Phil Coconut V Republic

8/22/2015 G.R. Nos.
177857-58
RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

PHILIPPINECOCONUTG.R.Nos.17785758
,PRODUCERSFEDERATION,INC.
(COCOFED),MANUELV.DEL
ROSARIO,DOMINGOP.ESPINA,
SALVADORP.BALLARES,
JOSELITOA.MORALEDA,
PAZM.YASON,
VICENTEA.CADIZ,
CESARIADELUNATITULAR,and
RAYMUNDOC.DEVILLA,
Petitioners,

versus

REPUBLICOFTHEPHILIPPINES,
Respondent,

WIGBERTOE.TAADA,
OSCARF.SANTOS,
SURIGAODELSURFEDERATION
OFAGRICULTURAL
COOPERATIVES(SUFAC)and
MOROFARMERSASSOCIATION
OFZAMBOANGADELSUR
(MOFAZS),representedby
ROMEOC.ROYANDOYAN,
Intervenors.
xx
DANILOS.URSUA,G.R.No.178193
Petitioner,

versus

REPUBLICOFTHEPHILIPPINES,
http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm 1/88
8/22/2015 G.R. Nos. 177857-58
Respondent,
xx

Present:

CORONA,C.J.,
CARPIO,*
VELASCO,JR.,
LEONARDODECASTRO,*
BRION,**
PERALTA,*
BERSAMIN,
DELCASTILLO,
ABAD,
VILLARAMA,JR.,
PEREZ,
MENDOZA,
SERENO,
REYES,and
PERLASBERNABE,JJ.

Promulgated:

January24,2012
xx

DECISION

VELASCO,JR.,J.:

TheCase

Castagainstasimilarbackdrop,theseconsolidatedpetitionsforreviewunderRule45of
theRulesofCourtassailandseektoannulcertainissuancesoftheSandiganbayaninitsCivil
8/22/2015 G.R. Nos. 177857-58
CaseNo.0033Aentitled,RepublicofthePhilippines,Plaintiff,v.EduardoM.Cojuangco,Jr.,
etal.,Defendants,COCOFED,etal.,BALLARES,etal.,ClassActionMovants,andCivilCase
No.0033Fentitled,RepublicofthePhilippines,Plaintiff,v.EduardoM.Cojuangco,Jr.,etal.,
Defendants.CivilCase(CC)Nos.0033Aand0033Faretheresultsofthesplittingintoeight
(8) amended complaints of CC No. 0033 entitled, Republic of the Philippines v. Eduardo
Cojuangco, Jr., et al., a suit for recovery of illgotten wealth commenced by the Presidential
Commission on Good Government (PCGG), for the Republic of the Philippines (Republic),
against Ferdinand E. Marcos and several individuals, among them, Ma. Clara Lobregat
(Lobregat)andpetitionerDaniloS.Ursua(Ursua).LobregatandUrsuaoccupied,atonetimeor
another, directorial or top management positions in either the Philippine Coconut Producers
[1]
Federation,Inc.(COCOFED)orthePhilippineCoconutAuthority(PCA),orboth. Each of
theeight(8)subdividedcomplaintscorrespondinglyimpleadedasdefendantsonlythealleged
participantsinthetransaction/ssubjectofthesuit,orwhoareaverredasowner/softheassets
involved.

The original complaint, CC No. 0033, as later amended to make the allegations more
[2]
specific, is described in Republic v. Sandiganbayan (one of several illgotten suits of the
sametitledisposedofbytheCourt)asrevolvingaroundtheprovisionaltakeoverbythePCGG
of COCOFED, Cocomark, and Coconut Investment Company and their assets and the
sequestrationofsharesofstockinUnitedCoconutPlantersBank(UCPB)allegedlyownedby,
among others, over a million coconut farmers, and the six (6) Coconut Industry Investment
[3]
Fund (CIIF) corporations, referred to in some pleadings as CIIF oil mills and the fourteen
[4]
(14) CIIF holding companies (hereafter collectively called CIIF companies), socalled for
havingbeeneitherorganized,acquiredand/orfundedasUCPBsubsidiarieswiththeuseofthe
CIIF levy. The basic complaint also contained allegations about the alleged misuse of the
coconut levy funds to buy out the majority of the outstanding shares of stock of San Miguel
Corporation(SMC).

More particularly, in G.R. Nos. 17785758, class action petitioners COCOFED and a
group of purported coconut farmers and COCOFED members (hereinafter COCOFED et al.
[5]
collectively) seek the reversal of the following judgments and resolutions of the antigraft
courtinsofarastheseissuancesareadversetotheirinterests:
8/22/2015 G.R. Nos. 177857-58

[6] [7]
1)PartialSummaryJudgment datedJuly11,2003,asreiteratedinaresolution of
December 28, 2004, denying COCOFEDs motion for reconsideration, and the May 11, 2007
resolution denying COCOFEDs motion to set case for trial and declaring the partial summary
[8]
judgmentfinalandappealable, allissuedinCivilCaseNo.0033Aand

[9] [10]
2)PartialSummaryJudgment datedMay7,2004,asalsoreiteratedinaresolution
[11]
ofDecember28,2004,andtheMay11,2007resolution issuedinCivil Case No. 0033F.
TheDecember 28, 2004 resolution denied COCOFEDs Class Action Omnibus Motion therein
praying to dismiss CC Case No. 0033F on jurisdictional ground and alternatively,
reconsiderationandtosetcasefortrial.TheMay11,2007resolutiondeclaredthejudgmentfinal
andappealable.

Forconvenience,thepartialsummaryjudgment(PSJ)renderedonJuly11,2003inCC
No.0033AshallhereinafterbereferredtoasPSJA,and that issued on May 7, 2004 in CC
0033F, as PSJF. PSJA and PSJF basically granted the Republics separate motions for
summaryjudgment.

OnJune5,2007,thecourtaquoissuedaResolutioninCCNo.0033A,whichmodified
PSJA by ruling that no further trial is needed on the issue of ownership of the subject
properties. Likewise, on May 11, 2007, the said court issued a Resolution in CC No. 0033F
amendingPSJFinlikemanner.
Ontheotherhand,petitionerUrsua,inG.R.No.178193,limitshispetitionforreviewon
PSJAtotheextentthatitnegateshisclaimsoversharesofstockinUCPB.

[12]
Taada,etal.haveintervened inG.R.Nos.17785758insupportofthegovernments
case.

Another petition was filed and docketed as G.R. No. 180705. It involves questions
relatingtoEduardoM.Cojuangco,Jr.s(Cojuangco,Jr.s)ownershipoftheUCPBshares,which
[13]
heallegedlyreceivedasoptionshares,andwhichisoneoftheissuesraisedinPSJA. G.R.
No.180705wasconsolidatedwithG.R.Nos.17785758and178193.OnSeptember28,2011,
[14]
respondent Republic filed a Motion to Resolve G.R. Nos. 17785758 and 178193. On
January 17, 2012, the Court issued a Resolution deconsolidating G.R. Nos. 17785758 and
8/22/2015 G.R. Nos. 177857-58
178193 from G.R. No. 180705. This Decision is therefore separate and distinct from the
decisiontoberenderedinG.R.No.180705.

TheFacts

Therelevantfacts,asculledfromtherecordsandasgatheredfromDecisionsoftheCourt
inabatchofcocolevyandillegalwealthcases,are:

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
[15]
8 thereof,wastobesourcedfromaPhP0.55levyonthesaleofevery100kg.ofcopra.Of
thePhP0.55levyofwhichthecoprasellerwas,oroughttobe,issuedCOCOFUNDreceipts,
PhP 0.02 was placed at the disposition of COCOFED, the national association of coconut
[16]
producers declared by the Philippine Coconut Administration (PHILCOA, now PCA ) as
[17]
havingthelargestmembership.

ThedeclarationofmartiallawinSeptember1972sawtheissuanceofseveralpresidential
decrees(P.Ds.)purportedlydesignedtoimprovethecoconutindustrythroughthecollectionand
use of the coconut levy fund. While coming generally from impositions on the first sale of
copra,thecoconutlevyfundcameundervariousnames,thedifferentestablishinglawsandthe
statedostensiblepurposefortheexactionexplainingthedifferingdenominations.Chargedwith
[18]
thedutyofcollectingandadministeringtheFundwasPCA. LikeCOCOFEDwithwhichit
[19]
had a legal linkage, the PCA, by statutory provisions scattered in different coco levy
[20]
decrees,haditsshareofthecocolevy.

Thefollowingweresomeoftheissuancesonthecocolevy,itscollectionandutilization,
howtheproceedsofthelevywillbemanagedandbywhom,andthepurposeitwassupposedto
serve:
1. P.D. No. 276 established the Coconut Consumers Stabilization Fund (CCSF) and
[21]
declaredtheproceedsoftheCCSFlevyastrustfund, tobeutilizedtosubsidizethesaleof
[22]
coconutbasedproducts,thusstabilizingthepriceofedibleoil.
8/22/2015 G.R. Nos. 177857-58

2.P.D.No.582createdtheCoconutIndustryDevelopmentFund(CIDF)tofinancethe
operationofahybridcoconutseedfarm.

3.ThencameP.D.No.755providingunderitsSection1thefollowing:

It is hereby declared that the policy of the State is to provide readily available credit
facilitiestothecoconutfarmersatapreferentialratesthatthispolicycanbeexpeditiouslyand
efficientlyrealizedbytheimplementationoftheAgreementfortheAcquisitionofaCommercial
BankforthebenefitofCoconutFarmersexecutedbythe[PCA]andthatthe[PCA]ishereby
authorized to distribute, for free, the shares of stock of the bank it acquired to the coconut
farmers.

Towardsachievingthepolicythusdeclared,P.D.No.755,underitsSection2,authorized
PCAtoutilizetheCCSFandtheCIDFcollectionstoacquireacommercialbankanddeposit
theCCSFlevycollectionsinsaidbank,interestfree,thedepositwithdrawableonlywhenthe
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
fiduciaryfundsorformpartofthegeneralfundsofthegovernmentwithinthecontemplationof
[23]
P.D.No.711.

4.P.D.No.961codifiedthevariouslawsrelatingtothedevelopmentofcoconut/palmoil
industries.

5.TherelevantprovisionsofP.D.No.961,aslateramendedbyP.D.No.1468(Revised
CoconutIndustryCode),read:

ARTICLEIII
Levies

Section1.CoconutConsumersStabilizationFundLevy.The[PCA]isherebyempowered
toimposeandcollecttheCoconutConsumersStabilizationFundLevy.

.

Section5.Exemption.The[CCSF]andthe[CIDF]aswellasalldisbursementsasherein
authorized,shallnotbeconstruedasspecialand/orfiduciaryfunds,oraspartofthegeneral
fundsofthenationalgovernmentwithinthecontemplationofPD711theintentionbeingthat
saidFundandthedisbursementsthereofashereinauthorizedforthebenefitofthecoconut
farmersshallbeownedbythemintheirprivatecapacities:.(Emphasissupplied.)

8/22/2015 G.R. Nos. 177857-58

6.LetterofInstructionsNo.(LOI)926,Seriesof1979,madereferencetothecreation,
outofothercocolevyfunds,oftheCoconutIndustryInvestmentFund(CIIF)inP.D.No.1468
andentrustedaportionoftheCIIFlevytoUCPBforinvestment,onbehalfofcoconutfarmers,
[24]
inoilmillsandotherprivatecorporations,withthefollowingequityownershipstructure:

Section 2. Organization of the Cooperative Endeavor. The [UCPB], in its capacity as the
investmentarmofthecoconutfarmersthruthe[CIIF]isherebydirectedtoinvest,onbehalfof
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
controlledbythefarmersthrutheCIIF.(Wordsinbracketadded.)

Throughtheyears,apartofthecoconutlevyfundswentdirectlyorindirectlytovarious
[25]
projectsand/orwasconvertedintodifferentassetsorinvestments. Ofparticularrelevanceto
thiscasewastheirusetoacquiretheFirstUnitedBank(FUB),laterrenamedUCPB,andthe
[26]
acquisitionbyUCPB,throughtheCIIFcompanies,ofalargeblockofSMCshares.

Apropostheintendedacquisitionofacommercialbankforthepurposestatedearlier,it
wouldappearthatFUBwasthebankofchoicewhichthePedroCojuangcogroup(collectively,
PedroCojuangco)hadcontrolof.Theplan,then,wasforPCAtobuyallofPedroCojuangcos
sharesinFUB.However,aslatereventsunfolded,asimpledirectsalefromtheseller(Pedro)to
PCA did not ensue as it was made to appear that Cojuangco, Jr. had the exclusive option to
acquire the formers FUB controlling interests. Emerging from this elaborate, circuitous
[27]
arrangementweretwodeedsthefirst,simplydenominatedasAgreement, datedMay1975,
[28]
enteredintobyandbetweenCojuangco,Jr.,forandinhisbehalfandinbehalfofcertain
other buyers, and Pedro Cojuangco, purportedly accorded Cojuangco, Jr. the option to buy
72.2%ofFUBsoutstandingcapitalstock,or137,866shares(theoptionshares,forbrevity),at
PhP200pershare.

Thesecondbutrelatedcontract,datedMay25,1975,wasdenominatedasAgreementfor
the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers of the
8/22/2015 G.R. Nos. 177857-58
[29] [30]
Philippines. IthadPCA, foritselfandforthebenefitofthecoconutfarmers,purchase
fromCojuangco,Jr.thesharesofstocksubjectoftheFirstAgreementforPhP200pershare.
AsadditionalconsiderationforPCAsbuyoutofwhatCojuangco,Jr.wouldlaterclaimtobehis
[31]
exclusiveandpersonaloption, itwasstipulatedthat,fromPCA,Cojuangco,Jr.shallreceive
equityinFUBamountingto10%,or7.22%,ofthe72.2%,orfullypaidshares.

Apart from the aforementioned 72.2%, PCA purchased from other FUB shareholders
6,534shares.

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
[32]
farmers equity were in the name of and delivered to PCA. There were, however, shares
[33]
formingpartoftheaforesaid64.98%portion,whichendedupinthehandsofnonfarmers.
Theremaining27.8%oftheFUBcapitalstockwerenotcoveredbyanyoftheagreements.

Underparagraph8ofthesecondagreement,PCAagreedtoexpeditiouslydistributethe
FUB shares purchased to such coconut farmers holding registered COCOFUND receipts on
equitablebasis.

AsfoundbytheSandiganbayan,thePCAappropriated,outofitsownfund,anamount
for the purchase of the said 72.2% equity, albeit it would later reimburse itself from the
[34]
coconutlevyfund.

[35]
AsofJune30,1975,thelistofFUBstockholdersshowsPCAwith129,955shares.

Shortly after the execution of the PCA Cojuangco, Jr. Agreement, President Marcos
issued,onJuly29,1975,P.D.No.755directing,asearliernarrated,PCAtousetheCCSFand
CIDF to acquire a commercial bank to provide coco farmers with readily available credit
facilities at preferential rate, and PCA to distribute, for free, the bank shares to coconut
farmers.

8/22/2015 G.R. Nos. 177857-58
Then came the 1986 EDSA event. One of the priorities of then President Corazon C.
Aquinosrevolutionarygovernmentwastherecoveryofillgottenwealthreportedlyamassedby
the Marcos family and close relatives, their nominees and associates. Apropos thereto, she
issuedExecutiveOrderNos.(E.Os.)1,2and14,asamendedbyE.O.14A,allSeriesof1986.
E.O. 1 created the PCGG and provided it with the tools and processes it may avail of in the
[36]
recovery efforts E.O. No. 2 asserted that the illgotten assets and properties come in the
formofsharesofstocks,etc.whileE.O.No.14conferredontheSandiganbayanexclusiveand
original jurisdiction over illgotten wealth cases, with the proviso that technical rules of
procedure and evidence shall not be applied strictly to the civil cases filed under the E.O.
Pursuanttotheseissuances,thePCGGissuednumerousordersofsequestration,amongwhich
were those handed out, as earlier mentioned, against shares of stock in UCPB purportedly
ownedbyorregisteredinthenamesof(a)morethanamillioncoconutfarmersand(b)theCIIF
companies,includingtheSMCsharesheldbytheCIIFcompanies.OnJuly31,1987,thePCGG
institutedbeforetheSandiganbayanarecoverysuitdocketedthereatasCCNo.0033.

After the filing and subsequent amendments of the complaint in CC 0033, Lobregat,
COCOFEDetal.,andBallaresetal.,purportedlyrepresentingoveramillioncoconutfarmers,
[37]
sought and were allowed to intervene. Meanwhile, the following incidents/events
transpired:

1. On the postulate, inter alia, that its cocofarmer members own at least 51% of the
outstandingcapitalstockofUCPB,theCIIFcompanies,etc.,COCOFEDetal.,onNovember29,
1989,filedClass Action Omnibus Motion praying for the lifting of the orders of sequestration
referredtoaboveandforachancetopresentevidencetoprovethecoconutfarmersownershipof
theUCPBandCIIFshares.Thepleatopresentevidencewasdenied

2. Later, the Republic moved for and secured approval of a motion for separate trial
whichpavedthewayforthesubdivisionofthecausesofactioninCC0033,eachdetailinghow
theassetssubjectthereofwereacquiredandthekeyrolestheprincipalplayed

3.CivilCase0033,pursuanttoanorderoftheSandiganbayanwouldbesubdividedinto
[38]
eightcomplaints,docketedasCC0033AtoCC0033H.

Lobregat,Ballaresetal.,COCOFED,etal.,onthestrengthoftheirauthoritytointervene
inCC0033,continuedtoparticipateinCC0033Awhereoneoftheissuesraisedwasthemisuse
[39]
ofthenames/identitiesoftheoveramillioncoconutfarmers

4. On February 23, 2001, Lobregat, COCOFED, Ballares et al., filed a Class Action
OmnibusMotion to enjoin the PCGG from voting the sequestered UCPB shares and the SMC
sharesregisteredinthenamesoftheCIIFcompanies.TheSandiganbayan,byOrderofFebruary
8/22/2015 G.R. Nos. 177857-58
28, 2001, granted the motion, sending the Republic to come to this Court on certiorari,
docketedasG.R.Nos.14706264,toannulsaidorderand

5. By Decision of December 14, 2001, in G.R. Nos. 14706264 (Republic v.
[40]
COCOFED), the Court declared the coco levy funds as prima facie public funds. And
purchasedasthesequesteredUCPBshareswerebysuchfunds,beneficialownershipthereonand
thecorollaryvotingrightsprimafaciepertain,accordingtotheCourt,tothegovernment.

TheinstantproceedingsrevolvearoundCC0033A(Re:AnomalousPurchaseandUse
[41]
of[FUB]now[UCPB]) andCC0033F(Re:AcquisitionofSanMiguelCorporationShares
ofStock),thefirstcasepivotingmainlyontheseriesoftransactionsculminatinginthealleged
anomalouspurchaseof72.2%ofFUBsoutstandingcapitalstockandthetransferbyPCAofa
portionthereoftoprivateindividuals.COCOFED,etal.andBallares,etal.participatedinCC
No.0033Aasclassactionmovants.

[42] [43]
PetitionersCOCOFEDetal. andUrsua narrateintheirpetitionshowthefarmers
UCPBsharesinquestionendedupinthepossessionofthoseashereunderindicated:

1) The farmers UCPB shares were originally registered in the name of PCA for the
eventual free distribution thereof to and registration in the individual names of the coconut
farmersinaccordancewithPD755andtheIRRthatPCAshallissue

2)PursuanttothestockdistributionproceduressetoutinPCAAdministrativeOrderNo.
[44]
1,s.of1975,(PCAAO1), farmerswhohadpaidtotheCIFunderRA6260andregistered
their COCOFUND (CIF) receipts with PCA were given their corresponding UCPB stock
certificates.AsofJune1976,thecutoffdatefortheextendedregistration,only16millionworth
ofCOCOFUNDreceiptswereregistered,leavingover50millionsharesundistributed
3)PCAwouldlaterpassRes.07478,s.of1978,toallocatethe50millionundistributed
shares to (a) farmers who were already recipients thereof and (b) qualified farmers to be
identifiedbyCOCOFEDafteranationalcensus.
4)AsofMay1981,some15.6millionshareswerestillheldbyandregisteredinthename
ofCOCOFEDinbehalfofcoconutfarmersfordistributionimmediatelyafterthecompletionof
thenationalcensus,toallthosedeterminedbythePCAtobebonafidecoconutfarmers,butwho
[45]
havenotreceivedthebankshares and

5) Prior to June 1986, a large number of coconut farmers opted to sell all/part of their
UCPB shares below their par value. This prompted the UCPB Board to authorize the CIIF
companiestobuytheseshares.Some40.34millioncommonvotingsharesofUCPBendedup
withtheseCIIFcompaniesalbeitinitiallyregisteredinthenameofUCPB.

Ontheotherhand,thesubjectofCC0033Faretwo(2)blocksofSMCsharesofstock,
thefirstreferringtosharespurchasedthroughand registered in the name of the CIIF holding
8/22/2015 G.R. Nos. 177857-58
companies. The purported ownership of the second block of SMC shares is for the nonce
irrelevant to the disposition of this case. During the time material, the CIIF block of SMC
sharesrepresented27%oftheoutstandingcapitalstockofSMC.

CivilCaseNo.0033A

After the pretrial, but before the Republic, as plaintiff a quo, could present, as it
[46]
committedto,alistofUCPBstockholdersasofFebruary25,1986, amongotherevidence,
COCOFED,etal.,onthepremisethatthesequesteredfarmersUCPBsharesarenotunlawfully
acquired assets, filed in April 2001 their Class Action Motion for a Separate Summary
Judgment. In it, they prayed for a judgment dismissing the complaint in CC 0033A, for the
reason that the over than a million unimpleaded coconut farmers own the UCPB shares. In
March2002,theyfiledClassActionMotionforPartialSeparateTrialontheissueofwhether
saidUCPBshareshavelegitimatelybecometheprivatepropertyofthemillioncoconutfarmers.

Correlatively,theRepublic,onthestrengthoftheDecember14,2001rulinginRepublic
[47]
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 R.A. 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
summaryjudgmentberendereddeclaring:

a. ThatSection2of[PD]755,Section5,ArticleIIIofP.D.961andSection5,ArticleIIIof
P.D.No.1468areunconstitutional

b. That(CIF) payments under (R.A.) No. 6260 are not valid and legal bases for ownership
claimsoverUCPBsharesand

c. ThatCOCOFED,etal.,andBallares,etal.havenotlegallyandvalidlyobtainedtitleover
thesubjectUCPBshares.

After an exchange of pleadings, the Republic filed its surrejoinder praying that it be
conclusivelyheldtobethetrueandabsoluteownerofthecoconutlevyfundsandtheUCPB
[48]
sharesacquiredtherefrom.
A joint hearing on the separate motions for summary judgment to determine what
8/22/2015 G.R. Nos. 177857-58
[49] [50]
materialfactsexistwithorwithoutcontroversyfollowed. ByOrder ofMarch11,2003,
the Sandiganbayan detailed, based on this Courts ruling in related cases, the parties
manifestationsmadeinopencourtandthepleadingsandevidenceonrecord,thefactsitfound
to be without substantial controversy, together with the admissions and/or extent of the
admissionmadebythepartiesrespectingrelevantfacts,asfollows:

Asculledfromtheexhaustivediscussionsandmanifestationsofthepartiesinopencourtoftheir
respective pleadings and evidence on record, the facts which exist without any substantial
controversyaresetforthhereunder,togetherwiththeadmissionsand/ortheextentorscopeof
theadmissionsmadebythepartiesrelatingtotherelevantfacts:

1. The late President Ferdinand E. Marcos was President for two terms . . . and, during the
secondterm,declaredMartialLawthroughProclamationNo.1081datedSeptember21,1972.

2.OnJanuary 17, 1973, [he] issued Proclamation No. 1102 announcing the ratification of the
1973Constitution.

3. From January 17, 1973 to April 7, 1981, [he] . . .exercised the powers and prerogative of
Presidentunderthe1935ConstitutionandthepowersandprerogativeofPresident...the1973
Constitution.

