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Republic of the Philippines CONGRESS OF THE PHILIPPINES

SENATE

Pasay City

COMMITTEE ON AGRICULTURE AND FOOD joint with COMMITTEES ON TRADE AND COMMERCE AND FINANCE

Date :

Tuesday, Decem ber 13, 20 1 1

Tim e :

10 :00 a .m .

V e n u e :

-

Se n . A . B. Pad illa Ro o m

 

2nd Floor, Senate of the Philippines

Financial Ce nter, Roxas Boulevard

Pasay City

Agenda:

SBN 2978 - Esta blishm ent of the Coconut Farm ers Trust Fund (Se n. Enrile)

Taking into consideration

S BN 2050 - Coconut Em ergency Measures

 

@

Act (Sen. Angara)

\

SR 302 - inquiry of the Condition of Filipino

Farmers (Sen. Villar) PSR 587 - Inquiry of the State of Philippine Coconut Industry (Sen. Villar)

ATTENDANCE

SENATORS PRESENT:

HON. FRANCIS N.'pANGILINAN ' - Chairman @ HON. EDGARDO J. ANGARA - Mem ber

HON. JUAN PONCE ENRILE

- Senate President

Com m ittee Agriculture

and Food

joint w ith Com m ittees on Trade

And Com merce and Finance Tuesday, December 13, 20 11 Page 2

GUESTS/ RESOURCE PERSONS:

Mr. Joel S. Rudinas

.Mr

Edilberto

M. De Luna

Mr. Euclides G. Forbes

Ms. Karen Singson

Atty . Christine Antonio

Atty. Marco Antonio Sardillo III

Mr. Jesus L. Arra nza

Mr. Jeronimo U. Kilayko

Att y. Jose A. Barcelon

Mr. Edgardo Amistad

' Mr. 'Ade lm p .Ara nde la

Mr. Vicente Fabe

Atty. Oscar F. Santos

Mr. Eduafdo Mora

-.Undersecretary, Fie ld

Operations, Depa rt ment of

Agriculture (DA)

- Field -Operations, DA

@Administrator,

Philippine

Coconut Authority (PCA)

@Chief Privatization

Officer

Privatization and

Management Office (PMO) Department of Finance (DOF)

@Deputy

Privatization Officer

PMO- DOF

Chief of Staff, Presidentia l Commission on Good Governance

(PCGG)

@ President and CEO, Coconut Industry Investment Fund (CIIF)

@ President and CEO, United

Coconut

Planters Bank (UCPB)

Senior Vice-President and Corporate Secretary, United Coconut Planters Bank President, UCPB CIIF Foundation Vice-president, Nagkakaisang Ugnayan ng mga Magsasaka sa

Niyugan (NIUGAN)

Chairman Emeritus Pambansang Kilusan ng mga Samahan g Magsasaka

(PAKISAMA)

Chairman Emeritus Coconut

Industry Reform Movem ent, Inc .

(COIR)

Chairman, Pambansang Kaisahan Ng mga Magbubukid ng Pilipinas @

Com m ittee Agriculture

and Food

joint w ith Comm ittees on Trade

And Com m erce and Finance Tuesday, Decem ber 13, 2011 Page 3

SENATORS' STAFF:

Mr.

Mark Evangelista

Ms .

Cecile Pa'lines

Mr:

E.P. Miko Nacino

Ms .

Julie Laconico

Ms .

Nyl Mendoza

SENATE SECRETARIAT:

@M r.' H ora ce. R.

Crud a

Ms. Remed ios

Ms. Ciridel B. Gea la n

Ms . Norm a G . Dizon

L. Tuma mpos

.

Ms . Jocelyri .B.

Ms. Zenaida Laure l

dela Cruz

@' M r.

Mr.

Eric Ca na

Hizar B. Sarm iento

Ms. Rubirosa F. Manalo @ Mr. Abigael d .G. Olson

Mr. J. Alzadon

- O/S Angara

- O/S Pangilinan

- O/S Recto

- O/S Pangilinan

- O/SP Estrada

- Cit e .' S e creta ry

-Ctte . Stenographe r

-do -

-do-

-do -

@ Leg .Co m .C lerk

-d o -

@Operator

@Leg . Pag e

-d o-

@GCP Ctte. Secretary

(For complete list, please see attached Attendance

Sheet)

Republic of the Philippines

CONGRESS OFTHE PHILIPPINES

SENATE

Pasay City

COMMITTEE ON AGRICULTURE AND FOOD

, Joint with the

COMMITTEES ON TRADE AND COMMERCE 8 FINANCE

Tuesday, 13 December 2011, 10:00 A.M.

Sen. A.B Padilla Room Senate ofthe Philippines, Pasay City

AGENDA: S.B. N. 2050, S.B N. 2978, P.S R. 302, & P.S R. 587

{BILLS ONCOCOLEVY}

ATT E N DA N C E

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M EM B E R S

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Represented by

1. SEN. FRANCIS N. PANGILINAN, Chairman, CommitteeonAgricultureandFood

2. SEN. MANNY VILLAR, Chairman, CommitteeonTrade andCommerce

3. SEN. FRANKLIN M. DRILON, Chairman, CommitteeonFinance

4.SEN. EDGARDOJ.ANGARA

5. SEN. LORENB. LEGARDA

6.SEN. GREGORIOB. HONASANII

7.SEN RALPHG. RECTO

8.SEN.PANFILO M. LACSON

9.SEN. FERDINANDR. MARCOS,JR.

10. SEN. AOUILINO"KOKO" PIMENTELIII

11. SEN. MIRIAMDEFENSORSANTIAGO

12. SEN. MANUEL "LITO" M. LAPID

13.SEN.PIAS.CAYETANO

14 SEN. RAMON "SOWC REVILLAJR.

15.SEN.TEOFISTO L.GUINGONA III

16. SEN.SERGIO R. OSMENIAIII

17. SEN. FRANCIS "CH/Z"G. ESCUDERO

18.SEN.JOKERP.ARROYO

19SEN.JINGGOYEJERCITOESTRADA, Ex-Offtcb Member

20. SEN. VICENTE C. SOTTO, Bt-Offi cfo Member

0004

21. SEN. ALAN PETER S. CAYETANO, Ex-OfUcb Member

SENATE SECRETARIAT

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COMMITTEE ON AGRICULTURE AND FOOD joint w ith COMMITTEES ON TRADE AND COMMERCE AND FINANCE

RLTU MA MPOS

1-1

Dece m ber 13, 20 1 1

10:15 a .m .

