Coconut levy funds

Also known as: Coconut Consumers Stabilization Fund (CCSF) — the ₱15 levy fund of PD 276 · Coconut Investment Fund (CIF) — the ₱0.55 levy fund under RA 6260 · Coconut Industry Development Fund (CIDF) — created under PD 582 · Coconut Industry Investment Fund (CIIF) — the later fund under PD 961, as amended by PD 1468, entrusted to UCPB · Coco Levy Fund scam — the popular name for the diversion controversy

Business

Definition

The coconut levy funds are the monies exacted from Philippine coconut farmers by a series of Marcos-era statutes and decrees — beginning with Republic Act No. 6260 (June 19, 1971), which levied ₱0.55 on the first domestic sale of every 100 kilograms of copra to capitalize a Coconut Investment Fund, and continuing under martial law with Presidential Decree No. 276 (August 20, 1973), which imposed the ₱15-per-100-kilogram Coconut Consumers Stabilization Fund (CCSF) levy effective August 10, 1973 “on every first sale, in accordance with the mechanics established under RA 6260.” (RA 6260 — LawPhil, PD 276 — LawPhil) The Supreme Court later characterized these exactions as “forced exactions decreed under P.D. Nos. 232, 276 and 582, among others,” imposed “with the end-goal of developing the entire coconut industry” — and on that basis held them public in character. (COCOFED v. Republic, Jan. 24, 2012)

The funds bought control of the United Coconut Planters Bank (UCPB) — under the 1975 “Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers” approved by Presidential Decree No. 755 (July 29, 1975), by which the Philippine Coconut Authority paid ₱85,773,600 for First United Bank — and, through UCPB-financed holding companies, a block of San Miguel Corporation shares amounting to 33,133,266 shares as of 1983, then 27 percent of SMC’s capital stock. (PD 755 — LawPhil, COCOFED v. Republic, Jan. 24, 2012) After 1986 the Presidential Commission on Good Government sequestered the UCPB and CIIF shares and sued; three decades of litigation ended with the Supreme Court declaring the sequestered shares owned by the government in trust for all coconut farmers, and with Republic Act No. 11524 (February 26, 2021), the Coconut Farmers and Industry Trust Fund Act, winding the funds down into a ₱75-billion trust fund released over five years. (COCOFED v. Republic, Jan. 24, 2012, RA 11524 — LawPhil)

Identities

Authority	Value
Wikipedia	https://en.wikipedia.org/wiki/Coco_Levy_Fund_scam
Wikidata	N/A
DBpedia	N/A
ProductOntology	N/A
Wiktionary	N/A
Library of Congress Subject Headings	Coconut industry
MeSH	N/A
NCBI Taxonomy	N/A
AGROVOC	N/A
Google Scholar	https://scholar.google.com/scholar?q=coconut+levy+funds+Philippines+San+Miguel
ConceptNet	N/A
OpenCyc	N/A

Also Known As

Coconut Consumers Stabilization Fund (CCSF) — the ₱15 levy fund of PD 276
Coconut Investment Fund (CIF) — the ₱0.55 levy fund under RA 6260
Coconut Industry Development Fund (CIDF) — created under PD 582
Coconut Industry Investment Fund (CIIF) — the later fund under PD 961, as amended by PD 1468, entrusted to UCPB
Coco Levy Fund scam — the popular name for the diversion controversy

Examples and Analogies

Stabilization that became acquisition money: PD 276’s CCSF was justified as a subsidy to stabilize cooking-oil prices, yet PD 755 directed the PCA “to draw and utilize the collections under the Coconut Consumers’ Stabilization Fund” to pay for a bank. (PD 276 — LawPhil, PD 755 — LawPhil)
From bank to brewery: the UCPB bought with levy money became the lender that financed the 14 CIIF holding companies’ ₱1.656-billion acquisition of the SMC block — coconut farmers’ levies ending up, by the Court’s finding, as a corporate empire in beer and food. (COCOFED v. Republic, Jan. 24, 2012)
A tax styled as equity: RA 6260 issued levy receipts “converted into shares of stock” of the Coconut Investment Company — the fiction of farmer ownership that later litigation dismantled. (RA 6260 — LawPhil)

Usage Scenarios

1. Litigation and Case-Record Research

The court record is the spine of the history: Sandiganbayan Civil Case No. 0033 (Republic v. Eduardo Cojuangco, Jr., et al.), split into eight sub-cases including No. 0033-A (UCPB shares) and No. 0033-F (CIIF companies and SMC block), produced partial summary judgments on July 11, 2003 and May 7, 2004, both affirmed by the Supreme Court. (COCOFED v. Republic, Jan. 24, 2012)

2. Accounting for the Farmers’ Money

Auditors trace the levies through their destinations — the ₱85.78 million bank purchase of 1975, the ₱1.656 billion UCPB loan that bought the SMC shares, and the 753,848,312 SMC Series 1 preferred shares into which the block was converted by the Court’s September 17, 2009 Resolution, held in escrow with the Land Bank or DBP. (COCOFED v. Republic, Jan. 24, 2012, Resolution, Sept. 4, 2012)

3. Administering the Trust Fund

Implementers of RA 11524 work from the five-year transfer schedule under a development plan prepared by the PCA and approved by the President, with government-held levy assets to be sold within five years. (RA 11524 — LawPhil)