[He]promulgatedvarious[P.D.s],amongwhichwereP.D.No.232,P.D.No.276,P.D.No.414,
P.D.No.755,P.D.No.961andP.D.No.1468.

4.OnApril17,1981,amendmentstothe1973Constitutionwereeffectedand,onJune30,1981,
[he],afterbeingelectedPresident,reassumedthetitleandexercisedthepowersofthePresident
until25February1986.
5.Defendants Maria Clara Lobregat and Jose R. Eleazar, Jr. were [PCA] Directors duringthe
period1970to1986.

6.PlaintiffadmitstheexistenceofthefollowingagreementswhichareattachedasAnnexesA
andBtotheOppositiondatedOctober10,2002ofdefendantEduardoM.Cojuangco,Jr.tothe
abovecitedMotionforPartialSummaryJudgment:

a)Agreementmadeandenteredintothis______dayofMay,1975atMakati,Rizal,Philippines,
byandbetween:

PEDROCOJUANGCO,Filipino,xxx,forandinhisownbehalfandinbehalfofcertain
otherstockholdersofFirstUnitedBanklistedinAnnexAattachedhereto(hereinaftercollectively
calledtheSELLERS)

and

EDUARDO COJUANGCO, JR., Filipino, x x x, represented in this act by his duly
authorizedattorneyinfact,EDGARDOJ.ANGARA,forandinhisownbehalfandinbehalfof
certainotherbuyers,(hereinaftercollectivelycalledtheBUYERS)

WITNESSETH:That

WHEREAS, the SELLERS own of record and beneficially a total of 137,866 shares of
stock,withaparvalueofP100.00each,ofthecommonstockoftheFirstUnitedBank(theBank),
8/22/2015 G.R. Nos. 177857-58
acommercialbankingcorporationexistingunderthelawsofthePhilippines

WHEREAS,theBUYERSdesiretopurchase,andtheSELLERSarewillingtosell,the
aforementioned shares of stock totaling 137,866 shares (hereinafter called the Contract Shares)
ownedbytheSELLERSduetotheirspecialrelationshiptoEDUARDOCOJUANGCO,JR.

NOW,THEREFORE,forandinconsiderationofthepremisesandthemutualcovenants
hereincontained,thepartiesagreeasfollows:

1.SaleandPurchaseofContractShares

SubjecttothetermsandconditionsofthisAgreement,theSELLERSherebysell,assign,
transfer and convey unto the BUYERS, and the BUYERS hereby purchase and acquire, the
ContractSharesfreeandclearofallliensandencumbrancesthereon.

2.ContractPrice

ThepurchasepricepershareoftheContractSharespayablebytheBUYERSisP200.00
oranaggregatepriceofP27,573,200.00(theContractPrice).

3.Deliveryof,andpaymentfor,stockcertificates

Upon the execution of this Agreement, (i) the SELLERS shall deliver to the
BUYERSthestockcertificatesrepresentingtheContractShares,freeandclearofallliens,
encumbrances,obligations,liabilitiesandotherburdensinfavoroftheBankorthirdparties,
dulyendorsedinblankorwithstockpowerssufficienttotransferthesharestobearerand
(ii)BUYERSshalldelivertotheSELLERSP27,511,295.50representingtheContractPrice
less the amount of stock transfer taxes payable by the SELLERS, which the BUYERS
undertaketoremittotheappropriateauthorities.(Emphasisadded.)

4.RepresentationandWarrantiesofSellers

TheSELLERSrespectivelyandindependentlyofeachotherrepresentandwarrantthat:

(a)TheSELLERSarethelawfulownersof,withgoodmarketabletitleto,theContract
Sharesandthat(i)thecertificatestobedeliveredpursuanttheretohavebeenvalidlyissuedandare
fullypaidandnoassessable(ii)theContractSharesarefreeandclearofallliens,encumbrances,
obligations,liabilitiesandotherburdensinfavoroftheBankorthirdparties

This representation shall survive the execution and delivery of this Agreement and the
consummationortransferherebycontemplated.

(b)Theexecution,deliveryandperformanceofthisAgreementbytheSELLERSdoesnot
conflictwithorconstituteanybreachofanyprovisioninanyagreementtowhichtheyareaparty
orbywhichtheymaybebound.

(c)TheyhavecompliedwiththeconditionsetforthinArticleXoftheAmendedArticles
ofIncorporationoftheBank.

5.RepresentationofBUYERS.

6.Implementation

Thepartiesheretoherebyagreetoexecuteorcausetobeexecutedsuchdocumentsand
instrumentsasmayberequiredinordertocarryouttheintentandpurposeofthisAgreement.

7.Notices.

INWITNESSWHEREOF,thepartiesheretohavehereuntosettheirhandsattheplaceandonthe
datefirstabovewritten.
8/22/2015 G.R. Nos. 177857-58

PEDROCOJUANGCOEDUARDOCOJUANGCO,JR.
(onhisownbehalfandin(onhisownbehalfandinbehalf
behalfoftheotherSellersoftheotherBuyers)
listedinAnnexAhereof)(BUYERS)
(SELLERS)
By:

EDGARDOJ.ANGARA
AttorneyinFact

b)AgreementfortheAcquisitionofaCommercialBankfortheBenefitoftheCoconutFarmersof
thePhilippines,madeandenteredintothis25thdayofMay1975atMakati,Rizal,Philippines,by
andbetween:

EDUARDOM.COJUANGCO,JR.,xxx,hereinafterreferredtoastheSELLER

and

PHILIPPINE COCONUT AUTHORITY, a public corporation created by Presidential
DecreeNo.232,asamended,foritselfandforthebenefitofthecoconutfarmersofthePhilippines,
(hereinaftercalledtheBUYER)

WITNESSETH:That

WHEREAS, on May 17, 1975, the Philippine Coconut Producers Federation (PCPF),
throughitsBoardofDirectors,expressedthedesireofthecoconutfarmerstoownacommercial
bank which will be an effective instrument to solve the perennial credit problems and, for that
purpose,passedaresolutionrequestingthePCAtonegotiatewiththeSELLERforthetransferto
thecoconutfarmersoftheSELLERsoptiontobuytheFirstUnitedBank(theBank)undersuch
termsandconditionsasBUYERmaydeemtobeinthebestinterestofthecoconutfarmersand
instructedMrs.MariaClaraLobregattoconveysuchrequesttotheBUYER

WHEREAS, the PCPF further instructed Mrs. Maria Clara Lobregat to make
representationswiththeBUYERtoutilizeitsfundstofinancethepurchaseoftheBank

WHEREAS, the SELLER has the exclusive and personal option to buy 144,400 shares
(theOptionShares)oftheBank,constituting72.2%ofthepresentoutstandingsharesofstockof
theBank,atthepriceofP200.00pershare,whichoptiononlytheSELLERcanvalidlyexercise

WHEREAS,inresponsetotherepresentationsmadebythecoconutfarmers,theBUYER
hasrequestedtheSELLERtoexercisehispersonaloptionforthebenefitofthecoconutfarmers

WHEREAS,theSELLERiswillingtotransfertheOptionSharestotheBUYERataprice
equaltohisoptionpriceofP200pershare

WHEREAS,recognizingthatownershipbythecoconutfarmersofacommercialbankisa
permanent solution to their perennial credit problems, that it will accelerate the growth and
developmentofthecoconutindustryandthatthepolicyofthestatewhichtheBUYERisrequired
to implement is to achieve vertical integration thereof so that coconut farmers will become
participantsin,andbeneficiariesof,therequestofPCPFthatitacquireacommercialbanktobe
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
positiontoadoptacreditpolicyforthecoconutfarmersatpreferentialrates
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
facilitiestococonutfarmersatpreferentialrates
8/22/2015 G.R. Nos. 177857-58

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
managementservicesrequiredofhimhereunder.

1.ToensurethatthetransfertothecoconutfarmersoftheOptionSharesiseffectedwith
theleastpossibledelayandtoprovideforthefaithfulperformanceoftheobligationsoftheparties
hereunder, the parties hereby appoint the Philippine National Bank as their escrow agent (the
EscrowAgent).

UponexecutionofthisAgreement,theBUYERshalldepositwiththeEscrowAgentsuch
amountasmaybenecessarytoimplementthetermsofthisAgreement.

2. As promptly as practicable after execution of this Agreement, the SELLER shall
exercisehisoptiontoacquiretheOptionShareandSELLERshallimmediatelythereafterdeliver
and turn over to the Escrow Agent such stock certificates as are herein provided to be received
fromtheexistingstockholdersoftheBankbyvirtueoftheexerciseontheaforementionedoption.

3.ToensurethestabilityoftheBankandcontinuityofmanagementandcreditpoliciesto
beadoptedforthebenefitofthecoconutfarmers,thepartiesundertaketocausethestockholders
andtheBoardofDirectorsoftheBanktoauthorizeandapproveamanagementcontractbetween
theBankandtheSELLERunderthefollowingterms:

(a)Themanagementcontractshallbeforaperiodoffive(5)years,renewableforanother
five(5)yearsbymutualagreementoftheSELLERandtheBank

(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
andemolumentsastheBoardofDirectorsmaydetermine

(c) The SELLER shall recruit and develop a professional management team to manage
andoperatetheBankunderthecontrolandsupervisionoftheBoardofDirectorsofthe
Bank

(d)TheBUYERundertakestocausethree(3)personsdesignatedbytheSELLERtobe
electedtotheBoardofDirectorsoftheBank

(e)TheSELLERshallreceivenocompensationformanagingtheBank,otherthansuch
salaries or emoluments to which he may be entitled by virtue of the discharge of his
functionanddutiesasPresident,providedand

(f) The management contract may be assigned to a management company owned and
controlledbytheSELLER.

4.AscompensationforexercisinghispersonalandexclusiveoptiontoacquiretheOption
Shares and for transferring such shares to the coconut farmers, as well as for performing the
managementservicesrequiredofhim,SELLERshallreceiveequityintheBankamounting,inthe
aggregate, to 95,304 fully paid shares in accordance with the procedure set forth in paragraph 6
below

5.InordertocomplywiththeCentralBankprogramforincreasedcapitalizationofbanks
andtoensurethattheBankwillbeinamorefavorablefinancialpositiontoattainitsobjectiveto
extend to the coconut farmers loans and credit facilities, the BUYER undertakes to subscribe to
shareswithanaggregateparvalueofP80,864,000(theSubscribedShares).Theobligationofthe
BUYERwithrespecttotheSubscribedSharesshallbeasfollows:

8/22/2015 G.R. Nos. 177857-58
(a)TheBUYERundertakestosubscribe,forthebenefitofthecoconutfarmers,toshares
with an aggregate par value of P15,884,000 from the present authorized but unissued
sharesoftheBankand

(b)TheBUYERundertakestosubscribe,forthebenefitofthecoconutfarmers,toshares
withanaggregateparvalueofP64,980,000fromtheincreasedcapitalstockoftheBank,
whichsubscriptionsshallbedeemedmadeupontheapprovalbythestockholdersofthe
increaseoftheauthorizedcapitalstockoftheBankfromP50MilliontoP140Million.

The parties undertake to declare stock dividends of P8 Million out of the present
authorizedbutunissuedcapitalstockofP30Million.

6.TocarryintoeffecttheagreementofthepartiesthattheSELLERshallreceiveashis
compensation95,304shares:

(a).

(b)WithrespecttotheSubscribedShares,theBUYERundertakes,inordertopreventthe
dilutionofSELLERsequityposition,thatitshallcedeovertotheSELLER64,980fully
paidsharesoutoftheSubscribedShares.Suchundertakingshallbecompliedwithinthe
followingmanner:.

7.ThepartiesfurtherundertakethattheBoardofDirectorsandmanagementoftheBank
shall establish and implement a loan policy for the Bank of making available for loans at
preferentialratesofinteresttothecoconutfarmers.

8.The BUYER shall expeditiously distribute from time to time the shares of the Bank,
thatshallbeheldbyitforthebenefitofthecoconutfarmersofthePhilippinesundertheprovisions
of this Agreement, to such, coconut farmers holding registered COCOFUND receipts on such
equitablebasisasmaybedeterminebytheBUYERinitssounddiscretion.

9..

10.Toensurethatnotonlyexistingbutfuturecoconutfarmersshallbeparticipantsinand
beneficiariesofthecreditpolicies,andshallbeentitledtothebenefitofloansandcreditfacilities
tobeextendedbytheBanktococonutfarmersatpreferentialrates,thesharesheldbythecoconut
farmers shall not be entitled to preemptive rights with respect to the unissued portion of the
authorizedcapitalstockoranyincreasethereof.

11.Afterthepartiesshallhaveacquiredtwothirds(2/3)oftheoutstandingsharesofthe
Bank,thepartiesshallcallaspecialstockholdersmeetingoftheBank:

(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,
constituting27.8%oftheoutstandingshares,asClassBshares

(b)ToamendthearticlesofincorporationoftheBanktoeffectthefollowingchanges:

(i)changeofcorporatenametoFirstUnitedCoconutBank

(ii)replacethepresentprovisionrestrictingthetransferabilityoftheshareswitha
limitationonownershipbyanyindividualorentitytonotmorethan10%ofthe
outstandingsharesoftheBank

(iii)providethattheholdersofClassAsharesshallnotbeentitledtopreemptive
rightswithrespecttotheunissuedportionoftheauthorizedcapitalstockorany
8/22/2015 G.R. Nos. 177857-58
increasethereofand

(iv)providethattheholdersofClassBsharesshallbeabsolutelyentitledtopre
emptiverights,withrespecttotheunissuedportionofClassBsharescomprising
partoftheauthorizedcapitalstockoranyincreasethereof,tosubscribetoClass
BsharesinproportiontthesubscriptionsofClassAshares,andtopayfortheir
subscriptionstoClassBshareswithinaperiodoffive(5)yearsfromthecallof
theBoardofDirectors.

(c) To increase the authorized capital stock of the Bank from P50 Million to P140
Million.

(d)TodeclareastockdividendofP8MillionpayabletotheSELLER,theBUYERand
otherstockholdersoftheBankoutofthepresentauthorizedbutunissuedcapitalstockof
P30Million

(e)ToamendthebylawsoftheBankaccordinglyand

(f)Toauthorizeandapprovethemanagementcontractprovidedinparagraph2above.

The parties agree that they shall vote their shares and take all the necessary corporate
actioninordertocarryintoeffecttheforegoingprovisionsofthisparagraph11.

12.ItisthecontemplationofthepartiesthattheBankshallachieveafinancialandequity
positiontobeabletolendtothecoconutfarmersatpreferentialrates.

In order to achieve such objective, the parties shall cause the Bank to adopt a policy of
reinvestment,bywayofstockdividends,ofsuchpercentageoftheprofitsoftheBankasmaybe
necessary.

13.Thepartiesagreetoexecuteorcausetobeexecutedsuchdocumentsandinstruments
asmayberequiredinordertocarryouttheintentandpurposeofthisAgreement.

INWITNESSWHEREOF,

PHILIPPINECOCONUTAUTHORITY
(BUYER)

By:

EDUARDOCOJUANGCO,JR.MARIACLARAL.LOBREGAT
(SELLER)

7.DefendantsLobregat,etal. and COCOFED, etal. and Ballares, et al. admit that the (PCA)
was the other buyers represented by . Cojuangco, Jr. in the May 1975 Agreement entered into
betweenPedroCojuangco(onhisownbehalfandinbehalfofothersellerslistedinAnnexAof
the agreement) and Cojuangco, Jr. (on his own behalf and in behalf of the other buyers).
DefendantCojuangcoinsistshewastheonlybuyerundertheaforesaidAgreement.

8...

9.DefendantsLobregat,etal.,andCOCOFED,etal.,andBallares,etal.admitthatinaddition
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
PCAincreasedfrom137,866sharesto144,400shares,theOPTIONSHARESreferredtointhe
AgreementofMay25,1975.DefendantCojuangcodidnotmakesaidadmissionastothesaid
6,534sharesinexcessofthe137,866sharescoveredbytheAgreementwithPedroCojuangco.
8/22/2015 G.R. Nos. 177857-58

10. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit that the
Agreement,describedinSection1ofPresidentialDecree(P.D.)No.755datedJuly29,1975as
the Agreement for the Acquisition of a Commercial Bank for the Benefit of Coconut Farmers
executedbythePhilippineCoconutAuthorityandincorporatedinSection1ofP.D.No.755by
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
defendantCojuangcosOPPOSITIONTOPLAINTIFFSMOTIONFORPARTIALSUMMARY
JUDGMENT[RE:EDUARDOM.COJUANGCO,JR.]datedSeptember18,2002).

Plaintiffrefusedtomakethesameadmission.

11.theCourttakesjudicialnoticethatP.D.No.755waspublished[in]volume71oftheOfficial
GazettebutthetextoftheagreementwasnotsopublishedwithP.D.No.755.

12.DefendantsLobregat,etal.and COCOFED, et al. and Ballares, et al. admit that the PCA
usedpublicfunds,inthetotalamountofP150million,topurchasetheFUBsharesamountingto
72.2% of the authorized capital stock of the FUB, although the PCA was later reimbursed
fromthecoconutlevyfundsandthatthePCAsubscriptionintheincreasedcapitalizationofthe
FUB,whichwaslaterrenamedthe(UCPB),camefromthesaidcoconutlevyfunds.

13.PursuanttotheMay25,1975Agreement,outofthe72.2%sharesoftheauthorizedandthe
increasedcapitalstockoftheFUB(laterUCPB),entirelypaidforbyPCA,64.98%oftheshares
wereplacedinthenameofthePCAforthebenefitofthecoconutfarmersand7,22%weregiven
todefendantCojuangco.Theremaining27.8%sharesofstockintheFUBwhichlaterbecame
theUCPBwerenotcoveredbythetwo(2)agreementsreferredtoinitemno.6,par.(a)and(b)
above.
There were shares forming part of the aforementioned 64.98% which were later sold or
transferredtononcoconutfarmers.
14.UndertheMay27,1975Agreement,defendantCojuangcosequityintheFUB(nowUCPB)
wastenpercent(10%)ofthesharesofstockacquiredbythePCAforthebenefitofthecoconut
farmers.
15. That the fully paid 95.304 shares of the FUB, later the UCPB, acquired by defendant
Cojuangco,Jr.pursuanttotheMay25,1975AgreementwerepaidforbythePCAinaccordance
withthetermsandconditionsprovidedinthesaidAgreement.
16. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit that the
affidavits of the coconut farmers (specifically, Exhibit 1Farmer to 70Farmer) uniformly state
that:

a.theyarecoconutfarmerswhosoldcoconutproducts
b.inthesalethereof,theyreceivedCOCOFUNDreceiptspursuanttoR.A.No.6260
c.theyregisteredthesaidCOCOFUNDreceiptsand
d.by virtue thereof, and under R.A. No. 6260, P.D. Nos. 755, 961 and 1468, they are
allegedlyentitledtothesubjectUCPBshares.

butsubjecttothefollowingqualifications:

8/22/2015 G.R. Nos. 177857-58
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
relativetothesaiddistributionoftheunclaimedUCPBsharesand

c.thecoconutfarmersclaimtheUCPBsharesbyvirtueoftheircompliancenotonlywith
thelawsmentionedinitem(d)abovebutalsowiththerelevantissuancesofthe
PCAsuchas,PCAAdministrativeOrderNo.1,datedAugust20,1975(Exh.298
Farmer)PCAResolutionNo.03378datedFebruary16,1978.

Theplaintiffdidnotmakeanyadmissionastotheforegoingqualifications.

17.DefendantsLobregat,etal.andCOCOFED,etal.andBallares,etal.claimthattheUCPB
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.755,961and1468andtheadministrativeissuancesofthePCAcitedabove.

18...

On July 11, 2003, the Sandiganbayan issued the assailed PSJA finding for the Republic, the
judgment accentuated by (a) the observation that COCOFED has all along manifested as
representingoveramillioncoconutfarmersand(b)adeclarationontheissueofownershipof
UCPB shares and the unconstitutionality of certain provisions of P.D. No. 755 and its
implementingregulations.Onthematterofownershipinparticular,theantigraftcourtdeclared
that the 64.98% sequestered Farmers UCPB shares, plus other shares paid by PCA are
conclusively owned by the Republic. In its pertinent parts, PSJA, resolving the separate
motionsforsummaryjudgmentinseriatimwithseparatedispositiveportionsforeach,reads:

WHEREFORE,inviewoftheforegoing,weruleasfollows:

A.Re:CLASSACTIONMOTIONFORASEPARATESUMMARYJUDGMENTdatedApril
11,2001filedbyDefendantMariaClaraL.Lobregat,COCOFED,etal.,andBallares,etal.

TheClassActionMotionforSeparateSummaryJudgmentdatedApril11,2001filedby
defendantMariaClaraL.Lobregat,COCOFED,etal.andBallares,etal.,isherebyDENIEDfor
lackofmerit.

B. Re:MOTIONFORPARTIALSUMMARYJUDGMENT(RE:COCOFED,ETAL.AND
BALLARES,ETAL.)datedApril22,2002filedbyPlaintiff.

1. a.Section1ofP.D.No.755,takeninrelationtoSection2ofthesameP.D.,is
unconstitutional:(i)forhavingallowedtheuseoftheCCSFtobenefitdirectlyprivate
8/22/2015 G.R. Nos. 177857-58
interest by the outright and unconditional grant of absolute ownership of the

FUB/UCPBsharespaidforbyPCAentirelywiththeCCSFtotheundefinedcoconut
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
legislativepowertothePCA.

b. The implementing regulations issued by PCA, namely, Administrative Order No. 1,
Seriesof1975andResolutionNo.07478arelikewiseinvalidfortheirfailuretosee
toitthatthedistributionofsharesserveexclusivelyoratleastprimarilyordirectly
theaforementionedpublicpurposeornationalpolicydeclaredbyP.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
governmentandsimilarprovisionsofSec.5,Art.III,P.D.No.961andSec.5,Art.III,
P.D. No. 1468 contravene the provisions of the Constitution, particularly, Art. IX (D),
Sec.2andArticleVI,Sec.29(3).

3.Lobregat,COCOFED,etal.andBallares,etal.havenotlegallyandvalidlyobtainedtitle
of ownership over the subject UCPB shares by virtue of P.D. No. 755, the Agreement
datedMay25,1975betweenthePCAanddefendantCojuangco,andPCAimplementing
rules,namely,Adm.OrderNo.1,s.1975andResolutionNo.07478.

4. ThesocalledFarmersUCPBsharescoveredby64.98%oftheUCPBsharesofstock,
whichformedpartofthe72.2%ofthesharesofstockoftheformerFUBandnowofthe
UCPB,theentireconsiderationofwhichwaschargedbyPCAtotheCCSF,arehereby
declaredconclusivelyownedby,thePlaintiffRepublicofthePhilippines.

C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO M.

COJUANGCO,JR.)datedSeptember18,2002filedbyPlaintiff.

1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA and defendant
EduardoM.Cojuangco,Jr.datedMay25,1975nordiditgivetheAgreementthebinding
forceofalawbecauseofthenonpublicationofthesaidAgreement.

2.RegardingthequestionedtransferofthesharesofstockofFUB(laterUCPB)byPCAto
defendantCojuangcoorthesocalledCojuangcoUCPBshareswhichcostthePCAmore
thanTenMillionPesosinCCSFin1975,wedeclare,thatthetransferofthefollowing
FUB/UCPB shares to defendant Eduardo M. Cojuangco, Jr. was not supported by
valuableconsideration,andthereforenullandvoid:

a.The14,400sharesfromtheOptionShares

b.AdditionalBankSharesSubscribedandPaidbyPCA,consistingof:

1. Fifteen Thousand Eight Hundred EightyFour (15,884) shares out of the
authorizedbutunissuedsharesofthebank,subscribedandpaidbyPCA

2. Sixty Four Thousand Nine Hundred Eighty (64,980) shares of the increased
capitalstocksubscribedandpaidbyPCAand

3. Stockdividendsdeclaredpursuanttoparagraph5andparagraph11(iv)(d)of
theAgreement.

8/22/2015 G.R. Nos. 177857-58
3. The abovementioned shares of stock of the FUB/UCPB transferred to defendant

CojuangcoareherebydeclaredconclusivelyownedbytheRepublicofthePhilippines.