1

AT 10 :15 A.M., HON. FRANCIS N. PANGI LI NAN,

CHAIRMAN OF THE COMMITTEE ON AGRICULTURE AND FOOD, CALLED THE HEARING TO ORDER.

THE CHAIRMAN

(SEN. PANGILINAN). We'd

like

to

heari ng

of the

Com m ittee' on

Agricu lture

and

Food

joint

call this

with

the

Com m ittees on Finance and Trade and Com merce.

We would like to ca ll

this meeting to order.

I'm informed that Senator

Enrile will be joining

us later on.

He is the principal author of the measure that we are

now

tackling .

We would like to thank our resource persons who are here with us .

Some are still on their

way but I'd like to

get

things going and not

waste the time waiting for the others to come forward or to join us.

In

the m eantime, we have the following here :

Well, before we acknowledge the resource persons,

we have, one ,

two, three, four measures that are being tackled

in

today's

meeting :

Senate

Bill

2978, Establishment of the Coconut Farmers Trust Fund .

This is ' Senator 'Enrile; Senate Bill 2050, Coconut Emergency Measures

Act;

Is

it

Senate Resolution 302, Inquiry on the Condition of

Filipino Farmers .

farm ers

or

coconut

farmers?

And

then

Proposed

Senate

Resolution

587, Inquiry on

the State of Philippine Coconut Industry .

Both the

Senate

resolutions were

filed by Senator Villar .

S o- we -ca n p rocee d .

COMMITTEE ON AGRICULTURE AND FOOD joint w ith COMMITTEES ON TRADE AND COMMERCE AND FINANCE

RLTU MAMPOS

.

1-1

Decem ber 13, 20 1 1

10 :15 a .m .

2

For the

record, the following

resource

persons

are

with

us

this

morning :

Field

Operations for the

DA,

Asec.

Edilberto

de

Luna;

Mr .

Euclides Fo.rbes of

the PCA, our'adm inistrator; Chief Privatization Officer

of

the

Privatization

and

Management

Office

of

the

Departm ent

of

Finance,

we

have- Ms.

Karen

Singson.

Hello

Karen;

Atty.

Christine

Antonio, Deputy Privatization Officer.

Is that you?

Yes, that's you .

Mr.

Eduardo

Mora,

chairman

ng

Pam bansan'g

Kaisahan

ng

Magbubukid sa

Pilipinas;

Mr. Jess Arranza, CEO and

president, Coconut

Industry

Investment Fund ; Atty. Jose Barce lon, senior vice-president and

corporate secretary of UCPB; Mr. Edgardo

Foundation;

Atty .1

Oca

Santos,

former

Am istad, president UCPB CIIF

congressman

and

cha irm a n

em eritus, Coconut Industry Reform Movem ent or COIR.

Isa pong ha lig i

sa industriya ng magbubuko o

magnunyog . Taga-Quezon po ito .

So the others who will come, we will just acknowledge .

Again, for the record, this Com m ittee is'interested to look into how

a portion of the

coco levy

funds based on the Senate bills and m easures

now referred to us--what we are to do with these pending measures in

the light of the plight of our coconut farmers, and the industry .

As Chairman of the Agriculture and Food Com m ittee in the Senate ,

our prim ary concern here is how we are to address the challenges of the

coconut industry, in particular,

@ ' @

but specifically how do we uplift the plight

@

0 0 1 1

COMMITTEE ON AGRICULTURE AND FOOD joint w ith COMMITTEES ON TRADE AND COMMERCE AND FINANCE

RLTU MAMPOS

1-1

Dece m ber 13, 20 1 1

10 :15 a .m .

3

of our coconut farm ers and how do we raise their incomes

and make the

industry more profitable, we ll, primarily for the -coconut farmers and their

fam ilies .

Ma laki ang coconut industry. It is

larger than the

rice@in terms of

hectarage,

it's larger than rice;

in terms of -num ber of farmers,

it is a lso

la rger

than

the

rice/palay industry.

It is the biggest export product,

agriculture export product of the country.

And

therefore, we are looking

at@

@

We would

like to

acknowledge the

presence of our former Senate

President,

former

chairman

of the

Com mittee

on

Agriculture,

forme r

secretary of Agricu lture

and a

current farmer as well, the

author

of

Coconut Emergency Measures Act, Senator Angara.

joining

us this morning .

Thank you Senator Angara .-

For the record, he is

So', we are looking at the aspect of how these measures will address

the challenges .facing the coconut industry.

How we are to level up the

qua lity of@well, the productivity of our coconut

farmers and how do we

address ' their plight

in

terms of improving

the

quality

of their

lives .

Because, ultimate ly, all that we do in terms of agriculture should redound

to being able to ensure that the qua lity of life of the primary producers-,

COMMITTEE ON AGRICULTURE AND FOOD joint w ith COMMITTEES ON TRADE AND COMMERCE AND FINANCE

RLTU MAMPOS

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Dece m ber 13, 20 1 1

10 :15 a .m .

4

our

fann ers,

are addressed .

There is a saying that@or a tenet that

for

us to address food security,

we m ust secure'our farmers and agricu lture .

So,

a lthough, @of course, the

coconut

industry

has

a

lot

of

pote ntia ls still in terms of@ if the support is given in terms of'research, in

terms of infrastructure, in terms of technology, we can actually be a@

more than just, you know,

a lead expo rter.

We can be the

world powe r

with respect to coconut and its related industries.

With that, we would

like to hear

the positions of our resource persons .

.'But

before that, Senator Angara, would you

like to have an opening

statem ent? Thank you .

S EN. ANGARA.

Than k you very much,

Mr. Chairman .

head

Let

me

greet our former colleague, Governor Sa ntos,

and

PCA

Magandang umaga, Oca.

Ang atin hong kasa lakuyang PCA head ,

si Atty . Forbes;- Asec. de Luna, si Jess, and Atty. Barcelon.

hong kayong mga kaibigan natjn sa

coconut industry .

