way reproduce the exact terms of the contract decree hence; the Supreme
Court cannot extend to the status of the said agreement the status of a law. The
Court merely treated it as an ordinary transaction between agreeing minds to be
governed by the Civil Code.

CHAPTER III

RESEARCH METHODOLOGY

This chapter is composed of the research design, methods of data

gathering and instrument used by the researchers to acquire relevant information.
The researchers also prepared questionnaires for eliciting respondents’ opinion
with regard to the veto of the President over the coconut levy bill. The legal
implication on

Research Design

In this study, the researchers used a qualitative research. A qualitative

research is designed to reveal a target audience’s range of behavior and
perceptions that drive with reference to specific topics or issues. It uses in-depth
studies of small group of people to guide and support the construction of
hypotheses. The results of qualitative research design are descriptive rather than
predictive. (Qualitative Research Consultants Association, 2016)
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Data Gathering

The researchers used the primary source in conducting this study. The
primary source is an original document (i.e., they are not about another document
or account) which reflects the individual viewpoint of a respondent and this
represent direct, uninterpreted records of the subject of your research such as
interviews, audio recordings, or internet communications on email. (University of
Southern California, 2017)

The data that were gathered from the respondents were based on the
interview.

Respondents of the Study

The researchers gathered data to determine the. The data or output was
gathered by conducting an interview based on questionnaire.

There were at least seven (7) respondents in this study. Out of the seven
(7) respondents, five (5) were coconut farmers, one (1) is an expert in
constitutional law and one (1) is a legislator. The respondents shared their ideas
and experiences in the coco levy bill.

The coconut farmers were chosen by the researchers because they have the
right over the proceeds. The coconut farmer is the one who directly experience the
impact since it is the fruits of their labor that is being manipulated.

The academe was interviewed to obtain their opinion with regard to the
veto of the President. The veto power of the president is clearly discussed in
constitutional law. And furthermore, the person is much more equipped in
answering the legal implication of the veto power of the president.
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Instrument

The researchers used an unstructured questionnaire. The questions were

based on the statement of problem. The questionnaires were also used to
determine their opinions and ideas of the veto of the President over the coco levy
bill.

It encourages participants to “use the richness of their own words to

explore and describe their experiences in relation to the research question.”
(Markham, Van Laar, Gibbard& Dean 2009, p.749)

We, Angelo Ursabia and Melvin Aragona, the researchers would like to
ask the following questions in order to obtain handful knowledge, understanding
and opinion of the respondent about the subject matter “The Veto of the Cocolevy
Bill: The Justifications and the Proposed Revisions.”
Name:_________________________________________________________

Occupation:____________________________________________________

Gender:_______________________________________________________

Educational Attainment:___________________________________________

For the coconut farmers who are affected by the coco levy bill.

1. Have you ever been given a stock certificate? If yes, how did the
government approach you? If no, what actions have you taken to obtain
such?
2. What is your idea of the coco levy funds?
3. What are the advantages of securing the stock certificates?
4. What are the disadvantages of the bill being vetoed by the president?
5. What could be the solution to justify the disbursement of the coco levy
funds?
6. What safeguards should be given to ensure that the disbursement will be
effected?
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For the lawyer who knows the implication of such veto to the bill based on
constitutional law.

1. What is your opinion regarding the veto of said bills?

2. Do you think President Duterte's justification that said bills lack vital
safeguards that will result to violation of the Constitution?

3. Do you think that the participation of private individuals in decision making

as well as to the disbursement of the special funds would undermine the welfare
and interest of our coconut farmers?

4. What should the law makers take into consideration in order to create a
more cautious and more conservative law regarding the Cocolevy fund?

5. What is the best solution that you think the government should do aside
from monetary assistance?

CHAPTER IV

SUMMARY, FINDINGS AND DISCUSSIONS

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Support to the judicious and sustainable utilization of the collected

coconut levy funds is manifested in the legislative policies proposed both in the
Philippine Senate and House of Representatives. The bills aim to consolidate the
benefits due to the coconut farmers, especially the poor and marginalized, and to
expedite the delivery and attainment of a balanced, equitable, integrated and
sustainable growth and development of the coconut industry.

Recently, various bills that would give life to the decision of the Supreme
Court were vetoed by the President. The President made emphasis that the said
bills lack vital safeguards that will ensure that the said funds will not be
compromised. In this chapter, the researchers will discuss said justifications of the
veto made by the President as well as the effects of the said justifications
regarding its veto.