4. TheUCPBsharesofstockoftheallegedfronts,nomineesanddummiesofdefendant
EduardoM.Cojuangco,Jr.whichformpartofthe72.2%sharesoftheFUB/UCPBpaid
forbythePCAwithpublicfundslaterchargedtothecoconutlevyfunds,particularlythe
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
disposedofinthisPartialSummaryJudgment.Forthispurpose,theplaintiffsMotionAd
CautelamtoPresentAdditionalEvidencedatedMarch28,2001isherebyGRANTED.

FromPSJA,LobregatmovedforreconsiderationwhichCOCOFED,etal.andBallares,
[51]
et al. adopted. All these motions were denied in the extended assailed Resolution of
December28,2004.

CivilCaseNo.0033F

Here,theRepublic,afterfilingitspretrialbrief,interposedaMotionforJudgmentonthe
Pleadings and/or for [PSJ] (Re: Defendants CIIF Companies, 14 Holding Companies and
COCOFED,etal.)prayingthat,inlightofthepartiessubmissionsandthesuperveningrulingin
[52]
Republicv.COCOFED whichleftcertainfactsbeyondquestion,ajudgmentissue:

1)DeclaringSection5ofArticleIIIofP.D.No.961(CoconutIndustryCode)andSection5of
ArticleIIIofP.D.No.1468(RevisedCoconutIndustryCode)tobeunconstitutional

2)DeclaringthatCIFpaymentsunderRANo.6260arenotvalidandlegalbasesforownership
claimsovertheCIIFcompaniesand,ultimately,theCIIFblockofSMCsharesand

3) OrderingthereconveyanceoftheCIIFcompanies,the14holdingcompanies,andthe27%
CIIF block of San Miguel Corporation shares of stocks in favor of the government and
declaring the ownership thereof to belong to the government in trust for all the coconut
farmers.

Atthisjuncture,itmaybestatedthat,visvisCC0033F,GabayFoundation,Inc.sought
butwasdeniedleavetointervene.ButpetitionersCOCOFED,etal.movedandwereallowedto
[53]
intervene onthebasisoftheirclaimthatCOCOFEDmembersbeneficiallyowntheblockof
SMC shares held by the CIIF companies, at least 51% of whose capitol stock such members
8/22/2015 G.R. Nos. 177857-58
own. The claim, as the OSG explained, arose from the interplay of the following: (a)
[54]
COCOFEDetal.sallegedmajorityownershipoftheCIIFcompaniesunderSections9 and
[55]
10 ofP.D.No.1468,and(b)theirallegedentitlementtosharesintheCIIFcompaniesby
virtue of their supposed registration of COCOFUND receipts allegedly issued to COCOFED
[56]
membersuponpaymentoftheR.A.6260CIFlevy.

JustasinCCNo.0033A,theSandiganbayanalsoconductedahearinginCCNo.0033F
todeterminefactsthatappearedwithoutsubstantialcontroversyasculledfromtherecordsand,
[57]
byOrder ofFebruary23,2004,outlinedthosefacts.
On May 7, 2004, the Sandiganbayan, in light of its ruling in CC No. 0033A and
disposing of the issue on ownership of the CIIF oil and holding companies and their entire
blockofsubjectSMCshares,issuedtheassailedPSJFalsofindingfortheRepublic,thefallo
ofwhichpertinentlyreading:

WHEREFORE,inviewoftheforegoing,weholdthat:

The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14
Holding Companies and Cocofed et al.) filed by Plaintiff is hereby GRANTED.
ACCORDINGLY,THECIIFCOMPANIES,namely:

1.SouthernLuzonCoconutOilMills(SOLCOM)
2.CagayandeOroOilCo.,Inc.(CAGOIL)
3.IliganCoconutIndustries,Inc.(ILICOCO)
4.SanPabloManufacturingCorp.(SPMC)
5.GranexportManufacturingCorp.(GRANEX)and
6.LegaspiOilCo.,Inc.(LEGOIL),

ASWELLASTHE14HOLDINGCOMPANIES,NAMELY:

1.SorianoShares,Inc.
2.ACSInvestors,Inc.
3.RoxasShares,Inc.
4.ArcInvestors,Inc.
5.TodaHoldings,Inc.
6.APHoldings,Inc.
7.FernandezHoldings,Inc.
8.SMCOfficersCorps,Inc.
9.TeDeumResources,Inc.
10.AngloVentures,Inc.
11.RandyAlliedVentures,Inc.
12.RockSteelResources,Inc.
13.ValhallaPropertiesLtd.,Inc.and
8/22/2015 G.R. Nos. 177857-58
14.FirstMeridianDevelopment,Inc.

AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC) SHARES OF STOCK
TOTALLING 33,133,266 SHARES AS OF 1983 ARE DECLARED OWNED BY THE
GOVERNMENT IN TRUST FOR ALL THE COCONUT FARMERS GOVERNMENT AND
[58]
ORDERDEDRECONVEYEDTOTHEGOVERNMENT. (Emphasisandcapitalizationin
theoriginalunderscoringadded.)

LetthetrialofthisCivilCaseproceedwithrespecttotheissueswhichhavenotbeendisposedof
in this Partial Summary Judgment, including the determination of whether the CIIF Block of
SMC Shares adjudged to be owned by the Government represents 27% of the issued and
outstanding capital stock of SMC according to plaintiff or to 31.3% of said capital stock
accordingtoCOCOFED,etalandBallares,etal.

SOORDERED.

Expressly covered by the declaration and the reconveyance directive are all dividends
declared, paid and issued thereon as well as any increments thereto arising from, but not
limitedto,exerciseofpreemptiverights.

On May 26, 2004, COCOFED et al., filed an omnibus motion (to dismiss for lack of
subjectmatterjurisdictionoralternativelyforreconsiderationandtosetcasefortrial),butthis
[59]
motionwasdeniedpertheSandiganbayansResolution ofDecember28,2004.

[60]
On May 11, 2007, in CC 0033A, the Sandiganbayan issued a Resolution denying
LobregatsandCOCOFEDsseparatemotionstosetthecasefortrial/hearing,notingthatthereis
no longer any point in proceeding to trial when the issue of their claim of ownership of the
sequesteredUCPBsharesandrelatedsubissueshavealreadybeenresolvedinPSJA.

Foreaseofreference,PSJAandPSJFeachoriginallydecreedtrialorfurtherhearingon
[61]
issuesyettobedisposedof.However,theResolution issuedonJune5,2007inCC0033A
[62]
and the Resolution of May 11, 2007 rendered in CC 0033F effectively modified the
underlyingpartialsummaryjudgmentsbydeletingthatportionsonthenecessityoffurther
trialontheissueofownershipof(1)thesequesteredUCPBshares,(2)theCIIFblockof
SMCsharesand(3)theCIIFcompanies.Astheantigraftcourtstressedinbothresolutions,
[63]
thesaidissueofownershiphasbeenfinallyresolvedinthecorrespondingPSJs.
8/22/2015 G.R. Nos. 177857-58

Hence,theinstantpetitions.

TheIssues

COCOFEDetal.,inG.R.Nos.17785758,imputereversibleerrorontheSandiganbayanfor(a)
assuming jurisdiction over CC Nos. 0033A and 0033F despite the Republics failure to
establishbelowthejurisdictionalfacts,i.e., that the sequestered assets sought to be recovered
areillgotteninthecontextofE.O.Nos.1,2,14and14A(b)declaringcertainprovisionsof
coco levy issuances unconstitutional and (c) denying the petitioners plea to prove that the
sequesteredassetsbelongtococonutfarmers.Specifically,petitionersaver:

I.TheSandiganbayangravelyerredwhenitrefusedtoacknowledgethatitdidnothavesubject
matter jurisdiction over the illgotten wealth cases because the respondent Republic failed to
prove, and did not even attempt to prove, the jurisdictional fact that the sequestered assets
constitute illgotten wealth of former President Marcos and Cojuangco. Being without subject
matter jurisdiction over the illgotten wealth cases, a defect previously pointed out and
repeatedlyassailedbyCOCOFED,etal.,theassailedPSJsandtheassailedResolutionsareall
nullandvoid.

A.Insofarastheillgottenwealthcasesareconcerned,theSandiganbayanssubjectmatter
jurisdictionislimitedtotherecoveryofillgottenwealthasdefinedinEos1,2,14and
14A.Consistentwiththatjurisdiction,thesubdividedcomplaintsintheillgottenwealth
casesexpresslyallegedthatthesequesteredassetsconstitutesillgottenwealthofformer
PresidentMarcosandCojuangco,havingbeenfiledpursuantto,andinconnectionwith,
Eos1,2,14and14A,theSandiganbayangravelyerred,ifnotexceededitsjurisdiction,
when it refused to require the respondent Republic to prove the aforesaid jurisdictional
fact.

B..Havingnoevidenceonrecordtoprovethesaidjurisdictionalfact,theSandiganbayan
gravely erred, if not grossly exceeded its statutory jurisdiction, when it rendered the
assailedPSJsinsteadofdismissingtheillgottenwealthcases.

C.UnderSection1ofRule9oftheRulesofCourt,lackofjurisdictionoverthesubject
matter may be raised at any stage of the proceedings. In any event, in pursuing its
intervention in the illgotten wealth cases, COCOFED, et al precisely questioned the
Sandiganbayanssubjectmatterjurisdiction,assertedthatthejurisdictionalfactdoesnot
exist, moved to dismiss the illgotten wealth cases and even prayed that the writs of
sequestration over the sequestered assets be lifted. In concluding that those actions
constituteaninvocationofitsjurisdiction,theSandiganbayanclearlyactedwhimsically,
capriciouslyandingraveabuseofitsdiscretion.

II.ThroughtheassailedPSJsandtheassailedResolutions,theSandiganbayandeclaredcertain
provisions of the coconut levy laws as well as certain administrative issuances of the PCA as
unconstitutional.Indoingso,theSandiganbayanerroneouslyemployed,ifnotgrosslyabused,its
powerofjudicialreview.

8/22/2015 G.R. Nos. 177857-58
A. the Sandiganbayan gravely erred, if not brazenly exceeded its statutory jurisdiction
and abused the judicial powers, when it concluded that the public purpose of certain
coconutlevylawswasnotevident,whenitthereuponformulateditsownpublicpolicies
and purposes for the coconut levy laws and at the same time disregarded the national
policiesspecificallyprescribedtherein.

B.Inrulingthatitisnotclearorevidenthowthemeansemployedbythe[coconutlevy]
laws would serve the avowed purpose of the law or can serve a public purpose, the
Sandiganbayan erroneously examined, determined and evaluated the wisdom of such
laws,aconstitutionalpowerwithintheexclusiveprovinceofthelegislativedepartment.

C.TheSandiganbayangravelyerredindeclaringSection1ofPD755,PCA[AO]1and
PCA Resolution No. 07478 constitutionally infirm by reason of alleged but unproven
andunsubstantiatedflawsintheirimplementation.

D.TheSandiganbayangravelyerredinconcludingthatSection1ofPD755constitutes
anunduedelegationoflegislativepowerinsofarasitauthorizesthePCAtopromulgate
rules and regulations governing the distribution of the UCPB shares to the coconut
farmers.Rather,takenintheirpropercontext,Section1ofPD755wascompleteinitself,
[and]prescribedsufficientstandardsthatcircumscribedthediscretionofthePCA.

More importantly, this Honorable Court has, on three (3) separate occasions,
rejected respondent Republics motion to declare the coconut levy laws
unconstitutional. The Sandiganbayan gravely erred, if not acted in excess of its
jurisdiction,whenitignoredthesettleddoctrinesoflawofthecaseand/orstaredecisis
and granted respondent Republics fourth attempt to declare the coconut levy laws
unconstitutional, despite fact that such declaration of unconstitutionality was not
necessary to resolve the ultimate issue of ownership involved in the illgotten wealth
cases.

III.InrenderingtheassailedPSJsandthereafterrefusingtoproceedtotrialonthemerits,onthe
mere sayso of the respondent Republic, the Sandiganbayan committed gross and irreversible
error, gravely abused its judicial discretion and flagrantly exceeded its jurisdiction as it
effectively sanctioned the taking of COCOFED, et al.s property by the respondent Republic
without due process of law and through retroactive application of the declaration of
unconstitutionality of the coconut levy laws, an act that is not only illegal and violative of the
settledOperativeFactDoctrinebut,moreimportantly,inequitabletothecoconutfarmerswhose
onlypossiblemistake,offenseormisfortunewastofollowthelaw.

A..

1.Inthecourseofthealmosttwenty(20)yearsthattheillgottenwealthcaseswere
pending, COCOFED, et al. repeatedly asked to be allowed to present evidence to
prove that the true, actual and beneficial owners of the sequestered assets are the
coconut farmers and not Cojuangco, an alleged crony of former President Marcos.
TheSandiganbayangrievouslyerredandclearlyabuseditsjudicialdiscretionwhenit
repeatedlyandcontinuouslydeniedCOCOFED,etal.theopportunitytopresenttheir
evidencetodisprovethebaselessallegationsoftheIllGottenWealthCasesthatthe
sequesteredassetsconstituteillgottenwealthofCojuangcoandofformerPresident
Marcos, an error that undeniably and illegally deprived COCOFED, et al of their
constitutionalrighttobeheard.

2. The Sandiganbayan erroneously concluded that the Assailed PSJs and Assailed
Resolutions settled the ultimate issue of ownership of the Sequestered Assets and,
8/22/2015 G.R. Nos. 177857-58
more importantly, resolved all factual and legal issues involved in the illgotten
wealthcases.Rather,astherearetriableissuesstilltoberesolved,itwasincumbent
upontheSandiganbayantoreceiveevidencethereonandconducttrialonthemerits.

3. Having expressly ordered the parties to proceed to trial and thereafter decreeing
thattrialisunnecessaryastheAssailedPSJswerefinalandappealablejudgments,the
Sandiganbayan acted whimsically, capriciously and contrary to the Rules of Court,
treatedthepartiesintheillgottenwealthcasesunfairly,disobeyedthedictateofthis
Honorable Court and, worse, violated COCOFED, et als right to due process and
equalprotectionofthelaws.

B. The Sandiganbayan gravely erred if not grossly abused its discretion when it
repeatedly disregarded, and outrightly refused to recognize, the operative facts that
existedaswellastherightsthatvestedfromthetimethecoconutlevylawswereenacted
untiltheirdeclarationofunconstitutionalityintheassailedPSJs.Asaresult,theassailed
PSJs constitute a proscribed retroactive application of the declaration of
unconstitutionality, a taking of private property, and an impairment of vested rights of
[64]
ownership,allwithoutdueprocessoflaw. Otherwisestated,theassailedPSJsandthe
assailed Resolutions effectively penalized the coconut farmers whose only possible
mistake, offense or misfortune was to follow the laws that were then legal, valid and
constitutional.

IV.The voluminous records of these illgotten wealth cases readily reveal the various dilatory
tacticsrespondentRepublicresortedto.Asaresult,despitethelapseofalmosttwenty(20)years
of litigation, the respondent Republic has not been required to, and has not even attempted to
prove,thebasesofitsperjuriousclaimthatthesequesteredassetsconstituteillgottenwealthof
formerPresidentMarcosandhiscrony,Cojuangco.IntoleratingrespondentRepublicsanticsfor
almosttwenty(20)years,theSandiganbayansoglaringlydepartedfromprocedureandthereby
flagrantlyviolatedCOCOFED,etal.srighttospeedytrial.

In G.R. No. 178193, petitioner Ursua virtually imputes to the Sandiganbayan the same
[65]
errorsattributedtoitbypetitionersinG.R.Nos.17785758. Hereplicatesasfollows:

I

The Sandiganbayan decided in a manner not in accord with the Rules of Court and settled
jurisprudence in rendering the questioned PSJ as final and appealable thereafter taking the
sequestered assets from their owners or record without presentation of any evidence, thus, the
questionedPSJandthequestionedResolutionsareallnullandvoid.

A. The Sandiganbayans jurisdiction insofar as the illgotten wealth cases are
concerned,islimitedtotherecoveryofillgottenwealthasdefinedinExecutive
OrdersNo.1,2,14and14A.

B. The Sandiganbayan should have decided to dismiss the case or continue to
receive evidence instead of ruling against the constitutionality of some coconut
levylawsandPCAissuancesbecauseitcoulddecideonothergroundsavailable
toit.

8/22/2015 G.R. Nos. 177857-58
II

TheSandiganbayangravelyerredwhenitdeclaredPD.755,Section1and2,Section5,Article1
ofPD961,andSection5ofArt.IIIofPD1468aswellasadministrativeissuancesofthePCA
asunconstitutionalineffect,itabuseditpowerofjudicialreview.

A. The Sandiganbayan gravely erred in concluding that the purpose of PD 755
Section1and2,Section5,Article1ofPD961,andSection5ofArt.IIIofPD
1468 is not evident. It then proceeded to formulated its own purpose thereby
intrudingintothewisdomofthelegislatureinenacting[t]helaw.

B.TheSandiganbayangravelyerredindeclaringSection1ofPD755,PCA[AO]
No. 1 and PCA Resolution No. 07478 unconstitutional due to alleged flaws in
theirimplementation.

C.TheSandiganbayangravelyerredinconcludingthatSection1ofPDNo.755
constitutes an undue delegation of legislative power insofar as it authorizes the
PCAtopromulgaterulesandregulationsgoverningthedistributionoftheUCPB
shares to the coconut farmers. Section 1 of PD 755 was complete in itself,
prescribed sufficient standardsthatcircumscribed thediscretion ofthe PCA and
merely authorized the PCA to fill matters of detail an execution through
promulgatedrulesandregulations.

III

The coconut levy laws, insofar as they allowed the PCA to promulgate rules and regulations
governing the distribution of the UCPB to the coconut farmers, do not constitute an undue
delegation of legislative power as they were complete in themselves and prescribed sufficient
standardsthatcircumscribedthediscretionofthePCA.

IV

Assumingexgratiaargumentithatthecoconutlevylawsareunconstitutional,still,theowners
thereof cannot be deprived of their property without due process of law considering that they
haveingoodfaithacquiredvestedrightsoverthesequesteredassets.
Insum,theinstantpetitionsseektoquestionthedecisionsoftheSandiganbayaninboth
CCNos.0033Aand0033F,alongwiththepreliminaryissuesofobjection.Weshalladdress
attheoutset,(1)thecommonpreliminaryquestions,includingjurisdictionalissue,followedby
(2) the common primary contentious issues (i.e. constitutional questions), and (3) the issues
particulartoeachcase.

TheCourtsRuling

I

TheSandiganbayanhasjurisdictionoverthesubject
matterofthesubdividedamendedcomplaints.
8/22/2015 G.R. Nos. 177857-58

The primary issue, as petitioners COCOFED, et al. and Ursua put forward, boils down to the
Sandiganbayansallegedlackofjurisdictionoverthesubjectmatteroftheamendedcomplaints.
Petitioners maintain that the jurisdictional facts necessary to acquire jurisdiction over the
subjectmatterinCCNo.0033Ahaveyettobeestablished.Infine,theRepublic,sopetitioners
claim,hasfailedtoprovetheillgottennatureofthesequesteredcoconutfarmersUCPBshares.
Accordingly, the controversy is removed from the subject matter jurisdiction of the
Sandiganbayanandnecessarilyanydecisionrenderedonthemerits,suchasPSJAandPSJF,
isvoid.

To petitioners, it behooves the Republic to prove the jurisdictional facts warranting the
Sandiganbayans continued exercise of jurisdiction over illgotten wealth cases. Citing Manila
[66]
Electric Company [Meralco] v. Ortaez, petitioners argue that the jurisdiction of an
adjudicatorytribunalexercisinglimitedjurisdiction,liketheSandiganbayan,dependsuponthe
[67]
factsofthecaseasprovedatthetrialandnotmerelyupontheallegationinthecomplaint.
[68]
CitedtooisPCGGv.Nepumuceno, wheretheCourtheld:

ThedeterminationsmadebythePCGGatthetimeofissuingsequestrationorderscannot
beconsideredasfinaldeterminationsthatthepropertiesorentitiessequesteredortakenoverin
fact constitute illgotten wealth according to [E.O.] No. 1 is a question which can be finally
determinedonlybyacourttheSandiganbayan.ThePCGGhastheburdenofprovingbeforethe
Sandiganbayanthattheassetsithassequesteredorbusinessentityithasprovisionallytakenover
constitutesillgottenwealthwithinthemeaningof[E.O.]No.1andArticleNo.XVIII(26)ofthe
1987Constitution.

Petitionersabovepostureiswithoutmerit.

JusticeFlorenzD.Regaladoexplicatessubjectmatterjurisdiction:

16.Basicis the doctrine that the jurisdiction of a court over the subjectmatter of an action is
conferred only by the Constitution or the law and that the Rules of Court yield to substantive
law,inthiscase,theJudiciaryActandB.P.Blg.129,bothasamended,andofwhichjurisdiction
isonlyapart.Jurisdictioncannotbeacquiredthrough,orwaived,enlargedordiminishedby,any
act or omission of the parties neither can it be conferred by the acquiescence of the court.
Jurisdictionmustexistasamatteroflaw.Consequently,questionsofjurisdictionmayberaised
forthefirsttimeonappealevenifsuchissuewasnotraisedinthelowercourt.

17.Nevertheless,insomecase,theprincipleofestoppelbylacheshasbeenavailedtobarattacks
8/22/2015 G.R. Nos. 177857-58
[69]
onjurisdiction.

It is, therefore, clear that jurisdiction over the subject matter is conferred by law. In turn, the
questiononwhetheragivensuitcomeswithinthepaleofastatutoryconfermentisdetermined
bytheallegationsinthecomplaint,regardlessofwhetherornottheplaintiffwillbeentitledat
[70]
the end to recover upon all or some of the claims asserted therein. We said as much in
[71]
Magayv.Estiandan:

[J]urisdiction over the subject matter is determined by the allegations of the complaint,
irrespectiveofwhetherornottheplaintiffisentitledtorecoveruponallorsomeoftheclaims
assertedthereinamatterthatcanberesolvedonlyafterandasaresultofthetrial.Normaythe
jurisdictionofthecourtbemadetodependuponthedefensessetupintheansweroruponthe
motiontodismiss,for,werewetobegovernedbysuchrule,thequestionofjurisdictioncould
dependalmostentirelyuponthedefendant.

OfthesametenorwaswhattheCourtwroteinAlliedDomecqPhilippines,Inc.v.Villon:
[72]

Jurisdictionoverthesubjectmatteristhepowertohearanddeterminethegeneralclass
towhichtheproceedingsinquestionbelong.Jurisdictionoverthesubjectmatterisconferredby
lawandnotbytheconsentoracquiescenceofanyorallofthepartiesorbyerroneousbeliefof
thecourtthatitexists.Basicistherulethatjurisdictionoverthesubjectmatterisdeterminedby
thecauseorcausesofactionasallegedinthecomplaint.
The material averments in subdivided CC No. 0033A and CC No. 0033F included the
following:

12. Defendant Eduardo Cojuangco, Jr served as a public officer during the Marcos
administration.

13.DefendantEduardoCojuangco,Jr.,takingadvantageofhisassociation,influenceand
connection, acting in unlawful concert with the [Marcoses] and the individual defendants,
embarkedupondevices,schemesandstratagems,includingtheuseofdefendantcorporationsas
fronts,tounjustlyenrichthemselvesastheexpenseofthePlaintiffandtheFilipinopeople,such
aswhenhe

a) manipulated, beginning the year 1975 with the active collaboration of Defendants ,
Marai Clara Lobregat, Danilo Ursua [etc.], the purchase by the (PCA) of 72.2% of the
outstandingcapitalstockofthe(FUB)whichwassubsequentlyconvertedintoauniversalbank
named (UCPB) through the use of (CCSF) 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
underanomalousandsinisterdesignsandcircumstances,towit:

(i) DefendantEduardoCojuangco,Jr.covetedthecoconutlevyfundsasacheap,lucrativeandriskfree
8/22/2015 G.R. Nos. 177857-58
sourceoffundswithwhichtoexercisehisprivateoptiontobuythecontrollinginterestinFUB.
(ii)tolegitimizeaposteriorihishighlyanomalousandirregularuseanddiversionofgovernmentfundsto
advance his own private and commercial interests Defendant Eduardo Cojuangco, Jr. caused the
issuance of PD 755 (a) declaring that the coconut levy funds shall not be considered special and
fiduciary and trust funds conveniently repealing for that purpose a series of previous decrees
establishingthecharacterof the coconut levy funds as special, fiduciary, trust and governments (b)
confirmingtheagreementbetweenCojuangcoandPCAonthepurchaseofFUBbyincorporatingby
referencesaidprivatecommercialagreementinPD755
(iii).
(iv) To perpetuate his opportunity to build his economic empire, Cojuangco caused the issuance of an
unconstitutionaldecree(PD1468)requiringthedepositofallcoconutlevyfundswithUCPBinterest
freetotheprejudiceofthegovernmentandfinally
(v) Havingfullyestablishedhimselfastheundisputedcoconutkingwithunlimitedpowerstodealwith
the coconut levy funds, the stage was now set for Defendant Eduardo Cojuangco, Jr. to launch his
predatoryforaysintoalmostallaspectsofPhilippineactivitynamely.oilmills.
(vi) In gross violation of their fiduciary positions and in contravention of the goal to create a bank for
coconutfarmersofthecountry,thecapitalstockofUCPBasofFebruary25,1986wasactuallyheld
bythedefendants,theirlawyers,factotumandbusinessassociates,therebyfinallygainingcontrolof
the UCPB by misusing the names and identities of the socalled more than one million coconut
farmers.