At lahat .na

I think as you put it, Mr. Chairman, coconut suddenly has becom e

so va luable nowadays.

And

that's

highlighted

by the

fact that the

President,

when he

ca me back,

was so

-enthusiastic about

coconut

water'.

And two weeks after,

I went to the United States and tried to

look

for that m an he

talked to,

who

convinced

him that coconut water

is such a valuable com modity. And I found

him .

He

is

a

Brazilian.

He

COMMITTEE ON AGRICULTURE AND FOOD joint w ith COMMITTEES

ON TRADE AND COMMERCE AND FINANCE

RLTU MAMPOS

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Dece m ber 13, 20 1 1

10:15 a.m .

5

m aybe just knows

him , his name is

Rodrigo

Alvarez, His com pany

in

Brazil was

able to

come

up together with their scientist on

how

to

preserve coconut water for at least eight

months.

And it became a best

se ller because they found out that coconut water has a better minera l

content and potassium

than Gatorade, the favorite sports drink .

So

suddenly,

coconut

water,

which

in

all

coconut-producing

provinces

in

this

country are just

thrown away,

have

suddenly

acquired value.

And he told

me, Mr. Chairman,

that he negotiated a

one-billion peso coconut water supply.

And I asked him, "With whom?"

He said, "With- Peter Paul of Candelaria ."

Cande laria ba sila?

And with

Ce lebes Coconut Oil

ow ned by a young entrepreneur, Rory

Ong, who I

happened to

help, Mr. Chairman, when I was secretary of Agriculture.

-I

helped .him get a -license to operate an oil mill and a

desiccated coconut .

And now, he is so

big in Mindanao.

But anyway, I told him that, "Yes ,

we are interested in coconut and we found that coconut

h.as

so

uses now including the

husk which again was just a farm waste@"

m any

THE CHAIRMAN (SEN. PANGILINAN).

tons of husk.

(off-mike) Two million

SEN. ANGARA. Ang coconut husk ngayon, tota l?

V O I C E,

(off- m ike)

per

ye ar.

COMMITTEE ON AGRICULTURE AND FOOD joint w ith COMMITTEES ON TRADE AND COMMERCE AND FINANCE

RLTU MA MPOS

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Decem ber 13, 20 1 1

THE CHAIRMAN (SEN. PANGILINAN).

tons of husk?

10 :15 a .m .

6

But how many

million

We would like to acknowledge the presence of our Senate President,

the principal author of S B 2978, Senate President Enrile .

Thank you for joining us .

Please go ahead .

S EN.

ANGARA,

Yes.

Ilan

ang

ngayon?

/rlt

demand

for

coconut

husk

COMMITTEE ON AGRICULTURE AND FOOD Joint w ith COMMITTEES ON FINANCE and TRADE AND COMMERCE

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Decem ber 13, 20 1 1

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S EN . A N GA RA .

Yes .

Ilan ang dem and for coconut husk ngayon?

coco n ut ta u n-tao n .

There are 15 billion

MR. FORBES ,

(off-mike) Ang capacity po ng Pilipinas@

THE CHAIRMAN (SEN. PANGILINAN).

Administrator.

Paki-ano po ng mic,

MR. FORBES .

Sa coconut husk po ang capacity po ng Pilipinas

na m ag-produce out of the 15 billion husks per year ay 500,000 m etric

tons@300,000 m etric tons pero unfortunately, ang atin pong dinada la

lam ang

sa

export ay

nasa

5,000 metric tons lang

ho, *yong sa coir

industry .

THE CHAI RMAN (S EN. PANGI LI NAN).

One percent .

MR. FORBES .

Wala pa pong 10 percent.

'Yun po ang@

THE CHAIRMAN (SEN. PANGI LI NA N).

Five thousand

tons out of 500,000?

MR. FORBES .

Ah, 300,000 po .

THE

CHAIRMAN

hundred thousand .

(SEN. PANGILINAN).

(off-mike)

m etric

Three

MR. FORBES.

Uh-huh.

'Yon po kasi Viing puwang sa coir.

S EN. ANGARA. That's coir.O ^/

COMMITTEE ON AGRICULTURE AND FOOD Joint w ith COMMITTEES ON FINANCE and TRADE AND COMMERCE

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MR. FO RBES . Doon naman po sa coconut water@

S EN. ANGARA . Oo .

MR. FORBES .

I had a report where are@'yon pong ating ine-

export ang nare-retrieve (retrieve) lang po'y@usua lly po'y nari-retrieve

lam ang

ng

mga

dessicators ay 'yon po ay

15

percent lang

ng tota l

coconut water na nai-produce m ula doon sa ating mga niyog .

'Yon po

ang@so ang natatapon po na coco water natin ay nasa 85 percent pa .

SEN.

ANGARA .

Ito

ba

matured coconut o buko?

'yong@Chairm an,

MR. FO RBES .

Sa matured coconut po 'yan .

SEN. ANGARA .

Uh-huh .

ito

ba 'y

tubig

sa

MR. FORBES.

'Yon po 'yung@kaya po natatapon 'yong m aram i

'di po ba pag 'yong nagsa@'yong sa lalo na kung malayo sa@ang

niyogan 'd i 'yong pagtabas ng niyog, tapon na po natin 'yan .

Ang nari-retri eve lamang po natin 'yong nam imili ng buko 'yong

mga dessicators@

SEN. ANGARA .

Uh-huh .

nung

MR. FORBES.

They don't@katulad po ng Franklin Baker at saka

ano@ng@'yong

nasa

Candelaria,

'yon

lang,

sila

lang

po

ang Q V

COMMITTEE ON AGRICULTURE AND FOOD Joint w ith COMMITTEES ON FINANCE and TRADE AND COMMERCE

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Decem ber 13, 20 11

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3

na kaka-retrieve do'n sa factory nila.

So 15 percent lang po 'yon sa

tota l na coco water na nai-produce ng Pilipinas .

S EN. ANGARA. Teka m una. Anong estimated coconut trees we

have in the Philippines?

MR.

FORBES .

Tayo

po

ay estimated

at

320

million

coconut

trees po .

SEN.

ANGARA .

Three

hundred

twenty

m illion@320.

Per

coconut year?

Forty-six nuts xdi ba, a year?

MR. FO RBES.