Vetoed Bills

1. Senate Bill No. 1976 - An Act to Further Strengthen the Philippine

Coconut Authority (PCA), Amending Presidential Decree No. 1468, otherwise
known as the “Revised Coconut Industry Code of 1978, As Amended
2. House Bill No. 8552 - An Act Reconstituting the Governing Board of the
Philippine Coconut Authority, Providing for Greater Coconut Farmers’
Representation, Amending for the Purpose PD 1468
3. House Bill No. 5745 - An Act Establishing the Coconut Farmers and
Industry Development Trust Fund and Providing for its Management and
Utilization
4. Senate Bill No. 1233 - The Coconut Farmers and Industry Development
Act

Discussion regarding the Presidential veto

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1. Senate Bill No. 1976 and House Bill No. 8522

This twin bill was supposed to strengthen the Philippine Coconut

Authority in promoting the integrated development and growth of the coconut
industry in all aspects and ensure that farmers as well as other beneficiaries will
have direct participation in its promotion was rejected by the President.

The President rejected the proposed measure, even though he

acknowledged that its objective is to adopt the necessary measures to immediately
address the serious problems, besetting the country, protect the socio-economic
well-being of coconut farmers, and ensure that the benefits due our coconut
farmers are consolidated and their delivery expedited.

Composition of the Committee under House Bill No. Senate Bill No. 1976 and
House Bill No. 8522

Under Sec. 5 of House Bill No. 1976 the reconstituted PCA board have six
(6) farmer representatives, four (4) from the government, and one (1) from the
industry, in a bid to grant coconut farmers greater representation in the board. The
six farmer representatives will come from Luzon, Visayas, and Mindanao.

On the government’s side, the secretaries of Agriculture and Finance will

serve as chairperson and vice chairperson, respectively. The Budget Secretary and
PCA administrator will act as members.

Justification of the President

While the said bill seeks to provide greater farmer representation in the
PCA board by allowing six farmer representatives to join four government
representatives and one from the coconut industry, the President pointed out that
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greater influence from the private sector will undermine the relevant regulations
and safeguards that were established to avoid abuses.

Analysis of the justification

1. PCA is not required to seek approval from executive branch

While the bill places executive branch officials within the PCA governing
board itself. In fact, the agriculture secretary will serve as board chairman, while
the finance and budget secretaries are members. The PCA administrator, the
President's appointee, will also sit on the board, the only body with oversight
functions over a reconstituted PCA is Congress. Not requiring such approval from
the executive branch supposedly makes the coco levy funds will be similar in
creating pork barrel funds.

To emphasize the importance of the participation of the government, the

annual disbursement from the fund will amount to ten (10) billion ($191 million).
Without such mechanism that will ensure the transparent accounting of the fund
will injure far more greatly the farmers than promoting their welfare.

2. PCA authority on sale, dissolution of coco levy assets jeopardizes executive

branch actions on coco levy cases

A reconstituted PCA is given various functions including but not limited

to the sale, disposition, or dissolution of coco levy assets without checks and
balances. Worth to remember that the PCA itself has been involved into
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corruption issues; hence a more conservative way of asset disposition must be

taken into consideration by the Congress. Moreover, the composition of the
committee that will vote upon the transactions that will supposed to benefit the
coconut farmers are coming mostly from the private sector.

3. PCA board composition puts taxpayers' money in hands of private

individuals

In the vetoed bill, the 15-member PCA board will be composed of 8

government officials and 7 private persons – 6 coconut farmer representatives and
one coconut industry representative. However, the President made an emphasis
that he does not want any influence from the private sector as this would not be a
“pro-poor” solution.

The Supreme Court doctrine was very clear on the purpose of the funds,
namely, the development of the coconut industry and the benefit of all the coconut
farmers, as stated in no uncertain terms in the case we elevated to them a few
years ago: “The coconut levy funds are special funds allocated for a specific
purpose and can never be used for purposes other than for the benefit of the
coconut farmers or the development of the coconut industry. Any attempt to
appropriate the said funds for another reason, no matter how noble or beneficial,
would be struck down as unconstitutional.

Cocolevy Funds are not simple funds, it is a special fund designed to

address the call for a more sustainable coconut industry that is designed to help
our marginalized coconut farmers.