(b)createdand/orfundedwiththeuseofcoconutlevyfundsvariouscorporations,such
as(COCOFED)withtheactivecollaborationandparticipationofDefendantsJuanPonceEnrile,
Maria Clara Lobregat most of whom comprised the interlocking officers and directors of said
companiesdissipated,misusedand/ormisappropriatedasubstantialpartofsaidcocolevyfunds
FINALLYGAINOWNERSHIPANDCONTROLOFTHEUNITEDCOCONUTPLANTERS
BANKBYMISUSINGTHENAMESAND/ORIDENTIFIESOFTHESOCALLLEDMORE
THANONEMILLIONCOCONUTFARNMERS

(c) misappropriated, misused and dissipated P840 million of the (CIDF) levy funds
deposited with the National Development Corporation (NIDC) as administrator trustee of said
fundsandlaterwithUCPB,ofwhichDefendantEduardoCojuangco,Jr.wastheChiefExecutive
Officer.

(d) established and caused to be funded with coconut levy fundfs, with the active
collaborationofDefendantsFerdinandE.MarcosthroughtheissuanceofLOI926andof[other]
defendantsthe United Coconut Oil Mills, Inc., a corporation controlled by Defendant Eduardo
Cojuangco, Jr. and bought sixteen (16) certain competing oil mills at exorbitant prices then
mothballedthem.

(i)misusedcoconutlevyfundstobuymajorityoftheoutstandingsharesofstockofSan
MiguelCorporation.

14. Defendants Eduardo Cojuangco, Jr. of the Angara Concepcion Cruz Regala and
Abellolawoffices(ACCRA)plotted,devised,schemed,conspiredandconfederatedwitheach
other in setting up, through the use of the coconut levy funds the financial and corporate
structures that led to the establishment of UCPB UNICOM [etc.] and more than twenty other
coconut levy funded corporations including the acquisition of [SMC] shares and its
institutionalizationthroughpresidentialdirectivesofthecoconutmonopoly.

16.TheactsofDefendants,singlyorcollectively,and/orinunlawfulconcertwithone
another,constitutegrossabuseofofficialpositionandauthority,flagrantbreachofpublictrust
8/22/2015 G.R. Nos. 177857-58
and fiduciary obligations, brazen abuse of right and power, unjust enrichment, violation of the
Constitution and laws to the grave and irreparable damage of the Plaintiff and the Filipino
people.

CCNo.0033F

12. Defendant Eduardo Cojuangco, Jr., served as a public officer during the Marcos
administration.

13. Having fully established himself as the undisputed coconut king with unlimited
powerstodealwiththecoconutlevyfunds,thestagewasnowsetforCojuangco,Jr.tolaunch
hispredatoryforaysintoalmostallaspectsofPhilippineeconomicactivitynamelyoilmills.

14. Defendant Eduardo Cojuangco, Jr., taking undue advantage of his association,
influence,andconnection,actinginunlawfulconcertwithDefendantsFerdinandE.Marcosand
Imelda R. Marcos, and the individual defendants, embarked upon devices, schemes and
stratagems,includingtheuseofdefendantcorporationsasfronts,tounjustlyenrichthemselvesat
theexpenseofPlaintiffandtheFilipinopeople.

(a)Havingcontroloverthecoconutlevy,DefendantEduardoM.Cojuangcoinvestedthe
fundsindiverseactivities,suchasthevariousbusinessesSMCwasengagedin.

(c) Laterthatyear[1983],CojuangcoalsoacquiredtheSorianostocksthroughaseries
of complicated and secret agreements, a key feature of which was a voting trust
agreementthatstipulatedthatAndres,Jr.orhisheirwouldproxyoverthevoteofthe
sharesownedbySorianoandCojuangco.

(g) All together, Cojuangco purchased 33 million shares of the SMC through the 14
holdingcompanies

3.1.Thesamefourteencompanieswereinturnownedbythesix(6)socalledCIIF
Companies.

(h) Defendant Corporations are but shell corporations owned by interlocking
shareholders who have previously admitted that they are just nominee stockholders
whodonothaveanyproprietaryinterestoverthesharesintheirnames.[L]awyersof
theAngaraAbelloConcepcionRegala&Cruz(ACCRA)Lawoffices,theprevious
counsel who incorporated said corporations, prove that they were merely nominee
stockholdersthereof.

(l) Thesecompanies,whichACCRALawOfficesorganizedforDefendantCojuangco
to be able to control more than 60% of SMC shares, were funded by institutions
whichdependeduponthecoconutlevysuchastheUCPB,UNICOM,(COCOLIFE),
among others. Cojuangco and his ACCRA lawyers used the funds from 6 large
coconutoilmillsand10copratradingcompaniestoborrowmoneyfromtheUCPB
and purchase these holding companies and the SMC stocks.Cojuangco used $ 150
millionfromthecoconutlevy,brokendownasfollows:

8/22/2015 G.R. Nos. 177857-58
AmountSourcePurpose
(inmillion)

$22.26OilMillsequityinholding
Companies

$65.6OilMillsloantoholding
Companies

$61.2UCPBloantoholding
Companies[164]

Theentireamount,therefore,camefromthecoconutlevy,somepassingthroughthe
UnicomOilmills,othersdirectlyfromtheUCPB.

(m) With his entry into the said Company, it began to get favors from the Marcos
government, significantly the lowering of the excise taxes on beer, one of themain
productsofSMC.

15.Defendantsplotted,devised,schemed,conspiredandconfederatedwitheachotherin
setting up, through the use of coconut levy funds, the financial and corporate framework and
structures that led to the establishment of UCPB, [etc.], and more than twenty other coconut
levyfundedcorporations, including the acquisitionof[SMC] sharesand its institutionalization
throughpresidentialdirectivesofthecoconutmonopoly.

16.The acts of Defendants, singly or collectively, and/or in unlawful concert with one
another,constitutegrossabuseofofficialpositionandauthority,flagrantbreachofpublictrust
and fiduciary obligations, brazen abuse of right and power, unjust enrichment, violation of the
constitutionandlawsoftheRepublicofthePhilippines,tothegraveandirreparabledamageof
[73]
PlaintiffandtheFilipinopeople.

Judging from the allegations of the defendants illegal acts thereat made, it is fairly
obviousthatbothCCNos.0033AandCC0033Fpartake,inthecontextofEONos.1,2and
14, series of 1986, the nature of illgotten wealth suits. Both deal with the recovery of
sequestered shares, property or business enterprises claimed, as alleged in the corresponding
basic complaints, to be illgotten assets of President Marcos, his cronies and nominees and
acquiredbytakingundueadvantageofrelationshipsorinfluenceand/orthroughorasaresultof
improper use, conversion or diversion of government funds or property. Recovery of these
assetsdetermined as shall hereinafter be discussed as prima facie illgottenfalls within the
[74]
unquestionablejurisdictionoftheSandiganbayan.

P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series of 1986, vests the
Sandiganbayanwith,amongothers,originaljurisdictionovercivilandcriminalcasesinstituted
8/22/2015 G.R. Nos. 177857-58
pursuanttoandinconnectionwithE.O.Nos.1,2,14and14A.Correlatively,thePCGGRules
andRegulationsdefinesthetermIllGottenWealthasanyasset,property,businessenterprise
ormaterialpossessionofpersonswithinthepurviewof[E.O.]Nos.1and2,acquiredbythem
directly, or indirectly thru dummies, nominees, agents, subordinates and/or business
associatesbyanyofthefollowingmeansorsimilarschemes:

(1)Throughmisappropriation,conversion,misuseormalversationofpublicfundsor
raidsonthepublictreasury

(2).

(3)Bytheillegalorfraudulentconveyanceordispositionofassetsbelongingtothe
government or any of its subdivisions, agencies or instrumentalities or government
ownedorcontrolledcorporations
(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)Throughtheestablishmentofagricultural,industrialorcommercialmonopoliesor
other combination and/or by the issuance, promulgation and/or implementation of
decreesandordersintendedtobenefitparticularpersonsorspecialinterestsand

(6)Bytakingundueadvantageofofficialposition,authority,relationshiporinfluence
[75]
forpersonalgainorbenefit. (Emphasissupplied)

Section2(a)ofE.O.No.1chargedthePCGGwiththetaskofassistingthePresidentin [T]he
recovery of all illgotten wealth accumulated by former [President] Marcos, his immediate
family,relatives,subordinatesandcloseassociatesincludingthetakeoverorsequestrationof
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
nomineeshaveanyinterestorparticipation.

The Republics averments in the amended complaints, particularly those detailing the alleged
wrongfulactsofthedefendants,sufficientlyrevealthatthesubjectmatterthereofcomprisesthe
recoverybytheGovernmentofillgottenwealthacquiredbythenPresidentMarcos,hiscronies
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
issuedthesedecreesinabrazenbidtolegalizewhatamountstoprivatetakingofthesaidpublic
8/22/2015 G.R. Nos. 177857-58
funds.

PetitionersCOCOFEDetal.andUrsua,however,wouldinsistthattheRepublichasfailedto
prove the jurisdiction facts: that the sequestered assets indeed constitute illgotten wealth as
averredintheamendedsubdividedcomplaints.

Thiscontentionisincorrect.

There was no actual need for Republic, as plaintiff a quo, to adduce evidence to show
thattheSandiganbayanhasjurisdictionoverthesubjectmatterofthecomplaintsasitleanedon
theavermentsintheinitiatorypleadingstomakevisiblethejurisdictionoftheSandiganbayan
over the illgotten wealth complaints. As previously discussed, a perusal of the allegations
easilyrevealsthesufficiencyofthestatementofmattersdisclosingtheclaimofthegovernment
againstthecocolevyfundsandtheassetsacquireddirectlyorindirectlythroughsaidfundsas
illgottenwealth.Moreover, the Court finds no rule that directs the plaintiff to first prove the
subjectmatterjurisdictionofthecourtbeforewhichthecomplaintisfiled.Rather,suchburden
falls on the shoulders of defendant in the hearing of a motion to dismiss anchored on said
groundorapreliminaryhearingthereonwhensuchgroundisallegedintheanswer.

COCOFED et al. and Ursuas reliance on Manila Electric Company [Meralco] v.
[76]
Ortanez ismisplaced,therebeingatotalfactualdissimilaritybetweenthatandthecaseat
bar.MeralcoinvolvedalabordisputebeforetheCourtofIndustrialRelations(CIR)requiring
the interpretation of a collective bargaining agreement to determine which between a regular
court and CIR has jurisdiction. There, it was held that in case of doubt, the case may not be
dismissedforfailuretostateacauseofactionasjurisdictionofCIRisnotmerelybasedonthe
allegationsofthecomplaintbutmustbeprovedduringthetrialofthecase.Thefactualmilieu
of Meralco shows that the said procedural holding is peculiar to the CIR. Thus, it is not and
couldnotbeaprecedenttothecasesatbar.

[77]
Even PCGG v. Nepomuceno is not on all fours with the cases at bench, the issue therein
being whether the regional trial court has jurisdiction over the PCGG and sequestered
properties, visvis the present cases, which involve an issue concerning the Sandiganbayans
jurisdiction.LikeinMeralco,theholdinginNepomucenoisnotdeterminativeoftheoutcome
8/22/2015 G.R. Nos. 177857-58
ofthecasesatbar.

Whilethe1964MeralcoandtheNepomucenocasesareinapplicable,theCourtsrulinginTijam
[78]
v. Sibonhonoy is the leading case on estoppel relating to jurisdiction. In Tijam, the Court
expresseddispleasureontheundesirablepracticeofapartysubmittinghiscasefordecisionand
thenacceptingjudgment,onlyiffavorable,andthenattackingitforlackofjurisdiction,when
adverse.

ConsideringtheantecedentsofCCNos.0033Aand0033F,COCOFED,Lobregat,Ballares,et
al. and Ursua are already precluded from assailing the jurisdiction of the Sandiganbayan.
Remember that the COCOFED and the Lobregat group were not originally impleaded as
defendants in CC No. 0033. They later asked and were allowed by the Sandiganbayan to
intervene. If they really believe then that the Sandiganbayan is without jurisdiction over the
subjectmatterofthecomplaintinquestion,thenwhyinterveneinthefirstplace?They could
have sat idly by and let the proceedings continue and would not have been affected by the
outcomeofthecaseastheycanchallengethejurisdictionoftheSandiganbayanwhenthetime
for implementation of the flawed decision comes. More importantly, the decision in the case
willhavenoeffectonthemsincetheywerenotimpleadedasindispensableparties.Afterall,
thejoinderofallindispensablepartiestoasuitisnotonlymandatory,butjurisdictionalaswell.
[79]
Bytheirintervention,whichtheSandiganbayanallowedperitsresolutiondatedSeptember
30, 1991, COCOFED and Ursua have clearly manifested their desire to submit to the
jurisdiction of the Sandiganbayan and seek relief from said court. Thereafter, they filed
numerous pleadings in the subdivided complaints seeking relief and actively participated in
numerous proceedings. Among the pleadings thus filed are the Oppositions to the Motion for
Intervention interposed by the Pambansang Koalisyon ng mga Samahang Magsasaka at
ManggagawasaNiyoganandGabayngMundosaKaunlaranFoundation,Inc.,aClassAction
Omnibus Motion to enjoin the PCGG from voting the SMC shares dated February 23, 2001
(granted by Sandiganbayan) and the Class Action Motion for a Separate Summary Judgment
datedApril11,2001.Bytheseacts,COCOFEDetal.arenowlegallyestoppedfromasserting
the Sandiganbayns want of jurisdiction, if that be the case, over the subject matter of the
complaint as they have voluntarily yielded to the jurisdiction of the Sandiganbayan. Estoppel
hasnowbarredthechallengeonSandiganbayansjurisdiction.

8/22/2015 G.R. Nos. 177857-58
[80]
TheensuingexcerptsfromMacahiligv.HeirsofMagalit areinstructive:

WecannotallowhertoattackitsjurisdictionsimplybecauseitrenderedaDecisionprejudicialto
herposition. Participation in all stages of a case before a trial court effectively estops a party
from challenging its jurisdiction. One cannot belatedly reject or repudiate its decision after
voluntarilysubmittingtoitsjurisdiction,justtosecureaffirmativereliefagainstonesopponentor
afterfailingtoobtainsuchrelief.If,bydeedorconduct,apartyhasinducedanothertoactina
particular manner, estoppel effectively bars the former from adopting an inconsistent position,
attitudeorcourseofconductthattherebycauseslossorinjurytothelatter.

Lest it be overlooked, this Court has already decided that the sequestered shares are
primafacieillgottenwealthrenderingtheissueofthevalidityoftheirsequestrationandofthe
jurisdiction of the Sandiganbayan over the case beyond doubt. In the case of COCOFED v.
[81]
PCGG, Westatedthat:

ItisofcoursenotforthisCourttopassuponthefactualissuesthusraised.Thatfunction
pertainstotheSandiganbayaninthefirstinstance.Forpurposesofthisproceeding,allthatthe
Courtneedstodetermineiswhetherornotthereisprimafaciejustificationforthesequestration
orderedbythePCGG.TheCourtissatisfiedthatthereis.Thecitedincidents,giventhepublic
character of the coconut levy funds, place petitioners COCOFED and its leaders and
officials,atleastprimafacie,squarelywithinthepurviewofExecutiveOrdersNos.1,2and
14,asconstruedandappliedinBASECO,towit:

1.thatillgottenproperties(were)amassedbytheleadersandsupportersoftheprevious
regime

a.moreparticularly,that(i)llgottenwealthwasaccumulatedbyMarcos,hisimmediate
family, relatives, subordinates and close associates, . (and) business enterprises and entities
(came to be) owned or controlled by them, during (the Marcos) administration, directly or
through nominees, by taking undue advantage of their public office and using their powers,
authority,influence,connectionsorrelationships

b. otherwise stated, that there are assets and properties purportedly pertaining to [the
Marcoses],theircloserelatives,subordinates,businessassociates,dummies,agentsornominees
which had been or were acquired by them directly or indirectly, through or as a result of the
improperorillegaluseoffundsorpropertiesownedbytheGovernmentoranyofitsbranches,
instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of
theiroffice,authority,influence,connectionsorrelationship,resultingintheirunjustenrichment
.

2.Thepetitionersclaimthattheassetsacquiredwiththecoconutlevyfundsareprivately
ownedbythecoconutfarmersisfoundedoncertainprovisionsoflaw,towit[Sec.7,RA6260
andSec.5,Art.III,PD1468](Wordsinbracketaddeditalicsintheoriginal).

Intheirattempttodismisstheamendedcomplaintsinquestion,petitionersasseveratethat
8/22/2015 G.R. Nos. 177857-58
(1)thecoconutfarmerscannotbeconsideredassubordinates,closeand/orbusinessassociates,
dummies, agents and nominees of Cojuangco, Jr. or the Marcoses, and (2) the sequestered
shareswerenotillegallyacquirednoracquiredthroughorasresultofimproperorillegaluseor
conversion of funds belonging to the Government. While not saying so explicitly, petitioners
are doubtless conveying the idea that wealth, however acquired, would not be considered ill
gotten in the context of EO 1, 2 and 14, s. of 1986, absent proof that the recipient or end
possessorthereofisoutsidetheMarcoscircleoffriends,associates,croniesornominees.

Wearenotconvinced.

Asmaybenoted,E.O.1and2adverttoPresidentMarcos,orhisassociatesnominees.In
its most common signification, the term nominee refers to one who is designated to act for
[82]
another usually in a limited way a person in whose name a stock or bond certificate is
[83]
registered but who is not the actual owner thereof is considered a nominee. Corpus Juris
Secundumdescribesanomineeasone:

designated to act for another as his representative in a rather limited sense. It has no
connotation,however,otherthanthatofactingforanother,inrepresentationofanotherorasthe
grantee of another. In its commonly accepted meaning the term connoted the delegation of
authoritytothenomineeinarepresentativeornominalcapacityonly,anddoesnotconnotethe
transfer or assignment to the nominee of any property in, or ownership of, the rights of the
[84]
personnominatinghim.

So,thenextquestionthatcomestotheforeis:wouldthetermnomineeincludethemore
thanonemillioncoconutfarmersallegedtobetherecipientsoftheUCPBshares?

Guided by the foregoing definitions, the query must be answered in the affirmative if
only to give life to those executive issuances aimed at ensuring the recovery of illgotten
wealth.Itisbasic,almostelementary,that:
Laws must receive a sensible interpretation to promote the ends for which they are
enacted.Theyshouldbesogivenreasonableandpracticalconstructionaswillgivelifetothem,
ifitcanbedonewithoutdoingviolencetoreason.Conversely,alawshouldnotbesoconstrued
as to allow the doing of an act which is prohibited by law, not so interpreted as to afford an
opportunitytodefeatcompliancewithitsterms,createaninconsistency,orcontravenetheplain
wordsofthelaw.Interpretatiofiendaestutresmagisvaleatquampereatorthatinterpretation
[85]
aswillgivethethingefficacyistobeadopted.

8/22/2015 G.R. Nos. 177857-58
E.O.1,2,14and14A,itbearstostress,wereissuedpreciselytoeffecttherecoveryof
illgottenassetsamassedbytheMarcoses,theirassociates,subordinatesandcronies,orthrough
theirnominees.Bethatasitmay,itstandstoreasonthatpersonslistedasassociatedwiththe
[86]
Marcoses refer to those in possession of such illgotten wealth but holding the same in
behalfoftheactual,albeitundisclosedowner,topreventdiscoveryandconsequentlyrecovery.
Certainly,itiswellnighinconceivablethatillgottenassetswouldbedistributedtoandleftin
thehandsofindividualsorentitieswithobvioustraceableconnectionstoMr.Marcosandhis
cronies.TheCourtcantake,asithasinfacttaken,judicialnoticeofschemesandmachinations
that have been put in place to keep illgotten assets under wraps. These would include the
[87]
setting up of layers after layers of shell or dummy, but controlled, corporations or
manipulatedinstrumentscalculatedtoconfuseifnotaltogethermisleadwouldbeinvestigators
from recovering wealth deceitfully amassed at the expense of the people or simply the fruits
thereof.TransferringtheillegalassetstothirdpartiesnotreadilyperceivedasMarcoscronies
wouldbeanother.SoitwasthatinPCGGv.Pena,theCourt,describingtheruleofMarcosasa
well entrenched plundering regime of twenty years, noted the magnitude of the past regimes
organizedpillageandtheingenuityoftheplunderersandpillagerswiththeassistanceofexperts
[88]
andthebestlegalmindsinthemarket.

Hence,togivefulleffecttoE.O.1,2and14,s.of1986,thetermnominee,asusedinthe
aboveissuances,mustbetakentomeantoincludeanypersonorgroupofpersons,naturalor
juridical,inwhosenamegovernmentfundsorassetsweretransferredtobyPres.Marcos,his
cronies or his associates. To this characterization must include what the Sandiganbayan
considered the unidentified coconut farmers, more than a million of faceless and nameless
coconutfarmers,theallegedbeneficiariesofthedistributedUCPBshares,who,underthe
termsofSec.10ofPCAA.O.No.1,s.of1975,wererequired,uponthedeliveryoftheir
respective stock certificates, to execute an irrevocable proxy in favor of the Banks
manager. There is thus ample truth to the observations [That] the PCA provided this
conditiononlyindicatesthatthePCAhadnointentiontoconstitutethecoconutfarmerUCPB
stockholderasabonafidestockholderthatthe1.5millionregisteredfarmerstockholderswere
[89]
merenominalstockholders.

Fromtheforegoing,thechallengeontheSandiganbayanssubjectmatterjurisdictionatbarmust
8/22/2015 G.R. Nos. 177857-58
fail.

II

PetitionersCOCOFEDetal.werenot
deprivedoftheirrighttobeheard.

Asaproceduralissue,COCOFED,etal.andUrsuanextcontendthatinthecourseofalmost20
years that the cases have been with the antigraft court, they have repeatedly sought leave to
adduce evidence (prior to respondents complete presentation of evidence) to prove the coco
farmers actual and beneficial ownership of the sequestered shares. The Sandiganbayan,
however, had repeatedly and continuously disallowed such requests, thus depriving them of
theirconstitutionalrighttobeheard.

Thiscontentionisuntenable,theirdemandtoadduceevidencebeingdisallowableontheground
ofprematurity.

The records reveal that the Republic, after adducing its evidence in CC No. 0033A,
subsequently filed a Motion Ad Cautelam for Leave to Present Additional Evidence dated
March 28, 2001. This motion remained unresolved at the time the Republic interposed its
Motion for Partial Summary Judgment. The Sandiganbayan granted the later motion and
accordinglyrenderedthePartialSummaryJudgment,effectivelypreemptingthepresentationof
evidencebythedefendantsinsaidcase(hereinpetitionersCOCOFEDandUrsua).

