PCGG Commissioner Ricardo Abcede boasted that the small farmers could no longer stop the conversion of the San Miguel Corporation (SMC) common shares into preferred shares.

Now that sounds like the PCGG is taking an adversarial stance against the small coconut farmers who are the beneficiary owners of the SMC shares. Instead of accommodating the plea for reconsideration lodged by the large blocks of small coconut farmer organizations, the PCGG has chosen to ignore and even belittle their effort.

This is the very opposite of the PCGG's stance when it was chaired by the late Ms. Haydee Yorac, who earnestly championed the interests of the small coconut farmers and even won several judicial victories on the latter's behalf. After her demise, it seems that the PCGG has done nothing but compromise the interests of the small coconut farmers.

Contrary to Abcede's assertion, the conversion of the common shares into preferred shares is grossly disadvantageous to the government and the small coconut farmers. The conversion does not result in actual gain and may even result in monetary loss. There will be no exchange of money but merely exchange of documents. What is more absurd is that the coconut farmers, through the government would pay for the transfer and tax consequences of the transaction.

Moreover, the PCGG settled for a pegged redemption price of P75 per share. This means that SMC is obligated to redeem only P75 to government even if the redeemable rate becomes higher, which is highly likely because the economic trend shows that share prices will improve instead of decline in the coming years. While the share price did decline from P65 per share in 2006 to P53.50 per share in June 2009, this has since increased to P63.50 per share as of 22 September 2009. The B shares even increased from  P54 to P70 per share! This trend of improvement indicates that the common shares would command prices higher than P75 per share in three years time.

In addition, the SMC common shares should have commanded a premium price because these are capable of seating at least three persons to the SMC's board of directors. This was precisely the process undertaken in the purchase of MERALCO shares by the SMC, which shelled out P90 per share even when the value of the said shares was only P44.50.

Lastly, the alleged dividend earnings of 8 percent per annum is not really guaranteed as it is subject to the availability of retained earnings of SMC. The SMC board could just divert funds available for dividend declaration into other investments or for expansion leaving nothing for the government and the small coconut farmers.

We are challenging Abcede to reply to the points raised in the motion for reconsideration filed by the small coconut farmers, especially because there also appears to be irregularities in the conversion process. For one, there are no documents showing that the boards of directors or majority shareholders of the 14 holding companies for the SMC shares have allowed the conversion of these shares. At the very least, this is a violation of the corporation code.

But more importantly, the issue should not be reduced to the computation of profits that would be ostensibly gained from the transaction.  The issue is about social justice for the beneficial owners of the coco levy. The issue is about the PCGG's apparent exclusion of genuine small coconut organizations from the consultation process and its shameless collusion with organizations like the COCOFED, which do not represent the small coconut farmers.

There was a time when the PCGG was praised by the small coconut farmers. But with the compromises entertained by PCGG Chair Camilo Sabio and Commissioner Abcede, the agency has only been getting curses these days. Hopefully, the Supreme Court will perceive the injustice and reverse the process.

Omi C. Royandoyan
Centro Saka, Inc.