Cojuangco, Jr. vs. Republic G.R. No. 180705. November 27, 2012

7/14/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 686
G.R. No. 180705. November 27, 2012.*
EDUARDO M. COJUANGCO, JR., petitioner, vs. REPUBLIC OF

THE PHILIPPINES, respondent.
Remedial Law; Civil Procedure; Jurisdiction; Subject matter

jurisdiction is conferred by law, not by the consent or acquiescence of any
or all of the parties.―The issue of jurisdiction over the subject matter of the
subdivided amended complaints has peremptorily been put to rest by the
Court in its January 24, 2012 Decision in COCOFED v. Republic, 663
SCRA 514 (2012). There, the Court, citing Regalado and settled
jurisprudence, stressed the following interlocking precepts: Subject matter
jurisdiction is conferred by law, not by the consent or acquiescence of any
or all of the parties. In turn, the issue on whether a suit comes within the
penumbra of a statutory conferment is determined by the allegations in the
complaint, regardless of whether or not the suitor will be entitled to recover
upon all or part of the claims asserted.
Statutes; Publication; It is well-settled that laws must be published to
be valid.―It bears to stress at this point that the PCA-Cojuangco Agreement
referred to above in Section 1 of P.D. 755 was not reproduced or attached as
an annex to the same law. And it is well-settled that laws must be published
to be valid. In fact, publication is an indispensable condition for the
effectivity of a law. Tañada v. Tuvera, 146 SCRA 446 (1986), said as much:
Publication [of the law] is indispensable in every case x x x. x x x x We note
at this point the conclusive presumption that every person knows the law,
which of course presupposes that the law has been published if the
presumption is to have any legal justification at all. It is no less important to
remember that Section 6 of the Bill of Rights recognizes “the right of the
people to information on matters of public concern,” and this certainly
applies to, among others, and indeed especially, the legislative enactments
of the government. x x x x We hold therefore that all statutes, including
those of local application and private laws, shall be published as a condition
for their effectivity, which shall begin fifteen days after publication unless a
different effectivity
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* EN BANC.
473
VOL. 686, NOVEMBER 27, 2012 473
Cojuangco, Jr. vs. Republic
date is fixed by the legislature. Covered by this rule are presidential decrees
and executive orders promulgated by the President in the exercise of
central.com.ph/sfsreader/session/000001734d784c293b859a0e003600fb002c009e/t/?o=False 1/50
legislative powers whenever the same are validly delegated by the

legislature, or, at present, directly conferred by the Constitution.
Administrative rules and regulations must also be published if their purpose
is to enforce or implement existing law pursuant also to a valid delegation.
Same; Same; The publication must be of the full text of the law since
the purpose of publication is to inform the public of the contents of the
law.―The publication, as further held in Tañada, must be of the full text of
the law since the purpose of publication is to inform the public of the
contents of the law. Mere referencing the number of the presidential decree,
its title or whereabouts and its supposed date of effectivity would not satisfy
the publication requirement. In this case, while it incorporated the PCA-
Cojuangco Agreement by reference, Section 1 of P.D. 755 did not in any
way reproduce the exact terms of the contract in the decree. Neither was a
copy thereof attached to the decree when published. We cannot, therefore,
extend to the said Agreement the status of a law. Consequently, We join the
Sandiganbayan in its holding that the PCA-Cojuangco Agreement shall be
treated as an ordinary transaction between agreeing minds to be governed by
contract law under the Civil Code.
Civil Law; Contracts; Consideration; Under Article 1354 of the Civil
Code, it is presumed that consideration exists and is lawful unless the
debtor proves the contrary.―The assumption that ample consideration is
present in a contract is further elucidated in Pentacapital Investment
Corporation v. Mahinay, 623 SCRA 284 (2010): Under Article 1354 of the
Civil Code, it is presumed that consideration exists and is lawful unless
the debtor proves the contrary. Moreover, under Section 3, Rule 131 of
the Rules of Court, the following are disputable presumptions: (1)
private transactions have been fair and regular; (2) the ordinary course of
business has been followed; and (3) there was sufficient consideration for
a contract. A presumption may operate against an adversary who has not
introduced proof to rebut it. The effect of a legal presumption upon a burden
of proof is to create the necessity of presenting evidence to meet the legal
presumption or the prima facie case created thereby, and which, if no proof
to the contrary is presented and offered, will prevail. The burden of proof
remains where
474
474 SUPREME COURT REPORTS ANNOTATED
it is, but by the presumption, the one who has that burden is relieved for the
time being from introducing evidence in support of the averment, because
the presumption stands in the place of evidence unless rebutted. (Emphasis
supplied.)
Same; Same; Same; Inadequacy of consideration does not vitiate a
contract unless it is proven that there was fraud, mistake or undue
influence.―Inadequacy of the consideration, however, does not render a
contract void under Article 1355 of the Civil Code: Art. 1355. Except in
cases specified by law, lesion or inadequacy of cause shall not invalidate
a contract, unless there has been fraud, mistake or undue influence.
(Emphasis supplied.) Alsua-Betts v. Court of Appeals, 92 SCRA 332 (1979),
is instructive that lack of ample consideration does not nullify the contract:
Inadequacy of consideration does not vitiate a contract unless it is
proven which in the case at bar was not, that there was fraud, mistake
or undue influence. (Article 1355, New Civil Code). We do not find the
stipulated price as so inadequate to shock the court’s conscience,
considering that the price paid was much higher than the assessed value of
the subject properties and considering that the sales were effected by a
father to her daughter in which case filial love must be taken into account.
(Emphasis supplied.)
Same; Same; A government agency, like the Philippine Coconut
Authority (PCA), stoops down to level of an ordinary citizen when it enters
into a private transaction with private individuals.―A government agency,
like the PCA, stoops down to level of an ordinary citizen when it enters into
a private transaction with private individuals. In this setting, PCA is bound
by the law on contracts and is bound to comply with the terms of the PCA-
Cojuangco Agreement which is the law between the parties. With the
silence of PCA not to challenge the validity of the PCA-Cojuangco
Agreement and the inability of government to demonstrate the lack of ample
consideration in the transaction, the Court is left with no other choice but to
uphold the validity of said agreements.
Coconut Levy Funds; Any property acquired by means of the coconut
levy funds, such as the subject United Coconut Planters Bank (UCPB)
shares, should be treated as public funds or public property, subject to the
burdens and restrictions attached by law to such property.―Any property
acquired by means of the coconut levy funds,
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VOL. 686, NOVEMBER 27, 2012 475
such as the subject UCPB shares, should be treated as public funds or public
property, subject to the burdens and restrictions attached by law to such
property. COCOFED v. Republic, 663 SCRA 514 (2012), delved into such
limitations, thusly: We have ruled time and again that taxes are imposed
only for a public purpose. “They cannot be used for purely private
purposes or for the exclusive benefit of private persons.” When a law
imposes taxes or levies from the public, with the intent to give undue
benefit or advantage to private persons, or the promotion of private
enterprises, that law cannot be said to satisfy the requirement of public
purpose.
Same; Taxation; As the coconut levy funds partake of the nature of
taxes and can only be used for public purpose, and importantly, for the
purpose for which it was exacted, i.e., the development, rehabilitation and
stabilization of the coconut industry, they cannot be used to
benefit―whether directly or indirectly―private individuals, be it by way of
a commission, or as the subject Agreement interestingly words it,
compensation.―As the coconut levy funds partake of the nature of taxes
and can only be used for public purpose, and importantly, for the purpose
for which it was exacted, i.e., the development, rehabilitation and
benefit―whether directly or indirectly―private individuals, be it by way of
a commission, or as the subject Agreement interestingly words it,
compensation. Consequently, Cojuangco cannot stand to benefit by
receiving, in his private capacity, 7.22% of the FUB shares without violating
the constitutional caveat that public funds can only be used for public
purpose. Accordingly, the 7.22% FUB (UCPB) shares that were given to
Cojuangco shall be returned to the Government, to be used “only for the

benefit of all coconut farmers and for the development of the coconut
industry.”
PETITION for review on certiorari of the partial summary decision

and resolution of the Sandiganbayan.
The facts are stated in the opinion of the Court.
Estelito P. Mendoza and Hyacinth E. Rafael for petitioner
Eduardo M. Cojuangco, Jr. in G.R. No. 180705.
476

Angara, Abello, Concepcion, Regala and Cruz for COCOFED,

et al.
The Solicitor General for respondent.
Cesar G. David and Francisco B.A. Saavedra for UCPB.
Sycip, Salazar, Hernandez & Gatmaitan for San Miguel
Corporation.
VELASCO, JR., J.:
The Case
Of the several coconut levy appealed cases that stemmed from

certain issuances of the Sandiganbayan in its Civil Case No. 0033,
the present recourse proves to be one of the most difficult.
In particular, the instant petition for review under Rule 45 of the
Rules of Court assails and seeks to annul a portion of the Partial
Summary Judgment dated July 11, 2003, as affirmed in a Resolution
of December 28, 2004, both rendered by the Sandiganbayan in its
Civil Case (“CC”) No. 0033-A (the judgment shall hereinafter be
referred to as “PSJ-A”), entitled “Republic of the Philippines,
Plaintiff, v. Eduardo M. Cojuangco, Jr., et al., Defendants,
COCOFED, et al., BALLARES, et al., Class Action Movants.” CC
No. 0033-A is the result of the splitting into eight (8) amended
complaints of CC No. 0033 entitled, “Republic of the Philippines v.
Eduardo Cojuangco, Jr., et al.,” a suit for recovery of ill-gotten
wealth commenced by the Presidential Commission on Good
Government (“PCGG”), for the Republic of the Philippines
(“Republic”), against Eduardo M. Cojuangco, Jr. (“Cojuangco”) and
several individuals, among them, Ferdinand E. Marcos, Maria Clara
Lobregat (“Lobregat”), and Danilo S. Ursua (“Ursua”). Each of the
eight (8) subdivided complaints, CC No. 0033-A to CC No. 0033-H,
correspondingly impleaded as defendants
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VOL. 686, NOVEMBER 27, 2012 477

only the alleged participants in the transaction/s subject of the suit,

or who are averred as owner/s of the assets involved.
Apart from this recourse, We clarify right off that PSJ-A was
challenged in two other separate but consolidated petitions for
review, one commenced by COCOFED et al., docketed as G.R. Nos.
177857-58, and the other, interposed by Danilo S. Ursua, and
docketed as G.R. No. 178193.
By Decision dated January 24, 2012, in the aforesaid G.R. Nos.
177857-58 (COCOFED et al. v. Republic) and G.R. No. 178193
(Ursua v. Republic) consolidated cases1 (hereinafter collectively
referred to as “COCOFED v. Republic”), the Court addressed and
resolved all key matters elevated to it in relation to PSJ-A, except
for the issues raised in the instant petition which have not yet been
resolved therein. In the same decision, We made clear that: (1) PSJ-
A is subject of another petition for review interposed by Eduardo
Cojuangco, Jr., in G.R. No. 180705, entitled Eduardo M. Cojuangco,
Jr. v. Republic of the Philippines, which shall be decided separately
by the Court,2 and (2) the issues raised in the instant petition should
not be affected by the earlier decision “save for determinatively
legal issues directly addressed [t]herein.”3
For a better perspective, the instant recourse seeks to reverse the
Partial Summary Judgment4 of the anti-graft court dated July 11,
2003, as reiterated in a Resolution5 of December 28, 2004, denying
COCOFED’s motion for reconsideration, and the May 11, 2007
Resolution6 denying COCOFED’s mo-
_______________
1 G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA 514.
2 Id.
3 Id.
4 Penned by Associate Justice Teresita Leonardo-De Castro (now a member of this
Court), concurred in by Associate Justices Diosdado M. Peralta (now also a member
of this Court) and Francisco H. Villaruz, Jr.; Rollo, pp. 179-261.
5 Rollo, pp. 361-400.
6 Id., at pp. 1043-53.
478

tion to set case for trial and declaring the partial summary judgment
final and appealable, all issued in PSJ-A. In our adverted January 24,
2012 Decision in COCOFED v. Republic, we affirmed with
modification PSJ-A of the Sandiganbayan, and its Partial Summary
Judgment in Civil Case No. 0033-F, dated May 7, 2004 (hereinafter
referred to as “PSJ-F’).7
_______________
7 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012, 663
SCRA 514.
The dispositive portion of the Our modificatory decision reads:
WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793 are hereby
DENIED. The Partial Summary Judgment dated July 11, 2003 in Civil Case No.
0033-A as reiterated with modification in Resolution dated June 5, 2007, as well as
the Partial Summary Judgment dated May 7, 2004 in Civil Case No. 0033-F, which
was effectively amended in Resolution dated May 11, 2007, are AFFIRMED with
MODIFICATION, only with respect to those issues subject of the petitions in G.R.
Nos. 177857-58 and 178193. However, the issues raised in G.R. No. 180705 in
relation to Partial Summary Judgment dated July 11, 2003 and Resolution dated June
5, 2007 in Civil Case No. 0033-A, shall be decided by this Court in a separate
decision.
The Partial Summary Judgment in Civil Case No. 0033-A dated July 11, 2003, is
hereby MODIFIED, and shall read as follows:
WHEREFORE, in view of the foregoing, We rule as follows:
SUMMARY OF THE COURT’S RULING.
A. Re: CLASS ACTION MOTION FOR A SEPARATE SUMMARY
JUDGMENT dated April 11, 2001 filed by Defendant Maria Clara L.
Lobregat, COCOFED, et al., and Ballares, et al.
The Class Action Motion for Separate Summary Judgment dated April 11,
2001 filed by defendant Maria Clara L. Lobregat, COCOFED, et al. and
Ballares, et al., is hereby DENIED for lack of merit.
479
VOL. 686, NOVEMBER 27, 2012 479

More specifically, We upheld the Sandiganbayan’s ruling thatA

the coconut levy funds are special public funds of the
_______________
B. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: COCOFED,
ET AL. AND BALLARES, ET AL.) dated April 22, 2002 filed by Plaintiff.
1. a. The portion of Section 1 of P.D. No. 755, which reads:
…and that the Philippine Coconut Authority is hereby authorized
to distribute, for free, the shares of stock of the bank it acquired to the
coconut farmers under such rules and regulations it may promulgate.
taken in relation to Section 2 of the same P.D., is
unconstitutional: (i) for having allowed the use of the CCSF to benefit
directly private interest by the outright and unconditional grant of
absolute ownership of the FUB/UCPB shares paid for by PCA entirely
with the CCSF to the undefined “coconut farmers”, which negated or
circumvented the national policy or public purpose declared by P.D.
No. 755 to accelerate the growth and development of the coconut
industry and achieve its vertical integration; and (ii) for having unduly
delegated legislative power to the PCA.
b. The implementing regulations issued by PCA, namely,
Administrative Order No. 1, Series of 1975 and Resolution No. 074-
78 are likewise invalid for their failure to see to it that the distribution
of shares serve exclusively or at least primarily or directly the
aforementioned public purpose or national policy declared by P.D. No.
755.
2. Section 2 of P.D. No. 755 which mandated that the coconut levy
funds shall not be considered special and/or fiduciary funds nor part of the
general funds of the national government and similar provisions of Sec. 5,
Art. III, P.D. No. 961 and Sec. 5, Art. III, P.D. No. 1468 contravene the
provisions of the Constitution, particularly, Art. IX (D), Sec. 2; and Article
VI, Sec. 29 (3).
3. Lobregat, COCOFED, et al. and Ballares, et al. have not legally and
validly obtained title of ownership over the subject UCPB shares by virtue of
P.D. No. 755, the Agreement dated May 25, 1975 between the PCA and de-
480

