THREE big coconut farmers’ groups supported the appeal made by an industry leader for the Supreme Court to review a controversial decision that could potentially strip the struggling coconut sector of more than P1 billion in needed support funding.
Efren M. Villaseñor, president of Confederation of Coconut Farmers Organizations of the Philippines (CCFOP-Confed); Mao K. Andong, Jr., vice president of Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan (PKSMMN); and Oscar C. Solidor, president of Alyansa sa Timawang Mag-uugmad sa Amihanang Mindanao (ATIMAN-Mindanao) assailed the High Court’s decision in the Felix Chua-UCPB case (G.R. No. 215999) penned on August 16, 2017 by now Chief Justice Lucas Bersamin, finding United Coconut Planters Bank (UCPB) liable to pay Felix Chua et. al. P430,000,000 in cash and properties with aggregate amount of around P1 billion.
All three were former members of the UCPB Board of Directors.
Last Thursday, Dr. Jesus L. Arranza, a UCPB stockholder and former member of the bank’s Board of Directors and its Legal Oversight Committee, sent a letter to the SC seeking a review of the decision and investigation of several justices for possible violation of the Constitution and the High Court’s own rules.
“On its face, the decision is absurd and the computations impossible to arrive at based on the contracts signed by the parties,” said Andong, also the National president of Coconut Peasant Reform Alliance (COPRA).
In July 1998, Felix Chua and his company Lucena Bus Terminal, who were in default of their loan obligations to UCPB, pleaded for the bank not to foreclose the properties they used to secure their debts and asked to restructure their loans.
On March 21, 2000, Felix Chua, Lucena Bus Terminal and UCPB signed a memorandum of agreement (MOA) to restructure their admitted loan obligations of P204,000,000 to the bank.
To partially satisfy their obligations to the bank, Felix Chua dacioned new properties, which were part of a joint venture project with Chua’s partner Jose Go. This reduced the obligation of Felix Chua and bus terminal to UCPB to the extent of P103,000,000 only under the agreement.
Under the restructuring agreements, Felix Chua expressly agreed that the value of dacioned properties (including Revere belonging to Go) will be applied to the aggregate debts of Felix Chua, the bus terminal and Jose Go, who was also in default of his loan obligations to the bank. But the SC ignored the agreements signed by the parties.
Felix Chua defaulted again on the restructuring and never paid UCPB the remaining balance of their obligation, which include Felix Chua’s obligation to issue shares of stocks of the bus terminal company to UCPB in the amount of P68,000,000. To prevent the bank from foreclosing on the securities, Chua filed the instant case against the bank.
Chua claimed fraud on the part of the bank, but UCPB pointed out that during the restructuring, Chua was assisted by his lawyer CASTILLO LAMAN TAN PANTALEON & SAN JOSE. It was even Chua’s lawyers who reviewed and drafted the agreements.
The Court of Appeals ruled in favor of UCPB in the case, and when it was elevated to the SC, the High Court’s Third Division initially sustained the appellate court’s decision. However, the court reversed its ruling via the Bersamin decision in 2017.
“Imposibleng magkautang ang UCPB kay Felix Chua ng P430 million. Yung na-restructure na loan ni Chua sa bangko ay P204 million lamang at hindi pa binayaran ni Chua ang kabuuang halaga! (It’s impossible for UCPB to be liable to pay Felix Chua P430 million when the subject matter of the case is Chua’s restructured loan to the bank amounting only to P204 million, which Chua did not fully pay!),” exclaimed Andong.
In the same decision, Andong questioned why UCPB was made to pay interest to Felix Chua in the amount of P200 million when the bank never borrowed money from Chua and the dacioned properties remained in the physical possession of Chua. Chua, under the MOA, has the perpetual right to repurchase, right of first refusal and right to develop the dacioned properties from UCPB.
UCPB, because of the decision, stands to lose a billion pesos worth of properties, which is detrimental to the government and the coconut farmers. The coconut farmers hold a 74-percent beneficial share in UCPB’s equity.
“We need to protect the interest of coconut farmers, who are the beneficial owners of coco levy funds and registered shareholders of UCPB,” Andong added.
UCPB has asked the SC to elevate the decision to the Supreme Court En Banc because of conflicting decisions of the SC in the case and to remedy the serious injustice to the bank, but the Chief Justice has not acted on the bank’s request after a lapse of more than a year.