CIIF firms want to pay loans with part of P74-B coco levy fund given to farmers

The 20 companies under the Coconut Industry Investment Fund (CIIF) have appealed for the Sandiganbayan to first allow them to use the P74-billion coco levy fund to pay off debts before allotting them for the benefit of coconut farmers and the industry.

In a 12-page motion for reconsideration filed before the Second Division, the CIIF companies sought court approval "to use a portion of the proceeds of the redemption of the (San Miguel Corporation) shares to pay their loan obligations."

The companies said these loans, which are needed to be fully paid first before the multi-billion-peso fund is distributed, were used to create the 14 holding companies under the CIIF Oil Mills Group.

This, however, is in contrast to their prayer which said they should be allowed to "resume efficient and profitable operation" that can be beneficial to the government and the coconut industry.

On August 7, the Sandiganbayan ruled that the government owns P74 billion worth of assets representing shares of stock at SMC that were acquired using coco levy funds collected from coconut farmers during the term of the late dictator Ferdinand Marcos. 

The ruling comes four years after the Supreme Court ruled with finality on a 2004 decision of the Sandiganbayan that declared the government as owner of the coco levy funds.

The Sandiganbayan then ordered all income earned by the 20 CIIF companies and the more than 753 million preferred shares in SMC be used to benefit the coconut industry.

Mistaken resolution

However, the CIIF companies said the Sandiganbayan made a mistake when it failed to consider their outstanding obligations before ruling the recovery of its only asset.

"This honorable court did not rule on herein defendants; prayer that the 14 holding companies be allowed to pay their outstanding obligations from their respective assets... so that the CIIF OMG can similarly settle their interest-bearing obligations to the creditor banks, to avoid unwarranted loan defaults and cessation of the CIIF OMG's business operation," it said.

The companies clarified it is not questioning the 2014 SC ruling, saying it only wants guidance from the Sandiganbayan on how the coco levy funds will be used and how it can affect their business operations.

"The CIIF OMG are in dire need of funds for their capital expenditures, including the restoration of their plants and equipment, to pay for the raw materials and the salaries of their employees necessary in their operations and to pay their liabilities to third parties," the motion read.

The companies even warned that a collapse of the CIIF OMG may "imperil the coconut industry" and "prejudice thousands of coconut farmers for whom the funds is intended"

Legal dispute

The bicameral conference committee approved a bill in August creating a P100-billion coco levy trust fund to be used for 25 years for the benefit of 3.5 million coconut farmers. 

The government first attempted to seize the tax collection from coconut farmers in 1987. The funds were allegedly used in favor of those allied with Marcos, including crony and SMC chairman Eduardo Cojuangco Jr.

Former President Benigno Aquino III tried to distribute the coco levy funds to farmers through Executive Order Nos. 179 and 180, but the SC issued a temporary restraining order on both in 2015.

The SC said the Office of the President has no authority over the coco levy funds, emphasizing the need for legislation before the fund is used. —NB, GMA News