"Yon po ang dapat na usua l natin 46 to 60, pero

ang average na po natin ngayon nasa 33 nuts@

S EN. ANGARA .

Bumagsak na?

MR. FO RBES.

Opo, nasa 33 nuts per year na lang po per tree .

S EN. ANGARA .

Bakit ho?

MR. FO RBES.

Ah 1y n9~ mara lT1i

S EN. ANGARA .

Matanda na?

pong@

MR. FO RBES.

Medyo po matanda na at *yong iba po nam an po

ay hindi na po napi-fertilize .

SEN. ANGARA.

Okay.

So

ngayon ang dem and for coconut coir.

maba lik

nga

ako, ganon

ka laki

Dahil sa a m in, sa Aurora, laging (Q V

COMMITTEE ON AGRICULTURE AND FOOD Joint w ith COMMITTEES ON FINANCE and TRADE AND COMMERCE

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pum upunta ang mga agent ng mga m ainland Chinese naghahanap ng

coconut coir and there is not enough production on coconut coir .

MR. FO RBES .

EhT yong@

S EN. ANGARA.

So kung estimeytin (estimate) mo ang demand

fo r co co nut coir@

MR. FORBES.

Napaka laki po ng demand

kaya lamang po dito

po pa la sa@ kaya po namamatay ang ating coir industry kasi po 'y n9

napuntang sa coconut farmer kakaunti po at ang na kikinabang lam ang

ng marami 'yon pong mga consolidators.

China at lalo po sa Europe .

Napakalaki po ng dem and ng

SEN. A NGARA. Sa'n nila ginagamit sa Europe?

MR. FORBES .

kotse @

Doon

po sa a no@xyon pong sa

paggawa po ng

S EN. ANGA RA . 'Yong mattress?

Mattress?

MR. FORBES .

xYong

mattresses po.

Sa China naman po dahil

po

xyong

mga

disye rto'y

pumapasok

na

sa

city,

ginagawa

po@

ginaga m it

po

nilang

pang-arrest

nung

pagpasok

ng

disyerto.

At

la lung-lalo na po lyong katulad po 'yong sa Aurora doon po naman

SEN. ANGARA.

Slopes- Of/

COMMITTEE ON AGRICULTURE AND FOOD Joint w ith COMMITTEES ON FINANCE and TRADE AND COMMERCE

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MR. FORBES.

ginagam itan ng coir.

S EN. ANGARA.

Decem ber 13, 20 1 1

10:25 A.M.

slope po ng bandang highway.

%Yon

5

po@do'n

So, kaya nga ang proposal under my bill, Mr .

Chairman, together with the Senate President, is to utilize now that

long@that long idle

THE CHAIRMAN (SEN. PANGILINAN). Sleeping@

S EN . A N GA RA .

s leep ing

THE CHAIRMAN (SEN. PANGILINAN).

pot of gold .

Sleeping El Dorado@

S EN. ANGARA

pot

of gold to revitalize our coconut industry .

THE CHAIRMAN (SEN. PANGILINAN).

Senator Enrile, the

Senate President, would you like to have your opening statement?

THE SENATE PRESIDENT.

You

know, I'm quite fam iliar with

this fund *no, how it started, how it was used, where it came from and

what was the agreem ent in the beginning when it was initiated by the

Marcos

governm ent.

And

my knowledge is based on the fact that I

was directed by then President Marcos initially to solve a problem that

involved the coconut industry.

And the problem was that, in 1973, the

price of copra in the world market became inordinately very high and

all copra production in the country including coconut oil m illed by the

COMMITTEE ON AGRICULTURE AND FOOD Joint with COMMITTEES ON FINANCE and TRADE AND COMMERCE

CBGea lan

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Decem ber 13, 20 1 1

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6

m illing

plants@coconut

m illing

plants

at

that

time

were

all

being

export ed to fore ign users.

And there cam e when the manufacturers of

coconut-based products in the country like soap, filled m ilk, cooking oil

and others were short or bereft of any supply to produce the products

that would be consumed in the local market. As a consequence, there

was

a

big

howl in the domestic market am ong

our consumers and

President Marcos got a larmed, so he planned to ban the exportation of

copra including coconut fruit@coconut oil.

Then we were under Mart ia l

Law, President Marcos asked me to find a solution to the problem .

So

what

I did

was

to

convoke

a

meeting

of all the

part ies

involved in the Cam e lot Hotel in Quezon City.

I was the one presid ing .

And

in

that

meeting

of course, the

Secretary

of Agriculture,

Bong

Tangco,

was

there

with

his

Undersecretary

Col.

Joe

Drilon;

the

m em bers of the Coconut Federation headed by Caling Lobregat, Pepot

Eleazar, O ld Manim ano(?), Mart inez, Miranda and so fort h, and all of

them . Then the users, the compa nies using coconut oil were there@

Herm inigildo

Zayco

was

there;

the

executive

secretary was there ;

Troadio Quiazon, who was the Trade secretary, was there;

Genera l

Ram os was there, he was the chief of Constabulary and the operating

COMMITTEE ON AGRICULTURE AND FOOD Joint w ith COMMITTEES ON FINANCE and TRADE AND COMMERCE

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arm

of the

Ma rtial

Law

Government

others.

I think Ben Olivas was there .

to

enforce

orders,

7

and

m any

So we were@I explained to the participants of this conference

the desire of President Marcos to find a solution.

So the

coconut

farm ers

represented

by

the

COCOFED,

Coconut

Federation

of the

Philippines, proposed to put up a fund to subsidize the coconut-based

consumer

products

in

the

country so that the

farmers will not

be

deprived of their profits because of the high price in the world market .

And the fund would come from a charge per 100 kilos of copra sold at

farm gate@a certain percentage of the farm

gate

at that tim e.

I

cannot@these

are all in the ethics of the Martial Law Government .

Now@but the basic understanding

/ cbg O ^

iOf

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THE

SENATE

PRESIDENT.

Now,

but

the

basic

understanding was that the government will utilize the fund to

subs idize the consum er-based prod ucts in order not to m a ke it

very difficult for the local consumers and at the same time the

coconut

producers,

copra

export their product .

producers

and the

oil millers

could

So it was actually Joe Drilon that provided this concept of

subsidy

and

we

have

to

recognize

that.