Section5,Rule30theRulesofCourtclearlysetsouttheorderofpresentingevidence:

SEC.5.Orderoftrial.Subjecttotheprovisionsofsection2ofRule31,andunlessthe
courtforspecialreasonsotherwisedirects,thetrialshallbelimitedtotheissuesstatedinthepre
trialorderandshallproceedasfollows:

(a)Theplaintiffshalladduceevidenceinsupportofhiscomplaint

(b) The defendant shall then adduce evidence in support of his defense,
counterclaim,crossclaimandthirdpartycomplaint

(g) Upon admission of the evidence, the case shall be deemed submitted for
8/22/2015 G.R. Nos. 177857-58
decision, unless the court directs the parties to argue or to submit their respective
memorandaoranyfurtherpleadings.

If several defendants or thirdparty defendants, and so forth. having separate defenses
appearbydifferentcounsel,thecourtshalldeterminetherelativeorderofpresentationoftheir
evidence.(Emphasissupplied.)

Evidently, for the orderly administration of justice, the plaintiff shall first adduce evidence in
support of his complaint and after the formal offer of evidence and the ruling thereon, then
comestheturnofdefendantunderSection3(b)toadduceevidenceinsupportofhisdefense,
counterclaim,crossclaimandthirdpartycomplaint,ifany.Deviationfromsuchorderoftrialis
purely discretionary upon the trial court, in this case, the Sandiganbayan, which cannot be
questionedbythepartiesunlessthevitiatingelementofgraveabuseofdiscretionsupervenes.
Thus,therightofCOCOFEDtopresentevidenceonthemaincasehadnotyetripened.Andthe
rendition of the partial summary judgments overtook their right to present evidence on their
defenses.

It cannot be stressed enough that the Republic as well as herein petitioners were well
within their rights to move, as they in fact separately did, for a partial summary judgment.
Summaryjudgmentmaybeallowedwhere,savefortheamountofdamages,thereis,asshown
byaffidavitsandlikeevidentiarydocuments,nogenuineissueastoanymaterialfactandthe
moving party is entitled to a judgment as a matter of law. A genuine issue, as distinguished
fromonethatisfictitious,contrivedandsetupinbadfaith,meansanissueoffactthatcallsfor
[90]
thepresentationofevidence. Summaryoracceleratedjudgment,therefore,isaprocedural
[91]
techniqueaimedatweedingoutshamclaimsordefensesatanearlystageofthelitigation.
Sections 1, 2 and 4 of Rule 35 of the Rules of Court on Summary Judgment, respectively
provide:

SECTION1.Summaryjudgmentforclaimant.Apartyseekingtorecoveruponaclaim,
counterclaim, or crossclaim may, at any time after the pleading in answer thereto has been
served,movewithsupportingaffidavits,depositionsoradmissionsforasummaryjudgmentin
hisfavoruponalloranypartthereof.

SEC. 2. Summary judgment for defending party.A party against whom a claim,
counterclaim or crossclaim is asserted is sought may, at any time, move with supporting
affidavits,depositionsoradmissionsforasummaryjudgmentinhisfavorastoalloranypart
thereof.

SEC.4.Casenotfullyadjudicatedonmotion.IfonmotionunderthisRule,judgmentis
8/22/2015 G.R. Nos. 177857-58
notrendereduponthewholecaseorforallthereliefssoughtandatrialisnecessary,thecourtat
the hearing of the motion, by examining the pleadings and the evidence before it and by
interrogatingcounselshallascertainwhatmaterialfactsexistwithoutsubstantialcontroversyand
whatareactuallyandingoodfaithcontroverted.Itshallthereuponmakeanorderspecifyingthe
facts that appear without substantial controversy, including the extent to which the amount of
damagesorotherreliefisnotincontroversy,anddirectingsuchfurtherproceedingsintheaction
asarejust.Thefactssospecifiedshallbedeemedestablished,andthetrialshallbeconductedon
thecontrovertedfactsaccordingly.

Clearly,petitionerCOCOFEDsrighttobeheardhadnotbeenviolatedbythemereissuanceof
PSJAandPSJFbeforetheycanadducetheirevidence.

As it were, petitioners COCOFED et al. were able to present documentary evidence in
conjunction with its Class Action Omnibus Motion dated February 23, 2001 where they
appendedaroundfourhundred(400)documentsincludingaffidavitsofallegedfarmers.These
petitioners manifested that said documents comprise their evidence to prove the farmers
ownership of the UCPB shares, which were distributed in accordance with valid and existing
[92]
laws.

Lastly,COCOFEDetal.evenfiledtheirownMotionforSeparateSummaryJudgment,anevent
reflective of their admission that there are no more factual issues left to be determined at the
level of the Sandiganbayan. This act of filing a motion for summary judgment is a judicial
admission against COCOFED under Section 26, Rule 130 which declares that the act,
declarationoromissionofapartyastoarelevantfactmaybegiveninevidenceagainsthim.

Viewed in this light, the Court has to reject petitioners selfserving allegations about being
deprivedtherighttoadduceevidence.

III

Therighttospeedytrialwasnotviolated.

This brings to the fore the alleged violation of petitioners right to a speedy trial and speedy
dispositionofthecase.Insupportoftheircontention,petitionersciteLicarosv.Sandiganbayan,
[93]
wheretheCourtdismissedthecasependingbeforetheSandiganbayanforviolationofthe
accusedsrighttoaspeedytrial.
8/22/2015 G.R. Nos. 177857-58

Itmustbeclarifiedrightoffthattherighttoaspeedydispositionofcaseandtheaccuseds
righttoaspeedytrialaredistinct,albeitkindred,guarantees,themostobviousdifferencebeing
that a speedy disposition of cases, as provided in Article III, Section 16 of the Constitution,
obtainsregardlessofthenatureofthecase:

Section16.Allpersonsshallhavetherighttoaspeedydispositionoftheircasesbefore
alljudicial,quasijudicial,oradministrativebodies.

Infine,therighttoaspeedytrialisavailableonlytoanaccusedandisapeculiarlycriminallaw
concept, while the broader right to a speedy disposition of cases may be tapped in any
proceedingsconductedbystateagencies.Thus,inLicarostheCourtdismissedthecriminalcase
againsttheaccusedduetothepalpabletransgressionofhisrighttoaspeedytrial.

Intheinstantcase,theappropriaterightinvolvedistherighttoaspeedydispositionofcases,
therecoveryofillgottenwealthbeingacivilsuit.

Nonetheless, the Court has had the occasion to dismiss several cases owing to the
[94]
infringement of a partys right to a speedy disposition of cases. Dismissal of the case for
violationofthisrightisthegeneralrule.Bernatv.TheHonorableSandiganbayan(5thDivision)
[95]
expoundsontheextentoftherighttoaspeedydispositionofcasesasfollows:

Section16ofArticleIIIoftheConstitutionguaranteestherightofallpersonstoaspeedy
dispositionoftheircases.Nevertheless,thisrightisdeemedviolatedonlywhentheproceedings
are attended by vexatious, capricious and oppressive delays. Moreover, the determination of
whether the delays are of said nature is relative and cannot be based on a mere mathematical
reckoningoftime.Particularregardmustbetakenofthefactsandcircumstancespeculiartoeach
case. As a guideline, the Court in Dela Pea v. Sandiganbayan mentioned certain factors that
should be considered and balanced, namely: 1) length of delay 2) reasons for the delay 3)
assertionorfailuretoassertsuchrightbytheaccusedand4)prejudicecausedbythedelay.

WhilethisCourtrecognizestherighttospeedydispositionquitedistinctlyfromtheright
to a speedy trial, and although this Court has always zealously espoused protection from
oppressiveandvexatiousdelaysnotattributabletothepartyinvolved,atthesametime,wehold
that a partys individual rights should not work against and preclude the peoples equally
importantrighttopublicjustice.Intheinstantcase,threepeoplediedasaresultofthecrashof
theairplanethattheaccusedwasflying.Itappearstousthatthedelayinthedispositionofthe
case prejudiced not just the accused but the people as well. Since the accused has completely
failedtoasserthisrightseasonablyandinasmuchastherespondentjudgewasnotinaposition
to dispose of the case on the merits we hold it proper and equitable to give the parties fair
8/22/2015 G.R. Nos. 177857-58
opportunitytoobtainsubstantialjusticeinthepremises.

[96]
ThemorerecentcaseofTellov.People laidstresstotherestrictivedimensiontotheright
tospeedydispositionofcases,i.e.,itislostunlessseasonablyinvoked:

InBernat,theCourtdeniedpetitionersclaimofdenialofhisrighttoaspeedydisposition
of cases considering that [he] chose to remain silent for eight years before complaining of the
delayinthedispositionofhiscase.TheCourtruledthatpetitionerfailedtoseasonablyasserthis
rightandhemerelysatandwaitedfromthetimehiscasewassubmittedforresolution.Inthis
case, petitioner similarly failed to assert his right to a speedy disposition of his case. He only
invokedhisrighttoaspeedydispositionofcasesafter[hisconviction].Petitionerssilencemay
beconsideredasawaiverofhisright.

An examination of the petitioners arguments and the cited indicia of delay would reveal the
absenceofanyallegationthatpetitionersmovedbeforetheSandiganbayanforthedismissalof
the case on account of vexatious, capricious and oppressive delays that attended the
proceedings. Following Tello, petitioners are deemed to have waived their right to a speedy
dispositionofthecase.Moreover,delays,ifany,prejudicedtheRepublicaswell.Whatismore,
the alleged breach of the right in question was not raised below. As a matter of settled
jurisprudence,butsubjecttoequallysettledexception,anissuenotraisedbeforethetrialcourt
[97]
cannotberaisedforthefirsttimeonappeal. Thesportingideaforbiddingonefrompulling
surprises underpins this rule. For these reasons, the instant case cannot be dismissed for the
allegedviolationofpetitionersrighttoaspeedydispositionofthecase.

IV
Sections1and2ofP.D.No.755,ArticleIII,Section5ofP.D.No.961andArticleIII,
Section5ofP.D.No.1468,areunconstitutional.

TheCourtmaypassupontheconstitutionalityofP.D.Nos.
755,961and1468.

PetitionersCOCOFEDetal.andUrsuauniformlyscoredtheSandiganbayanforabusing
its power of judicial review and wrongly encroaching into the exclusive domain of Congress
whenitdeclaredcertainprovisionsofthecoconutlevylawsandPCAadministrativeissuances
asunconstitutional.

Wearenotpersuaded.

8/22/2015 G.R. Nos. 177857-58
Itisbasicthatcourtswillnotdelveintomattersofconstitutionalityunlessunavoidable,
when the question of constitutionality is the very lis mota of the case, meaning, that the case
cannotbelegallyresolvedunlesstheconstitutionalissueraisedisdetermined. This rule finds
anchorage on the presumptive constitutionality of every enactment. Withal, to justify the
nullification of a statute, there must be a clear and unequivocal breach of the Constitution. A
[98]
doubtfulorspeculativeinfringementwouldsimplynotsuffice.

Just as basic is the precept that lower courts are not precluded from resolving, whenever
warranted,constitutionalquestions,subjectonlytoreviewbythisCourt.

To Us, the present controversy cannot be peremptorily resolved without going into the
constitutionalityofP.D.Nos.755,961and1468inparticular.ForpetitionersCOCOFEDetal.
andBallaresetal.predicatetheirclaimoverthesequesteredsharesandnecessarilytheircause
onlawsandmartiallawissuancesassailedbytheRepubliconconstitutionalgrounds.Indeed,as
aptlyobservedbytheSolicitorGeneral,thiscaseisfortherecoveryofsharesgroundedonthe
invalidityofcertainenactments,whichinturnisrootedinthesharesbeingpublicincharacter,
purchasedastheywerebyfundsraisedbythetaxingand/oramixoftaxingandpolicepowers
[99]
of the state. As may be recalled, P.D. No. 755, under the policydeclaring provision,
authorizedthedistributionofUCPBsharesofstockfreetococonutfarmers.Ontheotherhand,
Section2ofP.D.No.755,hereunder quoted below, effectively authorized the PCA to utilize
portionsoftheCCSFtopaythefinancialcommitmentofthefarmerstoacquireUCPBandto
deposit portions of the CCSF levies with UCPB interest free. And as there also provided, the
CCSF,CIDFandlikeleviesthatPCAisauthorizedtocollectshallbeconsideredasnonspecial
orfiduciaryfundstobetransferredtothegeneralfundoftheGovernment,meaningtheyshall
bedeemedprivatefunds.

Section2ofP.D.No.755reads:

Section 2. Financial Assistance. To enable the coconut farmers to comply with their
contractualobligationsundertheaforesaidAgreement,the[PCA]isherebydirectedtodraw
and utilize the collections under the [CCSF] authorized to be levied by [PD] No. 232, as
amended, to pay for the financial commitments of the coconut farmers under the said
agreement and, except for [PCAs] budgetary requirements , all collections under the [CCSF]
Levy and (50%) of the collections under the [CIDF] shall be deposited, interest free, with the
saidbankofthecoconutfarmersandsuchdepositsshallnotbewithdrawnuntilthethebankhas
sufficientequitycapitalandsincetheoperations,andactivitiesofthe[PCA]areallinaccord
8/22/2015 G.R. Nos. 177857-58
with the present social economic plans and programs of the Government, all collections and
levieswhichthe[PCA]isauthorizedtolevyandcollectsuchasbutnotlimitedtothe[CCS
Levy]andthe[CIDF]shall notbe consideredor construed,under any lawor regulation,
special and/or fiduciary funds and do not form part of the general funds of the national
governmentwithinthecontemplationof[P.D.]No.711.(Emphasissupplied)

AsimilarprovisioncanalsobefoundinArticleIII,Section5ofP.D.No.961andArticleIII,
Section5ofP.D.No.1468,whichWeshalllaterdiscussinturn:

P.D.No.961

Section 5. Exemptions. The Coconut Consumers Stabilization Fund and the Coconut
IndustryDevelopmentFundaswellasalldisbursementsofsaidfundsforthebenefitofthe
coconutfarmersashereinauthorizedshallnotbeconstruedorinterpreted,underanylaw
or regulation, as special and/or fiduciary funds, or as part of the general funds of the
nationalgovernmentwithinthecontemplationofP.D.No.711norasasubsidy,donation,levy,
governmentfundedinvestment,orgovernmentsharewithinthecontemplationofP.D.898,the
intentionbeingthatsaidFundandthedisbursementsthereofashereinauthorizedforthe
[100]
benefitofthecoconutfarmersshallbeownedbythemintheirownprivatecapacities.
(EmphasisOurs)

P.D.No.1468

Section 5. Exemptions. The [CCSF] and the [CIDF] as well as all disbursement as herein
authorized, shall not be construed or interpreted, under nay law or regulation, as special
and/orfiduciaryfunds,oraspartofthegeneralfundsofthenationalgovernmentwithinthe
contemplation of PD 711 nor as subsidy, donation, levy government funded investment, or
governmentsharewithinthecontemplationofPD898,theintentionbeingthatsaidFundand
thedisbursementsthereofashereinauthorizedforthebenefitofthecoconutfarmersshall
[101]
beownedbythemintheirprivatecapacities. (EmphasisOurs.)

In other words, the relevant provisions of P.D. Nos. 755, as well as those of P.D. Nos.
961and1468,couldhavebeentheonlyplausiblemeansbywhichclosetoapurportedmillion
and a half coconut farmers could have acquired the said shares of stock. It has, therefore,
become necessary to determine the validity of the authorizing law, which made the stock
transferandacquisitionspossible.

Toreiterate,itisofcrucialimportancetodeterminethevalidityofP.D.Nos.755,961and1468
inlightoftheconstitutionalproscriptionagainsttheuseofspecialfundssaveforthepurposeit
8/22/2015 G.R. Nos. 177857-58
was established. Otherwise, petitioners claim of legitimate private ownership over UCPB
sharesandindirectlyoverSMCsharesheldbyUCPBssubsidiarieswillhavenolegtostandon,
P.D.No.755beingtheonlylawauthorizingthedistributionoftheSMCandUCPBsharesof
stocktococonutfarmers,andwiththeaforementionedprovisionsactuallystatingandholding
thatthecocolevyfundshallnotbeconsideredasaspecialnotevengeneralfund,butshallbe
[102]
ownedbythefarmersintheirprivatecapacities.

The Sandiganbayans ensuing ratiocination on the need to pass upon constitutional issues the
Republicraisedbelowcommendsitselfforconcurrence:

ThisCourtisconvincedoftheimperativeneedtopassupontheissuesofconstitutionalityraised
by Plaintiff. The issue of constitutionality of the provisions of P.D. No. 755 and the laws
relatedtheretogoestotheverycoreofPlaintiffscausesofactionanddefensesthereto. It
willservethebestinterestofjusticetodefinethisearlythelegalframeworkwithinwhichthis
caseshallbeheardandtried,takingintoaccounttheadmissionofthepartiesandtheestablished
facts,particularlythoserelatingtothemainsubstanceofthedefenseofLobregat,COCOFED,
et al. and Ballares, et al., which is anchored on the laws being assailed by Plaintiff on
constitutionalgrounds.

The Court is also mindful that lower courts are admonished to observe a
becoming modesty in examining constitutional questions, but that they are
nonetheless not prevented from resolving the same whenever warranted, subject
onlytoreviewbythehighesttribunal(Ynotv.IntermediateAppellateCourt).

It is true that, as a general rule, the question of constitutionality must be raised at the
earliestopportunity.TheHonorableSupremeCourthasclearlystatedthatthegeneralruleadmits
ofexceptions,thus:

Forcourtswillpassuponaconstitutionalquestiononlywhenpresentedbeforeit
inbonafidecasesfordetermination,andthefactthatthequestionhasnotbeen
raisedbeforeisnotavalidreasonforrefusingtoallowittoberaisedlater.Ithas
been held that the determination of a constitutional question is necessary
wheneveritisessentialtothedecisionofthecaseaswheretherightofapartyis
foundedsolelyonastatute,thevalidityofwhichisattacked.

Inthecasenowbeforeus,theallegationsoftheSubdividedComplaintareconsistentwiththose
inthesubjectMotion,andtheysufficientlyraisetheissueofconstitutionalityoftheprovisionsof
lawsinquestion.TheThirdAmendedComplaint(Subdivided)states:

(ii) to legitimize a posteriori his highly anomalous and irregular use and
diversion of government funds to advance his own private and commercial
interests, Cojuangco, Jr. caused the issuance of PD 755 (a) declaring that the
coconutlevyfundsshallnotbeconsideredspecialandfiduciaryandtrustsfunds
and do not form part of the general funds of the National Government,
8/22/2015 G.R. Nos. 177857-58
convenientlyrepealingforthatpurposeaseriesofcoconutlevyfundsasspecial,
fiduciary,trustandgovernmentfunds.

(iv) To perpetuate his opportunity to deal with and make use the coconut levy
funds to build his economic empire, 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
prejudiceofthegovernment.

The abovequoted allegations in the Third Amended Complaint (Subdivided) already question
the legitimacy of the exercise by former President Marcos of his legislative authority when he
issued P.D. Nos. 755 and 1468. The provision of Sec. 5, Art. III of P.D. 961 is substantially
similar to the provisions of the aforesaid two [PDs]. P.D. No. 755 allegedly legitimized the
highlyanomalousandirregularuseanddiversionofgovernmentfundstoadvancehis[defendant
Cojuangcos]ownprivateandcommercialinterest.Theissuanceofthesaid[PD]whichhasthe
force and effect of a law can only be assailed on constitutional grounds. The merits of the
groundsadvertedtointheallegationsoftheThirdAmendedComplaint(Subdivided)canonlybe
resolvedbythisCourtbytestingthequestioned[PDs],whichareconsideredpartofthelawsof
theland.

AsearlyasJune20,1989,thisCourtinitsResolutionexpressedthisCourtsunderstandingofthe
importoftheallegationsofthecomplaint,asfollows:

ItislikewiseallegedintheComplaintthatinordertolegitimizethediversionof
funds,defendantFerdinandE.MarcosissuedthePresidentialDecreesreferredto
bythemovants.ThisisthenthecoreofPlaintiffscomplaint:that,insofaras
thecoconutlevyisconcerned,thesedecreeshadbeenenactedastoolsforthe
acquisitionofillgottenwealthforspecificfavoredindividuals.

EvenifPlaintiffmaynothavesaidsoeffectively,thecomplaintinfactdisputes
thelegitimacy,and,ifonepleases,theconstitutionalityofsuchenactments.

The issue is validly raised on the face of the complaint and defendants must
respondtoit.

Sincethequestionofconstitutionalitymayberaisedevenonappealifthedeterminationofsuch
a question is essential to the decision of the case, we find more reason to resolve this
constitutionalquestionatthisstageoftheproceedings,wherethedefenseisgroundedsolelyon
theverylawstheconstitutionalityofwhicharebeingquestionedandwheretheevidenceof
thedefendantswouldseekmainlytoprovetheirfaithfulandgoodfaithcompliancewiththesaid
[103]
lawsandtheirimplementingrulesandregulations. (Emphasisadded.)

TheCourtsrulingsinCOCOFEDv.PCGGandRepublicv.
Sandiganbayan,aslawofthecase,arespeciouslyinvoked.

TothwarttherulingontheconstitutionalityofP.D.Nos.755,961and1468,petitionerswould
sneak in the argument that the Court has, in three separate instances, upheld the validity, and
8/22/2015 G.R. Nos. 177857-58
thumbed down the Republics challenge to the constitutionality, of said laws imposing the
differentcoconutleviesandprescribingtheusesofthefundcollected.Theseparateactionsof
theCourt,petitionersadd,wouldconcludetheSandiganbayanontheissueofconstitutionality
ofsaidissuances,followingthelawofthecaseprinciple.Petitionersallege:

Otherwise stated, the decision of this Honorable Court in the COCOFED Case overruling the
strict public fund theory espoused by the RespondentRepublic, upholding the propriety of the
laws imposing the collections of the different Coconut Levies and expressly allowing
COCOFED,etal.,toprovethattheSequesteredAssetshavelegitimatelybecometheirprivate
[104]
propertieshadbecomefinalandimmutable.

Petitionersaremistaken.

[105] [106]
Yu v. Yu, as effectively reiterated in Vios v. Pantangco, defines and explains the
ramificationsofthelawofthecaseprincipleasfollows:

Lawofthecasehasbeendefinedastheopiniondeliveredonaformerappeal.Itisaterm
appliedtoanestablishedrulethatwhenanappellatecourtpassesonaquestionandremandsthe
casetothelowercourtforfurtherproceedings,thequestiontheresettledbecomesthelawofthe
case upon subsequent appeal. It means that whatever is once irrevocably established as the
controllinglegalruleordecisionbetweenthesamepartiesinthesamecasecontinuestobethe
lawofthecase,solongasthefactsonwhichsuchdecisionwaspredicatedcontinuetobethe
factsofthecasebeforethecourt.

Otherwiseput,theprinciplemeansthatquestionsoflawthathavebeenpreviouslyraisedand
disposedofintheproceedingsshallbecontrollinginsucceedinginstanceswherethesamelegal
questionisraised,providedthatthefactsonwhichthelegalissuewaspredicatedcontinuetobe
the facts of the case before the court. Guided by this definition, the law of the case principle
cannotprovidepetitionersanycomfort.Weshallexplainwhy.