Government. Consequently, We affirmed the Sandiganbayan’s

declaration that Sections 1 and 2 of Presidential Decree
_______________
fendant Cojuangco, and PCA implementing rules, namely, Adm. Order
No. 1, s. 1975 and Resolution No. 074-78.
4. The so-called “Farmers’ UCPB shares” covered by 64.98% of the
UCPB shares of stock, which formed part of the 72.2% of the shares of stock
of the former FUB and now of the UCPB, the entire consideration of which
was charged by PCA to the CCSF, are hereby declared conclusively owned
by, the Plaintiff Republic of the Philippines.
… … …
SO ORDERED.
The Partial Summary Judgment in Civil Case No. 0033-F dated May 7, 2004, is
hereby MODIFIED, and shall read as follows:
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL
SUMMARY JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF
STOCK) dated August 8, 2005 of the plaintiff is hereby denied for lack of
merit. However, this Court orders the severance of this particular claim of
Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now
considered a separate final and appealable judgment with respect to the said
CIIF Block of SMC shares of stock.
The Partial Summary Judgment rendered on May 7, 2004 is modified by
deleting the last paragraph of the dispositive portion, which will now read, as
follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF
Companies, 14 Holding Companies and Cocofed, et al.) filed by Plaintiff is
hereby GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp. (GRANEX); and
6. Legaspi Oil Co., Inc. (LEGOIL),
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VOL. 686, NOVEMBER 27, 2012 481

(“P.D.”) 755, Section 3, Article III of P.D. 961 and Section 3,
_______________
AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors; Inc.;

5. Toda Holdings, Inc.;
6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC)
SHARES OF STOCK TOTALING 33,133,266 SHARES AS OF 1983
TOGETHER WITH ALL DIVIDENDS DECLARED, PAID AND ISSUED
THEREON AS WELL AS ANY INCREMENTS THERETO ARISING FROM,
BUT NOT LIMITED TO, EXERCISE OF PRE-EMPTIVE RIGHTS ARE
DECLARED OWNED BY THE GOVERNMENT TO BE USED ONLY FOR
THE BENEFIT OF ALL COCONUT FARMERS AND FOR THE
DEVELOPMENT OF THE COCONUT INDUSTRY, AND ORDERED
RECONVEYED TO THE GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE
SANDIGANBAYAN ON JUNE 5, 2007 IN CIVIL CASE NO. 0033-A AND ON
MAY 11, 2007 IN CIVIL CASE NO. 0033-F, THAT THERE IS NO MORE
NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE ISSUE OF
OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES, (2) THE CIIF
BLOCK OF SMC SHARES, AND (3) THE CIIF COMPANIES. AS THEY
HAVE FINALLY BEEN ADJUDICATED IN THE AFOREMENTIONED
PARTIAL SUMMARY JUDGMENTS DATED JULY 11, 2003 AND MAY 7,
2004.
SO ORDERED.
…. (Emphasis and underlining in the original)
482

Article III of P.D. 1468, as well as the pertinent implementing

regulations of the Philippine Coconut Authority (“PCA”), are
unconstitutional for allowing the use and/or the distribution of
properties acquired through the coconut levy funds to private
individuals for their own direct benefit and absolute ownership. The
Decision also affirmed the Government’s ownership of the six CIIF
companies, the fourteen holding companies, and the CIIF block of
San Miguel Corporation shares of stock, for having likewise been
acquired using the coconut levy funds. Accordingly, the properties
subject of the January 24, 2012 Decision were declared owned by
and ordered reconveyed to the Government, to be used only for the
benefit of all coconut farmers and for the development of the
coconut industry.
By Resolution of September 4, 2012,8 the Court affirmed the
abovestated Decision promulgated on January 24, 2012.
It bears to stress at this juncture that the only portion of the
appealed Partial Summary Judgment dated July 11, 2003 (“PSJ-A”)
which remains at issue revolves around the following decretal
holdings of that court relating to the “compensation” paid to
petitioner for exercising his personal and exclusive option to acquire

the FUB/UCPB shares.9 It will be recalled that the Sandiganbayan
declared the Agreement between the PCA and Cojuangco containing
the assailed “compensation” null and void for not having the
required valuable consideration. Consequently, the UCPB shares of
stocks that are subject of the Agreement were declared conclusively
owned by the Government. It also held that the Agreement did not
have the effect of law as it was not published as part of P.D. 755,
even if Section 1 thereof made reference to the same.
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8 Resolution, COCOFED v. Republic, G.R. Nos. 177857-58 & 178193,
September 4, 2012, 679 SCRA 604.
9 Rollo, pp. 259-260.
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VOL. 686, NOVEMBER 27, 2012 483

Facts
We reproduce, below, portions of the statement of facts in
COCOFED v. Republic relevant to the present case:10
In 1971, Republic Act No. (“R.A.”) 6260 was enacted creating the
Coconut Investment Company (“CIC”) to administer the Coconut
Investment Fund (“CIF”), which, under Section 8 thereof, was to be
sourced from a PhP 0.55 levy on the sale of every 100 kg. of copra. Of the
PhP 0.55 levy of which the copra seller was―or ought to be―issued
COCOFUND receipts, PhP 0.02 was placed at the disposition of
COCOFED, the national association of coconut producers declared by the
Philippine Coconut Administration (“PHILCOA” now “PCA”) as having
the largest membership.
The declaration of martial law in September 1972 saw the issuance of
several presidential decrees (“P.D.”) purportedly designed to improve the
coconut industry through the collection and use of the coconut levy fund.
While coming generally from impositions on the first sale of copra, the
coconut levy fund came under various names x x x. Charged with the duty
of collecting and administering the Fund was PCA. Like COCOFED with
which it had a legal linkage, the PCA, by statutory provisions scattered in
different coco levy decrees, had its share of the coco levy.
The following were some of the issuances on the coco levy, its collection
and utilization, how the proceeds of the levy will be managed and by whom
and the purpose it was supposed to serve:
1. P.D. No. 276 established the Coconut Consumers Stabilization Fund
(“CCSF”) and declared the proceeds of the CCSF levy as trust fund, to be
utilized to subsidize the sale of coconut-based products, thus stabilizing the
price of edible oil.
2. P.D. No. 582 created the Coconut Industry Development Fund
(“CIDF”) to finance the operation of a hybrid coconut seed farm.
3. Then came P.D. No. 755 providing under its Section 1 the following:
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10 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA
514.
484

It is hereby declared that the policy of the State is to provide readily

available credit facilities to the coconut farmers at preferential rates; that
this policy can be expeditiously and efficiently realized by the
implementation of the “Agreement for the Acquisition of a Commercial
Bank for the benefit of Coconut Farmers” executed by the [PCA]…; and
that the [PCA] is hereby authorized to distribute, for free, the shares of stock
of the bank it acquired to the coconut farmers….
Towards achieving the policy thus declared, P.D. No. 755, under its
Section 2, authorized PCA to utilize the CCSF and the CIDF collections to
acquire a commercial bank and deposit the CCSF levy collections in said
bank interest free, the deposit withdrawable only when the bank has
attained a certain level of sufficiency in its equity capital. The same section
also decreed that all levies PCA is authorized to collect shall not be
considered as special and/or fiduciary funds or form part of the general
funds of the government within the contemplation of P.D. No. 711.
4. P.D. No. 961 codified the various laws relating to the development
of coconut/palm oil industries.
5. The relevant provisions of P.D. No. 961, as later amended by P.D.
No. 1468 (Revised Coconut Industry Code), read:
ARTICLE III
Levies
Section 1. Coconut Consumers Stabilization Fund Levy.―The
[PCA] is hereby empowered to impose and collect … the Coconut
Consumers Stabilization Fund Levy, ….
….
Section 5. Exemption.―The [CCSF] and the [CIDF] as well
as all disbursements as herein authorized, shall not be construed …
as special and/or fiduciary funds, or as part of the general funds
of the national government within the contemplation of PD 711; …
the intention being that said Fund and the disbursements thereof
as herein authorized for the benefit of the coconut farmers shall
be owned by them in their private capacities: …. (Emphasis
supplied)
6. Letter of Instructions No. (“LOI”) 926, s. of 1979, made reference
to the creation, out of other coco levy funds, of the Coconut
485
VOL. 686, NOVEMBER 27, 2012 485

Industry Investment Fund (“CIIF”) in P.D. No. 1468 and entrusted a portion
of the CIIF levy to UCPB for investment, on behalf of coconut farmers, in
oil mills and other private corporations, with the following equity ownership
structure:
Section 2. Organization of the Cooperative Endeavor.―The
[UCPB], in its capacity as the investment arm of the coconut farmers
thru the [CIIF] … is hereby directed to invest, on behalf of the
coconut farmers, such portion of the CIIF … in private corporations
… under the following guidelines:
a) The coconut farmers shall own or control at least … (50%) of

the outstanding voting capital stock of the private corporation
[acquired] thru the CIIF and/or corporation owned or controlled by
the farmers thru the CIIF …. (Words in bracket added.)
Through the years, a part of the coconut levy funds went directly or
indirectly to [finance] various projects and/or was converted into various
assets or investments.11 Relevant to the present petition is the acquisition of
the First United Bank (“FUB”), which was subsequently renamed as
United Coconut Planters Bank (“UCPB”).12
Apropos the intended acquisition of a commercial bank for the purpose
stated earlier, it would appear that FUB was the bank of choice which Pedro
Cojuangco’s group (collectively, “Pedro Cojuangco”) had control of. The
plan, then, was for PCA to buy all of Pedro Cojuangco’s shares in FUB.
However, as later events unfolded, a simple direct sale from the seller
(Pedro) to PCA did not ensue as it was made to appear that Cojuangco had
the exclusive option to acquire the former’s FUB controlling interests.
Emerging from this elaborate, circuitous arrangement were two deeds. The
first one was simply denominated as Agreement, dated May 1975, entered
into by and between Cojuangco for and in his behalf and in behalf of
“certain other buyers”, and Pedro Cojuangco in which the former was
purportedly accorded the option to buy 72.2% of FUB’s outstanding capital
stock, or 137,866 shares (the “option shares,” for brevity), at PhP 200 per
share. On its face, this agreement does not mention the word “option.”
_______________
11 Id.; citing Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007, 512 SCRA
25.
12 Id.
486

The second but related contract, dated May 25, 1975, was denominated
as Agreement for the Acquisition of a Commercial Bank for the Benefit of
the Coconut Farmers of the Philippines. It had PCA, for itself and for the
benefit of the coconut farmers, purchase from Cojuangco the shares of stock
subject of the First Agreement for PhP200.00 per share. As additional
consideration for PCA’s buy-out of what Cojuangco would later claim to be
his exclusive and personal option, it was stipulated that, from PCA,
Cojuangco shall receive equity in FUB amounting to 10%, or 7.22%, of the
72.2%, or fully paid shares. And so as not to dilute Cojuangco’s equity
position in FUB, later UCPB, the PCA agreed under paragraph 6 (b) of the
second agreement to cede over to the former a number of fully paid FUB
shares out of the shares it (PCA) undertakes to eventually subscribe. It was
further stipulated that Cojuangco would act as bank president for an
extendible period of 5 years.
Apart from the aforementioned 72.2%, PCA purchased from other FUB
shareholders 6,534 shares [of which Cojuangco, as may be gathered from
the records, got 10%.].
While the 64.98% portion of the option shares (72.2% – 7.22% =
64.98%) ostensibly pertained to the farmers, the corresponding stock
certificates supposedly representing the farmers’ equity were in the name of
and delivered to PCA. There were, however, shares forming part of the
aforesaid 64.98% portion, which ended up in the hands of non-farmers. The
remaining 27.8% of the FUB capital stock were not covered by any of the
agreements.
Under paragraph #8 of the second agreement, PCA agreed to
expeditiously distribute the FUB shares purchased to such “coconut farmers
holding registered COCOFUND receipts” on equitable basis.
As found by the Sandiganbayan, the PCA appropriated, out of its own
fund, an amount for the purchase of the said 72.2% equity, albeit it would
later reimburse itself from the coconut levy fund.
And per Cojuangco’s own admission, PCA paid, out of the

CCSF, the entire acquisition price for the 72.2% option shares.13
_______________
13 Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001, 372 SCRA
462, 477.
487
VOL. 686, NOVEMBER 27, 2012 487

As of June 30, 1975, the list of FUB stockholders included

Cojuangco with 14,440 shares and PCA with 129,955 shares.14 It
would appear later that, pursuant to the stipulation on maintaining
Cojuangco’s equity position in the bank, PCA would cede to him
10% of its subscriptions to (a) the authorized but unissued shares of
FUB and (b) the increase in FUB’s capital stock (the equivalent of
158,840 and 649,800 shares, respectively). In all, from the “mother”
PCA shares, Cojuangco would receive a total of 95,304 FUB
(UCPB) shares broken down as follows: 14,440 shares + 10%
(158,840 shares) + 10% (649,800 shares) = 95,304.15
We further quote, from COCOFED v. Republic, facts relevant to
the instant case:16
Shortly after the execution of the PCA―Cojuangco Agreement, President

Marcos issued, on July 29, 1975, P.D. No. 755 directing x x x as narrated, PCA to
use the CCSF and CIDF to acquire a commercial bank to provide coco farmers with
“readily available credit facilities at preferential rate” x x x.
Then came the 1986 EDSA event. One of the priorities of then President
Corazon C. Aquino’s revolutionary government was the recovery of ill-gotten
wealth reportedly amassed by the Marcos family and close relatives, their nominees
and associates. Apropos thereto, she issued Executive Order Nos. (EO) 1, 2 and 14,
as amended by E.O. 14-A, all series of 1986. E.O. 1 created the PCGG and provided
it with the tools and processes it may avail of in the recovery efforts;17 E.O. No. 2
asserted that the ill-gotten assets and properties come in the form of shares of stocks,
etc., while E.O. No. 14 conferred on the Sandiganbayan exclusive and original
jurisdic-
_______________
14 Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007, 512 SCRA 25.
15 Rollo, p. 263.
16 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
663 SCRA 514.
17 The validity and propriety of these processes were sustained by the Court in
BASECO v. PCGG, No. L-75885, May 27, 1987, 150 SCRA 181.
488

tion over ill-gotten wealth cases, with the proviso that “technical rules of procedure
and evidence shall not be applied strictly” to the civil cases filed under the EO.
Pursuant to these issuances, the PCGG issued numerous orders of sequestration,
among which were those handed out x x x against shares of stock in UCPB
purportedly owned by or registered in the names of (a) the more than a million
coconut farmers, (b) the CIIF companies and (c) Cojuangco, Jr., including the SMC
shares held by the CIIF companies. On July 31, 1987, the PCGG instituted before
the Sandiganbayan a recovery suit docketed thereat as CC No. 0033.
xxxx
3. Civil Case 0033 x x x would be subdivided into eight complaints, docketed
as CC 0033-A to CC 0033-H.
xxxx
5. By Decision of December 14, 2001, in G.R. Nos. 147062-64 (Republic v.
COCOFED),18 the Court declared the coco levy funds as prima facie public funds.
And purchased as the sequestered UCPB shares were by such funds, beneficial
ownership thereon and the corollary voting rights prima facie pertain, according to
the Court, to the government.
xxxx
Correlatively, the Republic, on the strength of the December 14, 2001 ruling in
Republic v. COCOFED and on the argument, among others, that the claim of
COCOFED and Ballares et al., over the subject UCPB shares is based solely on the
supposed COCOFUND receipts issued for payment of the RA 6260 CIF levy, filed a
Motion for Partial Summary Judgment [RE: COCOFED, et al. and Ballares, et al.]
dated April 22, 2002, praying that a summary judgment be rendered declaring:
a. That Section 2 of [PD] 755, Section 5, Article III of P.D. 961 and Section 5,
Article III of P.D. No. 1468 are unconstitutional;
b. That x x x (CIF) payments under x x x (R.A.) No. 6260 are not valid and
legal bases for ownership claims over UCPB shares; and
_______________
18 Reported in 372 SCRA 462 (2001).
489
VOL. 686, NOVEMBER 27, 2012 489

c. That COCOFED, et al., and Ballares, et al. have not legally and validly
obtained title over the subject UCPB shares.
Right after it filed the Motion for Partial Summary Judgment

