DoJ: Tillers not gov’t must enjoy levy funds

DoJ: Tillers not gov’t must enjoy levy funds | Daily Tribune

The Department of Justice, or DoJ, said proceeds from the disposition of the Coconut Levy Assets must be remitted to the Coconut Farmers and Industry Trust Fund, or CFITF, to benefit farmers directly instead of being remitted to the government.

In a five-page legal opinion signed “for the Secretary of Justice” by Undersecretary Raul Vasquez, the justice department clarified its Opinion series 2023 issued last 31 May 2023, which held that both the United Coconut Chemicals Inc., or Cocochem, and the Coconut Industry Investment Fund-Oil Mills Group, or CIIF-OMG, are government-owned and controlled corporations, thus, are required to remit at least half of their net earnings to the government pursuant to Republic Act 7656 or the Dividend Law.

Under R.A. 11524, the law creating the CFITF, “all Coconut Levy assets shall be transferred to the Trust Fund for the benefit of the coconut farmers.”

The law stated that CFITF “shall be maintained in such manner for 50 years under the Coconut Farmers and Industry Development Plan and shall be used for the benefit of the coconut farmers and the development of the coconut industry.”

The DOJ said, “We confirm, therefore, that the dividends and/or any proceeds of the GOCCs forming part of the Coconut Levy Assets shall be transmitted to the Trust Fund in accordance with the provisions of R.A. 11524.”

The legal opinion was issued upon the request of CFITF-Privatization and Corporate Affairs Group manager Undersecretary Catherine Fong.

What about dividends?

Fong sought DoJ’s confirmation of CFITF’s position that the dividends and/or proceeds of disposition of the Coconut Levy Assets should be remitted to the trust fund, pursuant to Section 7 R.A. 11524.

She also asked the DoJ’s confirmation of CFITF’s position that the Trust Fund Management Committee, through the Trust Fund Manager, can withhold remittance of the dividends under the Dividend Law, as part of its disposition effort of the coco levy assets and the investment and management of the trust fund.

The CFITF pointed out that during the 13th TFMC meeting held on 6 October 2023, it was disclosed that Cocochem’s valuation would be adversely affected if it remits its dividends to the national government, consequently reducing its expected selling price.

While the remitted dividends could be invested and earn additional income, Fong said the committee agreed that there would be a risk of an unattractive disposition since Cocochem would be placed in a non-viable or non-profitable state after the dividends remittance.

The decision, the DoJ said, whether to withhold remittance of the dividends to improve the sale of coco levy assets, which includes Cocohem and CIFF-OMG, falls within the mandate of the TFMC.