But

the

basic

understanding was that any amount left after the government

spent

the

amount

needed

to

subsidize

the

coconut-based

products for the benefit of the local consum ers wou ld rem ain the

fund of the coconut farmers.

That's in all the decrees issued by

Preside nt Marcos.

It was not a governm ent m oney.

It w as a

private money of the coconut farmers.

And, by the way, this

formula was based on a Republic Act that was authored by the

late form er senator, later on Vice

Preside nt Em m a nuel Pe laez.

I

th ink it is Repu blic Act 62, 64 or 60 . I'm not sure .

It is the so-

called Coconut Investment Company Act .

THE CHAIRMAN (SEN. PANGILINAN). 6260.

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THE SENATE PRESIDENT.

Ah, 6260.

Yes. That's the@

The formula there was a certain amount per one hundredths@

what

do

you

call

that?

Skate(?)@Hundred

kilos

of

copra

resecada, yata iyon, would be charged.

I think it's 50 or 55

centavos, I think at that time under the old law per kilo .

M R. A RRA NZA . Fifty-five ce ntavos .

THE

SENATE

PRESIDENT.

Ah,

55

centavos.

But

the

collection was supposed to be up to a certain amount, 100 million

'no? Kaya there's a lim it of the total collection. Once they have

reached that lim it to capitalize this coconut investment company,

the levy wou ld stop. There was a sunset provision a nd th is was

supposed to handle the development of the coconut industry .

THE CHAIRMAN

m illion .

(SEN. PANGILINAN).

One

hundred

THE SENATE PRESIDENT. One hundred million. And the

pa rticipation

of

the

coconut

fa rm ers@The

cha rge

to

the m

is

represented by so-ca lled coconut funds receipt. So we copied that

formula and in the levy that was imposed in 1983, the same

proced ure

was

used - that

every

co ntribution

of

the

coco nut

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farmers

for producing copra would be represented by coco fund

receipts so that that is their share part icipation in the residua l

fund of the subsidy .

Anyway, the total collection@There were several subsidies

later on. The

initial amount was

increased,

reduced, increased

again. And then in addition to this original subsidy, there was

another subsidy that was imposed particularly and specifically

intended for the replanting program of the

government which we

also adopted in late 1974 when we put up the Bugsuk Seed

Garden. But, again, the same concept

was introduced in the bill

that authorized it or the P.D. that authorized it that whatever

residual value existed or remained after we

have

set

up the

Bugsuk seed

garden would

remain the money of the coconut

fa rm ers .

All told, what we have collected out of all of these subsidies

was P9 .6 billion of which P7.1 billion was used for the purposes

for

which

these

subsidies

were

set

up

for

subsidization

of

consumer products and then later on including the export tax .

There was an export tax also that was covered by this. Some

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monies were used to provide scholarship fund for the children of

coconut farmers and then the amount spent for the Bugsuk Seed

Garden. This amounted to about P7.1 billion. The remainder, P2.5

billion was actually transferred. The depository of this fund used

to

be

the

Philippine

National

Bank.

tra nsferred to the

United

Coconut

And

later

on,

it

Pla nters

Ba nk

when

was

we

organized it sometime in 1975, I think, when we organized the

United

Coconut

Planters

Bank

as

a

credit

institution

for the

coconut industry.

So

the

capita lization,

by the

way,

of the

United

Coconut Planters Bank was taken from the share of the

Philippine Coconut Authority out of the coconut levy because a

portion of the coconut levy was given to the Philippine Coconut

Authority

for the

uses

of the

coconut federation

and for the

modernization

supposedly

Philippine Coconut Authority.

of

the

coconut

industry

by

the

I did not even know that there was

such a money until later on when I was asked to do something

about it.

And I was not really

involved in the coconut industry

except my participation in setting up the subsidy in 1973 and

supervising its

application for the purposes for which it was

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Decem ber 13, 20 11

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AND

5

intended. And later on, because I was asked by Danding to help

him

in

setting

up

the

coconut

seed

garden

project

of

the

government which was languishing for three years in the hands

of the

late

Executive

Secretary

Alejandro

Melchor

that

I got

involved in it directly and

deeply .

So late 1974, Danding Cojuangco

went to my office in the

Department of Defense

and asked me for help.

And

he said,

"Can

you

help

us,

help

me

put

up

a

coconut

seed

garde n

because this is the desire of President Marcos."

And I said, "For

what is that? What is a coconut seed garden?" He said, "We have

to re pla nt our ag ing coconut trees a ll over the country."

"How

many millions of hectares are we going to replant?"

He

said,

"About two

million

hectares and we

have to replant all these

aging trees in a cycle of 40 years." That was the understanding .

Anyway,

it's

a

lengthy

discussion.

So

I told

him, "You

bett er ask

the

perm ission

of

Preside nt

Marcos

for

m e

to

get

involved ."

Beca use

I

never

volunteered

to

get

involved

in

anything in those days except

to supervise the Department of

Defense.

So right then and there,

he called

President Marcos

COMMITTEE

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AGRICULTURE

AND

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the

1

THE SENATE PRESIDENT.

because

they did not know how

to set it up. So I organized a team in the Philippine National Bank, in

the@actually the Philippine national investment arm of the Philippine

National Bank. And in two months, we were able to set up the Bugsuk

of Seed

Garden.

So

after I've

finished

the

Bugsuk

Seed

Ga rden

project, this time it was from 100 hectares it was expanded to 1,000

hectares. President Marcos asked m e to act@to serve concurrently as

Philippine Coconut Authority@direct chairman of the Philippine Coconut

Authority. And it was here that@ the program for the coconut industry .

The first thing that happened was, it was about a week after I was

appointed, I was requested for a meeting by the Coconut Federation. I

cannot forget this because I was having a fever and I was roused fro m

bed

because

it

leaders

of

the

was

urgent.

So

I met the@for the first tim e@the

coconut

industry

at

the

m ezzanine

floor

of

the

Interc ontinental Hotel in Makati, at--above the coffee shop, there is a

m ezzanine

floor

there.

And

in

this

m eeting,

the

urgent

proble m

presented to

m e

by the coconut leaders was for the

release

of 90

m illion,

P90

m illion

for

the

importation

of

fertilizers

and

farm

im plements/farm

m achineries.