[RE: COCOFED, et al. and Ballares, et al., the Republic interposed
a Motion for Partial Summary Judgment [Re: Eduardo M.
Cojuangco, Jr.], praying that a summary judgment be rendered:
a. Declaring that Section 1 of P.D. No. 755 is unconstitutional insofar as it
validates the provisions in the “[PCA-Cojuangco] Agreement x x x” dated
May 25, 1975 providing payment of ten percent (10%) commission to
defendant Cojuangco with respect to the [FUB], now [UCPB] shares subject
matter thereof;
b. Declaring that x x x Cojuangco, Jr. and his fronts, nominees and dummies,
including x x x and Danilo S. Ursua, have not legally and validly obtained title
over the subject UCPB shares; and
c. Declaring that the government is the lawful and true owner of the subject
UCPB shares registered in the names of … Cojuangco, Jr. and the entities and
persons above-enumerated, for the benefit of all coconut farmers. x x x
Following an exchange of pleadings, the Republic filed its

surrejoinder praying that it be conclusively declared the true and
absolute owner of the coconut levy funds and the UCPB shares
acquired therefrom.19 We quote from COCOFED v. Republic:20
A joint hearing on the separate motions for summary judgment to

determine what material facts exist with or without controversy
_______________
19 Rollo (G.R. Nos. 177857-58), pp. 830-871.
20 G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA 514.
490

then ensued. By Order of March 11, 2003, the Sandiganbayan detailed,

based on this Court’s ruling in related ill-gotten cases, the parties’
manifestations made in open court and the pleadings and evidence on
record, the facts it found to be without substantial controversy, together with
the admissions and/or extent of the admission made by the parties respecting
relevant facts, as follows:
As culled from the exhaustive discussions and manifestations of the
parties in open court of their respective pleadings and evidence on
record, the facts which exist without any substantial controversy are
set forth hereunder, together with the admissions and/or the extent or
scope of the admissions made by the parties relating to the relevant
facts:
1. The late President Ferdinand E. Marcos was President x x x for
two terms under the 1935 Constitution and, during the second term,
he declared Martial Law through Proclamation No. 1081 dated
September 21, 1972.
2. On January 17, 1973, [he] issued Proclamation No. 1102
announcing the ratification of the 1973 Constitution.
3. From January 17, 1973 to April 7, 1981, [he] x x x exercised the
powers and prerogative of President under the 1935 Constitution and
the powers and prerogative of President x x x the 1973 Constitution.
[He] x x x promulgated various [P.D.s], among which were P.D. No.
232, P.D. No. 276, P.D. No. 414, P.D. No. 755, P.D. No. 961 and P.D.
No. 1468.
4. On April 17, 1981, amendments to the 1973 Constitution were
effected and, on June 30, 1981, [he], after being elected President,
“reassumed the title and exercised the powers of the President until
25 February 1986.”
5. Defendants Maria Clara Lobregat and Jose R. Eleazar, Jr. were
[PCA] Directors x x x during the period 1970 to 1986 x x x.
6. Plaintiff admits the existence of the following agreements which
are attached as Annexes “A” and “B” to the Opposition dated
October 10, 2002 of defendant Eduardo M. Cojuangco, Jr. to the

above-cited Motion for Partial Summary Judgment:
491
VOL. 686, NOVEMBER 27, 2012 491

a) “This Agreement made and entered into this ______ day of May,
1975 at Makati, Rizal, Philippines, by and between:
PEDRO COJUANGCO, Filipino, of legal age and with residence
at 1575 Princeton St., Mandaluyong, Rizal, for and in his own behalf
and in behalf of certain other stockholders of First United Bank listed
in Annex “A” attached hereto (hereinafter collectively called the
SELLERS);
– and –
EDUARDO COJUANGCO, JR., Filipino, of legal age and with
residence at 136 9th Street corner Balete Drive, Quezon City,
represented in this act by his duly authorized attorney-in-fact,
EDGARDO J. ANGARA, for and in his own behalf and in behalf of
certain other buyers, (hereinafter collectively called the BUYERS)”;
WITNESSETH: That
WHEREAS, the SELLERS own of record and beneficially a total
of 137,866 shares of stock, with a par value of P100.00 each, of the
common stock of the First United Bank (the “Bank”), a commercial
banking corporation existing under the laws of the Philippines;
WHEREAS, the BUYERS desire to purchase, and the SELLERS
are willing to sell, the aforementioned shares of stock totaling
137,866 shares (hereinafter called the “Contract Shares”) owned by
the SELLERS due to their special relationship to EDUARDO
COJUANGCO, JR.;
NOW, THEREFORE, for and in consideration of the premises
and the mutual covenants herein contained, the parties agree as
follows:
1. Sale and Purchase of Contract Shares
Subject to the terms and conditions of this Agreement, the
SELLERS hereby sell, assign, transfer and convey unto the
BUYERS, and the BUYERS hereby purchase and acquire, the
Contract Shares free and clear of all liens and encumbrances thereon.
2. Contract Price
The purchase price per share of the Contract Shares payable by
the BUYERS is P200.00 or an aggregate price of P27,573,200.00
(the “Contract Price”).
492

3. Delivery of, and payment for, stock certificates

Upon the execution of this Agreement, (i) the SELLERS shall
deliver to the BUYERS the stock certificates representing the
Contract Shares, free and clear of all liens, encumbrances,
obligations, liabilities and other burdens in favor of the Bank or
third parties, duly endorsed in blank or with stock powers
sufficient to transfer the shares to bearer; and (ii) BUYERS shall
deliver to the SELLERS P27,511,295.50 representing the

Contract Price less the amount of stock transfer taxes payable by
the SELLERS, which the BUYERS undertake to remit to the
appropriate authorities. (Emphasis added.)
4. Representation and Warranties of Sellers
The SELLERS respectively and independently of each other
represent and warrant that:
(a) The SELLERS are the lawful owners of, with good
marketable title to, the Contract Shares and that (i) the certificates to
be delivered pursuant thereto have been validly issued and are fully
paid and non-assessable; (ii) the Contract Shares are free and clear of
all liens, encumbrances, obligations, liabilities and other burdens in
favor of the Bank or third parties x x x.
This representation shall survive the execution and delivery of
this Agreement and the consummation or transfer hereby
contemplated.
(b) The execution, delivery and performance of this Agreement
by the SELLERS does not conflict with or constitute any breach of
any provision in any agreement to which they are a party or by which
they may be bound.
(c) They have complied with the condition set forth in Article X
of the Amended Articles of Incorporation of the Bank.
5. Representation of BUYERS
xxxx
6. Implementation
The parties hereto hereby agree to execute or cause to be executed
such documents and instruments as may be required in order to carry
out the intent and purpose of this Agreement.
7. Notices
xxxx
493
VOL. 686, NOVEMBER 27, 2012 493

IN WITNESS WHEREOF, the parties hereto have hereunto set their

hands at the place and on the date first above written.
PEDRO COJUANGCO EDUARDO

COJUANGCO, JR.
(on his own behalf and in behalf of the (on his own behalf and in
other Sellers listed in Annex “A” hereof) behalf of the other Buyers)
(SELLERS) (BUYERS)
By:
EDGARDO J. ANGARA
Attorney-in-Fact
xxxx
b) ”Agreement for the Acquisition of a Commercial Bank for the
Benefit of the Coconut Farmers of the Philippines, made and entered
into this 25th day of May 1975 at Makati, Rizal, Philippines, by and
between:
EDUARDO M. COJUANGCO, JR., Filipino, of legal age, with
business address at 10th Floor, Sikatuna Building, Ayala Avenue,
Makati, Rizal, hereinafter referred to as the SELLER;
– and –
PHILIPPINE COCONUT AUTHORITY, a public corporation
created by Presidential Decree No. 232, as amended, for itself and for
the benefit of the coconut farmers of the Philippines, (hereinafter
called the BUYER)”
WITNESSETH: That
WHEREAS, on May 17, 1975, the Philippine Coconut Producers
Federation (“PCPF”), through its Board of Directors, expressed the
desire of the coconut farmers to own a commercial bank which will
be an effective instrument to solve the perennial credit problems and,
for that purpose, passed a resolution requesting the PCA to negotiate
with the SELLER for the transfer to the coconut farmers of the
SELLER’s option to buy the First United Bank (the “Bank”) under
such terms and conditions as BUYER may deem to be in the best
interest of the coconut farmers and instructed Mrs. Maria Clara
Lobregat to convey such request to the BUYER;
WHEREAS, the PCPF further instructed Mrs. Maria Clara
Lobregat to make representations with the BUYER to utilize its
funds to finance the purchase of the Bank;
494

WHEREAS, the SELLER has the exclusive and personal option

to buy 144,400 shares (the “Option Shares”) of the Bank, constituting
72.2% of the present outstanding shares of stock of the Bank, at the
price of P200.00 per share, which option only the SELLER can
validly exercise;
WHEREAS, in response to the representations made by the
coconut farmers, the BUYER has requested the SELLER to exercise
his personal option for the benefit of the coconut farmers;
WHEREAS, the SELLER is willing to transfer the Option Shares
to the BUYER at a price equal to his option price of P200 per share;
WHEREAS, recognizing that ownership by the coconut farmers
of a commercial bank is a permanent solution to their perennial credit
problems, that it will accelerate the growth and development of the
coconut industry and that the policy of the state which the BUYER is
required to implement is to achieve vertical integration thereof so
that coconut farmers will become participants in, and beneficiaries of
the development and growth of the coconut industry, the BUYER
approved the request of PCPF that it acquire a commercial bank to be
owned by the coconut farmers and, appropriated, for that purpose, the
sum of P150 Million to enable the farmers to buy the Bank and
capitalize the Bank to such an extension as to be in a position to
adopt a credit policy for the coconut farmers at preferential rates;
WHEREAS, x x x the BUYER is willing to subscribe to
additional shares (“Subscribed Shares”) and place the Bank in a more
favorable financial position to extend loans and credit facilities to
coconut farmers at preferential rates;
NOW, THEREFORE, for and in consideration of the foregoing
premises and the other terms and conditions hereinafter contained,
the parties hereby declare and affirm that their principal contractual
intent is (1) to ensure that the coconut farmers own at least 60% of
the outstanding capital stock of the Bank; and (2) that the SELLER
shall receive compensation for exercising his personal and exclusive

option to acquire the Option Shares, for transferring such shares to
the coconut farmers at the option price of P200 per share, and for
performing the management services required of him hereunder.
1. To ensure that the transfer to the coconut farmers of the
Option Shares is effected with the least possible delay and to provide
for the faithful performance of the obligations of the par-
495
VOL. 686, NOVEMBER 27, 2012 495

ties hereunder, the parties hereby appoint the Philippine National

Bank as their escrow agent (the “Escrow Agent”).
Upon execution of this Agreement, the BUYER shall deposit with
the Escrow Agent such amount as may be necessary to implement the
terms of this Agreement x x x.
2. As promptly as practicable after execution of this Agreement,
the SELLER shall exercise his option to acquire the Option Share
and SELLER shall immediately thereafter deliver and turn over to
the Escrow Agent such stock certificates as are herein provided to be
received from the existing stockholders of the Bank by virtue of the
exercise on the aforementioned option x x x.
3. To ensure the stability of the Bank and continuity of
management and credit policies to be adopted for the benefit of the
coconut farmers, the parties undertake to cause the stockholders and
the Board of Directors of the Bank to authorize and approve a
management contract between the Bank and the SELLER under the
following terms:
(a) The management contract shall be for a period of five (5)
years, renewable for another five (5) years by mutual
agreement of the SELLER and the Bank;
(b) The SELLER shall be elected President and shall hold
office at the pleasure of the Board of Directors. While serving
in such capacity, he shall be entitled to such salaries and
emoluments as the Board of Directors may determine;
(c) The SELLER shall recruit and develop a professional
management team to manage and operate the Bank under the
control and supervision of the Board of Directors of the Bank;
(d) The BUYER undertakes to cause three (3) persons
designated by the SELLER to be elected to the Board of
Directors of the Bank;
(e) The SELLER shall receive no compensation for
managing the Bank, other than such salaries or emoluments to
which he may be entitled by virtue of the discharge of his
function and duties as President, provided x x x and
(f) The management contract may be assigned to a
management company owned and controlled by the SELLER.
4. As compensation for exercising his personal and exclusive
option to acquire the Option Shares and for transferring
496

such shares to the coconut farmers, as well as for performing the

management services required of him, SELLER shall receive equity
in the Bank amounting, in the aggregate, to 95,304 fully paid shares
in accordance with the procedure set forth in paragraph 6 below;
5. In order to comply with the Central Bank program for
increased capitalization of banks and to ensure that the Bank will be
in a more favorable financial position to attain its objective to extend
to the coconut farmers loans and credit facilities, the BUYER
undertakes to subscribe to shares with an aggregate par value of
P80,864,000 (the “Subscribed Shares”). The obligation of the
BUYER with respect to the Subscribed Shares shall be as follows:
(a) The BUYER undertakes to subscribe, for the benefit of
the coconut farmers, to shares with an aggregate par value of
P15,884,000 from the present authorized but unissued shares
of the Bank; and
(b) The BUYER undertakes to subscribe, for the benefit of
the coconut farmers, to shares with an aggregate par value of
P64,980,000 from the increased capital stock of the Bank,
which subscriptions shall be deemed made upon the approval
by the stockholders of the increase of the authorized capital
stock of the Bank from P50 Million to P140 Million.
The parties undertake to declare stock dividends of P8 Million out
of the present authorized but unissued capital stock of P30 Million.
6. To carry into effect the agreement of the parties that the
SELLER shall receive as his compensation 95,304 shares:
(a) The Escrow Agent shall, upon receipt from the SELLER
of the stock certificates representing the Option Shares, duly
endorsed in blank or with stock powers sufficient to transfer
the same to bearer, present such stock certificates to the
Transfer Agent of the Bank and shall cause such Transfer
Agent to issue stock certificates of the Bank in the following
ratio: one share in the name of the SELLER for every nine
shares in the name of the BUYER.
(b) With respect to the Subscribed Shares, the BUYER
undertakes, in order to prevent the dilution of SELLER’s
equity position, that it shall cede over to the SELLER 64,980
fully-paid shares out of the Subscribed Shares. Such
undertaking shall be complied with in the following
497
VOL. 686, NOVEMBER 27, 2012 497