[107]
In the first instance, petitioners cite COCOFED v. PCGG. There, respondent PCGG
questioned the validity of the coconut levy laws based on the limits of the states taxing and
policepower,asmaybededucedfromtheensuingobservationsoftheCourt:

. Indeed, the Solicitor General suggests quite strongly that the laws operating or
purportingtoconvertthecoconutlevyfundsintoprivatefunds,areatransgressionofthebasic
limitations for the licit exercise of the state's taxing and police powers, and that certain
provisionsofsaidlawsaremerelycleverstratagemstokeepawaygovernmentauditinorderto
facilitatemisappropriationofthefundsinquestion.
8/22/2015 G.R. Nos. 177857-58

Theutilizationandpropermanagementofthecoconutlevyfunds,[toacquiresharesof
stocks for coconut farmers and workers] raised as they were by the States police and taxing
powerarecertainlytheconcernoftheGovernment.Thecoconutlevyfundsareclearlyaffected
with public interest. Until it is demonstrated satisfactorily that they have legitimately become
privatefunds,theymustprimafaciebeaccountedsubjecttomeasuresprescribedinEONos.1,
[108]
2,and14topreventtheirconcealment,dissipation,etc. [Wordsinbracketadded.]

Theissue,therefore,inCOCOFEDv.PCGGturnsonthelegalityofthetransferofthesharesof
stockboughtwiththecoconutlevyfundstococonutfarmers.Thismustbedistinguishedwith
the issues in the instant case of whether P.D. No. 755 violated Section 29, paragraph 3 of
Article VI of the 1987 Constitution as well as to whether P.D. No. 755 constitutes undue
delegation of legislative power. Clearly, the issues in both sets of cases are so different as to
precludetheapplicationofthelawofthecaserule.
ThesecondandthirdinstancesthatpetitionersdrawattentiontorefertotherulingsinRepublic
v. Sandiganbayan, where the Court by Resolution of December 13, 1994, as reiterated in
anotherresolutiondatedMarch26,1996,resolvedtodenytheseparatemotionsoftheRepublic
to resolve legal questions on the character of the coconut levy funds, more particularly to
declareasunconstitutional(a)coconutleviescollectedpursuanttovariousissuancesaspublic
fundsand(b)ArticleIII,Section5ofP.D.No.1468.

Prescinding from the foregoing considerations, petitioners would state: Having filed at least
three (3) motions seeking, among others, to declare certain provisions of the Coconut Levy
LawsunconstitutionalandhavingbeenrebuffedallthreetimesbythisCourt,theRepublicand
necessarily Sandiganbayan should have followed as [they were] legally bound by this Courts
prior determination on that above issue of constitutionality under the doctrine of Law of the
Case.

Petitionersarewrong.TheCourtmerelydeclinedtopassupontheconstitutionalityofthe
coconutlevylawsorsomeoftheirprovisions.ItdidnotdeclarethattheUCPBsharesacquired
withtheuseofcoconutlevyfundshavelegitimatelybecomeprivate.

The coconut levy funds are in the nature of taxes and can
onlybeusedforpublicpurpose.Consequently, they cannot
beusedtopurchasesharesofstockstobegivenforfreeto
privateindividuals.
Indeed,Wehavehithertodiscussed,thecoconutlevywasimposedintheexerciseoftheStates
8/22/2015 G.R. Nos. 177857-58
[109]
inherentpoweroftaxation.AsWewroteinRepublicv.COCOFED:

Indeed, coconut levy funds partake of the nature of taxes, which, in general, are enforced
proportional contributions from persons and properties, exacted by the State by virtue of its
sovereigntyforthesupportofgovernmentandforallpublicneeds.

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
squarelyintotheseelementsforthefollowingreasons:

(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 Coconut
Consumer[s]StabilizationFund(CCSF),mandatedthefollowing:

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
establishedunderRA6260,effectiveatthestartofbusinesshoursonAugust10,1973.

TheproceedsfromthelevyshallbedepositedwiththePhilippineNationalBankorany
othergovernmentbanktotheaccountoftheCoconutConsumersStabilizationFund,asaseparate
trustfundwhichshallnotformpartofthegeneralfundofthegovernment.

Thecocolevieswerefurtherclarifiedinamendatorylaws,specificallyPDNo.961and
PDNo.1468inthiswise:

TheAuthority(PCA)isherebyempoweredtoimposeandcollectalevy,tobeknownas
theCoconutConsumersStabilizationFundLevy,oneveryonehundredkilosofcopraresecada,or
itsequivalentdeliveredto,and/orpurchasedby,copraexporters,oilmillers,desiccatorsandother
endusers of copra or its equivalent in other coconut products.The levy shall be paid by such
copra exporters, oil millers, desiccators and other endusers of copra or its equivalent in
other coconut products under such rules and regulations as the Authority may prescribe. Until
otherwiseprescribedbytheAuthority,thecurrentlevybeingcollectedshallbecontinued.

Like other tax measures, they were not voluntary payments or donations by the people.
Theywereenforcedcontributionsexactedonpainofpenalsanctions,asprovidedunderPDNo.
276:

3. Any person or firm who violates any provision of this Decree or the rules and
regulationspromulgatedthereunder,shall,inadditiontopenaltiesalreadyprescribedunderexisting
administrativeandspeciallaw,payafineofnotlessthanP2,500ormorethanP10,000,orsuffer
cancellationoflicensestooperate,orboth,atthediscretionoftheCourt.

Suchpenaltieswerelateramendedthus:.

(b) The coconut levies were imposed pursuant to the laws enacted by the proper
legislativeauthoritiesoftheState.Indeed,theCCSFwascollectedunderPDNo.276.

(c) They were clearly imposed for a public purpose. There is absolutely no question
that they were collected to advance the governments avowed policy of protecting the
coconutindustry.ThisCourttakesjudicialnoticeofthefactthatthecoconutindustryisoneof
the great economic pillars of our nation, and coconuts and their byproducts occupy a leading
positionamongthecountrysexportproducts.
8/22/2015 G.R. Nos. 177857-58

Taxation is done not merely to raise revenues to support the government, but also to
providemeansfortherehabilitationandthestabilizationofathreatenedindustry,whichis
soaffectedwithpublicinterestastobewithinthepolicepoweroftheState.

Even if the money is allocated for a specialpurpose 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
underasuccessionoflawofthelatedictatorshipwithdeposedFerdinandMarcosandhiscronies
asthesuspectedauthorsandchiefbeneficiariesoftheresultingcoconutindustrymonopoly.The
Court continued: . It cannot be denied that the coconut industry is one of the major
industries supporting the national economy. It is, therefore, the States concern to make it a
strongandsecuresourcenotonly 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
[110]
economicstability. (EmphasisOurs)

[111]
We have ruled time and again that taxes are imposed only for a public purpose.
Theycannotbeusedforpurelyprivatepurposesorfortheexclusivebenefitofprivatepersons.
[112]
Whenalawimposestaxesorleviesfromthepublic,withtheintenttogiveunduebenefit
oradvantagetoprivatepersons,orthepromotionofprivateenterprises,thatlawcannotbesaid
[113]
to satisfy the requirement of public purpose. In Gaston v. Republic Planters Bank, the
petitioningsugarproducers,sugarcaneplantersandmillerssoughtthedistributionoftheshares
ofstockoftheRepublicPlantersBank,allegingthattheyarethetruebeneficialownersthereof.
[114]
In that case, the investment, i.e., the purchase of the said bank, was funded by the
deductionofPhP1.00perpiculfromthesugarproceedsofthesugarproducerspursuanttoP.D.
[115]
No.388. Inrulingagainstthepetitioners,theCourtheldthattoruleintheirfavorwould
contravenethegeneralprinciplethatrevenuesreceivedfromtheimpositionoftaxesorlevies
[116]
cannotbeusedforpurelyprivatepurposesorfortheexclusivebenefitofprivatepersons.
The Court amply reasoned that the Stabilization Fund must be utilized for the benefit of the
entiresugarindustry,andallitscomponents,stabilizationofthedomesticmarketincluding
foreign market, the industry being of vital importance to the countrys economy and to
[117]
nationalinterest.

Similarlyinthiscase,thecoconutlevyfundsweresourcedfromforcedexactionsdecreed
8/22/2015 G.R. Nos. 177857-58
[118]
under P.D. Nos. 232, 276 and 582, among others, with the endgoal of developing the
[119]
entirecoconutindustry. Clearly,toholdtherefore,evenbylaw,thattherevenuesreceived
fromtheimpositionofthecoconutleviesbeusedpurelyforprivatepurposestobeownedby
privateindividualsintheirprivatecapacityandfortheirbenefit,wouldcontravenetherationale
behindtheimpositionoftaxesorlevies.

Needlesstostress,courtsdonot,astheycannot,allowbyjudicialfiattheconversionof
special funds into a private fund for the benefit of private individuals. In the same vein, We
cannotsubscribetotheideaofwhatappearstobeanindirectifnotexactlydirectconversionof
specialfundsintoprivatefunds,i.e.,byusingspecialfundstopurchasesharesofstocks,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
[120]
Gaston, asexpressedbelow,appliesmutatismutandistothiscase:

The stabilization fees in question are levied by the State for a special purpose that of
financingthegrowthanddevelopmentofthesugarindustryandallitscomponents,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
thoughtheyareheldforaspecialpurpose.

That the fees were collected from sugar producers,[etc.], and that the funds were
channeledtothepurchaseofsharesofstockinrespondentBankdonotconvertthefundsinto
atrustfundfortheirbenefitnormakethemthebeneficialownersofthesharessopurchased.
It is but rational that the fees be collected from them since it is also they who are benefited
[121]
fromtheexpenditureofthefundsderivedfromit.. (EmphasisOurs.)

Inthiscase,thecoconutlevyfundswerebeingexactedfromcopraexporters,oilmillers,
[122]
desiccators and other endusers of copra or its equivalent in other coconut products.
Likewise so, the funds here were channeled to the purchase of the shares of stock in UCPB.
DrawingaclearparallelismbetweenGastonandthiscase,thefactthatthecoconutlevyfunds
werecollectedfromthepersonsorentitiesinthecoconutindustry,amongothers,doesnotand
cannotentitlethemtobebeneficialownersofthesubjectfundsormorebluntly,ownersthereof
in their private capacity. Parenthetically, the said private individuals cannot own the UCPB
[123]
sharesofstockssopurchasedusingthesaidspecialfundsofthegovernment.
8/22/2015 G.R. Nos. 177857-58

Coconut levy funds are special public funds of the
government.

Plainly enough, the coconut levy funds are public funds. We have ruled in Republic v.
COCOFED that the coconut levy funds are not only affected with public interest they are
[124]
primafaciepublicfunds. Infact,thispronouncementthattheleviesaregovernmentfunds
[125]
wasadmittedandrecognizedbyrespondents,COCOFED,etal.,inG.R.No.14706264.
And more importantly, in the same decision, We clearly explained exactly what kind of
governmentfundthecoconutleviesare.Wewerecategoricalinsayingthatcoconutleviesare
treatedasspecialfundsbytheverylawswhichcreatedthem:

Finally and tellingly, the very laws governing the coconut levies recognize their public
character.Thus,thethirdWhereasclauseofPDNo.276treatsthemasspecial funds for a
specific public purpose. Furthermore, PD No. 711 transferred to the general funds of the
StateallexistingspecialandfiduciaryfundsincludingtheCCSF.Ontheotherhand,PDNo.
1234specificallydeclaredtheCCSFasaspecialfundforaspecialpurpose,whichshouldbe
[126]
treatedasaspecialaccountintheNationalTreasury. (EmphasisOurs.)

Ifonlytostressthepoint,P.D.No.1234expresslystatedthatcoconutleviesarespecial
funds to be remitted to the Treasury in the General Fund of the State, but treated as Special
Accounts:

Section1.AllincomeandcollectionsforSpecialorFiduciaryFundsauthorizedbylaw
shallberemittedtotheTreasuryandtreatedasSpecialAccountsintheGeneralFund,including
thefollowing:

(a)[PCA]DevelopmentFund,includingallincomederivedtherefromunderSections13
and 14 of [RA] No. 1145 Coconut Investments Fund under Section 8 of [RA] No. 6260,
including earnings, profits, proceeds and interests derived therefrom Coconut Consumers
StabilizationFundsunderSection3AofPDNo.232,asinsertedbySection3ofP.D.No.232,
as inserted by Section 2 of P.D. No. 583 and all other fees accruing to the [PCA] under the
provisionsofSection19of[RA]No.1365,inaccordancewithSection2ofP.D.No.755andall
[127]
otherincomeaccruingtothe[PCA]underexistinglaws. (EmphasisOurs)

Moreover,theCourt,inGaston,statedtheobservationthatthecharacterofastabilizationfund
as a special fund is emphasized by the fact that the funds are deposited in the Philippine
8/22/2015 G.R. Nos. 177857-58
NationalBank[PNB]andnotinthePhilippineTreasury,moneysfromwhichmaybepaidout
[128]
only in pursuance of an appropriation made by law. Similarly in this case, Sec.1 (a) of
P.D.No.276statesthattheproceedsfromthecoconutlevyshallbedepositedwiththePNB,
then a government bank, or any other government bank under the account of the CCSF, as a
[129]
separatetrustfund,whichshallnotformpartofthegovernmentsgeneralfund. Andeven
assumingarguendothatthecoconutlevyfundsweretransferredtothegeneralfundpursuantto
P.D.No.1234,itwaswiththespecificdirectivethatthesamebetreatedasspecialaccountsin
[130]
thegeneralfund.

The coconut levy funds can only be used for the special
purpose and the balance thereof should revert back to the
general fund. Consequently, their subsequent
reclassification as a private fund to be owned by private
individuals in their private capacities under P.D. Nos. 755,
961and1468areunconstitutional.

To recapitulate, Article VI, Section 29 (3) of the 1987 Constitution, restating a general
principleontaxation,enjoinsthedisbursementofaspecialfundinaccordancewiththespecial
purpose for which it was collected, the balance, if there be any, after the purpose has been
fulfilledorisnolongerforthcoming,tobetransferredtothegeneralfundsofthegovernment,
thus:

Section29(3).

(3)Allmoneycollectedonanytaxleviedforaspecialpurposeshallbetreatedasaspecial
fundandpaidoutforsuchpurposeonly.Ifthepurposeforwhichaspecialfundwascreated
hasbeenfulfilledorabandoned,thebalance,ifany,shallbetransferredtothegeneralfundsof
theGovernment.(EmphasisOurs)

Correlatively,Section2ofP.D.No.755clearlystatesthat:

Section 2. Financial Assistance. To enable the coconut farmers to comply with their
contractualobligationsundertheaforesaidAgreement,the[PCA]isherebydirectedtodrawand
utilizethecollectionsundertheCoconutConsumersStabilizationFund[CCSF]authorizedto
8/22/2015 G.R. Nos. 177857-58
be levied by [P.D.] 232, as amended, to pay for the financial commitments of the coconut
farmersunderthesaidagreement.andtheCoconutIndustryDevelopmentFundasprescribedby
Presidential Decree No. 582 shall not be considered or construed, under any law or
regulation,specialand/orfiduciaryfundsanddonotformpartofthegeneralfundsofthe
nationalgovernmentwithinthecontemplationofPresidentialDecreeNo.711.(EmphasisOurs)

Likewise,asdiscussedsupra, Article III, Section 5 of both P.D. Nos. 961 and 1468 provides
that the CCSF shall not be construed by any law as a special and/or trust fund, the stated
intentionbeingthatactualownershipofthesaidfundshallpertaintococonutfarmersintheir
[131]
private capacities. Thus, in order to determine whether the relevant provisions of P.D.
Nos.755,961and1468compliedwithArticleVI,Section29(3)ofthe1987Constitution,a
lookatthepublicpolicyorthepurposeforwhichtheCCSFlevywasimposedisnecessary.

TheCCSFwasestablishedbyvirtueofP.D.No.276whereinitisstatedthat:

WHEREAS, an escalating crisis brought about by an abnormal situation in the world
marketforfatsandoilshasresultedinsupplyandpricedislocationsinthedomesticmarketfor
coconutbasedgoods,andhascreatedhardshipsforconsumersthereof

WHEREAS, the representatives of the coconut industry have proposed the
implementationofanindustryfinancedstabilizationschemewhichwillpermitsocializedpricing
ofcoconutbasedcommodities

WHEREAS,itisthepolicyoftheStatetopromotethewelfareandeconomicwellbeing
oftheconsumingpublic

.

1.Inadditiontoitspowersgrantedunder[P.D.]No.232,the[PCA]isherebyauthorized
to formulate and immediately implement a stabilization scheme for coconutbased consumer
goods,alongthefollowinggeneralguidelines:

(a).TheproceedsofthelevyshallbedepositedwiththePhilippineNationalBank
oranyothergovernmentbanktotheaccountoftheCCSFasaseparatetrustfund.

(b)TheFundshallbeutilizedtosubsidizethesaleofcoconutbasedproducts
atpricessetbythePriceControlCouncil.:

.

As couched, P.D. No. 276 created and exacted the CCSF to advance the governments
[132]
avowedpolicyofprotectingthecoconutindustry. Evidently,theCCSFwasoriginallyset
up as a special fund to support consumer purchases of coconut products. To put it a bit
8/22/2015 G.R. Nos. 177857-58
differently, the protection of the entire coconut industry, and even more importantly, for the
consumingpublicprovidestherationaleforthecreationofthecoconutlevyfund.Therecanbe
noquibblingthenthattheforegoingprovisionsofP.D.No.276intendedthefundcreatedand
setupthereinnotespeciallyforthecoconutfarmersbutfortheentirecoconutindustry,albeit
theimprovementoftheindustrywoulddoubtlessredoundtothebenefitofthefarmers. Upon
theforegoingperspective,thefollowingprovisionsofP.D.Nos.755,961and1468insofaras
theydeclared,asthecasemaybe,that:[thecoconutlevy]fundandthedisbursementsthereof
[shallbe]authorizedforthebenefitofthecoconutfarmersandshallbeownedbythemintheir
[133]
private capacities or the coconut levy fund shall not be construed by any law to be a
specialand/orfiduciaryfund,anddonotthereforeformpartofthegeneralfundofthenational
[134]
government later on or the UCPB shares acquired using the coconut levy fund shall be
[135]
distributedtothecoconutfarmersforfree, violatedthespecialpublicpurpose for which
theCCSFwasestablished.

Insum,notonlywerethechallengedpresidentialissuancesunconstitutionalfordecreeing
thedistributionofthesharesofstockforfreetothecoconutfarmersand,therefore,negatingthe
[136]
public purpose declared by P.D. No. 276, i.e., to stabilize the price of edible oil and to
[137]
protectthecoconutindustry. Theylikewisereclassified,naytreated,thecoconutlevyfund
as private fund to be disbursed and/or invested for the benefit of private individuals in their
private capacities, contrary to the original purpose for which the fund was created. 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
[138]
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
provisionsofP.D.Nos.755,961and1468areunconstitutionalforviolatingArticleVI,Section
29 (3) of the Constitution. In this context, the distribution by PCA of the UCPB shares
purchasedbymeansofthecoconutlevyfundaspecialfundofthegovernmenttothecoconut
farmers,isthereforevoid.

WequotewithapprovaltheSandiganbayansreasonsfordeclaringtheprovisionsofP.D.Nos.
755,961and1468asunconstitutional:
8/22/2015 G.R. Nos. 177857-58

Itisnowsettled,inviewoftherulinginRepublicv.COCOFED,etal.,supra,thatCoconutlevy
funds are raised with the use of the police and taxing powers of the State that they are levies
imposedbytheStateforthebenefitofthecoconutindustryanditsfarmersandthattheywere
clearly imposed for a public purpose. This public purpose is explained in the said case, as
follows:

. c) They were clearly imposed for a public purpose. There is absolutely no
question that they were colleted to advance the governments avowed policy of
protectingthecoconutindustry.

Taxationisdonenotmerelytoraiserevenuestosupportthegovernment,butalso
to provide means for the rehabilitation and the stabilization of a threatened
industry,whichissoaffectedwithpublicinterestastobewithinthepolicepower
oftheState,asheldinCaltexPhilippinesv.COAandOsmeav.Orbos.

TheavowedpublicpurposeforthedisbursementoftheCCSFiscontainedintheperambulatory
clausesandSection1ofP.D.No.755.Theimperativenessofenunciatingthepublicpurposeof
the expenditure of funds raised through taxation is underscored in the case of Pascual v. The
SecretaryofPublicWorksandCommunications,etal,supra,whichheld:

Asregardsthelegalfeasibilityofappropriatingpublicfundsforaprivatepurpose
theprincipleaccordingtoRulingCaseLaw,isthis:

It is a general rule that the legislature is without power to appropriate public
revenueforanythingbutapublicpurposeitistheessentialcharacterofthedirect
objectoftheexpenditurewhichmustdetermineitsvalidityasjustifyingatax,and
not the magnitude of the interests to be affected nor the degree to which the
general advantage of the community, and thus the public welfare may be
ultimatelybenefitedbytheirpromotion.Incidental advantage to the public or to
thestate,whichresultsfromthepromotionofprivateinterestsandtheprosperity
of private enterprises or business, does not justify their aid by the use of public
money.25R.L.C.pp.398400)

TheruleissetforthinCorpusJurisSecunduminthefollowinglanguage:

The test of the constitutionality of a statute requiring the use of public
fundsiswhetherthestatuteisdesignedtopromotethepublicinterests,
asopposedtothefurtheranceoftheadvantageofindividuals,although
each advantage to individuals might incidentally serve the public. (81
C.J.S.p.1147)

Needlesstosay,thisCourtisfullyinaccordwiththeforegoingviews.Besides,
reflecting as they do, the established jurisprudence in the United States, after
whose constitutional system ours has been patterned, said views and
jurisprudenceare,likewise,partandparcelofourownconstitutionallaw.

ThegiftoffundsraisedbytheexerciseofthetaxingpowersoftheStatewhichwereconverted
intosharesofstockinaprivatecorporation,slatedforfreedistributiontothecoconutfarmers,
canonlybeaccordedconstitutionalsanctionifitwilldirectlyservethepublicpurposedeclared
8/22/2015 G.R. Nos. 177857-58
[139]
bylaw.

Section 1 of P.D. No. 755, as well as PCA Administrative
OrderNo.1,Seriesof1975(PCAAO1),andResolutionNo.
07475,areinvaliddelegationsoflegislativepower.

Petitioners argue that the antigraft court erred in declaring Section 1 of PD 755, PCA
AdministrativeOrderNo.1andPCAResolutionNo.07478constitutionallyinfirmbyreason
ofallegedbutunprovenandunsubstantiatedflawsintheirimplementation.Additionally, they
explainthatsaidcourterredinconcludingthatSection1ofPDNo.755constitutesanundue
delegation of legislative power insofar as it authorizes the PCA to promulgate rules and
regulationsgoverningthedistributionoftheUCPBsharestothefarmers.

Thesepropositionsaremeritless.

TheassailedPSJAnotedtheoperationaldistributionnightmarefacedbyPCAandthemodeof
distributionofUCPBsharessetinmotionbythatagencyleftmuchroomfordiversion.Wrote
theSandiganbayan:

The actual distribution of the bank shares was admittedly an enormous operational problem
whichresultedinthefailureoftheintendedbeneficiariestoreceivetheirsharesofstocksinthe
bank, as shown by the rules and regulations, issued by the PCA, without adequate guidelines
beingprovidedtoitbyP.D.No.755.PCAAdministrativeOrderNo.1,Seriesof1975(August
20, 1975), Rules and Regulations Governing the Distribution of Shares of Stock of the Bank
Authorized to be Acquired Pursuant to PCA Board Resolution No. 24675, quoted hereunder
discloseshowtheundistributedsharesofstocksduetoanonymouscoconutfarmersorpayorsof
thecoconutlevyfeeswereauthorizedtobedistributedtoexistingshareholdersoftheBank:

Section 9. Fractional and Undistributed Shares Fractional shares and
shares which remain undistributed shall be distributed to all the coconut
farmerswhohavequalifiedandreceivedequityintheBankandshallbe
apportioned among them, as far as practicable, in proportion to their
equity in relation to the number of undistributed equity and such further
rulesandregulationsasmayhereafterbepromulgated.

The foregoing PCA issuance was further amended by Resolution No. 07478, still
citingthesameproblemofdistributionofthebankshares.:

Thus, when 51,200,806 shares in the bank remained undistributed, the PCA deemed it
propertogiveabonanzatococonutfarmerswhoalreadygottheirbankshares,bygivingthem
anadditionalshareforeachshareownedbythemandbyconvertingtheirfractionalsharesinto
fullshares.Therestoftheshareswerethentransferredtoaprivateorganization,theCOCOFED,
8/22/2015 G.R. Nos. 177857-58
fordistributiontothosedeterminedtobebonafidecoconutfarmerswhohadnotreceivedshares
ofstockoftheBank..

