Professional Documents
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Cojuangco, Jr. vs. Republic G.R. No. 180705. November 27, 2012
Cojuangco, Jr. vs. Republic G.R. No. 180705. November 27, 2012
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* EN BANC.
473
date is fixed by the legislature. Covered by this rule are presidential decrees
and executive orders promulgated by the President in the exercise of
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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
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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,
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
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. 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
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476
VELASCO, JR., J.:
The Case
477
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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-
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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
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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
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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
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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-
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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),
481
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AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
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482
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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.
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.
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484
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:
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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
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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.
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13 Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001, 372 SCRA
462, 477.
487
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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.
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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
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18 Reported in 372 SCRA 462 (2001).
489
c. That COCOFED, et al., and Ballares, et al. have not legally and validly
obtained title over the subject UCPB shares.
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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
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19 Rollo (G.R. Nos. 177857-58), pp. 830-871.
20 G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA 514.
490
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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
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493
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;
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– 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
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495
496
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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.
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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
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.
16. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit
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;
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502
_______________
21 PSJ-A, pp. 15, 54-55, 80-83; Rollo, pp. 193, 231-232, 257-60.
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503
_______________
22 PSJ-A, pp. 15, 54-55, 80-83; Rollo, pp. 193, 231-32, 257-60.
23 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
663 SCRA 514.
504
The Issues
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_______________
24 Rollo, pp. 361-400.
25 Id., at pp. 42-43.
26 Id.
505
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.
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CC No. 0033-A
_______________
27 1 Regalado, R L C 11 (6th revised ed., 1997).
506
507
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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
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
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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;
_______________
29 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
663 SCRA 514.
30 Id.; citing San Miguel Corporation v. Sandiganbayan, G.R. Nos. 104637-38,
September 14, 2000, 340 SCRA 289.
509
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510
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
“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,
office,
511
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
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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
_______________
31 Id.; citing Yuchengco v. Sandiganbayan, G.R. No. 149802, January 20, 2006,
479 SCRA 1.
32 Id.
512
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_______________
33 Id.
34 Id.
35 Rollo, pp. 956-961.
36 The date of the agreement was left blank.
513
_______________
37 No. L-63915, December 29, 1986, 146 SCRA 446, 452-454.
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514
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
_______________
38 Id.
39 Id.
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
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III
THE PCA-COJUANGCO AGREEMENT IS A VALID
CONTRACT FOR HAVING THE REQUISITE
CONSIDERATION.
_______________
40 Id.
41 PSJ-A, p. 74; Rollo, p. 251.
516
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
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_______________
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
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
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Cojuangco, Jr. vs. Republic
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.)
_______________
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
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
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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.)
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521
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
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523
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
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_______________
52 71 Phil. 497, 501 (1941).
524
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would still end up paying a higher price for the FUB shares. The
“profit” that will accrue
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
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aforementioned option. The Escrow Agent shall thereupon issue its check in
favor of the SELLER covering the purchase price for the shares delivered.
(Emphasis supplied.)
_______________
53 R C , Rule 131(p).
527
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-
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_______________
54 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA
514; citing Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001, 372 SCRA 462,
482-484.
528
529
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530
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
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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
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.
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
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532
_______________
56 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA
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
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.)
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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. 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.
58 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
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
_______________
60 Id.
61 Id.; citing Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007, 512
SCRA 25.
62 Id.
535
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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
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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.
64 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
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
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538
Petition denied.
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