2. Senate Bill No. 1233 and House Bill No. 5745

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The coconut levy fund management mechanism provided under the

various bills has four main features: (1) creation of a trust fund; (2) conduct of
audit and inventory of all coconut levy funds and assets; (3) creation of the
coconut farmers and industry fund committee or council; and (4) establishment of
coconut industry plan or framework. The trust fund shall be established to help
the coconut farmers and develop the coconut industry. Its initial capitalization
shall be generated from all the current recovered coconut levy funds and shall
thereafter be augmented with all the proceeds, income, interests, earnings and
monetary benefits from the potential privatization or disposition of other coconut
levy assets and investments. The trust fund shall be perpetual in character to
ensure its sustainability.

One of the important features of the policy initiatives is the recognition

and inclusion of coconut farmers as one of the key decision-makers on the
appropriate use and allocation of the coco levy funds. They will form part of the
committee or council that will be established to manage and administer the coco
levy funds including the disposition and utilization of its earnings. As the rightful
owners of the coconut levy funds, farmers’ participation in the appropriation and
utility of funds would ensure that they are part of and benefit from the growth in
the sector.

Lastly, the bills provide for the crafting of the coconut industry plan or
framework that will outline the national program to develop the industry. The
development plan include among others program on enhancing productivity,
rehabilitating and replanting activities since majority of the coconut trees are
senile, R&D initiatives to develop science-based solutions to technological
problems impeding the sector, improvement and integration of processing and
marketing, and provision of infrastructures. The plan shall also include programs
and activities that will directly benefit the coconut farmers such as but not limited
 UNIVERSITY OF THE EAST- COLLEGE OF LAW 21

to medical/health and life insurance services and educational plans or scholarships

for students coming from families of coconut farmers.

Composition of the Committee under House Bill No. 5754

Under Sec. 12 of House Bill 5745 the Committee is composed of five (5)
representatives of the government who shall be serving in ex officio capacities,
nine (9) representatives from coconut organizations with three (3) each from
Luzon, Visayas and Minadanao and two (2) representatives from the coconut
industry sector who have considerable experience and reputable track record.

Justification of the President

President Duterte has explained that the said bill lacks vital safeguards that
would ensure that funds will not be misappropriated. Considering the fact that the
Committee under Sec. 12 of House Bill 6745 consists of nine (9) representatives
from the Luzon, Visayas and Mindanao plus two (2) representatives from the
coconut industry would result to 11 private individuals that would handle and
decide how said funds will be disbursed.

Furthermore, under Sec. 6 of House Bill 6745, a perpetual trust fund will
be created and that no portion of the trust fund will accrue to the general fund of
the government which will result to a clear violation of Sec. 29 par. 3 of Art. VI
of the 1987 Constitution which provides that, “all money collected on any tax
levied for a special purpose shall be treated as a special fund and paid out for such
purpose only. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general
funds of the Government.”
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Likewise, the bill does not provide any limitation to the land area as this
would in effect affluent members of the coconut sector rather than small scale
coconut farmers.

The President also said that while the Enrolled Bill is in the common
legislative agenda of the Legislative-Executive Development Advisory Council,
the provisions of the bill do not reflect our ultimate goal of accelerating the
further utilization of coco levy assets and funds for the benefit of our
marginalized coconut farmers and the coconut industry.

Analysis of the justification

While we aim for a law that would empower the coconut farmers, a law
that will endanger a fund that has long been associated with corruption will put all
the hopes of our beneficiary farmers into an empty promise. In analyzing the
effect of greater influence of private individuals in the disbursement and use of
the said funds absent scrutiny and approval from the Executive Department will
result to abuses as this would not benefit the poor farmers. It is not the greater
representation from private individuals that will make the law a champion of the
poor. It does not mean that since farmers in the said bill have greater voice in their
own specialized sector will result to a better law. What makes a better law is to
think of not only of its purpose but the Congress should also keep in mind on how
this law will become prone to abuse in the long run. It is not that we do not have
trust with our coconut farmers to handle a fund that they really own, but since this
funds were already a subject of numerous issues of corruption way back from the
past it is but worthy to think of a better law that will promote coconut farmers’
success but also a law that will protect them.
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CHAPTER V

CONCLUSION AND RECOMMENDATIONS

Conclusion

The coconut industry is an important sector in the Philippine agriculture. It

supports millions of Filipino farmers and workers and has been a significant
contributor to the country’s economic growth. Efforts, through policies and laws,
have been initiated to develop the coconut industry. These policies provided legal
environment for the collection of tax or levies to serve as funds to be used for the
growth of the sector. However, while the purpose of collecting the coconut levies
is noble, issues on the utilization and management of the funds hindered the long-
term objective of developing the coconut industry.