ThePCAthusassumed,duetolackofadequateguidelinessetbyP.D.No.755,thatit
had complete authority to define who are the coconut farmers and to decide as to who
amongthecoconutfarmersshallbegiventhegiftofbankshareshowmanysharesshallbe
giventothem,andwhatbasisitshallusetodeterminetheamountofsharestobedistributedfor
free to the coconut farmers. In other words, P.D. No. 755 fails the completeness test which
rendersitconstitutionallyinfirm.

Regarding the second requisite of standard, it is settled that legislative standard need not be
expressed.

We observed, however, that the PCA [AO] No. 1, Series of 1975 and PCA Rules and
Regulations07478,didnottakeintoconsiderationtheaccomplishmentofthepublicpurposeor
thenationalstandard/policyofP.D.No.755whichisdirectlytoacceleratethedevelopmentand
growth of the coconut industry and as a consequence thereof, to make the coconut farmers
participantsinandbeneficiariesofsuchgrowthanddevelopment.ThesaidPCAissuancesdid
nothingmorethanprovideguidelinesastowhomtheUCPBsharesweretobedistributedand
howmanybanksharesshallbeallottedtothebeneficiaries.Therewasnomentionofhowthe
distributedsharesshallbeusedtoachieveexclusivelyoratleastdirectlyorprimarilytheaimor
publicpurposeenunciatedbyP.D.No.755.Thenumericalorquantitativedistributionofshares
contemplatedbythePCAregulationswhichisaconditionforthevalidlyofsaidadministrative
issuances.There was a reversal of priorities. The narrow private interests prevailed over
thelaudableobjectivesofthelaw.However,undertheMay25,1975agreementimplemented
by the PCA issuances, the PCA acquired only 64.98% of the shares of the bank and even the
sharescoveringthesaid64.98%werelaterontransferredtononcoconutfarmers.

ThedistributionforfreeofthesharesofstockoftheCIIFCompaniesistaintedwiththe
abovementionedconstitutionalinfirmitiesofthePCAadministrativeissuances.In view of the
foregoing, we cannot consider the provision of P.D. No. 961 and P.D. No. 1468 and the
implementingregulationsissuedbythePCAasvalidlegalbasistoholdthatassetsacquiredwith
[140]
publicfundshavelegitimatelybecomeprivateproperties. (Emphasisadded.)

P.D.No.755involvesaninvaliddelegationoflegislativepower,aconceptdiscussedin
[141]
Sorianov.Laguardia, citingthefollowingexcerptsfromEduv.Ericta:
ItisafundamentalthatCongressmaynotdelegateitslegislativepower.Whatcannotbe
delegatedistheauthoritytomakelawsandtoalterandrepealthemthetestisthecompleteness
of the statute in all its term and provisions when it leaves the hands of the legislature. To
determinewhetherornotthereisanunduedelegationoflegislativepower,theinquirymustbe
directedtothescopeanddefinitenessofthemeasureenacted.Thelegislaturedoesnotabdicate
itsfunctionswhenitdescribeswhatjobmustbedone,whoistodoit,andwhatisthescope
ofhisauthority.

Toavoidthetaintofunlawfuldelegation,theremustbeastandard,whichimpliesatthe
veryleastthatthelegislatureitselfdeterminesmattersofprincipleandlaysdownfundamental
policy. Otherwise, the charge of complete abdication may be hard to repel. A standard thus
defineslegislativepolicy,marksitslimits,mapsoutitsboundariesandspecifiesthepublic
agencytoapplyit.Itindicatesthecircumstancesunderwhichthelegislativecommandisto
beeffected.Itisthecriterionbywhichlegislativepurposemaybecarriedout.Thereafter,the
8/22/2015 G.R. Nos. 177857-58
executive or administrative office designated may in pursuance of the above guidelines

[142]
promulgatesupplementalrulesandregulations. (Emphasissupplied)

Jurisprudenceisconsistentasregardsthetwotests,whichmustbecompliedwithtodetermine
theexistenceofavaliddelegationoflegislativepower.In Abakada Guro Party List, et al. v.
[143]
Purisima, Wereiteratedthediscussion,towit:

Twotestsdeterminethevalidityofdelegationoflegislativepower:(1)thecompleteness
testand(2)thesufficientstandardtest.Alawiscompletewhenitsetsforththereinthepolicy
tobeexecuted,carriedoutorimplementedbythedelegate.Itlaysdownasufficientstandard
whenitprovidesadequateguidelinesorlimitationsinthelawtomapouttheboundariesof
thedelegatesauthorityandpreventthedelegationfromrunningriot.Tobesufficient,the
standardmustspecifythelimitsofthedelegatesauthority,announcethelegislativepolicy
andidentifytheconditionsunderwhichitistobeimplemented.

Intheinstantcase,therequisitestandardsorcriteriaareabsentinP.D.No.755.Asmay
benoted,thedecreeauthorizesthePCAtodistributetococonutfarmers,forfree,thesharesof
stocks of UCPB and to pay from the CCSF levy the financial commitments of the coconut
farmers under the Agreement for the acquisition of such bank. Yet, the decree does not even
statewhoaretobeconsideredascoconutfarmers.Would,say,onewhoplantsasinglecoconut
treebealreadyconsideredacoconutfarmerand,therefore,entitledtoownUCPBshares?Ifso,
howmanysharesshallbegiventohim?Thedefinitionofacoconutfarmerandthebasisasto
the number of shares a farmer is entitled to receive for free are important variables to be
determinedbylawandcannotbelefttothediscretionoftheimplementingagency.

Moreover,P.D.No.755didnotidentifyordelineateanyclearconditionastohowthe
dispositionoftheUCPBsharesortheirconversionintoprivateownershipwillredoundtothe
advancementofthenationalpolicydeclaredunderit.Torecall,P.D.No.755seekstoaccelerate
thegrowthanddevelopmentofthecoconutindustryandachieveaverticalintegrationthereof
so that coconut farmers will become participants in, and beneficiaries of, such growth and
[144]
development. TheSandiganbayaniscorrectinitsobservationandrulingthatthesaidlaw
gratuitouslygaveawaypublicfundstoprivateindividuals,andconvertedthemexclusivelyinto
private property without any restriction as to its use that would reflect the avowed national
policyorpublicpurpose.Conversely, the private individuals to whom the UCPB shares were
transferred are free to dispose of them by sale or any other mode from the moment of their
acquisition.Infactandtrueenough,theSandiganbayancategoricallystatedinitsOrderdated
8/22/2015 G.R. Nos. 177857-58
[145]
March11,2003, thatoutofthe72.2%sharesandincreasedcapitalstockoftheFUB(later
[146]
UCPB) allegedly covered by the May 25, 1975 Agreement, entirely paid for by PCA,
7.22%weregiventoCojuangcoandtheremaining64.98%,whichwereoriginallyheldbyPCA
for the benefit of the coconut farmers, were later sold or transferred to noncoconut farmers.
[147]
Even the proposed rewording of the factual allegations of Lobregat, COCOFED, et al.
and Ballares, et al., reveals that indeed, P.D. No. 755 did not provide for any guideline,
standard, condition or restriction by which the said shares shall be distributed to the coconut
farmers that would ensure that the same will be undertaken to accelerate the growth and
developmentofthecoconutindustrypursuanttoitsnationalpolicy.Theproposedrewordingof
admissionsreads:

There were shares forming part of the aforementioned 64.98% which were, after their
distribution, for free, to the coconut farmers as required by P.D. No. 755, sold or transferred
respectively by individual coconut farmers who were then the registered stockholders of those
[148]
UCPBsharestononcoconutfarmers.

Clearly,P.D.No.755,insofarasitgrantsPCAaveritablecarteblanchetodistributetococonut
farmersUCPBsharesatthelevelitmaydetermine,aswellasthefulldispositionofsuchshares
toprivateindividualsintheirprivatecapacitywithoutanyconditionsorrestrictionsthatwould
advance the laws national policy or public purpose, present a case of undue delegation of
legislative power. As such, there is even no need to discuss the validity of the administrative
orders and resolutions of PCA implementing P.D. No. 755. Water cannot rise higher than its
source.

Evenso,PCAAO1andPCAResolutionNo.07874,areinthemselves,infirmunderthe
unduedelegationoflegislativepowers.Particularly,Section9ofPCAAOIprovides:

SECTION 9. Fractional and Undistributed Shares Fractional shares and shares which
remain undistributed as a consequence of the failure of the coconut farmers to register their
COCOFUND receipts or the destruction of the COCOFUND receipts or the registration of
COCOFUND receipts in the name of an unqualified individual, after the final distribution is
made on the basis of the consolidated IBM registration Report as of March 31, 1976 shall be
distributed to all the coconut farmers who have qualified and received equity in the Bank and
shallbeappointedamongthem,asfaraspracticable,inproportiontotheirequityinrelationto
the number of undistributed equity and such further rules and regulations as may hereafter be
promulgated.

8/22/2015 G.R. Nos. 177857-58
The foregoing provision directs and authorizes the distribution of fractional and
undistributed shares as a consequence of the failure of the coconut farmers with Coco Fund
receipts to register them, even without a clear mandate or instruction on the same in any
pertinent existing law. PCA Resolution No. 07874 had a similar provision, albeit providing
more detailed information. The said Resolution identified 51,200,806 shares of the bank that
remained undistributed and PCA devised its own rules as to how these undistributed and
fractional shares shall be disposed of, notwithstanding the dearth as to the standards or
parametersinthelawswhichitsoughttoimplement.

Eventually,whathappenedwasthat,ascorrectlypointedoutbytheSandiganbayan,the
PCAgaveabonanzatosupposedcoconutfarmerswhoalreadygottheirbankshares,bygiving
themextrasharesaccordingtotherulesestablishedonitsownbythePCAunderPCAAO1
andResolutionNo.07874.BecauseofthelackofadequateguidelinesunderP.D.No.755asto
howthesharesweresupposedtobedistributedtothecoconutfarmers,thePCAthusassumed
thatitcoulddecideforitselfhowtheseshareswillbedistributed.Thisobviouslypavedtheway
toplayingfavorites,ifnotallowingoutrightshenanigans.Inthisregard,thisposerraisedinthe
CourtsFebruary16,1993ResolutioninG.R.No.96073isasrelevantthenasitisnow:Howis
itthatsharesofstocksinsuchentitieswhichwasorganizedandfinancedbyrevenuesderived
fromcoconutlevyfundswhichwereimbuedwithpublicinterestendedupinprivatehandswho
arenotfarmersorbeneficiariesandwhetherornottheholdersofsaidstock,whoinoneway
or another had had some part in the collection, administration, disbursement or other
dispositionofthecoconutlevyfundswerequalifiedtoacquirestockinthecorporationsformed
[149]
andoperatedfromthesefunds.

Likewise, the said PCA issuances did not take note of the national policy or public
purpose for which the coconut levy funds were imposed under P.D. No. 755, i.e. the
accelerationofthegrowthanddevelopmentoftheentirecoconutindustry,andtheachievement
of a vertical integration thereof that could make the coconut farmers participants in, and
[150]
beneficiariesof,suchgrowthanddevelopment. Instead, the PCA prioritized the coconut
farmers themselves by fully disposing of the bank shares, totally disregarding the national
policy for which the funds were created. This is clearly an undue delegation of legislative
powers.

8/22/2015 G.R. Nos. 177857-58
Withthispronouncement,thereishardlyanyneedtoestablishthatthesequesteredassetsare
illgottenwealth.Thedocumentaryevidence,theP.D.sandAgreements,provethatthetransfer
of the shares to the more than one million of supposed coconut farmers was tainted with
illegality.

ArticleIII,Section5ofP.D.No.961andArticleIII,Section
5 of P.D. No. 1468 violate Article IX (D) (2) of the 1987
Constitution.

Article III, Section 5 of P.D. No. 961 explicitly takes away the coconut levy funds from the
coffer of the public funds, or, to be precise, privatized revenues derived from the coco levy.
Particularly,theaforesaidSection5provides:

Section 5. Exemptions. The Coconut Consumers Stabilization Fund and the Coconut
Industry Development fund as well as all disbursements of said funds for the benefit of the
coconut farmers as herein authorized shall not be construed or interpreted, under any law or
regulation,as special and/or fiduciary funds, or aspartofthegeneralfunds of the national
government within the contemplation of P.D. No. 711 nor as a subsidy, donation, levy,
governmentfundedinvestment,orgovernmentsharewithinthecontemplationofP.D.898the
intention being that said Fund and the disbursements thereof as herein authorized for the
[151]
benefit of the coconut farmers shall be owned in their own private capacity. (Emphasis
Ours)

ThesameprovisioniscarriedoverinArticleIII,Section5ofP.D.No.1468,theRevised
CoconutIndustryCode:

These identical provisions of P.D. Nos. 961 and 1468 likewise violate Article IX (D),
Section2(1)oftheConstitution,definingthepowersandfunctionsoftheCommissiononAudit
(COA)asaconstitutionalcommission:

Sec. 2. (1) The Commission on Audit shall have the power, authority, and duty to
examine, audit, and settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the
Government,oranyofitssubdivisions,agencies,orinstrumentalities,includinggovernment
owned and controlled corporations with original charters, and on a postaudit basis: (a)
constitutionalbodies,commissionsandofficesthathavebeengrantedfiscalautonomyunderthis
Constitution (b) autonomous state colleges and universities (c) other governmentowned or
[152]
controlledcorporationsandtheirsubsidiaries. (EmphasisOurs)

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AsimilarprovisionwaslikewisepreviouslyfoundinArticleXII(D),Section2(1)ofthe1973
Constitution,thus:

Section2.TheCommissiononAuditshallhavethefollowingpowersandfunctions:

(1) Examine, audit, and settle, in accordance with law and regulations, all accounts
pertaining to the revenues and receipts of, and expenditures or uses of funds and
property, owned or held in trust by, or pertaining to, the Government, or any of its
subdivisions,agencies,orinstrumentalities,includinggovernmentownedandcontrolled
corporationskeepthegeneralaccountsofthegovernmentand,forsuchperiodasmaybe
provided by law, preserve the vouchers pertaining thereto and promulgate accounting
and auditing rules and regulations including those for the prevention of irregular,
[153]
unnecessary, excessive, or extravagant expenditures or use of funds and property.
(EmphasisOurs)

TheConstitution,byexpressprovision,veststheCOA with the responsibility for State audit.
[154]
AsanindependentsupremeStateauditor,itsauditjurisdictioncannotbeunderminedby
any law. Indeed, under Article IX (D), Section 3 of the 1987 Constitution, [n]o law shall be
passedexemptinganyentityoftheGovernmentoritssubsidiaryinanyguisewhatever,orany
[155]
investmentofpublicfunds,fromthejurisdictionoftheCommissiononAudit. Following
themandateoftheCOAandtheparameterssetforthbytheforegoingprovisions,itisclearthat
ithasjurisdictionoverthecoconutlevyfunds,beingspecialpublicfunds.Conversely,theCOA
has the power, authority and duty to examine, audit and settle all accounts pertaining to the
coconut levy funds and, consequently, to the UCPB shares purchased using the said funds.
However, declaring the said funds as partaking the nature of private funds, ergo subject to
privateappropriation,removesthemfromthecofferofthepublicfundsofthegovernment,and
consequently renders them impervious to the COA audit jurisdiction. Clearly, the pertinent
provisionsofP.D.Nos.961and1468divesttheCOAofitsconstitutionallymandatedfunction
andundermineitsconstitutionalindependence.

TheassailedpurchaseofUCPBsharesofstocksusingthecoconutlevyfundspresentsaclassic
example of an investment of public funds. The conversion of these special public funds into
private funds by allowing private individuals to own them in their private capacities is
somethingelse.IteffectivelydeprivestheCOAofitsconstitutionallyinvestedpowertoaudit
andsettlesuchaccounts.Theconversionofthesaidsharespurchasedusingspecialpublicfunds
into pure and exclusive private ownership has taken, or will completely take away the said
fundsfromtheboundarieswithwhichtheCOAhasjurisdiction.Obviously,theCOAiswithout
8/22/2015 G.R. Nos. 177857-58
auditjurisdictionoverthereceiptordisbursementofprivateproperty.Accordingly,ArticleIII,
Section5ofbothP.D.Nos.961and1468mustbestruckdownforbeingunconstitutional,be
they assayed against Section 2(1), Article XII (D) of the 1973 Constitution or its counterpart
provisioninthe1987Constitution.

The Court, however, takes note of the dispositive portion of PSJA, which states that:
[156]

2.Section2ofP.D.No.755whichmandatedthatthecoconutlevyfundsshallnotbeconsidered
special and/or fiduciary funds nor part of the general funds of the national government and
similarprovisionsofSec.3,Art.III,P.D.961andSec.5,Art.III,P.D.1468contravenethe
provisions of the Constitution, particularly, Art. IX (D), Sec. 2 and Article VI, Sec. 29 (3).
(EmphasisOurs)

However, a careful reading of the discussion in PSJA reveals that it is Section 5 of
ArticleIIIofP.D.No.961andnotSection3ofsaiddecree,whichisatissue,andwhichwas
thereforeheldtobecontrarytotheConstitution.ThedispositiveportionofthesaidPSJshould
therefore be corrected to reflect the proper provision that was declared as unconstitutional,
whichisSection5ofArticleIIIofP.D.No.961andnotSection3thereof.

V

TheCIIFCompaniesandtheCIIFBlock
ofSMCsharesarepublicfunds/assets

From the foregoing discussions, it is fairly established that the coconut levy funds are
specialpublicfunds.Consequently,anypropertypurchasedbymeansofthecoconutlevyfunds
shouldlikewisebetreatedaspublicfundsorpublicproperty,subjecttoburdensandrestrictions
attachedbylawtosuchproperty.

Inthiscase,the6CIIFOilMillswereacquiredbytheUCPBusingcoconutlevyfunds.
[157]
Ontheotherhand,the14CIIFholdingcompaniesarewhollyownedsubsidiariesofthe
[158]
CIIFOilMills. Conversely,thesecompanieswereacquiredusingorwhosecapitalization
8/22/2015 G.R. Nos. 177857-58
comesfromthecoconutlevyfunds.However,asinthecaseofUCPB,UCPBitselfdistributeda
partofitsinvestmentsintheCIIFoilmillstococonutfarmers,andretainedapartthereofas
[159]
administrator. The portion distributed to the supposed coconut farmers followed the
[160]
procedureoutlinedinPCAResolutionNo.03378. AndastheadministratoroftheCIIF
[161]
holdingcompanies,theUCPBauthorizedtheacquisitionoftheSMCshares. Infact,these
[162]
companieswereformedororganizedsolelyforthepurposeofholdingtheSMCshares. As
found by the Sandiganbayan, the 14 CIIF holding companies used borrowed funds from the
[163]
UCPBtoacquiretheSMCsharesintheaggregateamountofP1.656Billion.

Since the CIIF companies and the CIIF block of SMC shares were acquired using
coconutlevyfundsfunds,whichhavebeenestablishedtobepublicincharacteritgoeswithout
saying that these acquired corporations and assets ought to be regarded and treated as
government assets. Being government properties, they are accordingly owned by the
[164]
Government,forthecoconutindustrypursuanttocurrentlyexistinglaws.

It may be conceded hypothetically, as COCOFED et al. urge, that the 14 CIIF holding
companiesacquiredtheSMCsharesinquestionusingadvancesfromtheCIIFcompaniesand
fromUCPBloans.ButtherecanbenogainsayingthatthesameadvancesandUCPBloansare
publicincharacter,constitutingastheydoassetsofthe14holdingcompanies,whichinturnare
whollyowned subsidiaries of the 6 CIIF Oil Mills. And these oil mills were organized,
capitalized and/or financed using coconut levy funds. In net effect, the CIIF block of SMC
shares are simply the fruits of the coconut levy funds acquired at the expense of the coconut
[165]
industry. In Republic v. COCOFED, the en banc Court, speaking through Justice (later
Chief Justice) Artemio Panganiban, stated: Because the subject UCPB shares were acquired
with government funds, the government becomes their prima facie beneficial and true owner.
By parity of reasoning, the adverted block of SMC shares, acquired as they were with
government funds, belong to the government as, at the very least, their beneficial and true
owner.

WethusaffirmthedecisionoftheSandiganbayanonthispoint.ButasWehaveearlier
discussed, reiterating our holding in Republic v. COCOFED, the States avowed policy or
8/22/2015 G.R. Nos. 177857-58
purposeincreatingthecoconutlevyfundisforthedevelopmentoftheentirecoconutindustry,
whichisoneofthemajorindustriesthatpromotessustainedeconomicstability,andnotmerely
[166]
the livelihood of a significant segment of the population. Accordingly, We sustain the
rulingoftheSandiganbayaninCCNo.0033FthattheCIIFcompaniesandtheCIIFblockof
SMCsharesarepublicfundsnecessaryownedbythe Government. We, however, modify the
sameinthefollowingwise:ThesesharesshallbelongtotheGovernment,whichshallbeused
onlyforthebenefitofthecoconutfarmersandforthedevelopmentofthecoconutindustry.

Sandiganbayandidnoterrinrulingthat
PCA(AO)No.1,Seriesof1975and
PCArulesandregulations07478did
notcomplywiththenationalstandard
orpolicyofP.D.No.755.

Accordingtothepetitioners,theSandiganbayanhasidentifiedthenationalpolicysought
tobeenhancedbyandexpressedunderSection1inrelationtoSection2ofP.D.No.755.Yet,
so petitioners argue, that court, with grave abuse of discretion, disregarded such policy and
thereafter,ruledthatSection1inrelationtoSection2ofP.D.No.755isunconstitutionalasthe
decreefailedtopromotethepurposeforwhichitwasenactedinthefirstplace.

Wearenotpersuaded.TherelevantassailedportionofPSJAstates:

Weobserve,however,thatthePCA[AO]No.1,Seriesof1975andPCARulesandRegulations
07478,didnottakeintoconsiderationtheaccomplishmentofthepublicpurposeorthenational
standard/policyofP.D.No.755whichisdirectlytoacceleratethedevelopmentandgrowthof
thecoconutindustryandasaconsequencethereof,tomakethecoconutfarmersparticipantsin
andbeneficiariesofsuchgrowthanddevelopment.

Itisabasiclegalpreceptthatcourtsdonotlookintothewisdomofthelawspassed.The
principleofseparationofpowersdemandsthishandsoffattitudefromthejudiciary.Saguiguit
[167]
v.People teacheswhy:

[W]hatthepetitionerasksisfortheCourttodelveintothepolicybehindorwisdomofa
statute,which,underthedoctrineofseparationofpowers,itcannotdo,.Evenwiththebestof
8/22/2015 G.R. Nos. 177857-58
motives, the Court can only interpret and apply the law and cannot, despite doubts about its
wisdom,amendorrepealit.Courtsofjusticehavenorighttoencroachontheprerogativesof
lawmakers,aslongasithasnotbeenshownthattheyhaveactedwithgraveabuseofdiscretion.
Andwhilethejudiciarymayinterpretlawsandevaluatethemforconstitutionalsoundnessandto
strikethemdowniftheyareproventobeinfirm,thissolemnpoweranddutydonotincludethe
discretiontocorrectbyreadingintothelawwhatisnotwrittentherein.

WereproducethepolicydeclaringprovisionofP.D.No.755,thus:

Section 1. Declaration of National Policy. It is hereby declared that the policy of the
Stateistoprovidereadilyavailablecreditfacilitiestothecoconutfarmersatpreferentialrates
that this policy can be efficiently realized by the implementation of the Agreement for the
AcquisitionofaCommercialBankforthebenefitoftheCoconutFarmersexecutedbythe
[PCA],the terms of which Agreement are hereby incorporated by reference and that the
[PCA]isherebyauthorizedtodistribute,forfree,thesharesofstockofthebankitacquiredto
thecoconutfarmersundersuchrulesandregulationsitmaypromulgate.

