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Gov’t now owns 72% of UCPB

By: - Reporter / @MRamosINQ
/ 03:30 AM October 29, 2015

Finally, the government has secured ownership of 72.2 percent of the United Coconut Planters Bank (UCPB) shares from business tycoon Eduardo “Danding” Cojuangco Jr. which were purchased in the 1970s using the controversial coco levy funds.

This, after the Sandiganbayan granted the motion of the Office of the Solicitor General (OSG) which sought the transfer to the government of 14,400 in UCPB shares following the Supreme Court ruling in 2012 which declared the state as the rightful owner of the UCPB stocks.

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The antigraft court’s Second Division promulgated its 17-page ruling on Oct. 23, which was made available to the media on Wednesday.

“The court finds that the proper procedure is for defendant Cojuangco to transfer the subject shares to the Republic of the Philippines and for UCPB to record such transfer in its corporate books,” the court ruled.

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The resolution was penned by Associate Justice Teresita Diaz-Baldos, chair of the Second Division, and was concurred in by Associate Justices Napoleon Inoturan and Maria Cristina Cornejo.

In granting the OSG’s motion for execution, the court dismissed Cojuangco’s claims that the subject of the government lawyers’ request was vague as it ruled that the contested “properties  involved are well-identified.”

It ordered UCPB to “cancel the subject shares of stock and to issue the equivalent number of shares in the name of the Republic of the Philippines.”

 ‘Rules are clear’

“The rules are clear. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right by mere motion within five years from the date of entry of judgment,” the court said.

“The contentions of defendant Cojuangco about the alleged ambiguity of the instant motion and its violation … lack basis,” it added.

In fact, the court said its “factual finding” that the shares of stocks in UCPB and it predecessor, First United Bank, were purchased by the Philippine Coconut Authority (PCA) using public funds had been “upheld by the Supreme Court with finality.”

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It said the shares of stocks in UCPB “must therefore be reconveyed” to the government being the “true and beneficial owner.”

“The PCA and defendant Cojuangco are hereby ordered to surrender to the court the necessary documents to effect the transfer of the subject shares of stocks in favor of plaintiff Republic of the Philippines,” the court said.

What went before

In July 2003, the Sandiganbayan ruled that businessman Eduardo “Danding” Cojuangco Jr. had illegally acquired the United Coconut Planters Bank (UCPB) with coconut levy funds and forfeited his shareholdings there in favor of the government.

The coconut levy was a tax imposed by then President Ferdinand Marcos on the produce of coconut farmers between 1973 and 1982, supposedly to develop the coconut industry.

In 1975, Marcos issued Presidential Decree No. 755, which authorized the Philippine Coconut Authority (PCA), whose board included Cojuangco, to use the levy funds to buy 72.2 percent of First United Bank (FUB), which was later renamed UCPB. Cojuangco became its president and chief executive officer.

With the PCA and UCPB in their control, Cojuangco and his associates were able to buy firms and mills placed under the Coconut Industry Investment Fund (CIIF), a group of 14 holding companies whose assets included 47 percent of San Miguel Corp. (SMC). These assets were held by UCPB, the CIIF administrator.

In 1986, shortly after the Edsa People Power Revolution, all coco levy-acquired assets were sequestered by the Philippine Commission on Good Government (PCGG), but control of UCPB went to Cojuangco when Joseph Estrada became the President in 1998.

In December 2001, the Supreme Court ruled that the coco levy funds were “public in character,” but left it to the Sandiganbayan to decide who owned the assets acquired with the funds.

In its 2003 ruling, the Sandiganbayan declared unconstitutional PD 755, and declared null and void the transfer of the shares of stock of FUB/UCPB by the PCA to Cojuangco, which cost the PCA more than P10 million in 1975.

The antigraft court forfeited 72.2 percent of UCPB’s outstanding stocks in favor of the government.

The high court affirmed this ruling in November 2012, stressing that Cojuangco was not entitled to the UCPB shares that were bought with public funds and, as such, were considered public property.

In July 2013, the Supreme Court ruled with finality that the government owned the shares of Cojuangco in UCPB and that these should be used for the benefit of the coconut farmers.

The high tribunal declared as unconstitutional provisions in the agreement between Cojuangco and the PCA in May 25, 1975, which allowed the businessman, known to be a crony of Marcos, “to personally and exclusively own public funds or property.”

The agreement provided for the transfer to Cojuangco “by way of compensation,” of 10 percent of the 72.2 percent shares of stock that PCA purchased using the coconut levy funds.

No more pleadings

The court said that it would no longer entertain any further pleadings on the case.

In March, President Aquino signed two executive orders (EOs) that would pave the way for the privatization of the coco levy funds, specifically shares in UCPB, SMC and CIIF.

PCGG Chair Andres Bautista said the signing of the EOs would allow the long-awaited sale of UCPB, which has drawn the interest of potential bidders such as Philippine National Bank, East West Banking Corp., BDO Unionbank Inc., Union Bank of the Philippines and China Banking Corp.

The President signed EO 179, which laid down the guidelines for the inventory and privatization of coco levy assets, and EO 180, which provides for administrative guidelines for the reconveyance and utilization of the coco levy assets for the benefit of the coconut farmers, the development of the coconut industry, and for other purposes.

EO 179 mandates the PCGG, with the help of the Office of the Solicitor General, to identify and account for all known coco levy assets, whether surrendered or sequestered.

The PCGG will map out the ownership structure of corporations that were formed using the coco levy and the investments they made, and bare the money, assets and investments of the CIIF companies and their holding firms.

3 coco levy assets

The order specified three main coco levy assets for disposition—UCPB shares to be determined by the government; shares in the CIIF and its holding firms; and 5.5 million shares held by the PCGG since March 1999.

The President also ordered the dissolution of the CIIF companies.

On the other hand, EO 180 mandates the Governance Commission for GOCCs, in consultation with the Finance Secretary, the Presidential Assistant for Food Security and Agricultural Modernization, and Philippine Coconut Authority, to find ways to dispose of the noncash assets of the coco levy fund. The Privatization and Management Office has been designated the main disposition body.

In June, a coalition of coconut farmer groups asked the Supreme Court to stop President Aquino from implementing two EOs, warning that the twin EOs “would cause new plunder of the coco levy funds.”

Source: Inquirer Archives

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TAGS: Coco levy funds, Danding Cojuangco, Eduardo Cojuangco Jr., Office of the Solicitor General, OSG, UCPB, United Coconut Planters Bank
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