Currently, the coconut levy funds collected since the Marcos regime has
been legally awarded to the government on behalf of the coconut farmers. Years
of legal dispute to claim these funds have been settled.

With the resolution of some coconut levy fund cases, a mechanism of fund
management and utilization that is viable, transparent and inclusive can affect
sustainable development interventions for the sector. However, the decision on
how the coconut levy funds will be used should be combined with a clear and
implementable roadmap for the sector. This would ensure that investments on
 UNIVERSITY OF THE EAST- COLLEGE OF LAW 24

programs and projects will indeed achieve its goal of providing the necessary
development of the coconut sector; thereby growth can be inclusive and felt by all
stakeholders of the sector especially the farmers.

The researchers believe that the veto is reasonable enough against yielding
to the passage of said bills into law. A balance between the control of the
Government as well as hearing the voice of the coconut farmers must be achieved
without abandoning such precaution to avoid misappropriation of special funds.
In the end such safeguards will benefit not just the coconut industry itself but
families awaiting what they really own and deserve. President Duterte’s rejection
of the bills before him is correct because investing only in public debt is surely
not in the best interest of the beneficial owners of the coco levy funds.

Recommendations

 The bills vetoed by the President that would entrust the coco levy funds to
the Treasury, placing them only in Philippine government bonds, and the
assets to the privatization agency (PMO) would only mean outsourcing to
 UNIVERSITY OF THE EAST- COLLEGE OF LAW 25

government with participation of the private sector, completely the

decision what to do with the money and who will benefit from it. This is
very deceitful. The coconut farmers are being forced to give up the
economic potential on their money to someone else.

 The researchers believe that a need of separate farmer- and government-

controlled management corporation to focus on the levy funds and assets.
The PCA can remain a regulatory agency and manager of GAA funds —
not the coconut levy funds and assets. Moreover, a mandatory need of
government participation regarding disbursements as well as projects must
be present, since from the vetoed bills what is only required is the
presence of the majority of the committee but does not made emphasis of
any representation of any government participation when it comes to
quorum. Hence, a mere participation of majority of the private sector that
has been appointed is already enough to disburse the funds as high as P
100 million. Also, the 5 years limitation on the Congressional oversight
under HB 5745 must likewise be removed since limiting the power of the
Congress to check the transactions entered into by the PCA would be risky
since after such time, the Congress could no longer intervene with any of
the projects that the PCA would do. Also, a limitation as to the land area
would be vital to balance the interest of the rich and the poor farmers in
the industry.

 The court doctrine is anchored on recognizing the levy funds and assets as
public trust with all the coconut farmers as the true beneficial owners and
the development of the industry its goal. It was a long, drawn-out fight on
the part of the coconut farmers before they could come to this point of
victory in the public trust fund doctrine.
 UNIVERSITY OF THE EAST- COLLEGE OF LAW 26

 Lastly, the researchers believe that distribution of Cocolevy fund is not the
primary solution in helping our marginalized farmers. The researchers
recommend that the government must also provide long term solutions in
addressing the declining coconut industry. A creation of thriving market
would help farmers to sell their products at a reasonable amount. A more
sustainable farming method to avoid deterioration of crops is also suitable
especially during typhoon season and in times of infestation. Best
practices in farming can also help lift farmers from poverty. Farmers who
plant other crops and raise livestock on the side can bring in as much as
P50,000 a month per hectare. To be globally competitive, the challenge for
the Philippine coconut industry is to ensure quality, volume and reliability
of supply.

Sources:

https://news.mb.com.ph/2018/12/01/senate-ratifies-p105-b-coco-levy-fund/
https://www.manilatimes.net/state-ph-coconut-industry-must-done/346624/
https://businessmirror.com.ph/2017/05/25/government-help-badly-needed-in-
coconut-industry/
http://sc.judiciary.gov.ph/jurisprudence/2012/november2012/180705.pdf
http://agriculture.com.ph/2018/07/17/transform-coconut-farmers-from-poverty-to-
prosperity-by-revising-government-policies-part-1/
https://legal-dictionary.thefreedictionary.com/trustee
https://pia.gov.ph/news/articles/1012373