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Duterte says coco levy trust fund unconstitutional

President Rodrigo Duterte vetoed the bill creating a P100-billion trust fund for the benefit of coconut farmers due to supposed lack of safeguards and concerns it may violate the Constitution.

Duterte explained his position in a letter sent to Congress on February 14, a day before Malacañang confirmed the presidential veto on the proposed measure.

“After much deliberation, I have come to the conclusion that the bill may be violative of the Constitution and is lacking in vital safeguards to avoid repetition of painful mistakes committed in the past,” the President said.

The establishment of an “effectively perpetual” trust fund would violate Article VI, Section 29(3) of the 1987 Constitution which provides that money collected on any tax levied for a special purpose “shall be treated as a special fund and paid out for such purpose only.”

The provision also states that if the purpose for which the special fund was created “has been fulfilled or abandoned, the balance, if any shall be transferred to the general fund of the government.”

The absence of limits against a land area entitled to the benefits of the trust fund may “disproportionately benefit wealthy coconut farm owners,”  according to the President.

Broad powers given to the Philippine Coconut Authority, which would have managed the funds, would undermine relevant regulations and safeguards that were established to avoid abuses. The President earlier vetoed the bill creating a reconstituted 15-member PCA board which includes seven members from the private sector.

Duterte said the provisions do not reflect the “ultimate goal of accelerating the full utilization of coco levy assets and funds” for marginalized coconut farmers and the coconut industry.

The President, however, hopes that the Executive department and Congress would be able to come up with a bill that is “acceptable to all.”


A coconut farmers’ group on Monday criticized Duterte's decision to exercise his veto powers on the proposed Coconut Levy Trust Fund bill.

“Kataksilan ito sa magniniyog,” Kilusan para sa Ugnayan ng mga Samahang Magniniyog (Kilus Magniniyog) claimed in a statement.

The group also said that they see Duterte’s move as siding with the interests of the few who were behind the coco levy scam and not with the interests of farmers suffering from poverty.

A coco levy was imposed on coconut farmers from 1973 to 1982. However, the farmers supposedly did not benefit from their contributions because their money was used to prop up the businesses of allies of the late former President Ferdinand Marcos.

Supreme Court rulings indicate that the funds were used to buy shares of stock in the United Coconut Planters Bank and diversifying conglomerate San Miguel Corporation.

A separate decision in 2011, however, said businessman Eduardo “Danding” Cojuangco Jr.’s 20-percent equity in SMC was legally acquired, denying the government’s claim that it was also acquired through coco levy funds. —VDS/KG, GMA News