ISSUE WON the coco levy fund may be owned by the coconut 9)
farmers in their private capacities
amount for the purchase of the said 72.2% equity. It
FACTS 1)
later reimbursed itself from the coconut levy fund.
10) While the 64.98% (72.2 % 7.22%) portion of the
In 1971, RA 6260 created the Coconut Investment
Company
(CIC)
to
administer
the
Coconut
option shares ostensibly pertained to the farmers,
Investment Fund, a fund to be sourced from levy
the corresponding stock certificates supposedly
on the sale of copra. The copra seller was, or ought
representing the farmers equity were in the name
to be, issued COCOFUND receipts. The fund was
of and delivered to PCA. There were, however,
placed at the disposition of COCOFED, the
2)
3)
4)
5)
national association of coconut producers having
shares forming part of the 64.98% portion, which
the largest membership.
When martial law started
several
remaining 27.8% of the FUB capital stock were not
presidential decrees were issued to improve the
coconut industry through the collection and use of
covered by any of the agreements.
11) Through the years, a part of the coconut levy funds
the coconut levy fund:
PD 276 established the Coconut Consumers
went directly or indirectly to various projects
and/or was converted into different assets or
Stabilization Fund (CCSF) and declared the
investments. Of particular relevance to this was
proceeds of the CCSF levy as trust fund, to be
their use to acquire the FUB / UCPB, and the
utilized to subsidize the sale of coconut-based
acquisition by UCPB, through the CIIF and holding
products, thus stabilizing the price of edible oil.
PD 582 created the Coconut Industry Development
companies, of a large block of San Miguel
in
1972,
ended up in the hands of non-farmers. The
Corporation (SMC) shares.
Fund (CIDF) to finance the operation of a hybrid
DECISION
coconut seed farm.
In 1973, PD 232 created the Philippine Coconut
NO
Authority (PCA) to accelerate the growth and
6)
development of the coconut and palm oil industry.
Then came P.D. No. 755 in July 1975, providing
cannot be used to purchase shares of stocks to be
given for free to private individuals. Even if the money is allocated for a special purpose and raised
available credit facilities to the coconut farmers at
preferential rates. Towards achieving this, Section 2 of PD 755 authorized PCA to utilize the CCSF and
shares of stock of the bank it acquired to the
and deposit the CCSF levy collections in said bank,
coconut farmers under such rules and regulations
interest free, the deposit withdrawable only when
-
the PCA may promulgate is unconstitutional.
It is unconstitutional because first, it have unduly
in its equity capital. It also decreed that all levies
delegated legislative power to the PCA, and
PCA is authorized to collect shall not be considered
second, it allowed the use of the CCSF to benefit
as special and/or fiduciary funds or form part of
directly private interest by the outright and
the general funds of the government.
Both P.D. Nos. 961 and 1468 also provide that the
unconditional grant of absolute ownership of the
CCSF shall not be construed by any law as a special
the CCSF to the undefined coconut farmers,
FUB/UCPB shares paid for by PCA entirely with
and/or trust fund, the stated intention being that
which negated or circumvented the national policy
actual ownership of the said fund shall pertain to
8)
by special means, it is still public in character.
Accordingly, the presidential issuances which authorized the PCA to distribute, for free, the
the CIDF collections to acquire a commercial bank
the bank has attained a certain level of sufficiency
The coconut levy funds are in the nature of taxes
and can only be used for public purpose. They
under its Section 1 the policy to provide readily
7)
option to buy the FUB shares.
The PCA appropriated, out of its own fund, an
coconut farmers in their private capacities.
Shortly before the issuance of PD 755 however, PCA had already bought from Peping Cojuangco 72.2% of the outstanding capital stock of FUB / UCPB. In that contract, it was also stipulated that Danding Cojuanco shall receive equity in FUB amounting to 10%, or 7.22 % of the 72.2%, as consideration for PCAs buy-out of what Danding
or public purpose declared by P.D. No. 755.
Hence, the so-called Farmers shares do not belong
to the coconut farmers in their private capacities, but to the Government. The coconut levy funds are special public funds and any property purchased by means of the coconut levy funds should likewise be treated as public funds or public property, subject to burdens and restrictions attached by law to such property. ##
Digest retrieved from http://barexamphil.com/gr-177857-58-cocofed/