Recto warns of misuse of coco levy fund

MANILA, Philippines—Sen. Ralph Recto has warned of a possible misuse of the trust fund to be created out of the monies collected from coconut farmers during martial law.

“Here we are creating another trust fund and there are so many off-budget items in the government. Before long, the people tasked to spend this money might benefit from it themselves,” he said.

Three Senate bills by Recto and Senators Cynthia Villar and Paolo Benigno Aquino IV seek the creation of a trust fund out of the coco levies and of a body that would manage the fund.

Sen. Ralph Recto. INQUIRER FILE PHOTO

If at all, Recto said a portion of the principal as well as the income interest of fund should be spent on the first year for the coconut farmers.

“It’s necessary to spend part of the principal immediately, not just the interest income,” he said.

Villar assured her colleague that her bill specifies percentages of the principal to be spent over a certain period to avoid possible misuse.

Since Congress has yet to pass a law on the disposition of the fund, President Aquino has begun crafting an executive order detailing how the farmers would benefit from the fund.

Presidential Commission on Good Government officials said the government was the “trustee” of some P80 billion in coco levy fund and assets.

The Supreme Court recently granted the government’s motion for partial entry of judgment on 753.8-million shares in the San Miguel Corp., a 31-percent Series 1 block purchased through the coco levy.

SC ruling

The ruling cleared the way for the funneling of P60 billion for the benefit of the 3.5-million coconut farmers.

Rafael Mariano, national chair of the Kilusang Magbubukid ng Pilipinas, said subjecting the disbursement of the fund to the President’s approval would in effect turn it into a “discretionary fund.”

“We are opposed to the EO. The fund will become discretionary and pork barrel because it’s subject to the approval of the President. It just so happened that P-Noy is the President. So that will become his discretionary fund and pork barrel,” Mariano said in an interview.

Without a law yet from Congress, officials said the President would be invoking Presidential Decree 1234 to authorize the Philippine Coconut Authority to disburse the fund once the EO is in effect.

PD 1234 outlines the procedure for the use of the fund, while the EO would fast-track the process, the officials said.

Recto expressed misgivings about this, warning that the government ran the risk of being reversed by the Supreme Court as what had happened in the Malampaya fund.

“My problem with the PD 1234, although I have not seen it, is that this is similar to the Malampaya fund. The Supreme Court has decided to strike down portions of the Malampaya, the PD creating that, and ruled that the President can only spend it for energy-related projects,” Recto said.

“With the recent Supreme Court decisions, the Supreme Court has strengthened the role of Congress in spending public funds. Because by their very nature, these are public funds in trust for the coconut industry,” he added.

The Malampaya Fund represents government revenue from the sale of natural gas from the Malampaya gas fields.

Section 8 of Presidential Decree 910 provides for the use of the special fund to finance energy resource development and exploitation programs and “for such other purposes as may be directed by the President.”

In a landmark ruling in November 2013, the high court struck down this provision allowing the President to use the special fund for non-energy related projects.

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