manner: upon receipt of advice that the BUYER has

subscribed to the Subscribed Shares upon approval by the
stockholders of the increase of the authorized capital stock of
the Bank, the Escrow Agent shall thereupon issue a check in
favor of the Bank covering the total payment for the
Subscribed Shares. The Escrow Agent shall thereafter cause
the Transfer Agent to issue a stock certificates of the Bank in
the following ratio: one share in the name of the SELLER for
every nine shares in the name of the BUYER.
7. The parties further undertake that the Board of Directors and
management of the Bank shall establish and implement a loan policy
for the Bank of making available for loans at preferential rates of

interest to the coconut farmers x x x.
8. The BUYER shall expeditiously distribute from time to time
the shares of the Bank, that shall be held by it for the benefit of the
coconut farmers of the Philippines under the provisions of this
Agreement, to such, coconut farmers holding registered
COCOFUND receipts on such equitable basis as may be determine
by the BUYER in its sound discretion.
9. x x x x
10. To ensure that not only existing but future coconut farmers
shall be participants in and beneficiaries of the credit policies, and
shall be entitled to the benefit of loans and credit facilities to be
extended by the Bank to coconut farmers at preferential rates, the
shares held by the coconut farmers shall not be entitled to pre-
emptive rights with respect to the unissued portion of the authorized
capital stock or any increase thereof.
11. After the parties shall have acquired two-thirds (2/3) of the
outstanding shares of the Bank, the parties shall call a special
stockholders’ meeting of the Bank:
(a) To classify the present authorized capital stock of
P50,000,000 divided into 500,000 shares, with a par
value of P100.00 per share into: 361,000 Class A
shares, with an aggregate par value of P36,100,000 and
139,000 Class B shares, with an aggregate par value of
P13,900,000. All of the Option Shares constituting
72.2% of the outstanding shares, shall be classified as
Class A shares and the balance of the outstanding
shares, constituting 27.8% of the outstanding shares, as
Class B shares;
(b) To amend the articles of incorporation of the
Bank to effect the following changes:
198

(i) change of corporate name to First United Coconut

Bank;
(ii) replace the present provision restricting the
transferability of the shares with a limitation on
ownership by any individual or entity to not more than
10% of the outstanding shares of the Bank;
(iii) provide that the holders of Class A shares shall
not be entitled to pre-emptive rights with respect to the
unissued portion of the authorized capital stock or any
increase thereof; and
(iv) provide that the holders of Class B shares shall
be absolutely entitled to pre-emptive rights, with
respect to the unissued portion of Class B shares
comprising part of the authorized capital stock or any
increase thereof, to subscribe to Class B shares in
proportion to the subscriptions of Class A shares, and
to pay for their subscriptions to Class B shares within a
period of five (5) years from the call of the Board of
Directors.
(c) To increase the authorized capital stock of the Bank from

P50 Million to P140 Million, divided into 1,010,800 Class A
shares and 389,200 Class B shares, each with a par value of
P100 per share;
(d) To declare a stock dividend of P8 Million payable to the
SELLER, the BUYER and other stockholders of the Bank out
of the present authorized but unissued capital stock of P30
Million;
(e) To amend the by-laws of the Bank accordingly; and
(f) To authorize and approve the management contract
provided in paragraph 2 above.
The parties agree that they shall vote their shares and take all the
necessary corporate action in order to carry into effect the foregoing
provisions of this paragraph 11, including such other amendments of
the articles of incorporation and by-laws of the Bank as are necessary
in order to implement the intention of the parties with respect thereto.
12. It is the contemplation of the parties that the Bank shall
achieve a financial and equity position to be able to lend to the
coconut farmers at preferential rates.
In order to achieve such objective, the parties shall cause the Bank to
adopt a policy of reinvestment, by way of stock divi-
499
VOL. 686, NOVEMBER 27, 2012 499

dends, of such percentage of the profits of the Bank as may be

necessary.
13. The parties agree to execute or cause to be executed such
documents and instruments as may be required in order to carry out
the intent and purpose of this Agreement.
IN WITNESS WHEREOF x x x
PHILIPPINE COCONUT AUTHORITY

(BUYER)
By:
EDUARDO COJUANGCO, MARIA CLARA L. LOBREGAT
JR.
(SELLER)
xxxx
7. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit that
the x x x (PCA) was the “other buyers” represented by defendant Eduardo M.
Cojuangco, Jr. in the May 1975 Agreement entered into between Pedro Cojuangco
(on his own behalf and in behalf of other sellers listed in Annex “A”of the
agreement) and defendant Eduardo M. Cojuangco, Jr. (on his own behalf and in
behalf of the other buyers). Defendant Cojuangco insists he was the “only buyer”
under the aforesaid Agreement.
8. Defendant Eduardo M. Cojuangco, Jr. did not own any share in the x x x (FUB)
prior to the execution of the two Agreements x x x.
9. Defendants Lobregat, et al., and COCOFED, et al., and Ballares, et al. admit
that in addition to the 137,866 FUB shares of Pedro Cojuangco, et al. covered by the
Agreement, other FUB stockholders sold their shares to PCA such that the total
number of FUB shares purchased by PCA … increased from 137,866 shares to
144,400 shares, the OPTION SHARES referred to in the Agreement of May 25,
1975. Defendant Cojuangco did not make said admission as to the said 6,534 shares
in excess of the 137,866 shares covered by the Agreement with Pedro Cojuangco.
10. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit
that the Agreement, described in Section 1 of Presidential Decree (P.D.) No. 755
dated July 29, 1975 as the “Agreement for the Acquisition of a Commercial Bank
for the Benefit of Coconut Farmers” executed by the Philippine
500

Coconut Authority” and incorporated in Section 1 of P.D. No. 755 by reference,

refers to the “AGREEMENT FOR THE ACQUISITION OF A COMMERCIAL
BANK FOR THE BENEFIT OF THE COCONUT FARMERS OF THE
PHILIPPINES” dated May 25, 1975 between defendant Eduardo M. Cojuangco, Jr.
and the [PCA] (Annex “B” for defendant Cojuangco’s OPPOSITION TO
PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT [RE:
EDUARDO M. COJUANGCO, JR.] dated September 18, 2002).
Plaintiff refused to make the same admission.
11. As to whether P.D. No. 755 and the text of the agreement described therein
was published, the Court takes judicial notice that P.D. No. 755 was published [in]
x x x volume 71 of the Official Gazette but the text of the agreement x x x was not
so published with P.D. No. 755.
that the PCA used public funds x x x in the total amount of P150 million, to
purchase the FUB shares amounting to 72.2% of the authorized capital stock of the
FUB, although the PCA was later reimbursed from the coconut levy funds and
that the PCA subscription in the increased capitalization of the FUB, which was later
renamed the x x x (UCPB), came from the said coconut levy funds x x x.
13. Pursuant to the May 25, 1975 Agreement, out of the 72.2% shares of the
authorized and the increased capital stock of the FUB (later UCPB), entirely paid for
by PCA, 64.98% of the shares were placed in the name of the “PCA for the benefit
of the coconut farmers” and 7.22% were given to defendant Cojuangco. The
remaining 27.8% shares of stock in the FUB which later became the UCPB were not
covered by the two (2) agreements referred to in item no. 6, par. (a) and (b) above.
“There were shares forming part of the aforementioned 64.98% which were later
sold or transferred to non-coconut farmers.
14. Under the May 27, 1975 Agreement, defendant Cojuangco’s equity in the FUB
(now UCPB) was ten percent (10%) of the shares of stock acquired by the PCA for
the benefit of the coconut farmers.
501
VOL. 686, NOVEMBER 27, 2012 501

15. That the fully paid 95.304 shares of the FUB, later the UCPB, acquired by
defendant x x x Cojuangco, Jr. pursuant to the May 25, 1975 Agreement were paid
for by the PCA in accordance with the terms and conditions provided in the said
Agreement.
that the affidavits of the coconut farmers (specifically, Exhibit “1-Farmer” to “70-
Farmer”) uniformly state that:
a. they are coconut farmers who sold coconut products;
b. in the sale thereof, they received COCOFUND receipts pursuant to R.A. No.
6260;
c. they registered the said COCOFUND receipts; and

d. by virtue thereof, and under R.A. No. 6260, P.D. Nos. 755, 961 and 1468,
they are allegedly entitled to the subject UCPB shares.
but subject to the following qualifications:
a. there were other coconut farmers who received UCPB shares although they
did not present said COCOFUND receipt because the PCA distributed the
unclaimed UCPB shares not only to those who already received their UCPB
shares in exchange for their COCOFUND receipts but also to the coconut
farmers determined by a national census conducted pursuant to PCA
administrative issuances;
b. [t]here were other affidavits executed by Lobregat, Eleazar, Ballares and
Aldeguer relative to the said distribution of the unclaimed UCPB shares; and
c. the coconut farmers claim the UCPB shares by virtue of their compliance
not only with the laws mentioned in item (d) above but also with the relevant
issuances of the PCA such as, PCA Administrative Order No. 1, dated
August 20, 1975 (Exh. “298-Farmer”); PCA Resolution No. 033-78 dated
February 16, 1978….
The plaintiff did not make any admission as to the foregoing qualifications.
502

17. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.

claim that the UCPB shares in question have legitimately become the private
properties of the 1,405,366 coconut farmers solely on the basis of their
having acquired said shares in compliance with R.A. No. 6260, P.D. Nos.
755, 961 and 1468 and the administrative issuances of the PCA cited above.
18. On the other hand, defendant … Cojuangco, Jr. claims ownership of
the UCPB shares, which he holds, solely on the basis of the two
Agreements…. (Emphasis and words in brackets added.)
On July 11, 2003, the Sandiganbayan issued the assailed PSJ-A,

ruling in favor of the Republic, disposing insofar as pertinent as
follows:21
WHEREFORE, in view of the foregoing, we rule as follows:

xxxx
C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO M.
COJUANGCO, JR.) dated September 18, 2002 filed by plaintiff.
1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA
and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 nor
did it give the Agreement the binding force of a law because of the
non-publication of the said Agreement.
2. Regarding the questioned transfer of the shares of stock of FUB
(later UCPB) by PCA to defendant Cojuangco or the so-called
“Cojuangco UCPB shares” which cost the PCA more than Ten
Million Pesos in CCSF in 1975, we declare, that the transfer of the
following FUB/UCPB shares to defendant Eduardo M. Cojuangco,
Jr. was not supported by valuable consideration, and therefore null
and void:
a. The 14,400 shares from the “Option Shares”;
_______________
21 PSJ-A, pp. 15, 54-55, 80-83; Rollo, pp. 193, 231-232, 257-60.
503
VOL. 686, NOVEMBER 27, 2012 503

b. Additional Bank Shares Subscribed and Paid by PCA,

consisting of:
1. Fifteen Thousand Eight Hundred Eighty-Four (15,884)
shares out of the authorized but unissued shares of the bank,
subscribed and paid by PCA;
2. Sixty Four Thousand Nine Hundred Eighty (64,980)
shares of the increased capital stock subscribed and paid by
PCA; and
3. Stock dividends declared pursuant to paragraph 5 and
paragraph 11 (iv) (d) of the Agreement.
3. The above-mentioned shares of stock of the FUB/UCPB
transferred to defendant Cojuangco are hereby declared
conclusively owned by the plaintiff Republic of the Philippines.
4. The UCPB shares of stock of the alleged fronts, nominees and
dummies of defendant Eduardo M. Cojuangco, Jr. which form part of
the 72.2% shares of the FUB/UCPB paid for by the PCA with public
funds later charged to the coconut levy funds, particularly the CCSF,
belong to the plaintiff Republic of the Philippines as their true and
beneficial owner.
Let trial of this Civil Case proceed with respect to the issues which have not
been disposed of in this Partial Summary Judgment. For this purpose, the
plaintiff’s Motion Ad Cautelam to Present Additional Evidence dated March
28, 2001 is hereby GRANTED.22 (Emphasis and underlining added.)
As earlier explained, the core issue in this instant petition is Part

C of the dispositive portion in PSJ-A declaring the 7.22% FUB (now
UCPB) shares transferred to Cojuangco, plus the other shares paid
by the PCA as “conclusively” owned by the Republic. Parts A and B
of the same dispositive portion have already been finally resolved
and adjudicated by this Court in COCOFED v. Republic on January
24, 2012.23
_______________
22 PSJ-A, pp. 15, 54-55, 80-83; Rollo, pp. 193, 231-32, 257-60.
663 SCRA 514.
504

From PSJ-A, Cojuangco moved for partial reconsideration but

the Sandiganbayan, by Resolution24 of December 28, 2004, denied
the motion.
Hence, the instant petition.
The Issues
Cojuangco’s petition formulates the issues in question form, as

follows:25
a. Is the acquisition of the [so-called Cojuangco, Jr. UCPB shares] by

petitioner Cojuangco x x x “not supported by valuable consideration and,
therefore, null and void”?
b. Did the Sandiganbayan have jurisdiction, in Civil Case No. 0033-A,
an “ill-gotten wealth” case brought under [EO] Nos. 1 and 2, to declare the
[Cojuangco UCPB shares] acquired by virtue of the Pedro Cojuangco, et al.
Agreement and/or the PCA Agreement null and void because “not
supported by valuable consideration”?
c. Was the claim that the acquisition by petitioner Cojuangco of shares
representing 7.2% of the outstanding capital stock of FUB (later UCPB)
“not supported by valuable consideration”, a “claim” pleaded in the
complaint and may therefore be the basis of a “summary judgment” under
Section 1, Rule 35 of the Rules of Court?
d. By declaring the [Cojuangco UCPB shares] as “not supported by
valuable consideration, and therefore, null and void”, did the Sandiganbayan
effectively nullify the PCA Agreement? May the Sandiganbayan nullify the
PCA Agreement when the parties to the Agreement, namely: x x x concede
its validity? If the PCA Agreement be deemed “null and void”, should not
the FUB (later UCPB) shares revert to petitioner Cojuangco (under the PCA
Agreement) or to Pedro Cojuangco, et al. x x x? Would there be a basis
then, even assuming the absence of consideration x x x, to declare 7.2%
UCPB shares of petitioner Cojuangco as “conclusively owned by the
plaintiff Republic of the Philippines”?26
_______________
24 Rollo, pp. 361-400.
25 Id., at pp. 42-43.
26 Id.
505
VOL. 686, NOVEMBER 27, 2012 505