So

I asked them , "What is this

for?

Where

will

we

get

the

money?" And

then they told

m e

that the

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chairman of the Philippine Coconut Authority board has the disposition

of funds in the hands of the Philippine Coconut Authority. So this was

the first time I knew that there were funds available for investments .

So they were asking me 60 million for the import ation of fertilizers to

be distributed to the coconut farmers and then 30 million for the

im portation

of farm

implements. So I asked them , "How

can we

be

sure that all the coconut farmers will get their share of this fert ilizer

and how can I be sure if I release this money to you that all the

farmers

will

machineries?"

benefit

out

of

the

import ation

of

these

agricultura l

And we went into a lengthy d iscussion . They could not

explain to me. So I said, "I refuse, I will not release to you this 90

million. We will create a fund . And anybody, any one of you in the

coconut industry who would want to have fert ilizers, you m ust borrow

from the fund and pay interest. In the same m anner, anyone who

would

want to

have farm

implements

for your coconut farm

cou ld

borrow from this fund to im port the agricultural m achineries and you

pay im plement@interest so that those coconut farmers who could not

avail of these credit facilities would be equa lized ." They will have@

Their fund

becom e

a

will earn

interest

for those

who

will use

part

of their

wea lth.

So

then, we

went

it

and that will

furt her into

a

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discussion and finally we agreed to

make

a

bank for the

coconut

industry. Then the

question was where. Where

can we find a

bank?

The

window

for new

banks

in

the

Central

Bank

at that

point

was

closed .

Now,

I rem em ber that when

I was doing the Seed

Garden fo r

Dand ing,

he

m entioned

to

me@he

was

inviting

me

to join

him

in

buying the People's Bank of the Aranetas, Am ado Araneta, the one in

Cubao. And I said, "I am not interested to

these businesses, Danding .

But anyway I just join you." Then he mentioned to me in passing that

he had an option over the First United

Bank of his

uncle Jose@ Don

Jose Cojuangco, the father of Cory and the grandfather of Noynoy,

who was my client before I joined the governm ent. And

he sa id

he

wanted to buy it because some people were interested to get it from

him .

At

that

point,

President

Marcos

and

Greg

Licaros

decided

to

increase the capita lization of banks in the country with the m inim um

capita l of 100 billion and very few of the banks could com ply. So the

Cojuangco

fam ily,

Don

Jose, fina lly

decided

to

give

this

option

to

Dand ing .

So because of this discussion with the governm ent@ leaders of

the coconut farm ers, I asked Colonel Honasan to call Danding to the

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meeting which he did; and when he arrived there, I told him, "Will you

kind ly discuss a joint venture between the coconut farmers and you

and we'll buy the First United Coconut Planters Bank. I will pay your

option w ith 10 percent free shares of the resulting bank."

And after

the discussion, I assigned@I contacted Joe Concepcion of ACCRA, the

law

office of Ed Angara which we formed

by the way in

187 1. I was

supposed to be in that law office together when I lost the e lection in

197 1 but I left it to them when I got back to the government. So I

assigned this project to the ACCRA Law Office and they were the ones

who formed the

United

Coconut

Planters

Bank

with

money that

I

provided, the 90 million plus more in order to comply with the 100

m illion capitalization for First United Coconut Planters Bank. That is the

United Coconut Planters Bank. We organized it .

What happened was Danding got 10 percent plus an additional

17 Vi percent for the private sector and the remaining 72 .5 percent

became the property of the coconut farmers under the CIIF fund@ No,

under

the

money

controlled

by

the

Philippine

Coconut

Authority

because that was not funded out of the CIIF fund . So this is@I am just

giving you this structure. Then later you, the CIIF fund was invested in

coco chem ical plant that was set up in Batangas. We bought Legasp i

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Oil because at this point many of the coconut oil refining plants in the

country were losing. There was fierce competition for copra and they

were

not

m aking

money except very few. So we finally decided to

consolidate

all of these coconut oil plants under the control of the

coconut industry. And so we bought Legaspi Oil, the three m ills@one in

Davao, the one I think in

Legaspi and in Jim enez. We bought Granex,

Cagoil in Cagayan de Oro, Ilicoco in Iligan. We ll, while Sindangan was

bought by Danding directly and

their Solcom so forth and so on. All

told, we acquired all the

/jad

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THE SENATE PRESIDENT.

All told, we acquired a ll the

coconut

oil mills

including, the oil mill of Dimaporo (?)

which was losing a lot of

m o ney .

So we invested the monies through the@by using the coconut levy

fund .

The residue of the coconut levy fund.

Then I think,

in 1979, if I

am not m istaken, Ramon Silay, who was a very good friend of m ine

and

owner of

Solid Mills, ca me to me one

morning and told me about the

desire of the Ayalas

to sell their 20 percent share in San Miguel.

At this

point, there was some

disagreement among the cousins, a ll

Sori anos,

who are cousins

of the Zobels, and who were all

in San Mig uel.

And

Enriquito Zobel who was managing Ayala at that time wanted to get out

of San Miguel.

So I got this

information,

and @Ra mon @Silay asked me

if

I

was

interested.' I said, "I do not have that kind of money.

So let me ask

my

friends

if they would want to try their luck on it."

So

on

my

way

to

the . Batasan

Pa m ba'nsa,

I

ca lled

up

Dand ing,

through my mobile phone in my car and told him about this information

that I got and I told him to

get in touch with Enriquito Zobel.

because of that Danding sta rted negotiating .with Enriquito

Zobel.

And

And I

saw

Danding

and

Enriquito,

Andres Soriano, Jr.

a lso in Ma lacanang

talking to President Marcos one morning about it.

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But anyway, I think/

about two weeks or three weeks past then I

had a meeting in

the United Coconut Planters Bank one evening .

It was

our normal monthly

meeting . in the

board

of the

bank,

I was the

cha irm an of the bank at that time, and I asked Dandin "What happened

to the San Miguel shares of the

Ayalas?"

And he

told me that they

wanted too much for it.

"How m uch,"

I said "P50 per share ."

The

ma rket

at that time, I think was about P20 or P22 per share .

So,

I tol'd him, "Danding, if you can ask Enriquito to help you get

enough@more shares and enough to control San Miguel and manage it,

P50 is not a very expensive price for that share."

