By AMADO P. MACASAET
‘There is so much confusion about the coconut levy. It is now alleged by the coconut farmers that the levy belongs to them.’
THERE is so much confusion about the coconut levy. It is now alleged by the coconut farmers that the levy belongs to them. They claimed the Supreme Court erred when it ruled that Eduardo M. Cojuangco used the coconut levy money deposited in United Coconut Planters Bank to buy the San Miguel Corp. shares.
We might be missing the most important issue here. How did Cojuangco get the money from UCPB? Did he take out a loan? Has the loan been paid?
The possible liability of UCPB in this case is if the loan exceeded the “single borrower limit” imposed on all banks.
It is silly to say that if the money was a loan it was part of the coconut levy funds deposited in UCPB.
Deposits in all banks do not have individual or distinct personalities. Indeed, part of the loan that Cojuangco borrowed could very well be coconut levy money. Part of it could also be mine if I were a depositor at the time the loan was granted. The money deposited by one in a bank is not made any different from the rest of the deposits.
By regulation, the owners of the deposits are clearly identified. After that, the deposits cease to have individual identification. Otherwise, the banks’ monthly statements of condition would identify the depositors on the liabilities side of the balance sheet.
Would the coconut farmers claim that the levy money belonged to the farmers if a huge loan the size of what Cojuangco was granted, was given to another person? We think not.
The Court ruled in January this year that the 24 percent bloc of shares presumably belonged to the coconut farmers. The Court said the block belongs to the government and may be used only for the benefit of the coconut farmers and for the improvement of the antiquated coconut industry.
It bears stressing that the government was never a stockholder of SMC.
It became only an owner of 24 percent of the conglomerate at the courtesy of the Supreme Court. It is presumed that the government is a trustee of the coconut farmers.
Following the Supreme Court ruling, the coconut farmers who contributed to the levy should demand from the state the benefits due them.
It is necessary to explain that the 20 percent of SMC owned by Cojuangco is his “personal” investment. On the other hand, the state, following the Supreme Court ruling, took over the 24 percent of San Miguel bought with coco levy money.
The loan used by Cojuangco to buy 20 percent of SMC is not remotely related to the coconut levy. In this sense, the “enemy” of the coconut farmers is the government, not Eduardo Cojuangco.
The Court gave them their due by ruling that the 24 percent bloc of shares in San Miguel belongs to the coconut farmers who contributed to the levy. The dispute over the levy was permanently resolved by the Supreme Court.
It is important to remember that the coconut levy was imposed as early as the time of President Garcia. I think the funds are in the custody of the Development Bank of the Philippines.
When prices of essential commodities soared skyward, then President Ferdinand Marcos ordered the creation of a special stabilization fund to be contributed by oil millers and exporters of coconut products. This fund is not in any way related to the levy collected from the coconut farmers.
When prices normalized, collection for the fund was ordered stopped by Marcos.
But the oil millers and exporters continued with the private contribution.
Enough money was raised among them to set up the Coco chemical complex which the government sequestered. The contributions to the special stabilization fund were never part of the coconut levy.
I have seen documents showing contributions of millers and exporters. I have also been told about a room in the UCPB with stock certificates of contributors to the levy.
If memory serves me right, it was the private levy that bought a string of coconut oil mills.
Or was it bought by the contributions of coconut farmers?
Minola is now the top selling coconut cooking oil in the market. I do not know whether it is owned by the oil mills, which in turn were bought by the contributions of the farmers or by the private levy of the group of Cojuangco.
What might seem unusual in the SMC case is the Supreme Court-approved conversion of common shares to preferred. SMC dangled a premium. The common shares of the farmers became non-voting preferred. But they were supposed to have been paid a premium for such conversion.
The bottom line is the farmers lost representation in the board of directors of SMC since preferred shares do not vote. The coconut farmers lost the right to ask the Cojuangco group whether or not they converted their common shares into preferred since the government, on their behalf, accepted the conversion.
The normal corporate practice is to gather the stockholders to a special meeting and get approval of the majority to convert common shares to preferred. SMC went to the Supreme Court instead.
By ruling that such conversion does not violate any law, the Court effectively usurped the rights of the stockholders to reject or approve the conversion. No question bordering on Constitutional interpretation was involved in the issue.
The issue is exclusive to the stockholders of San Miguel Corp. to decide. Yet, the ruling of the Highest Tribunal does not force common stockholders to convert.
In a manner of speaking, the farmers were “betrayed” by their lawyers. Now, they ask the Sereno court to reconsider the decision. Personally, I do not think the ruling has a chance of being reconsidered.