The Court’s Ruling
I
THE SANDIGANBAYAN HAS JURISDICTION OVER THE
SUBJECT MATTER OF THE SUBDIVIDED AMENDED
COMPLAINTS,
INCLUDING THE SHARES ALLEGEDLY ACQUIRED BY
COJUANGCO BY VIRTUE OF THE PCA AGREEMENTS.
The issue of jurisdiction over the subject matter of the subdivided
amended complaints has peremptorily been put to rest by the Court
in its January 24, 2012 Decision in COCOFED v. Republic. There,
the Court, citing Regalado27 and settled jurisprudence, stressed the
following interlocking precepts: Subject matter jurisdiction is
conferred by law, not by the consent or acquiescence of any or all of
the parties. In turn, the issue on whether a suit comes within the
penumbra of a statutory conferment is determined by the allegations
in the complaint, regardless of whether or not the suitor will be
entitled to recover upon all or part of the claims asserted.
The Republic’s material averments in its complaint subdivided in

CC No. 0033-A included the following:
CC No. 0033-A
12. Defendant Eduardo M. Cojuangco, Jr. served as a public officer during the

Marcos administration. During the period of his incumbency as a public officer, he
acquired assets, funds and other property grossly and manifestly disproportionate to
his salaries, lawful income and income from legitimately acquired property.
13. Defendant Eduardo M. Cojuangco, Jr., taking undue advantage of his
association, influence, connection, and acting in unlawful concert with Defendants
Ferdinand E. Marcos and Imelda
_______________
27 1 Regalado, R L C 11 (6th revised ed., 1997).
506

R. Marcos, AND THE INDIVIDUAL DEFENDANTS, embarked

upon devices, schemes and stratagems, to unjustly enrich themselves
at the expense of Plaintiff and the Filipino people, such as when he
—
a) manipulated, beginning the year 1975 with the active collaboration of
Defendants x x x Maria Clara Lobregat, Danilo Ursua [etc.], the purchase by . . .
(PCA) of 72.2% of the outstanding capital stock of the x x x (FUB) which was
subsequently converted into a universal bank named x x x (UCPB) through the use
of the Coconut Consumers Stabilization Fund (CCSF) being initially in the amount
of P85,773,100.00 in a manner contrary to law and to the specific purposes for
which said coconut levy funds were imposed and collected under P.D. 276, and with
sinister designs and under anomalous circumstances, to wit:
(i) Defendant Eduardo Cojuangco, Jr. coveted the coconut levy funds as a
cheap, lucrative and risk-free source of funds with which to exercise his
private option to buy the controlling interest in FUB; thus, claiming that the
72.2% of the outstanding capital stock of FUB could only be purchased and
transferred through the exercise of his “personal and exclusive action
[option] to acquire the 144,000 shares” of the bank, Defendant Eduardo M.
Cojuangco, Jr. and PCA, x x x executed on May 26, 1975 a purchase
agreement which provides, among others, for the payment to him in fully
paid shares as compensation thereof 95,384 shares worth P1,444,000.00 with
the further condition that he shall manage and control the bank as Director
and President for a term of five (5) years renewable for another five (5) years
and to designate three (3) persons of his choice who shall be elected as
members of the Board of Directors of the Bank;
(ii) to legitimize a posteriori his highly anomalous and irregular use and
diversion of government funds to advance his own private and commercial
interests, Defendant Eduardo Cojuangco, Jr. caused the issuance by
Defendant Ferdinand E. Marcos of PD 755 (a) declaring that the coconut
levy funds shall not be considered special and fiduciary and trust funds and
do not form part of the general funds of the National Government,
conveniently repealing for that purpose a series of previous de-
507
VOL. 686, NOVEMBER 27, 2012 507

crees, PDs 276 and 414, establishing the character of the coconut
levy funds as special, fiduciary, trust and governmental funds; (b)
confirming the agreement between Defendant Eduardo Cojuangco,
Jr. and PCA on the purchase of FUB by incorporating by reference
said private commercial agreement in PD 755;
(iii) To further consolidate his hold on UCPB, Defendant Eduardo Cojuangco,
Jr. imposed as consideration and conditions for the purchase that (a) he gets
one out of every nine shares given to PCA, and (b) he gets to manage and
control UCPB as president for a term of five (5) years renewable for another
five (5) years;
(iv) To perpetuate his opportunity to deal with and make use of the coconut
levy funds x x x Cojuangco, Jr. caused the issuance by Defendant Ferdinand
E. Marcos of an unconstitutional decree (PD 1468) requiring the deposit of
all coconut levy funds with UCPB, interest free to the prejudice of the
government.
(v) In gross violation of their fiduciary positions and in contravention of the
goal to create a bank for the coconut farmers of the country, the capital stock
of UCPB as of February 25, 1986 was actually held by the defendants, their
lawyers, factotum and business associates, thereby finally gaining control of
the UCPB by misusing the names and identities of the so-called “more than
one million coconut farmers.”
14. The acts of Defendants, singly or collectively, and/or in unlawful concert
with one another, constitute gross abuse of official position and authority, flagrant
breach of public trust and fiduciary obligations, brazen abuse of right and power,
and unjust enrichment, violation of the constitution and laws of the Republic of the
Philippines, to the grave and irreparable damage of Plaintiff and the Filipino
people.28
_______________
28 Rollo, pp. 488-493.
508

In no uncertain terms, the Court has upheld the Sandiganbayan’s

assumption of jurisdiction over the subject matter of Civil Case Nos.
0033-A and 0033-F.29 The Court wrote:
Judging from the allegations of the defendants’ illegal acts thereat made, it is
fairly obvious that both CC Nos. 0033-A and CC 0033-F partake, in the context of
EO Nos. 1, 2 and 14, series of 1986, the nature of ill-gotten wealth suits. Both deal
with the recovery of sequestered shares, property or business enterprises claimed, as
alleged in the corresponding basic complaints, to be ill-gotten assets of President
Marcos, his cronies and nominees and acquired by taking undue advantage of
relationships or influence and/or through or as a result of improper use, conversion
or diversion of government funds or property. Recovery of these
assets―determined as shall hereinafter be discussed as prima facie ill-gotten―falls
within the unquestionable jurisdiction of the Sandiganbayan.30
P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series of 1986, vests
the Sandiganbayan with, among others, original jurisdiction over civil and criminal
cases instituted pursuant to and in connection with E.O. Nos. 1, 2, 14 and 14-A.
Correlatively, the PCGG Rules and Regulations defines the term “Ill-Gotten Wealth”
as “any asset, property, business enterprise or material possession of persons within
the purview of [E.O.] Nos. 1 and 2, acquired by them directly, or indirectly thru
dummies, nominees, agents, subordinates and/or business associates by any of the
following means or similar schemes”:
(1) Through misappropriation, conversion, misuse or malversation of
public funds or raids on the public treasury;
(2) x x x x
(3) By the illegal or fraudulent conveyance or disposition of assets
belonging to the government or any of its subdivisions, agencies or
instrumentalities or government-owned or controlled corporations;
_______________
663 SCRA 514.
30 Id.; citing San Miguel Corporation v. Sandiganbayan, G.R. Nos. 104637-38,
September 14, 2000, 340 SCRA 289.
509
VOL. 686, NOVEMBER 27, 2012 509

(4) By obtaining, receiving or accepting directly or indirectly any

shares of stock, equity or any other form of interest or participation in any
business enterprise or undertaking;
(5) Through the establishment of agricultural, industrial or commercial
monopolies or other combination and/or by the issuance, promulgation
and/or implementation of decrees and orders intended to benefit particular
persons or special interests; and
(6) By taking undue advantage of official position, authority,
relationship or influence for personal gain or benefit. (Emphasis supplied)
Section 2(a) of E.O. No. 1 charged the PCGG with the task of assisting the
President in “[T]he recovery of all ill-gotten wealth accumulated by former …
[President] Marcos, his immediate family, relatives, subordinates and close
associates … including the takeover or sequestration of all business enterprises and
entities owned or controlled by them, during his administration, directly or through
nominees, by taking undue advantage of their public office and/or using their
powers, authority, influence, connections or relationship.” Complementing the
aforesaid Section 2(a) is Section 1 of E.O. No. 2 decreeing the freezing of all assets
“in which the [Marcoses] their close relatives, subordinates, business associates,
dummies, agents or nominees have any interest or participation.”
The Republic’s averments in the amended complaints, particularly those
detailing the alleged wrongful acts of the defendants, sufficiently reveal that the
subject matter thereof comprises the recovery by the Government of ill-gotten
wealth acquired by then President Marcos, his cronies or their associates and
dummies through the unlawful, improper utilization or diversion of coconut levy
funds aided by P.D. No. 755 and other sister decrees. President Marcos himself
issued these decrees in a brazen bid to legalize what amounts to private taking of the
said public funds.
xxxx
There was no actual need for Republic, as plaintiff a quo, to adduce evidence to
show that the Sandiganbayan has jurisdiction over the subject matter of the
complaints as it leaned on the averments in the initiatory pleadings to make visible
the jurisdiction of the Sandiganbayan over the ill-gotten wealth complaints. As

previ-
510

ously discussed, a perusal of the allegations easily reveals the

sufficiency of the statement of matters disclosing the claim of the
government against the coco levy funds and the assets acquired
directly or indirectly through said funds as ill-gotten wealth.
Moreover, the Court finds no rule that directs the plaintiff to first
prove the subject matter jurisdiction of the court before which the
complaint is filed. Rather, such burden falls on the shoulders of
defendant in the hearing of a motion to dismiss anchored on said
ground or a preliminary hearing thereon when such ground is
alleged in the answer.
xxxx
Lest it be overlooked, this Court has already decided that the sequestered shares
are prima facie ill-gotten wealth rendering the issue of the validity of their
sequestration and of the jurisdiction of the Sandiganbayan over the case beyond
doubt. In the case of COCOFED v. PCGG, We stated that:
It is of course not for this Court to pass upon the factual issues thus
raised. That function pertains to the Sandiganbayan in the first instance. For
purposes of this proceeding, all that the Court needs to determine is whether
or not there is prima facie justification for the sequestration ordered by the
PCGG. The Court is satisfied that there is. The cited incidents, given the
public character of the coconut levy funds, place petitioners COCOFED
and its leaders and officials, at least prima facie, squarely within the
purview of Executive Orders Nos. 1, 2 and 14, as construed and applied in
BASECO, to wit:
“1. that ill-gotten properties (were) amassed by the leaders and supporters of the previous
regime;
“a. more particularly, that ‘(i) Ill-gotten wealth was accumulated by x x x Marcos, his
immediate family, relatives, subordinates and close associates, x x x (and) business enterprises and
entities (came to be) owned or controlled by them, during x x x (the Marcos) administration,
directly or through nominees, by taking undue advantage of their public office and using their
powers, authority, influence, connections or relationships’;
“b. otherwise stated, that ‘there are assets and properties purportedly pertaining to [the
Marcoses], their close relatives, subordinates, business associates, dummies, agents or nominees
which had been or were acquired by them directly or indirectly, through or as a result of the
improper or illegal use of funds or properties owned by the Government x x x or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of their
office,
511
VOL. 686, NOVEMBER 27, 2012 511

authority, influence, connections or relationship, resulting in their unjust enrichment x x x;
xxxx
2. The petitioners’ claim that the assets acquired with the coconut levy funds are privately
owned by the coconut farmers is founded on certain provisions of law, to wit [Sec. 7, RA 6260 and
Sec. 5, Art. III, PD 1468]… (Words in bracket added; italics in the original).
xxxx
E.O. 1, 2, 14 and 14-A, it bears to stress, were issued precisely to effect the
recovery of ill-gotten assets amassed by the Marcoses, their associates, subordinates
and cronies, or through their nominees. Be that as it may, it stands to reason that
persons listed as associated with the Marcoses refer to those in possession of such
ill-gotten wealth but holding the same in behalf of the actual, albeit undisclosed
owner, to prevent discovery and consequently recovery. Certainly, it is well-nigh
inconceivable that ill-gotten assets would be distributed to and left in the hands of
individuals or entities with obvious traceable connections to Mr. Marcos and his
cronies. The Court can take, as it has in fact taken, judicial notice of schemes and
machinations that have been put in place to keep ill-gotten assets under wraps. These
would include the setting up of layers after layers of shell or dummy, but controlled,
corporations31 or manipulated instruments calculated to confuse if not altogether
mislead would-be investigators from recovering wealth deceitfully amassed at the
expense of the people or simply the fruits thereof. Transferring the illegal assets to
third parties not readily perceived as Marcos cronies would be another. So it was
that in PCGG v. Pena, the Court, describing the rule of Marcos as a “well entrenched
plundering regime of twenty years,” noted the magnitude of the past regime’s
organized pillage and the ingenuity of the plunderers and pillagers with the
assistance of experts and the best legal minds in the market.32
Prescinding from the foregoing premises, there can no longer be

any serious challenge as to the Sandiganbayan’s
_______________
31 Id.; citing Yuchengco v. Sandiganbayan, G.R. No. 149802, January 20, 2006,
479 SCRA 1.
32 Id.
512

subject matter jurisdiction. And in connection therewith, the Court

wrote in COCOFED v. Republic, that the instant petition shall be
decided separately and should not be affected by the January 24,
2012 Decision, “save for determinatively legal issues directly
addressed” therein.33 Thus:
We clarify that PSJ-A is subject of another petition for review interposed

by Eduardo Cojuangco, Jr., in G.R. No. 180705 entitled, Eduardo M.
Cojuangco, Jr. v. Republic of the Philippines, which shall be decided
separately by this Court. Said petition should accordingly not be affected by
this Decision save for determinatively legal issues directly addressed
herein.34 (Emphasis Ours.)
We, therefore, reiterate our holding in COCOFED v. Republic

respecting the Sandiganbayan’s jurisdiction over the subject matter
of Civil Case No. 0033-A, including those matters whose
adjudication We shall resolve in the present case.
II
PRELIMINARILY, THE AGREEMENT BETWEEN THE
PCAAND EDUARDO M. COJUANGCO, JR. DATED MAY 25,
1975 CANNOT BE ACCORDED THE STATUS OF A LAW

FOR THE LACK OF THE REQUISITE PUBLICATION.
It will be recalled that Cojuangco’s claim of ownership over the
UCPB shares is hinged on two contract documents the respective
contents of which formed part of and reproduced in their entirety in
the aforecited Order35 of the Sandiganbayan dated March 11, 2003.
The first contract refers to the agreement entered into by and
between Pedro Cojuangco and his group, on one hand, and Eduardo
M. Cojuangco, Jr., on the other, bearing date “May 1975”36
(hereinafter referred to as
_______________
33 Id.
34 Id.
35 Rollo, pp. 956-961.
36 The date of the agreement was left blank.
513
VOL. 686, NOVEMBER 27, 2012 513