And so, I think what

happened was

Danding negotiated with Benny Toda, Rosemarie Toda, his

wife, and the Ortols, the Recoletos, the Augustinians and. the Dom inicans

and the Franciscans because they were

stockholders of the San Migue l

and I was able to assem ble

additional 27 percent .

At this point, ACCRA, the law office of ACCRA organized I think 11

corporations or

Ed, huh?

14?

SEN. ANGARA .

Fourteen .

THE SENATE PRESIDENT.

Fourteen

corporations to

hold , the

sha res to the different owners, different corporation.

But all of these

14

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corporations

are supposed to be owned by the coconut farmers because

the funding came from the CIIF.

In

return

for

the

acquisition

remem ber correctly, the transaction

of

the, shares,

San

Miguel,

if

I

decided to make UCPB its depository

bank, and invested P700,000

in different shares of the

United Coconut

Planters Bank .

So there

was

a

marrying

between

UCPB

and

San

Miguel

Danding became the president, I think, or chairm an of San Migue l.

and

And

this was the relationship San Miguel prospered, UCPB prospered, became

a very profitable bank until the Edsa Revolution happened .

So, at that point government came in because they

thought -the

bank was actua lly a crony bank, and then the problem started .

This is the history

of this thing .

Now, today,

the value of what was left of the 9 .6 billion levy that

was invested in the bank, insurance company,

other a llied

business

I think would

amount to

and all the oil m ills and

about

more

than

a

hundred billion pesos, if my calculation is

correct .

So-, then the question now is how. to give this back to

the coconut

industry, to the

coconut farmers?

It is no longer possible to give it to

the individua l coconut farmers that contributed to this fund .

There is no

way because in the meantime there are so many

people who now claim

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to

be

coconut

farmers

and

contributors

to

this.

But

the

rea l

representation of the

coconut industry, when

all of this

was happening ,

was the Coconut Federation of the Philippines.

Because by the law, under

Republic

Act

6260,

the

Coconut

Federation

of

the

Philippines

was

designated as the1 representative of the cocon ut industry .

It is, by law, . the only recognized organization to represent the

coconut industry .

So, today, that is the problem that we are facing.

How to dea l with

this value?

For as long as you allow this to hang on and stay in the

courts,

the -funds will be dissipated.

We have seen this.

So m uch of the

m oney

of the

coconut

industry

was

lost

because

shenanigan

by the

people

assigned

to

hand le

them .

And

I think it's time that

the

government will now make a decision.

think of is Congress now to act without

And the

on ly solution that can

waiting for the courts to m a ke a

decision

because they

are in a quandary

how to hand le this a lso.

I a m

sure they do not .know who are the owners.

So the only way is the

government

Congress

to

as

a. parens

patrie

must

now

declare this fund@the

values

ma ke

a

decision

through

of the@com ing from

a ll of

these assets as a public fund but earmarked it for the coconut industry

a lone where'it came from .

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Now--and

my suggestion is this money m ust not be spent for the

industry instead we liquidate the assets, create,

liquefy it and

reduce it

into cash and let this cash be borrowed by the national governm ent and

use it for infrastructure deve lopment.

Hard

assets for the country

and

pay market interest on it and that interest will be used

to deve lop the

coconut industry - @

That,

in

a

nutshell,

is the

concept

that I proposed which was

picked -up

by

-Bobby

Tanada

when

we . had

a

meeting

about

the

anniversary of the celebration of the nonratification of the m ilitary bases

agreement and then they translate it

into a bill which they, filed in the

House and they asked me to file a counterpart bill here in the Senate

/rlt

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THE

SENATE

PRESIDENT.

and

they asked me to file a

counterpa rt bill here in the Senate which is the subject matter of this

discussion.

I just want to give you this background so that we know

what we are doing .

THE CHAIRMAN

(SEN. PANGILINAN).

Thank you to the

Senate President for the backgrounder, he is a wa lking history book,

and the very interesting insights as well as firsthand account, I don't

think we can ever get something like that .

THE SENATE PRESIDENT.

By the way, Ed Angara's ACCRA has

2 percent of United Coconut Planters Bank.

S EN. ANGARA,

(off-m ike)

THE S ENATE P RESI DENT.

I.don't know how m uch it is worth .

I have one percent but I did not@

You see when we organized the bank, Danding wa nted me to stay in

the bank and he gave me 3 percent but I said, "I do not need this."

So I was returning it though he said, "You better stay."

So I gave

ACCRA 2 percent and I retained the 1 percent .

THE

CHAIRMAN

(SEN.

firsthand account.

(Laughter)

PANGILINAN).

That

is

another

Litera lly, an account.CM

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THE SENATE PRESI DENT.

I want to put all of these on record

because they think that we stole the money of the coconut farm ers

and in fact I still have a pending case, I guess@but I can sleep very

we ll because I know that they have no case against me .

THE CHAIRMAN (SEN. PANGILINAN). Thank you, Mr. Senate

President, for the backgrounder.

We can now proceed with the positions of our resource persons

on the pending measures that are now being tackled .

Perhaps we ca n

begin with UCPB.

We would like to acknowledge the presence and

recognize Mr. Geronimo Kilayko, CEO and President of UCPB .

We'd

like

to

really@just

the

sa lient

points

of

your

position

because we're m ore interested in the exchange in terms of asking the

questions and then getting mga clarifications on the positions taken so

kung m aaari let's limit the position presentation to the sa lient points ,

the highlights, and then we can go through the others and then we can

go through exchange of questions and answers .

Please proceed .

M R. KI LAYKO .

Thank you .

I just want to be short.

As you know, UCPB is supposed to be

the@is the adm inistrator of the CIIF, xno and I was listening to the

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Senate

President

and yes, according to our records, the

3

appraised

value of a ll the coconut m ills is about close to about 60 billion .

THE SENATE PRESIDENT. About?

MR.

KI LAYKO .

Sixty@six, zero@billion .

I don't know, but

that's the appraised va lue so@

THE CHAIRMAN

la ng .

(SEN. PANGILINAN). (off-mike)

Oil

mill

MR. KI LAYKO .

Oil mill lang . The oil@the coconut oil.

THE SENATE PRESIDENT. Oil mills only?

MR. KI LAYKO .

Yes.

