MANILA- Six coconut oil mills and their holding companies are worried of possible bankruptcy as they have outstanding obligations which must first be paid before the execution of Supreme Court and Sandiganbayan decisions favoring the use of coco levy funds by coconut farmers.
In a motion for reconsideration before the Sandiganbayan 2nd Division, the Coconut Industry Investment Fund (CIIF) Oil Mills Group and their 14 holding companies asked to be allowed to pay their outstanding obligations first from the proceeds of the redemption of San Miguel Corporation (SMC) shares to avoid loan defaults and closure.
The oil mills group include Granexport Manufacturing Corporation, Legaspi Oil Company Inc, San Pablo Manufacturing Corporation, Southern Luzon Coconut Oil Mills Inc, Cagayan De Oro Oil Company Inc, and Iligan Coconut Industries Inc while the 14 holding companies include Soriano Shares Inc, ACS Investors Inc, Roxas Shares Inc, Arc Investors Inc, TODA Holdings Inc, AP Holdings Inc, Fernandez Holdings Inc, SMC Officers Corp Inc, Te Deum Resources Inc, Anglo Ventures Inc, Randy Allied Ventures Inc, Rock Steel Resources Inc, Valhalla Properties Ltd Inc and First Meridian Development Inc.
Lawyer Jhimmy Santiago, who represents the firms, said taking the SMC shares away from the 14 holding companies "is tantamount to depriving a corporation of its assets in fraud of its creditors."
“To deprive the 14 holding companies of their only asset without any compensation will be to effectively bankrupt them," Santiago said.
The motion for reconsideration pertains to the resolution of the Sandiganbayan 2nd Division dated August 7, 2018 which ordered the transfer of coco levy funds from the CIIF companies, 14 holding companies and converted SMC shares to the government so that the funds could finally be used for the benefit of coconut farmers.
The anti-graft court granted the motion for reconsideration filed by the Presidential Commission on Good Government which argued that the Sandiganbayan has no discretion to stay the enforcement of the Supreme Court's Partial Summary Judgment dated May 7, 2004.
The SC decision said coco levy funds were “owned by the government to be used only for the benefit of all coconut farmers and for the development of the coconut industry.”
The oil mills and the 14 holding companies also said that non-payment of their obligations would adversely affect coconut farmers.
“Thus, as of date, all the aforesaid advances remain unpaid to the detriment not only of the CIIF OMG but also of the coconut farmers who depend on the business of the CIIF OMG for the purchase and processing of their coconut products,” Santiago said.
The firms also said that after paying their debt, they should be allowed to “resume efficient and profitable operation” as this would be “beneficial” for both government and coconut farmers.
Coco levy funds came from taxes that the late strongman Ferdinand Marcos' alleged cronies collected from coconut farmers during martial law. They then used the public money for personal profit through the purchase of the United Coconut Planters Bank and a majority stake in SMC.
A lengthy court battle ensued and government sequestered the fund after Marcos' ouster in 1986.