“PC-ECJ Agreement”), while the second relates to the accord

between the PCA and Eduardo M. Cojuangco, Jr. dated May 25,
1975 (hereinafter referred to as “PCA-Cojuangco Agreement”). The
PC-ECJ Agreement allegedly contains, inter alia, Cojuangco’s
personal and exclusive option to acquire the FUB (“UCPB”) shares
from Pedro and his group. The PCA-Cojuangco Agreement shows
PCA’s acquisition of the said option from Eduardo M. Cojuangco, Jr.
Section 1 of P.D. No. 755 incorporated, by reference, the
“Agreement for the Acquisition of a Commercial Bank for the
Benefit of the Coconut Farmers” executed by the PCA. Particularly,
Section 1 states:
Section 1. Declaration of National Policy.—It is hereby declared that the

policy of the State is to provide readily available credit facilities to the
coconut farmers at preferential rates; that this policy can be expeditiously
and efficiently realized by the implementation of the “Agreement for the
Acquisition of a Commercial Bank for the benefit of the Coconut
Farmers” executed by the Philippine Coconut Authority, the terms of
which “Agreement” are hereby incorporated by reference; and that the
Philippine Coconut Authority is hereby authorized to distribute, for free, the
shares of stock of the bank it acquired to the coconut farmers under such
rules and regulations it may promulgate. (Emphasis Ours.)
It bears to stress at this point that the PCA-Cojuangco Agreement

referred to above in Section 1 of P.D. 755 was not reproduced or
attached as an annex to the same law. And it is well-settled that laws
must be published to be valid. In fact, publication is an
indispensable condition for the effectivity of a law. Tañada v.
Tuvera37 said as much:
Publication [of the law] is indispensable in every case x x x.

xxxx
_______________
37 No. L-63915, December 29, 1986, 146 SCRA 446, 452-454.
514

We note at this point the conclusive presumption that every person

knows the law, which of course presupposes that the law has been published
if the presumption is to have any legal justification at all. It is no less
important to remember that Section 6 of the Bill of Rights recognizes “the
right of the people to information on matters of public concern,” and this
certainly applies to, among others, and indeed especially, the legislative
enactments of the government.
xxxx
We hold therefore that all statutes, including those of local application
and private laws, shall be published as a condition for their effectivity,
which shall begin fifteen days after publication unless a different effectivity
date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature, or, at present, directly
conferred by the Constitution. Administrative rules and regulations must
also be published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.38
We even went further in Tañada to say that:
Laws must come out in the open in the clear light of the sun instead of
skulking in the shadows with their dark, deep secrets. Mysterious
pronouncements and rumored rules cannot be recognized as binding unless
their existence and contents are confirmed by a valid publication intended to
make full disclosure and give proper notice to the people. The furtive law is
like a scabbarded saber that cannot feint, parry or cut unless the naked blade
is drawn.39
The publication, as further held in Tañada, must be of the full

text of the law since the purpose of publication is to inform the
public of the contents of the law. Mere referencing the number of the
presidential decree, its title or whereabouts
_______________
38 Id.
39 Id.
515
VOL. 686, NOVEMBER 27, 2012 515

and its supposed date of effectivity would not satisfy the publication
requirement.40
In this case, while it incorporated the PCA-Cojuangco
Agreement by reference, Section 1 of P.D. 755 did not in any way
reproduce the exact terms of the contract in the decree. Neither was
a copy thereof attached to the decree when published. We cannot,
therefore, extend to the said Agreement the status of a law.
Consequently, We join the Sandiganbayan in its holding that the
PCA-Cojuangco Agreement shall be treated as an ordinary

transaction between agreeing minds to be governed by contract law
under the Civil Code.
III
THE PCA-COJUANGCO AGREEMENT IS A VALID
CONTRACT FOR HAVING THE REQUISITE
CONSIDERATION.
In PSJ-A, the Sandiganbayan struck down the PCA-Cojuangco

Agreement as void for lack of consideration/cause as required under
Article 1318, paragraph 3 in relation to Article 1409, paragraph 3 of
the Civil Code. The Sandiganbayan stated:
In sum, the evidence on record relied upon by defendant Cojuangco

negates the presence of: (1) his claimed personal and exclusive option to
buy the 137,866 FUB shares; and (2) any pecuniary advantage to the
government of the said option, which could compensate for generous
payment to him by PCA of valuable shares of stock, as stipulated in the May
25, 1975 Agreement between him and the PCA.41
On the other hand, the aforementioned provisions of the Civil

Code state:
_______________
40 Id.
41 PSJ-A, p. 74; Rollo, p. 251.
516

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (Emphasis
supplied)42
Art 1409. The following contracts are inexistent and void from the
beginning:
xxxx
(3) Those whose cause or object did not exist at the time of the
transaction;43
The Sandiganbayan found and so tagged the alleged cause for the
agreement in question, i.e., Cojuangco’s “personal and exclusive
option to acquire the Option Shares,” as fictitious. A reading of the
purchase agreement between Cojuangco and PCA, so the
Sandiganbayan ruled, would show that Cojuangco was not the only
seller; thus, the option was, as to him, neither personal nor exclusive
as he claimed it to be. Moreover, as the Sandiganbayan deduced, that
option was inexistent on the day of execution of the PCA-Cojuangco
Agreement as the Special Power of Attorney executed by Cojuangco
in favor of now Senator Edgardo J. Angara, for the latter to sign the
PC-ECJ Agreement, was dated May 25, 1975 while the PCA-
Cojuangco Agreement was also signed on May 25, 1975. Thus, the
Sandiganbayan believed that when the parties affixed their
signatures on the second Agreement, Cojuangco’s option to

purchase the FUB shares of stock did not yet exist. The
Sandiganbayan further ruled that there was no justification in the
second Agreement for the compen-
_______________
42 An Act to Ordain and Institute the Civil Code of the Philippines [C C ],
Republic Act No. 386, Art. 1318 (1950).
43 C C , Art. 1409; see also 4 Arturo M. Tolentino, C
J C C P 629 (2002).
517
VOL. 686, NOVEMBER 27, 2012 517

sation of Cojuangco of 14,400 shares, which it viewed as exorbitant.

Additionally, the Sandiganbayan ruled that PCA could not validly
enter, in behalf of FUB/UCPB, into a veritable bank management
contract with Cojuangco, PCA having a personality separate and
distinct from that of FUB. As such, the Sandiganbayan concluded
that the PCA-Cojuangco Agreement was null and void.
Correspondingly, the Sandiganbayan also ruled that the sequestered
FUB (UCPB) shares of stock in the name of Cojuangco are
conclusively owned by the Republic.
After a circumspect study, the Court finds as inconclusive the
evidence relied upon by Sandiganbayan to support its ruling that the
PCA-Cojuangco Agreement is devoid of sufficient consideration.
We shall explain.
Rule 131, Section 3(r) of the Rules of Court states:
Sec. 3. Disputable presumptions.―The following presumptions are

satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:
xxxx
(r) That there was a sufficient consideration for a contract;
The Court had the occasion to explain the reach of the above
provision in Surtida v. Rural Bank of Malinao (Albay), Inc.,44 to wit:
Under Section 3, Rule 131 of the Rules of Court, the following are
disputable presumptions: (1) private transactions have been fair and regular;
(2) the ordinary course of business has been followed; and (3) there was
sufficient consideration for a contract. A presumption may operate against
an adversary who has not introduced proof to rebut it. The effect of a legal
presumption upon a burden of proof is to create the necessity of presenting
evidence to meet the legal presumption or the prima facie case created
thereby, and which if no proof to the contrary is presented and offered, will
prevail. The bur-
_______________
44 G.R. No. 170563, December 20, 2006, 511 SCRA 507.
518
den of proof remains where it is, but by the presumption, the one who has
that burden is relieved for the time being from introducing evidence in
support of the averment, because the presumption stands in the place of
evidence unless rebutted.
The presumption that a contract has sufficient consideration cannot
be overthrown by the bare uncorroborated and self-serving assertion of
petitioners that it has no consideration. To overcome the presumption of
consideration, the alleged lack of consideration must be shown by
preponderance of evidence. Petitioners failed to discharge this burden
x x x. (Emphasis Ours.)
The assumption that ample consideration is present in a contract

is further elucidated in Pentacapital Investment Corporation v.
Mahinay:45
Under Article 1354 of the Civil Code, it is presumed that

consideration exists and is lawful unless the debtor proves the contrary.
Moreover, under Section 3, Rule 131 of the Rules of Court, the
following are disputable presumptions: (1) private transactions have been
fair and regular; (2) the ordinary course of business has been followed; and
(3) there was sufficient consideration for a contract. A presumption may
operate against an adversary who has not introduced proof to rebut it. The
effect of a legal presumption upon a burden of proof is to create the
necessity of presenting evidence to meet the legal presumption or the prima
facie case created thereby, and which, if no proof to the contrary is
presented and offered, will prevail. The burden of proof remains where it is,
but by the presumption, the one who has that burden is relieved for the time
being from introducing evidence in support of the averment, because the
presumption stands in the place of evidence unless rebutted.46 (Emphasis
supplied.)
_______________
45 G.R. Nos. 171736 & 181482, July 5, 2010, 623 SCRA 284, 303.
46 See also Union Bank of the Philippines v. Spouses Tiu, G.R. Nos. 173090-91,
September 7, 2011, 657 SCRA 86; Great Asian Sales Center v. Court of Appeals, 431
Phil. 293; 381 SCRA 557 (2002); Fernandez v. Fernandez, 416 Phil. 322; 363 SCRA
811 (2001); Gevero
519
VOL. 686, NOVEMBER 27, 2012 519

The rule then is that the party who stands to profit from a
declaration of the nullity of a contract on the ground of insufficiency
of consideration―which would necessarily refer to one who asserts
such nullity―has the burden of overthrowing the presumption
offered by the aforequoted Section 3(r). Obviously then, the
presumption contextually operates in favor of Cojuangco and against
the Republic, as plaintiff a quo, which then had the burden to prove
that indeed there was no sufficient consideration for the Second
Agreement. The Sandiganbayan’s stated observation, therefore, that
based on the wordings of the Second Agreement, Cojuangco had no
personal and exclusive option to purchase the FUB shares from
Pedro Cojuangco had really little to commend itself for acceptance.

This, as opposed to the fact that such sale and purchase agreement is
memorialized in a notarized document whereby both Eduardo
Cojuangco, Jr. and Pedro Cojuangco attested to the correctness of
the provisions thereof, among which was that Eduardo had such
option to purchase. A notarized document, Lazaro v. Agustin47
teaches, “generally carries the evidentiary weight conferred upon it
with respect to its due execution, and documents acknowledged
before a notary public have in their favor the disputable presumption
of regularity.”
In Samanilla v. Cajucom,48 the Court clarified that the
presumption of a valid consideration cannot be discarded on a
simple claim of absence of consideration, especially when the
contract itself states that consideration was given:
x x x This presumption appellants cannot overcome by a simple

assertion of lack of consideration. Especially may not the presumption
be so lightly set aside when the contract
_______________
v. Intermediate Appellate Court, G.R. No. 77029, August 30, 1990, 189 SCRA 201; Spouses
Nuguid v. Court of Appeals, 253 Phil. 207; 171 SCRA 213 (1989).
47 G.R. No. 152364, April 15, 2010, 618 SCRA 298.
48 107 Phil. 432 (1960).
520

itself states that consideration was given, and the same has been
reduced into a public instrument will all due formalities and solemnities
as in this case. (Emphasis ours.)
A perusal of the PCA-Cojuangco Agreement disclosed an

express statement of consideration for the transaction:
NOW, THEREFORE, for and in consideration of the foregoing

premises and the other terms and conditions hereinafter contained, the
parties hereby declare and affirm that their principal contractual intent
is (1) to ensure that the coconut farmers own at least 60% of the
outstanding capital stock of the Bank, and (2) that the SELLER shall
receive compensation for exercising his personal and exclusive option to
acquire the Option Shares, for transferring such shares to the coconut
farmers at the option price of P200 per share, and for performing the
management services required of him hereunder.
xxxx
4. As compensation for exercising his personal and exclusive option
to acquire the Option Shares and for transferring such shares to the
coconut farmers, as well as for performing the management services
required of him, SELLER shall receive equity in the Bank amounting, in
the aggregate, to 95,304 fully paid shares in accordance with the procedure
set forth in paragraph 6 below. (Emphasis supplied.)
Applying Samanilla to the case at bar, the express and positive

declaration by the parties of the presence of adequate consideration
in the contract makes conclusive the presumption of sufficient
consideration in the PCA Agreement. Moreover, the option to

purchase shares and management services for UCPB was already
availed of by petitioner Cojuangco for the benefit of the PCA. The
exercise of such right resulted in the execution of the PC-ECJ
Agreement, which fact is not disputed. The document itself is
incontrovertible proof and hard evidence that petitioner Cojuangco
had the right to purchase the subject FUB (now UCPB) shares. Res
ipsa loquitur.
521
VOL. 686, NOVEMBER 27, 2012 521

The Sandiganbayan, however, pointed to the perceived “lack of

any pecuniary value or advantage to the government of the said
option, which could compensate for the generous payment to him by
PCA of valuable shares of stock, as stipulated in the May 25, 1975
Agreement between him and the PCA.”49
Inadequacy of the consideration, however, does not render a
contract void under Article 1355 of the Civil Code:
Art. 1355. Except in cases specified by law, lesion or inadequacy of

cause shall not invalidate a contract, unless there has been fraud, mistake
or undue influence. (Emphasis supplied.)
Alsua-Betts v. Court of Appeals50 is instructive that lack of ample

consideration does not nullify the contract:
Inadequacy of consideration does not vitiate a contract unless it is

proven which in the case at bar was not, that there was fraud, mistake
or undue influence. (Article 1355, New Civil Code). We do not find the
stipulated price as so inadequate to shock the court’s conscience,
considering that the price paid was much higher than the assessed value of
the subject properties and considering that the sales were effected by a
father to her daughter in which case filial love must be taken into account.
Vales v. Villa51 elucidates why a bad transaction cannot serve as

basis for voiding a contract:
x x x Courts cannot follow one every step of his life and extricate him
from bad bargains, protect him from unwise investments, relieve him from
one-sided contracts, or annul the effects of foolish
_______________
49 PSJ-A, pp. 73-74.
50 Nos. L-46430-31, July 30, 1979, 92 SCRA 332; Morales Development Company, Inc. v.
Court of Appeals, No. L-26572, March 28, 1969, 27 SCRA 484.
51 35 Phil. 769, 788 (1916).
522

acts. x x x Men may do foolish things, make ridiculous contracts, use

miserable judgment, and lose money by them―indeed, all they have in
the world; but not for that alone can the law intervene and restore.
There must be, in addition, a violation of law, the commission of what
the law knows as an actionable wrong, before the courts are authorized
to lay hold of the situation and remedy it. (Emphasis ours.)
While one may posit that the PCA-Cojuangco Agreement puts