Yes .

THE SENATE PRESIDENT. How about the San Miguel shares?

MR.

KI LAYKO .

about 60 billion a lso .

Okay

that

would

be@round figure

lang,

it's

THE SENATE PRESIDENT. So 120 billion.

MR. KI LAYKO .

About 120 billion .

THE SENATE PRESIDENT.

billion .

That's why I said

at least

100

MR. KI LAYKO .

Yes, at least@about 120@Whether we can get

the 60 billion in the fixed asset in the coconut mill, well that depends

on the actual sale but we can say that it's about 120 billion in, well,Q V

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4

what you called, m aybe fund, 'no.

So it's there, UCPB as administrator

is looking out for this, xno and we are very supportive of whatever the

good Senators would suggest on how to really deal with this fund once

and

for all because

it's

been

affecting

. because of a lot of opinions being given.

the

bank

a lso

in

the

past

So if this is solved, UCPB

itself will also benefit from whatever solution that you will give .

Thank you .

THE CHAIRMAN (SEN. PANGILINAN).

Now could we

have

the foundation's position also before we go to the question and

a nswers and of course the other-

Go ahead, Mr. Am istad .

MR. A MISTA D.

Thank you, Your Honors .

Since the

foundation is under the

bank,

UCPB,

we

honor the

position of the

bank.

The foundation is actually trying to help the

coconut farmers at present@

THE SENATE PRESIDENT.

Why was the CIIF converted into a

foundation, when was it converted?

MR. AMISTAD .

No, Your Honor.

from the oil mills group .

This is a separate company

THE SENATE PRESIDENT. Yeah, I know thatful

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MR. AMISTAD .

Yeah .

THE S ENATE PRESI DENT.

the United Coconut Planters Bank .

We were the one who set it up in

MR. A MISTA D.

Yeah.

It was@yes@

THE SENATE PRESI DENT.

At that time it was just a trust fund

in the bank.

It was never a foundation .

MR.

AMISTAD.

Your

Honor,

the

foundation

is

a

sm all

organization

with

a

capita lization

of@or

an

endowment

fund

of

something like, at present, P50 million.

It was organized by the bank

to assist the coconut farms@the small coconut farmers so basically the

programs are scholarship@

THE SENATE PRESIDENT.

But why duplicate the work of the

Philippine Coconut Authority?

You are spending money@this money@

the trust fund for@the purpose of the Philippine Coconut Authority is

precisely to handle the coconut industry and here you are duplicating ,

what can you do?

MR. AMISTAD .

It's actua lly, Your Honor@

TH E S ENATE PRESI DENT.

industry?

Have you studied the entire coconut

My goodness! Ql/

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MR.

AMISTAD .

It's

the

social

corporate

responsibility

underta king of the group that is handled by the Coco Foundation, Your

Ho no r .

S EN.

A NGARA .

Pinapaliwanag

ho

lang

ni

Mr.

Am istad

na

kinreate (create) itong foundation na ito as an instrument to helping

out the sma ll farm ers through@by discharging the@

THE S ENATE PRESI DENT.

How small is the small farmer?

One

hectare?

Ha lf a hectare?

Ten hectares?

Twenty hectares?

MR. AMISTAD.

Your Honor, we followed the definition of PCA.

It should be not more tha n five hectares and there is a minim um lim it

of the num ber of trees@coconut trees planted, so on and so forth ,

Yo u r H onor .

THE

CHAIRMAN

(SEN.

PANGILINAN).

Is

there

a

PCA

representative in your foundation, meron ba ?

MR.

AMISTAD.

At

present

wala

coordinate with PCA regarding@

po

but

we@we

closely

THE SENATE PRESIDENT. Is that by law or that was the@that

was just done by the bank?

MR. A MISTAD.

By the bank, Your Honor. O f

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THE SENATE PRESIDENT. What is the power of the bank to do

that? It's supposed to be a trust fund .

SEN. A NGARA.

Hindi

naman@hindi

nam an,

Ininkorporeyt (incorporate) na nila %y ng trust fund eh.

Mr.

President .

This is just a

vehicle to perform like charitable work. So hindi ho@

THE S ENATE PRESI DENT.

of the bank@

That's the bank, that's the function

S EN. ANGARA .

Yes, yes .

THE SENATE PRESIDENT.

But the bank cannot use the trust

fund for that purpose.

its own profit.

Se lfless .

If it wants to put up a foundation then it uses

S EN. A NGARA.

Sa'n

na nggaling@nadi-divert

itong

attention

natin eh@Sa'n nangga ling ang funding ng foundation, sa bangko?

MR. AMISTAD.

SEN. ANGARA.

MR. A MISTAD .

S EN. ANGARA.

CIIF?

MR. A MISTAD .

S EN. ANGARA.

Nag-um pisa po sa mga officers ng UCPB

Bangko?

Bangko?

Kaya'nga .

from

their personal funds .

So wala kayong pakialam sa manage ment ng

Wa la po .

So I think that's what@n k

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THE CHAIRMAN (SEN. PANGILINAN).

it is not@

So the fund is intact,

word

S EN. ANGARA . Oo. Oo. Okay .

THE S ENATE

PRESI DENT.

Sorry

"CIIF Foundation" because that

is

huh, but I reacted

to the

the

special na me

used

to

identify the trust fund in the bank, you know .

@ trust

THE CHAIRMAN (SEN. PANGILINAN).

So the fund

is

account and

it

is

not used by the foundation for its programs .

MR. AMISTAD.

Opo. Yes, Your Honor.

in

a

THE CHAIRMAN (SEN. PANGILINAN). Okay.

Mr. Arranza, would you like to also give your position?

THE

S ENATE

PRESIDENT.

Alam

mo

nung

prim ero

ang

panga lan n'yan is CIS F (Coconut Industry Stabilization Fund), xdi ba?

MR. ARRA NZA.

CCSF.

THE SENATE PRESIDENT. Ah, C- ?

MR. ARRA NZA.

CCS F (Coconut Consum er Stabilization Fund) .

THE S ENATE PRESI DENT.

Yeah.

Coconut@Well, that was the

subsidy .

MR. ARRANZA.

Ah, yes po.

Yes, sir .

Ah ito, CIDF. Oft

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THE SENATE PRESIDENT.