Strategies

Read the instruments in sequence: from RA 6260 through PD 961 and PD 1468, the design evolved from a farmers’ investment fund into a compulsory levy empire administered through COCOFED and UCPB. (RA 6260 — LawPhil, PD 961 — LawPhil)
Follow the constitutional holdings: the Court struck the free-distribution scheme of PD 755 as negating the public purpose declared by PD 276 — the doctrinal hinge on which the funds were declared public. (Resolution, Sept. 4, 2012)
Distinguish the blocks: the 27-percent CIIF block (government-owned), Cojuangco’s personal 20-percent block (left with him in 2011), and his 7.22-percent UCPB option shares (recovered in 2012) travel through different dockets and must not be merged. (Republic v. Sandiganbayan, Apr. 12, 2011, Cojuangco v. Republic, Nov. 27, 2012)

Security and Safety Measures

Judicial custody: after sequestration the shares stood in custodia legis, dividends and increments ordered into escrow with the Land Bank or DBP pending final ownership determination. (Resolution, Sept. 4, 2012)
Constitutional appropriation rule: the Court reiterated in 2017 that the funds “are to be deposited in the Special Accounts in the General Fund and are to be appropriated only for the benefit of the coconut farmers and for the development of the coconut industry.” (CCFOP v. Aquino III, Aug. 8, 2017)
Statutory ring-fencing and gradual execution: RA 11524 caps releases to the five-year schedule and directs asset sales through designated institutions; recovery on the ground proceeded by the Sandiganbayan’s writ of partial execution of August 7, 2018, not unilateral takeover. (RA 11524 — LawPhil, Rappler — Aug. 9, 2018)

Historical Context

RA 6260 created the ₱0.55 levy in 1971, on the eve of martial law; PD 232 (June 30, 1973) consolidated state coco agencies into the Philippine Coconut Authority, and PD 276 (August 20, 1973) multiplied the levy thirtyfold. In May 1975 an option over 72.2 percent of First United Bank was bought for the farmers through PCA under the agreement PD 755 approved; the bank became United Coconut Planters Bank, with Eduardo M. Cojuangco, Jr. taking 7.22 percent as his option premium. In 1983 the CIIF holding companies borrowed ₱1.656 billion from UCPB to buy the SMC block; the 2012 rulings were reported as recovering around ₱71 billion for the farmers. (RA 6260 — LawPhil, PD 276 — LawPhil, PD 755 — LawPhil, Cojuangco v. Republic, Nov. 27, 2012, COCOFED v. Republic, Jan. 24, 2012, Wikipedia — Coco Levy Fund Scam)

After February 1986 the PCGG sequestered the UCPB and CIIF shares and launched Civil Case No. 0033. The court-record register then runs: Republic v. Sandiganbayan, G.R. Nos. 166859, 169023 and 180702, April 12, 2011 — the 20-percent “Cojuangco block” of SMC (16,276,879 shares at acquisition) declared the exclusive property of its registered owners, affirming the Sandiganbayan’s November 28, 2007 decision; COCOFED, et al. v. Republic, G.R. Nos. 177857-58 and 178193, January 24, 2012 — the levy exactions declared public funds, and the sequestered UCPB shares, the CIIF companies, the 14 holding companies, and the 27-percent CIIF block of SMC declared owned by the government in trust for all coconut farmers; the September 4, 2012 Resolution denying the motions for reconsideration with finality; Cojuangco, Jr. v. Republic, G.R. No. 180705, November 27, 2012 — the transfers of the “Cojuangco UCPB shares,” which cost PCA more than ₱10 million in CCSF money in 1975, declared null and void and ordered reconveyed; and CCFOP v. Aquino III, G.R. No. 217965, August 8, 2017 — Sections 6 to 9 of Executive Order No. 180 (2015) held not in conformity with law. Execution followed on August 7, 2018 by writ of partial execution, and RA 11524 (February 26, 2021) completed the arc by converting the recovered assets into the ₱75-billion Coconut Farmers and Industry Trust Fund. (Republic v. Sandiganbayan, Apr. 12, 2011, COCOFED v. Republic, Jan. 24, 2012, Resolution, Sept. 4, 2012, Cojuangco v. Republic, Nov. 27, 2012, CCFOP v. Aquino III, Aug. 8, 2017, RA 11524 — LawPhil, Rappler — Aug. 9, 2018)

Challenges and Controversies

Public Funds or Private Farmers’ Property?

The central controversy — whether the levies belonged to the farmers, the industry, or the state — was resolved in 2012: the Court held PD 755’s free-share-distribution promise unconstitutional and the exactions imposed by law for a public purpose, hence public funds held for the farmers’ benefit. (COCOFED v. Republic, Jan. 24, 2012, Resolution, Sept. 4, 2012)

The Cojuangco Blocks

Two holdings, two outcomes: Cojuangco’s personal 20-percent SMC block survived the state’s claim for want of proof that levy money bought it, while his UCPB option shares were recovered as unconscionable transfers of levy money — a split cited as evidence of the litigation’s evidentiary, not political, logic. (Republic v. Sandiganbayan, Apr. 12, 2011, Cojuangco v. Republic, Nov. 27, 2012)

Delay and the Farmers’ Dividend

Thirty-five years passed between the first levy and the trust fund: many farmers who paid the levies died before RA 11524’s benefits began, and sub-cases of Civil Case No. 0033 were still in litigation decades on — the reason the 2017 ruling and the 2021 statute insist on special-account custody and statutory channels. (CCFOP v. Aquino III, Aug. 8, 2017, Wikipedia — Coco Levy Fund Scam, RA 11524 — LawPhil)