PCA and the coconut farmers at a disadvantage, the facts do not
make out a clear case of violation of any law that will necessitate the
recall of said contract. Indeed, the anti-graft court has not put
forward any specific stipulation therein that is at war with any law,
or the Constitution, for that matter. It is even clear as day that none
of the parties who entered into the two agreements with petitioner
Cojuangco contested nor sought the nullification of said agreements,
more particularly the PCA who is always provided legal advice in
said transactions by the Government corporate counsel, and a battery
of lawyers and presumably the COA auditor assigned to said agency.
A government agency, like the PCA, stoops down to level of an
ordinary citizen when it enters into a private transaction with private
individuals. In this setting, PCA is bound by the law on contracts
and is bound to comply with the terms of the PCA-Cojuangco
Agreement which is the law between the parties. With the silence of
PCA not to challenge the validity of the PCA-Cojuangco Agreement
and the inability of government to demonstrate the lack of ample
consideration in the transaction, the Court is left with no other
choice but to uphold the validity of said agreements.
While consideration is usually in the form of money or property,
it need not be monetary. This is clear from Article 1350 which reads:
Art. 1350. In onerous contracts the cause is understood to be, for each

contracting party, the prestation or promise of a thing
523
VOL. 686, NOVEMBER 27, 2012 523

or service by the other; in remuneratory ones, the service or benefit which

is remunerated; and in contracts of pure beneficence, the mere liability of
the benefactor. (Emphasis supplied.)
Gabriel v. Monte de Piedad y Caja de Ahorros52 tells us of the

meaning of consideration:
x x x A consideration, in the legal sense of the word, is some right,

interest, benefit, or advantage conferred upon the promisor, to which he is
otherwise not lawfully entitled, or any detriment, prejudice, loss, or
disadvantage suffered or undertaken by the promisee other than to such as
he is at the time of consent bound to suffer. (Emphasis Ours.)
The Court rules that the transfer of the subject UCPB shares is
clearly supported by valuable consideration.
To justify the nullification of the PCA-Cojuangco Agreement, the
Sandiganbayan centered on the alleged imaginary option claimed by
petitioner to buy the FUB shares from the Pedro Cojuangco group. It
relied on the phrase “in behalf of certain other buyers” mentioned in
the PC-ECJ Agreement as basis for the finding that petitioner’s
option is neither personal nor exclusive. The pertinent portion of

said agreement reads:
EDUARDO COJUANGCO, JR., Filipino, of legal age and with

residence at 136 9th Street corner Balete Drive, Quezon City, represented in
this act by his duly authorized attorney-in-fact, EDGARDO J. ANGARA,
for and in his own behalf and in behalf of certain other buyers,
(hereinafter collectively called the “BUYERS”); x x x.
A plain reading of the aforequoted description of petitioner as a

party to the PC-ECJ Agreement reveals that petitioner is not only the
buyer. He is the named buyer and there are other buyers who were
unnamed. This is clear from the word
_______________
52 71 Phil. 497, 501 (1941).
524

“BUYERS.” If petitioner is the only buyer, then his description as a

party to the sale would only be “BUYER.” It may be true that
petitioner intended to include other buyers. The fact remains,
however, that the identities of the unnamed buyers were not revealed
up to the present day. While one can conjure or speculate that PCA
may be one of the buyers, the fact that PCA entered into an
agreement to purchase the FUB shares with petitioner militates
against such conjecture since there would be no need at all to enter
into the second agreement if PCA was already a buyer of the shares
in the first contract. It is only the parties to the PC-ECJ Agreement
that can plausibly shed light on the import of the phrase “certain
other buyers” but, unfortunately, petitioner was no longer allowed to
testify on the matter and was precluded from explaining the
transactions because of the motion for partial summary judgment
and the eventual promulgation of the July 11, 2003 Partial Summary
Judgment.
Even if conceding for the sake of argument that PCA is one of
the buyers of the FUB shares in the PC-ECJ Agreement, still it does
not necessarily follow that petitioner had no option to buy said
shares from the group of Pedro Cojuangco. In fact, the very
execution of the first agreement undeniably shows that he had the
rights or option to buy said shares from the Pedro Cojuangco group.
Otherwise, the PC-ECJ Agreement could not have been
consummated and enforced. The conclusion is incontestable that
petitioner indeed had the right or option to buy the FUB shares as
buttressed by the execution and enforcement of the very document
itself.
We can opt to treat the PC-ECJ Agreement as a totally separate
agreement from the PCA-Cojuangco Agreement but it will not
detract from the fact that petitioner actually acquired the rights to the
ownership of the FUB shares from the Pedro Cojuangco group. The
consequence is he can legally sell the shares to PCA. In this
scenario, he would resell the shares to PCA for a profit and PCA
would still end up paying a higher price for the FUB shares. The
“profit” that will accrue
525
VOL. 686, NOVEMBER 27, 2012 525

to petitioner may just be equal to the value of the shares that were
given to petitioner as commission. Still we can only speculate as to
the true intentions of the parties. Without any evidence adduced on
this issue, the Court will not venture on any unproven conclusion or
finding which should be avoided in judicial adjudication.
The anti-graft court also inferred from the date of execution of
the special power of attorney in favor of now Senator Edgardo J.
Angara, which is May 25, 1975, that the PC-ECJ Agreement appears
to have been executed on the same day as the PCA-Cojuangco
Agreement (dated May 25, 1975). The coincidence on the dates
casts “doubts as to the existence of defendant Cojuangco’s prior
‘personal and exclusive’ option to the FUB shares.”
The fact that the execution of the SPA and the PCA-Cojuangco
Agreement occurred sequentially on the same day cannot, without
more, be the basis for the conclusion as to the non-existence of the
option of petitioner. Such conjecture cannot prevail over the fact that
without petitioner Cojuangco, none of the two agreements in
question would have been executed and implemented and the FUB
shares could not have been successfully conveyed to PCA.
Again, only the parties can explain the reasons behind the
execution of the two agreements and the SPA on the same day. They
were, however, precluded from elucidating the reasons behind such
occurrence. In the absence of such illuminating proof, the
proposition that the option does not exist has no leg to stand on.
More importantly, the fact that the PC-ECJ Agreement was
executed not earlier than May 25, 1975 proves that petitioner
Cojuangco had an option to buy the FUB shares prior to that date.
Again, it must be emphasized that from its terms, the first
Agreement did not create the option. It, however, proved the
exercise of the option by petitioner.
526

The execution of the PC-ECJ Agreement on the same day as the

PCA-Cojuangco Agreement more than satisfies paragraph 2 thereof
which requires petitioner to exercise his option to purchase the FUB
shares as promptly as practicable after, and not before, the
execution of the second agreement, thus:
2. As promptly as practicable after execution of this Agreement,

the SELLER shall exercise his option to acquire the Option Shares and
SELLER shall immediately thereafter deliver and turn over to the Escrow
Agent such stock certificates as are herein provided to be received from the
existing stockholders of the bank by virtue of the exercise on the
aforementioned option. The Escrow Agent shall thereupon issue its check in
favor of the SELLER covering the purchase price for the shares delivered.
The Sandiganbayan viewed the compensation of petitioner of

14,400 FUB shares as exorbitant. In the absence of proof to the
contrary and considering the absence of any complaint of illegality
or fraud from any of the contracting parties, then the presumption
that “private transactions have been fair and regular”53 must apply.
Lastly, respondent interjects the thesis that PCA could not validly
enter into a bank management agreement with petitioner since PCA
has a personality separate and distinct from that of FUB. Evidently,
it is PCA which has the right to challenge the stipulations on the
management contract as unenforceable. However, PCA chose not to
assail said stipulations and instead even complied with and
implemented its prestations contained in said stipulations by
installing petitioner as Chairman of UCPB. Thus, PCA has waived
and forfeited its right to nullify said stipulations and is now estopped
from questioning the same.
_______________
53 R C , Rule 131(p).
527
VOL. 686, NOVEMBER 27, 2012 527

In view of the foregoing, the Court is left with no option but to

uphold the validity of the two agreements in question.
IV
COJUANGCO IS NOT ENTITLED TO THE UCPB SHARES
WHICH WERE BOUGHT WITH PUBLIC FUNDS AND
HENCE, ARE PUBLIC PROPERTY.
The coconut levy funds were exacted
for a special public purpose. Conse-
quently, any use or transfer of the
funds that directly benefits private
individuals should be invalidated.
The issue of whether or not taxpayers’ money, or funds and
property acquired through the imposition of taxes may be used to
benefit a private individual is once again posed. Preliminarily, the
instant case inquires whether the coconut levy funds, and
accordingly, the UCPB shares acquired using the coconut levy funds
are public funds. Indeed, the very same issue took center stage,
discussed and was directly addressed in COCOFED v. Republic.
And there is hardly any question about the subject funds’ public and
special character. The following excerpts from COCOFED v.
Republic,54 citing Republic v. COCOFED and related cases, settle
once and for all this core, determinative issue:
Indeed, We have hitherto discussed, the coconut levy was imposed in the
exercise of the State’s inherent power of taxation. As We wrote in Republic
v. COCOFED:
Indeed, coconut levy funds partake of the nature of taxes,
which, in general, are enforced proportional contribu-
_______________
514; citing Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001, 372 SCRA 462,
482-484.
528

tions from persons and properties, exacted by the State by virtue of

its sovereignty for the support of government and for all public
needs.
Based on its definition, a tax has three elements, namely: a) it is
an enforced proportional contribution from persons and properties; b)
it is imposed by the State by virtue of its sovereignty; and c) it is
levied for the support of the government. The coconut levy funds fall
squarely into these elements for the following reasons:
(a) They were generated by virtue of statutory enactments
imposed on the coconut farmers requiring the payment of prescribed
amounts. Thus, PD No. 276, which created the … (CCSF), mandated
the following:
“a. A levy, initially, of P15.00 per 100 kilograms of
copra resecada or its equivalent in other coconut products,
shall be imposed on every first sale, in accordance with the
mechanics established under RA 6260, effective at the start of
business hours on August 10, 1973.
“The proceeds from the levy shall be deposited with the
Philippine National Bank or any other government bank to the
account of the Coconut Consumers Stabilization Fund, as a
separate trust fund which shall not form part of the general
fund of the government.”
The coco levies were further clarified in amendatory laws,
specifically PD No. 961 and PD No. 1468―in this wise:
“The Authority (PCA) is hereby empowered to impose and
collect a levy, to be known as the Coconut Consumers
Stabilization Fund Levy, on every one hundred kilos of copra
resecada, or its equivalent … delivered to, and/or purchased
by, copra exporters, oil millers, desiccators and other end-
users of copra or its equivalent in other coconut products. The
levy shall be paid by such copra exporters, oil millers,
desiccators and other end-users of copra or its equivalent
in other coconut products under such rules and regulations
as the Authority may prescribe. Until otherwise prescribed by
the Authority, the current levy being collected shall be
continued.”
529
VOL. 686, NOVEMBER 27, 2012 529

Like other tax measures, they were not voluntary payments or

donations by the people. They were enforced contributions exacted
on pain of penal sanctions, as provided under PD No. 276:
“3. Any person or firm who violates any provision of this

Decree or the rules and regulations promulgated thereunder,
shall, in addition to penalties already prescribed under existing
administrative and special law, pay a fine of not less than
P2,500 or more than P10,000, or suffer cancellation of
licenses to operate, or both, at the discretion of the Court.”
Such penalties were later amended thus: ….
(b) The coconut levies were imposed pursuant to the laws
enacted by the proper legislative authorities of the State. Indeed, the
CCSF was collected under PD No. 276, ….”
(c) They were clearly imposed for a public purpose. There is
absolutely no question that they were collected to advance the
government’s avowed policy of protecting the coconut industry.
This Court takes judicial notice of the fact that the coconut industry
is one of the great economic pillars of our nation, and coconuts and
their byproducts occupy a leading position among the country’s
export products; ….
Taxation is done not merely to raise revenues to support the
government, but also to provide means for the rehabilitation and
the stabilization of a threatened industry, which is so affected with
public interest as to be within the police power of the State ….
Even if the money is allocated for a special purpose and raised
by special means, it is still public in character…. In Cocofed v.
PCGG, the Court observed that certain agencies or enterprises “were
organized and financed with revenues derived from coconut levies
imposed under a succession of law of the late dictatorship … with
deposed Ferdinand Marcos and his cronies as the suspected authors
and chief beneficiaries of the resulting coconut industry monopoly.”
The Court continued: “…. It cannot be denied that the coconut
industry is one of the major industries supporting the national
530

economy. It is, therefore, the State’s concern to make it a strong and

secure source not only of the livelihood of a significant segment of
the population, but also of export earnings the sustained growth of
which is one of the imperatives of economic stability. (Emphasis
Ours.)
The following parallel doctrinal lines from Pambansang

Koalisyon ng mga Samahang Magsasaka at Manggagawa sa
Niyugan (PKSMMN) v. Executive Secretary55 came next:
The Court was satisfied that the coco-levy funds were raised pursuant to
law to support a proper governmental purpose. They were raised with the
use of the police and taxing powers of the State for the benefit of the
coconut industry and its farmers in general. The COA reviewed the use of
the funds. The Bureau of Internal Revenue (BIR) treated them as public
funds and the very laws governing coconut levies recognize their public
character.
The Court has also recently declared that the coco-levy funds are in the
nature of taxes and can only be used for public purpose. Taxes are enforced
proportional contributions from persons and property, levied by the State by
virtue of its sovereignty for the support of the government and for all its
public needs. Here, the coco-levy funds were imposed pursuant to law,
namely, R.A. 6260 and P.D. 276. The funds were collected and managed by
the PCA, an independent government corporation directly under the
President. And, as the respondent public officials pointed out, the pertinent
laws used the term levy, which means to tax, in describing the exaction.
Of course, unlike ordinary revenue laws, R.A. 6260 and P.D. 276 did not
raise money to boost the government’s general funds but to provide means
for the rehabilitation and stabilization of a threatened industry, the coconut
industry, which is so affected with public interest as to be within the police
power of the State. The funds sought to support the coconut industry, one of
the main economic backbones of the country, and to secure economic
benefits for the coconut farmers and far workers. The subject laws are akin
to the
_______________
55 G.R. Nos. 147036-37 & 147811, April 10, 2012, 669 SCRA 49.
531
VOL. 686, NOVEMBER 27, 2012 531

sugar liens imposed by Sec. 7(b) of P.D. 388, and the oil price stabilization
funds under P.D. 1956, as amended by E.O. 137.
From the foregoing, it is at once apparent that any property

acquired by means of the coconut levy funds, such as the subject
UCPB shares, should be treated as public funds or public property,
subject to the burdens and restrictions attached by law to such
property. COCOFED v. Republic, delved into such limitations,
thusly:
We have ruled time and again that taxes are imposed only for a
public purpose. “They cannot be used for purely private purposes or
for the exclusive benefit of private persons.” When a law imposes taxes
or levies from the public, with the intent to give undue benefit or
advantage to private persons, or the promotion of private enterprises,
that law cannot be said to satisfy the requirement of public purpose. In
Gaston v. Republic Planters Bank, the petitioning sugar producers,
sugarcane planters and millers sought the distribution of the shares of stock
of the Republic Planters Bank (RPB), alleging that they are the true
beneficial owners thereof. In that case, the investment, i.e., the purchase of
RPB, was funded by the deduction of PhP 1.00 per picul from the sugar
proceeds of the sugar producers pursuant to P.D. No. 388. In ruling against
the petitioners, the Court held that to rule in their favor would contravene
the general principle that revenues received from the imposition of taxes or
levies “cannot be used for purely private purposes or for the exclusive
benefit of private persons.” The Court amply reasoned that the sugar
stabilization fund is to “be utilized for the benefit of the entire sugar
industry, and all its components, stabilization of the domestic market
including foreign market, the industry being of vital importance to the
country’s economy and to national interest.”
Similarly in this case, the coconut levy funds were sourced from forced
exactions decreed under P.D. Nos. 232, 276 and 582, among others, with the
end-goal of developing the entire coconut industry. Clearly, to hold
therefore, even by law, that the revenues received from the imposition
of the coconut levies be used purely for private purposes to be owned by

private individuals in their private capacity and for their benefit,
532

would contravene the rationale behind the imposition of taxes or levies.

