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COCOFED v REPUBLIC

Conjuanco claim as his exclusive and personal

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/

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