Needless to stress, courts do not, as they cannot, allow by judicial fiat
the conversion of special funds into a private fund for the benefit of
private individuals. In the same vein, We cannot subscribe to the idea of
what appears to be an indirect―if not exactly direct―conversion of
special funds into private funds, i.e., by using special funds to purchase
shares of stocks, which in turn would be distributed for free to private
individuals. Even if these private individuals belong to, or are a part of
the coconut industry, the free distribution of shares of stocks purchased
with special public funds to them, nevertheless cannot be justified. The
ratio in Gaston, as articulated below, applies mutatis mutandis to this case:
The stabilization fees in question are levied by the State … for a
special purpose―that of “financing the growth and development of
the sugar industry and all its components, stabilization of the
domestic market including the foreign market.” The fact that the
State has taken possession of moneys pursuant to law is sufficient
to constitute them as state funds even though they are held for a
special purpose….
That the fees were collected from sugar producers [etc.], and
that the funds were channeled to the purchase of shares of stock in
respondent Bank do not convert the funds into a trust fund for their
benefit nor make them the beneficial owners of the shares so
purchased. It is but rational that the fees be collected from them
since it is also they who are benefited from the expenditure of the
funds derived from it. …. 56
In this case, the coconut levy funds were being exacted from copra
exporters, oil millers, desiccators and other end-users of copra
_______________
514; citing Gaston v. Republic Planters Bank, No. L-77194, March 15, 1988, 158 SCRA 626,
633-34; see also Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001, 372
SCRA 462, 485-486.
533
VOL. 686, NOVEMBER 27, 2012 533

or its equivalent in other coconut products.57 Likewise so, the funds here
were channeled to the purchase of the shares of stock in UCPB. Drawing a
clear parallelism between Gaston and this case, the fact that the coconut
levy funds were collected from the persons or entities in the coconut
industry, among others, does not and cannot entitle them to be beneficial
owners of the subject funds―or more bluntly, owners thereof in their
private capacity. Parenthetically, the said private individuals cannot own
the UCPB shares of stocks so purchased using the said special funds of
the government.58 (Emphasis Ours.)
As the coconut levy funds partake of the nature of taxes and can
only be used for public purpose, and importantly, for the purpose for
which it was exacted, i.e., the development, rehabilitation and
benefit―whether directly or indirectly―private individuals, be it by
way of a commission, or as the subject Agreement interestingly
words it, compensation. Consequently, Cojuangco cannot stand to
benefit by receiving, in his private capacity, 7.22% of the FUB
shares without violating the constitutional caveat that public funds
can only be used for public purpose. Accordingly, the 7.22% FUB
(UCPB) shares that were given to Cojuangco shall be returned to the
Government, to be used “only for the benefit of all coconut farmers
and for the development of the coconut industry.”59
The ensuing are the underlying rationale for declaring, as
unconstitutional, provisions that convert public property into private
funds to be used ultimately for personal benefit:
_______________
57 Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001, 372 SCRA
462, 483; citing P.D. No. 961, 1976, Art. III, Sec. 1; P.D. No. 1468, 1978, Art. III,
Sec. 1.
663 SCRA 514.
59 Id.
534

… not only were the laws unconstitutional for decreeing the distribution of
the shares of stock for free to the coconut farmers and therefore negating the
public purposed declared by P.D. No. 276, i.e., to stabilize the price of
edible oil and to protect the coconut industry. They likewise reclassified the
coconut levy fund as private fund, to be owned by private individuals in
their private capacities, contrary to the original purpose for the creation of
such fund. To compound the situation, the offending provisions effectively
removed the coconut levy fund away from the cavil of public funds which
normally can be paid out only pursuant to an appropriation made by law.
The conversion of public funds into private assets was illegally allowed, in
fact mandated, by these provisions. Clearly therefore, the pertinent
provisions of P.D. Nos. 755, 961 and 1468 are unconstitutional for violating
Article VI, Section 29 (3) of the Constitution. In this context, the
distribution by PCA of the UCPB shares purchased by means of the coconut
levy fund―a special fund of the government―to the coconut farmers is,
therefore, void.60
It is precisely for the foregoing that impels the Court to strike

down as unconstitutional the provisions of the PCA-Cojuangco
Agreement that allow petitioner Cojuangco to personally and
exclusively own public funds or property, the disbursement of which
We so greatly protect if only to give light and meaning to the
mandates of the Constitution.
As heretofore amply discussed, taxes are imposed only for a
public purpose.61 They must, therefore, be used for the benefit of the
public and not for the exclusive profit or gain of private persons.62
Otherwise, grave injustice is inflicted not only upon the Government

but most especially upon the citizenry―the taxpayers―to whom We
owe a great deal of accountability.
In this case, out of the 72.2% FUB (now UCPB) shares of stocks
PCA purchased using the coconut levy funds, the May 25, 1975
Agreement between the PCA and Cojuangco pro-
_______________
60 Id.
61 Id.; citing Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007, 512
SCRA 25.
62 Id.
535
VOL. 686, NOVEMBER 27, 2012 535

vided for the transfer to the latter, by way of compensation, of 10%

of the shares subject of the agreement, or a total of 7.22% fully paid
shares. In sum, Cojuangco received public assets―in the form of
FUB (UCPB) shares with a value then of ten million eight hundred
eighty-six thousand pesos (PhP 10,886,000) in 1975, paid by
coconut levy funds. In effect, Cojuangco received the
aforementioned asset as a result of the PCA-Cojuangco Agreement,
and exclusively benefited himself by owning property acquired
using solely public funds. Cojuangco, no less, admitted that the PCA
paid, out of the CCSF, the entire acquisition price for the 72.2%
option shares.63 This is in clear violation of the prohibition, which
the Court seeks to uphold.
_______________
63 Republic v. COCOFED, G.R. Nos. 147062-64, Dec. 14, 2001, 372 SCRA 462,
477.
In the present case before the Court, it is not disputed that the money used to
purchase the sequestered UCPB shares came from the Coconut Consumer
Stabilization Fund (CCSF), otherwise known, as the coconut levy funds.
This fact was plainly admitted by private respondent’s counsel, Atty. Teresita J.
Hebosa, during the Oral Arguments held on April 17, 2001 in Baguio City, as
follows:
“Justice Panganiban:
“In regard to the theory of the Solicitor General that the funds used to purchase
[both] the original 28 million and the subsequent 80 million came from the CCSF,
Coconut Consumers Stabilization Fund, do you agree with that?
“Atty. Herbosa:
“Yes, Your Honor.
… … …
“Justice Panganiban:
“So it seems that the parties [have] agreed up to that point that the funds used to
purchase 72% of the former First United Bank came from the Coconut Consumer
Stabilization Fund?
“Atty. Herbosa:
“Yes, Your Honor.”
536

We, therefore, affirm, on this ground, the decision of the

Sandiganbayan nullifying the shares of stock transfer to Cojuangco.
Accordingly, the UCPB shares of stock representing the 7.22% fully
paid shares subject of the instant petition, with all dividends
declared, paid or issued thereon, as well as any increments thereto
arising from, but not limited to, the exercise of pre-emptive rights,
shall be reconveyed to the Government of the Republic of the
Philippines, which as We previously clarified, shall “be used only
for the benefit of all coconut farmers and for the development of the
coconut industry.”64
But apart from the stipulation in the PCA-Cojuangco Agreement,
more specifically paragraph 4 in relation to paragraph 6 thereof,
providing for the transfer to Cojuangco for the UCPB shares
adverted to immediately above, other provisions are valid and shall
be enforced, or shall be respected, if the corresponding prestation
had already been performed. Invalid stipulations that are
independent of, and divisible from, the rest of the agreement and
which can easily be separated therefrom without doing violence to
the manifest intention of the contracting minds do not nullify the
entire contract.65
WHEREFORE, Part C of the appealed Partial Summary
Judgment in Sandiganbayan Civil Case No. 0033-A is AFFIRMED
with modification. As MODIFIED, the dispositive
_______________
FN40. Transcript of Oral Arguments, April 17, 2001, pp. 171, 173. During the
same Oral Argument, Private Respondent Cojuangco similarly admitted that the
“entire amount” paid for the shares had come from the Philippine Coconut Authority.
TSN,
p. 115.
663 SCRA 514.
65 C C , Art. 1420 specifically provides, “[I]n case of a divisible contract,
if the illegal terms can be separated from the legal ones, the latter may be enforced.”
537
VOL. 686, NOVEMBER 27, 2012 537

portion in Part C of the Sandiganbayan’s Partial Summary Judgment

in Civil Case No. 0033-A, shall read as follows:
C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO
M. COJUANGCO, JR.) dated September 18, 2002 filed by Plaintiff.
1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA
and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 nor did
it give the Agreement the binding force of a law because of the non-
publication of the said Agreement.
2. The Agreement between PCA and defendant Eduardo M. Cojuangco,
Jr. dated May 25, 1975 is a valid contract for having the requisite
consideration under Article 1318 of the Civil Code.
3. The transfer by PCA to defendant Eduardo M. Cojuangco, Jr. of 14,400

shares of stock of FUB (later UCPB) from the “Option Shares” and
the additional FUB shares subscribed and paid by PCA, consisting of
a. Fifteen Thousand Eight Hundred Eighty-Four (15,884) shares
out of the authorized but unissued shares of the bank,
subscribed and paid by PCA;
b. Sixty Four Thousand Nine Hundred Eighty (64,980) shares of
the increased capital stock subscribed and paid by PCA; and
c. Stock dividends declared pursuant to paragraph 5 and
paragraph 11 (iv) (d) of the PCA-Cojuangco Agreement
dated May 25, 1975 or the so-called “Cojuangco-UCPB
shares”
is declared unconstitutional, hence null and void.
4. The above-mentioned shares of stock of the FUB/UCPB transferred to
defendant Cojuangco are hereby declared conclusively owned by the
Republic of the Philippines to be used only for the benefit of all
coconut farmers and for the development of the
538

coconut industry, and ordered reconveyed to the Government.

5. The UCPB shares of stock of the alleged fronts, nominees and dummies
of defendant Eduardo M. Cojuangco, Jr. which form part of the 72.2%
shares of the FUB/UCPB paid for by the PCA with public funds later
charged to the coconut levy funds, particularly the CCSF, belong to
the plaintiff Republic of the Philippines as their true and beneficial
owner.
Accordingly, the instant petition is hereby DENIED.

Costs against petitioner Cojuangco.
SO ORDERED.
Sereno (C.J.), Bersamin, Del Castillo, Abad, Villarama, Jr.,

Perez, Mendoza and Leonen, JJ., concur.
Carpio, Leonardo-De Castro and Peralta, JJ., No part.
Brion, Reyes and Perlas-Bernabe, JJ., On leave.
Petition denied.
Notes.―The Court cannot reverse the decision of the

Sandiganbayan on the basis alone of judicial pronouncements to the
effect that the coconut levy funds were prima facie public funds, but
without any competent evidence linking the acquisition of the block
of San Miguel Corporation (SMC) shares by Cojuangco, et al. to the
coconut levy funds. (Republic vs. Sandiganbayan [First Division],
648 SCRA 47 [2011])
The coconut levy funds were sourced from forced exactions
decreed under P.D. Nos. 232, 276 and 582, among others, with the
end-goal of developing the entire coconut industry. (Philippine
Coconut Producers Federation, Inc. [COCOFED] vs. Republic, 663
SCRA 514 [2012])
――o0o――
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Cojuangco, Jr. vs. Republic G.R. No. 180705. November 27, 2012

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7/14/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 686

G.R. No. 180705. November 27, 2012.*

EDUARDO M. COJUANGCO, JR., petitioner, vs. REPUBLIC OF

Remedial Law; Civil Procedure; Jurisdiction; Subject matter

VOL. 686, NOVEMBER 27, 2012 473

Cojuangco, Jr. vs. Republic

legislative powers whenever the same are validly delegated by the

474 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

VOL. 686, NOVEMBER 27, 2012 475

Cojuangco, Jr. vs. Republic

Cojuangco shall be returned to the Government, to be used “only for the

PETITION for review on certiorari of the partial summary decision

476 SUPREME COURT REPORTS ANNOTATED

Angara, Abello, Concepcion, Regala and Cruz for COCOFED,

Of the several coconut levy appealed cases that stemmed from

VOL. 686, NOVEMBER 27, 2012 477

only the alleged participants in the transaction/s subject of the suit,

478 SUPREME COURT REPORTS ANNOTATED

VOL. 686, NOVEMBER 27, 2012 479

More specifically, We upheld the Sandiganbayan’s ruling thatA

480 SUPREME COURT REPORTS ANNOTATED

Government. Consequently, We affirmed the Sandiganbayan’s

VOL. 686, NOVEMBER 27, 2012 481

(“P.D.”) 755, Section 3, Article III of P.D. 961 and Section 3,

4. Arc Investors; Inc.;

482 SUPREME COURT REPORTS ANNOTATED

Article III of P.D. 1468, as well as the pertinent implementing

petitioner for exercising his personal and exclusive option to acquire

VOL. 686, NOVEMBER 27, 2012 483

484 SUPREME COURT REPORTS ANNOTATED

It is hereby declared that the policy of the State is to provide readily

VOL. 686, NOVEMBER 27, 2012 485

a) The coconut farmers shall own or control at least … (50%) of

486 SUPREME COURT REPORTS ANNOTATED

And per Cojuangco’s own admission, PCA paid, out of the

VOL. 686, NOVEMBER 27, 2012 487

As of June 30, 1975, the list of FUB stockholders included

Shortly after the execution of the PCA―Cojuangco Agreement, President

488 SUPREME COURT REPORTS ANNOTATED

VOL. 686, NOVEMBER 27, 2012 489

Right after it filed the Motion for Partial Summary Judgment

Following an exchange of pleadings, the Republic filed its

A joint hearing on the separate motions for summary judgment to

490 SUPREME COURT REPORTS ANNOTATED

then ensued. By Order of March 11, 2003, the Sandiganbayan detailed,

October 10, 2002 of defendant Eduardo M. Cojuangco, Jr. to the

VOL. 686, NOVEMBER 27, 2012 491

492 SUPREME COURT REPORTS ANNOTATED

3. Delivery of, and payment for, stock certificates

deliver to the SELLERS P27,511,295.50 representing the

VOL. 686, NOVEMBER 27, 2012 493

IN WITNESS WHEREOF, the parties hereto have hereunto set their

PEDRO COJUANGCO EDUARDO

494 SUPREME COURT REPORTS ANNOTATED

WHEREAS, the SELLER has the exclusive and personal option

shall receive compensation for exercising his personal and exclusive

VOL. 686, NOVEMBER 27, 2012 495

ties hereunder, the parties hereby appoint the Philippine National

496 SUPREME COURT REPORTS ANNOTATED

such shares to the coconut farmers, as well as for performing the

VOL. 686, NOVEMBER 27, 2012 497

manner: upon receipt of advice that the BUYER has

for the Bank of making available for loans at preferential rates of