P.D. No. 755 having stated in no uncertain terms that the national policy of providing cheap
creditfacilitiestococonutfarmersshallbeachievedwiththeacquisitionofacommercialbank,
theCourtiswithoutdiscretiontoruleonthewisdomofsuchanundertaking.Itisabundantly
clear,however,thattheSandiganbayandidnotlookintothepolicybehind,orthewisdomof,
P.D.No.755.Incontext,itdidnomorethantoinquirewhetherthepurposedefinedinP.D.No.
755andforwhichthecocolevyfundwasestablishedwouldbecarriedout,obviouslyhavingin
mindthe(a)dictumthatthepowertotaxshouldonlybeexercisedforapublicpurposeand(b)
commandofSection29,paragraph3ofArticleVIofthe1987Constitutionthat:
(3) All money collected on any tax levied for a special purpose shall be treated as a
specialfundandpaidoutforsuchpurposeonly.Ifthepurposeforwhichaspecialfundwas
created has been fulfilled or abandoned, the balance, if any, shall be transferred to the general
fundsoftheGovernment.(Emphasissupplied)

Fortheabovereason,theaboveassailedactionoftheSandiganbayanwaswellwithinthe
scopeofitssounddiscretionandmandate.
Moreover, petitioners impute on the antigraft court the commission of grave abuse of
discretionforgoingintothevalidityofandindeclaringthecocolevylawsasunconstitutional,
whentherewerestillfactualissuestoberesolvedinafullblowntrialasdirectedbythisCourt.
[168]

PetitionersCOCOFEDandthefarmerrepresentativesmissthepoint.Theyacknowledgedthat
theirallegedownershipofthesequesteredsharesinUCPBandSMCispredicatedonthecoco
8/22/2015 G.R. Nos. 177857-58
levy decrees. Thus, the legality and propriety of their ownership of these valuable assets are
directly related to and must be assayed against the constitutionality of those presidential
decrees.Thisisaprimordialissue,whichmustbedeterminedtoaddressthevalidityoftherest
of petitioners claims of ownership. Verily, the Sandiganbayan did not commit grave abuse of
discretion,aphrasewhich,intheabstract,denotestheideaofcapriciousorwhimsicalexercise
ofjudgmentortheexerciseofpowerinanarbitraryordespoticmannerbyreasonofpassionor
[169]
personalhostilityastobeequivalenttohavingactedwithoutjurisdiction.

TheOperativeFactDoctrinedoesnotapply

Petitioners assert that the Sandiganbayans refusal to recognize the vested rights purportedly
createdunderthecoconutlevylawsconstitutestakingofprivatepropertywithoutdueprocess
of law. They reason out that to accord retroactive application to a declaration of
unconstitutionalitywouldbeunfairinasmuchassuchapproachwouldpenalizethefarmerswho
merelyobeyedthenvalidlaws.

Thiscontentionisspecious.

[170]
In Yap v. Thenamaris Ships Management, the Operative Fact Doctrine was
discussedinthat:

Asageneralrule,anunconstitutionalactisnotalawitconfersnorightsitimposesno
dutiesitaffordsnoprotectionitcreatesnoofficeitisinoperativeasifithasnotbeenpassedat
all.ThegeneralruleissupportedbyArticle7oftheCivilCode,whichprovides:

Art.7.Lawsarerepealedonlybysubsequentones,andtheirviolationornonobservanceshallnot
beexcusedbydisuseorcustomorpracticetothecontrary.

Thedoctrineofoperativefactservesasanexceptiontotheaforementionedgeneralrule.In
PlantersProducts,Inc.v.FertiphilCorporation,weheld:

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of
equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the
existence of a statute prior to a determination of unconstitutionality is an operative fact and may
have consequences which cannot always be ignored. The past cannot always be erased by a new
judicialdeclaration.

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Thedoctrineisapplicablewhenadeclarationofunconstitutionalitywillimposeanundueburdenon
thosewhohavereliedontheinvalidlaw.Thus,itwasappliedtoacriminalcasewhenadeclaration
ofunconstitutionalitywouldputtheaccusedindoublejeopardyorwouldputinlimbotheactsdone
[171]
byamunicipalityinrelianceuponalawcreatingit.

Inthatcase,thisCourtfurtherheldthattheOperativeFactDoctrinewillnotbeappliedasan
exceptionwhentoruleotherwisewouldbeiniquitousandwouldsendawrongsignalthatan
[172]
actmaybejustifiedwhenbasedonanunconstitutionalprovisionoflaw.

TheCourthadthefollowingdisquisitionontheconceptoftheOperativeFactDoctrinein
[173]
thecaseofChavezv.NationalHousingAuthority:

TheoperativefactdoctrineisembodiedinDeAgbayaniv.CourtofAppeals,whereinitisstated
thatalegislativeorexecutiveact,priortoitsbeingdeclaredasunconstitutionalbythecourts,is
validandmustbecompliedwith,thus:

As the new Civil Code puts it: When the courts declare a law to be inconsistent with the
Constitution,theformershallbevoidandthelattershallgovern.Administrativeorexecutiveacts,
orders and regulations shall be valid only when they are not contrary to the laws of the
Constitution. It is understandable why it should be so, the Constitution being supreme and
paramount.Anylegislativeorexecutiveactcontrarytoitstermscannotsurvive.

Such a view has support in logic and possesses the merit of simplicity.It may not however be
sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such
challengedlegislativeorexecutiveactmusthavebeeninforceandhadtobecompliedwith.This
is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed their positions.
What could be more fitting than that in a subsequent litigation regard be had to what has been
done while such legislative or executive act was in operation and presumed to be valid in all
respects.It is now accepted as a doctrine that prior to its being nullified, its existence as a fact
mustbereckonedwith.Thisismerelytoreflectawarenessthatpreciselybecausethejudiciaryis
the governmental organ which has the final say on whether or not a legislative or executive
measureisvalid,aperiodoftimemayhaveelapsedbeforeitcanexercisethepowerofjudicial
review that may lead to a declaration of nullity.It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired prior to such
adjudication.

InthelanguageofanAmericanSupremeCourtdecision:Theactualexistenceofastatute,priorto
such a determination [of unconstitutionality], is an operative fact and may have consequences
whichcannotjustlybeignored.Thepastcannotalwaysbeerasedbyanewjudicialdeclaration.
Theeffectofthesubsequentrulingastoinvaliditymayhavetobeconsideredinvariousaspects,
with respect to particular relations, individual and corporate, and particular conduct, private and
official.This language has been quoted with approval in a resolution in Araneta v. Hill and the
decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of
JusticeZaldivarspeakingfortheCourtinFernandezv.CuervaandCo.(Emphasissupplied.)

TheprinciplewasfurtherexplicatedinthecaseofRietav.PeopleofthePhilippines,thus:

InsimilarsituationsinthepastthisCourthadtakenthepragmaticandrealisticcourseset
forthinChicotCountyDrainageDistrictvs.BaxterBanktowit:
8/22/2015 G.R. Nos. 177857-58

ThecourtsbelowhaveproceededonthetheorythattheActofCongress,having
been found to be unconstitutional, was not a law that it was inoperative,
conferringnorightsandimposingnoduties,andhenceaffordingnobasisforthe
challengeddecree.Itisquiteclear,however,thatsuchbroadstatementsastothe
effect of a determination of unconstitutionality must be taken with
qualifications.Theactualexistenceofastatute,priorto[thedeterminationofits
invalidity],isanoperativefactandmayhaveconsequenceswhichcannotjustly
beignored.Thepastcannotalwaysbeerasedbyanewjudicialdeclaration.The
effect of the subsequent ruling as to invalidity may have to be considered in
variousaspectswithrespecttoparticularconduct,privateandofficial.Questions
of rights claimed to have become vested, of status, of prior determinations
deemedtohavefinalityandacteduponaccordingly,ofpublicpolicyinthelight
of the nature both of the statute and of its previous application, demand
examination.Thesequestionsareamongthemostdifficultofthosewhichhave
engaged the attention of courts, state and federal, and it is manifest from
numerous decisions that an allinclusive statement of a principle of absolute
retroactiveinvaliditycannotbejustified.

Moreover,theCourtruledinChavezthat:

Furthermore, when petitioner filed the instant case against respondents on August 5, 2004, the
JVAs were already terminated by virtue of the MOA between the NHA and RBI. The
respondents had no reason to think that their agreements were unconstitutional or even
questionable, as in fact, the concurrent acts of the executive department lent validity to the
implementationoftheProject.TheSMDRPagreementshaveproducedvestedrightsinfavorof
the slum dwellers, the buyers of reclaimed land who were issued titles over said land, and the
agencies and investors who made investments in the project or who bought SMPPCs. These
propertiesandrightscannotbedisturbedorquestionedafterthepassageofaroundten(10)years
fromthestartoftheSMDRPimplementation.Evidently,theoperativefactprinciplehassetin.
[174]
Thetitlestothelandsinthehandsofthebuyerscannolongerbeinvalidated.

Inthecaseatbar,theCourtrulesthatthedictatesofjustice,fairnessandequitydonotsupport
the claim of the alleged farmerowners that their ownership of the UCPB shares should be
respected.Ourreasons:

1. Said farmers or alleged claimants do not have any legal right to own the UCPB shares
distributed to them. It was not successfully refuted that said claimants were issued receipts
underR.A.6260forthepaymentofthelevythatwentintotheCoconutInvestmentFund(CIF)
uponwhichsharesintheCoconutInvestmentCompanywillbeissued.TheCourtupholdsthe
findingoftheSandiganbayanthatsaidinvestmentcompanyisadifferentcorporateentityfrom
theUnitedCoconutPlantersBank.ThiswasinfactadmittedbypetitionersduringtheApril17,
[175]
2001oralargumentsinG.R.Nos.14706264.

ThepaymentsunderR.A.6260cannotbeequatedwiththepaymentsunderP.D.No.276,the
8/22/2015 G.R. Nos. 177857-58
first having been made as contributions to the Coconut Investment Fund while the payments
underP.D.No.276constitutedtheCoconutConsumersStabilizationFund(CCSF).R.A. 6260
reads:

Section2.DeclarationofPolicy.Itisherebydeclaredtobethenationalpolicytoacceleratethe
development of the coconut industry through the provision of adequate medium and longterm
financing for capital investment in the industry, by instituting a Coconut Investment fund
[176]
capitalizedandadministeredbycoconutfarmersthroughaCoconutInvestmentCompany.

P.D.No.276provides:

1.In addition to its powers granted under Presidential Decree No. 232, the Philippine Coconut
Authority is hereby authorized to formulate andimmediately implement a stabilization scheme
forcoconutbasedconsumergoods,alongthefollowinggeneralguidelines:

(a).

TheproceedsfromthelevyshallbedepositedwiththePhilippineNationalBankorany
othergovernmentbanktotheaccountoftheCoconutConsumersStabilizationFund,asa
separatetrustfundwhichshallnotformpartofthegeneralfundofthegovernment.

(b)TheFundshallbeutilizedtosubsidizethesaleofcoconutbasedproductsatpricesset
by the Price Control Council, under rules and regulations to be promulgated by the
[177]
PhilippineConsumersStabilizationCommittee.

ThePCA,viaResolutionNo.04575datedMay21,1975,clarifiedthedistinctionbetweenthe
CIFlevypaymentsunderR.A.6260andtheCCSFlevypaidpursuanttoP.D.276,thusly:

It must be remembered that the receipts issued under R.A. No. 6260 were to be registered in
exchangeforsharesofstockintheCoconutInvestmentCompany(CIC),whichobviouslyisa
differentcorporateentityfromUCPB.ThisfactwasadmittedbypetitionersduringtheApril17,
2001oralargumentsinG.R.Nos.14706264.

Infact,whiletheCIFlevypaymentsclaimedtohavebeenpaidbypetitionersweremeantforthe
CIC,thedistributionofUCPBstockcertificatestothecoconutfarmers,ifatall,weremeantfor
the payors of the CCSF in proportion to the coconut farmers CCSF contributions pursuant to
PCAResolutionNo.04575datedMay21,1975:

RESOLVED, FURTHER, That the amount of ONE HUNDRED FIFTY
MILLION (P150,000,000.00) PESOS be appropriated and set aside from
available funds of the PCA to be utilized in payment for the shares of stock of
suchexistingcommercialbankandthattheTreasurerbeinstructedtodisbursethe
saidamountaccordingly.
8/22/2015 G.R. Nos. 177857-58

RESOLVED,FINALLY,Thatbedirectedtoorganizeateamwhichshallprepare
alistofcoconutfarmerswhohavepaidthelevyandcontributedtothe[CCSF]
and to prepare a stock distribution plan to the end that the aforesaid coconut
farmersshallreceivecertificatesofstockofsuchcommercialbankinproportion
totheircontributionstotheFund.

Unfortunately, the said resolution was never complied with in the distribution of the socalled
farmersUCPBshares.

The payments therefore under R.A. 6260 are not the same as those under P.D. No. 276. The
amounts of CIF contributions under R.A. 6260 which were collected starting 1971 are
undeniably different from the CCSF levy under P.D. No. 276, which were collected starting
1973.Thetwo(2)groupsofclaimantsdiffernotonlyinidentitybutalsointhelevypaid,the
amountofproduceandthetimethegovernmentstartedthecollection.

Thus,petitionersandtheallegedfarmersclaimingthempursuanttoR.A.6260donothaveany
legal basis to own the UCPB shares distributed to them, assuming for a moment the legal
feasibilityoftransferringthesesharespaidfromtheR.A.6260levytoprivateindividuals.

2.TograntalltheUCPBsharestopetitionersanditsallegedmemberswouldbeiniquitousand
prejudicialtotheremaining4.6millionfarmerswhohavenotreceivedanyUCPBshareswhen
infacttheyalsomadepaymentstoeithertheCIFortheCCSFbutdidnotreceiveanyreceiptor
whowasnotabletoregistertheirreceiptsormisplacedthem.

Section1ofP.D.No.755whichwasdeclaredunconstitutionalcannotbeconsideredtobethe
legalbasisforthetransferofthesupposedprivateownershipoftheUCPBsharestopetitioners
whoallegedlypaidthesameunderR.A.6260. The Solicitor General is correct in concluding
that such unauthorized grant to petitioners constitutes illegal deprivation of property without
dueprocessoflaw.DueprocessoflawwouldmeanthatthedistributionoftheUCPB shares
shouldbemadeonlytofarmerswhohavepaidthecontributiontotheCCSFpursuanttoP.D.
No. 276, and not to those who paid pursuant to R.A. 6260. What would have been the
appropriatedistributionschemewasviolatedbySection1ofP.D.No.755whenitrequiredthat
theUCPBsharesshouldbedistributedtococonutfarmerswithoutdistinctioninfact,givingthe
PCAlimitlesspowerandfreehand,todeterminewhothesefarmersare,orwouldbe.

8/22/2015 G.R. Nos. 177857-58
WecannotsanctiontheawardoftheUCPBsharestopetitionerswhoappeartorepresentonly
1.4millionmemberswithoutanylegalbasistotheextremeprejudiceoftheother4.6million
coconutfarmers(ExecutiveOrderNo.747fixedthenumberofcoconutfarmersat6millionin
1981). Indeed, petitioners constitute only a small percentage of the coconut farmers in the
Philippines.Thus,theSandiganbayancorrectlydeclaredthattheUCPBsharesaregovernment
assets in trust for the coconut farmers, which would be more beneficial to all the coconut
farmersinsteadofaveryfewdubiousclaimants

3. The Sandiganbayan made the finding that due to enormous operational problems and
administrative complications, the intended beneficiaries of the UCPB shares were not able to
receivethesharesduetothem.Toreiteratewhattheantigraftcourtsaid:
The actual distribution of the bank shares was admittedly an enormous
operationalproblemwhichresultedinthefailureoftheintendedbeneficiariesto
receivetheirsharesofstocksinthebank,asshownbytherulesandregulations,
issuedbythePCA,withoutadequateguidelinesbeingprovidedtoitbyP.D.No.
755.PCAAdministrativeOrderNo.1,Seriesof1975(August20,1975),Rules
and Regulations Governing the Distribution of Shares of Stock of the Bank
AuthorizedtobeAcquiredPursuanttoPCABoardResolutionNo.24675,quoted
hereunder discloses how the undistributed shares of stocks due to anonymous
coconut farmers or payors of the coconut levy fees were authorized to be
distributedtoexistingshareholdersoftheBank:

Section 9. Fractional and Undistributed Shares Fractional shares and
shareswhichremainundistributedasaconsequenceofthefailureofthe
coconutfarmerstoregistertheirCOCOFUNDreceiptsorthedestruction
of the COCOFUND receipts or the registration of the COCOFUND
receipts in the name of an unqualified individual, after the final
distribution is made on the basis of the consolidated IBM registration
Report as of March 31, 1976 shall be distributed to all the coconut
farmerswhohavequalifiedandreceivedequityintheBankandshallbe
apportioned among them, as far as practicable, in proportion to their
equityinrelationtothenumberofundistributedequityandsuchfurther
rulesandregulationsasmayhereafterbepromulgated.

TheforegoingPCAissuancewasfurtheramendedbyResolutionNo.07478,still
citingthesameproblemofdistributionofthebankshares.ThislatterResolution
isquotedasfollows:

RESOLUTIONNO.07478

AMENDMENTOFADMINISTRATIVEORDER
NO.1,SERIESOF1975,GOVERNINGTHE
DISTRIBUTIONOFSHARES

WHEREAS,pursuanttoPCABoardResolutionNo.24675,thetotalparvalueof
the shares of stock of the Bank purchased by the PCA for the benefit of the
coconut farmers is P85,773,600.00 with a par value of P1.00 per share or
8/22/2015 G.R. Nos. 177857-58
equivalentto85,773.600shares

WHEREAS, out of the 85,773,600 shares, a total of 34,572,794 shares have
alreadybeendistributedinaccordancewithAdministrativeOrderNo.1,Seriesof
1975,towit:

FirstDistribution12,573,059
SecondDistribution10,841,409
ThirdDistribution11,158,326
34,572,794

WHEREAS, there is, therefore, a total of 51,200,806 shares still available for
distributionamongthecoconutfarmers

WHEREAS,itwasdeterminedbythePCABoard,inconsonancewiththepolicy
ofthestateontheintegrationofthecoconutindustry,thattheBanksharesmust
bewidelydistributedaspossibleamongthecoconutfarmers,forwhichpurposea
national census of coconut farmers was made through the Philippine Coconut
ProducersFederation(COCOFED)

WHEREAS,toimplementsuchdeterminationofthePCABoard,thereisaneed
toaccordinglyamendAdministrativeOrderNo.1,Seriesof1975

NOW,THEREFORE,BEITRESOLVED,ASITISHEREBYRESOLVED,that
theremaining51,200,806sharesofstockoftheBankauthorizedtobeacquired
pursuant to the PCA Board Resolution No. 24675 dated July 25, 1975 be
distributedasfollows:

(1)Allthecoconutfarmerswhohavereceivedtheirsharesintheequityofthe
BankonthebasisofSection8ofAdministrativeOrderNo.1,Seriesof1975,
shallreceiveadditionalshareforeachsharepresentlyownedbythem

(2)Fractionalsharesshallbecompletedintofullshares,andsuchfullshares
shall be distributed among the coconut farmers who qualified for the
correspondingfractionalshares

(3) The balance of the shares, after deducting those to be distributed in
accordance with (1) and (2) above, shall be transferred to COCOFED for
distribution, immediately after completion of the national census of coconut
farmers prescribed under Resolution No. 03378 of the PCA Board, to all
thosewhoaredeterminedbythePCABoardtobebonafidecoconutfarmers
andhavenotreceivedsharesofstockoftheBank.Thesharesshallbeequally
determinedamongthemonthebasisofpercapita.

RESOLVED, FURTHER, That the rules and regulations under Administrative
Order No. 1, Series of 1975, which are inconsistent with this Administrative
Orderbe,astheyarehereby,repealedand/oramendedaccordingly.

Thus, when 51,200,806 shares in the bank remained undistributed, the PCA deemed it
propertogiveabonanzatococonutfarmerswhoalreadygottheirbankshares,bygivingthem
anadditionalshareforeachshareownedbythemandbyconvertingtheirfractionalsharesinto
fullshares.Therestoftheshareswerethentransferredtoaprivateorganization,theCOCOFED,
fordistributiontothosedeterminedtobebonafidecoconutfarmerswhohadnotreceivedshares
ofstockoftheBank.Thedistributiontothelatterwasmadeonthebasisofpercapita,meaning
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withoutregardtotheCOCOFUNDreceipts.ThePCAconsidereditselffreetodisregardthesaid
receipts in the distribution of the shares although they were considered by the May 25, 1975
Agreement between the PCA and defendant Cojuangco (par. [8] of said Agreement) and by
Sections1,3,4,6and9,PCAAdministrativeOrderNo.1,Seriesof1975asthebasisforthe
distributionofshares.

ThePCAthusassumed,duetolackofadequateguidelinessetbyP.D.No.755,thatit
hadcompleteauthoritytodefinewhoarethecoconutfarmersandtodecideastowhoamongthe
coconutfarmersshallbegiventhegiftofbankshareshowmanysharesshallbegiventothem,
and what basis it shall use to determine the amount of shares to be distributed for free to the
coconut farmers. In other words, P.D. No. 755 fails the completeness test which renders it
constitutionallyinfirm.

DuetonumerousflawsinthedistributionoftheUCPBsharesbyPCA,itwouldbebestforthe
interestofallcoconutfarmerstoreverttheownershipoftheUCBPsharestothegovernment
fortheentirecoconutindustry,whichincludesthefarmers

4.TheCourtalsotakesjudicialcognizanceofthefactthatanumber,ifnotall,ofthecoconut
farmers who sold copra did not get the receipts for the payment of the coconut levy for the
reasonthatthecopratheyproducedwereboughtbytradersormiddlemenwhointurnsoldthe
same to the coconut mills. The reality on the ground is that it was these traders who got the
receipts and the corresponding UCPB shares. In addition, some uninformed coconut farmers
whoactuallygottheCOCOFUNDreceipts,notappreciatingtheimportanceandvalueofsaid
receipts,havealreadysoldsaidreceiptstononcoconutfarmers,therebydeprivingthemofthe
benefitsunderthecoconutlevylaws.Ergo, the coconut farmers are the ones who will not be
benefitedbythedistributionoftheUCPBsharescontrarytothepolicybehindthecoconutlevy
laws. The nullification of the distribution of the UCPB shares and their transfer to the
governmentforthecoconutindustrywill,therefore,ensurethatthebenefitstobedeprivedfrom
theUCPBshareswillactuallyaccruetotheintendedbeneficiariesthegenuinecoconutfarmers.

Fromtheforegoing,itishighlyinappropriatetoapplytheoperativefactdoctrinetotheUCPB
shares. Public funds, which were supposedly given utmost safeguard, were haphazardly
distributed to private individuals based on statutory provisions that are found to be
constitutionallyinfirmonnotonlyonebutonavarietyofgrounds.Worsestill,therecipientsof
the UCPB shares may not actually be the intended beneficiaries of said benefit. Clearly,
applying the Operative Fact Doctrine would not only be iniquitous but would also serve
injusticetotheGovernment,tothecoconutindustry,andtothepeople,who,whetherwillingly
8/22/2015 G.R. Nos. 177857-58
or unwillingly, contributed to the public funds, and therefore expect that their Government
wouldtakeutmostcareofthemandthattheywouldbeusednoless,thanforpublicpurpose.

We clarify that PSJA 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,whichshallbedecidedseparatelybythisCourt.Said petition should accordingly
notbeaffectedbythisDecisionsavefordeterminativelylegalissuesdirectlyaddressedherein.

WHEREFORE,thepetitionsinG.R.Nos.17785758and178793areherebyDENIED.
ThePartialSummaryJudgmentdatedJuly11,2003inCivilCaseNo.0033Aasreiteratedwith
modificationinResolutiondatedJune5,2007,aswellasthePartialSummaryJudgmentdated
May 7, 2004 in Civil Case No. 0033F, which was effectively amended in Resolution dated
May 11, 2007, are AFFIRMED with MODIFICATION, only with respect to those issues
subjectofthepetitionsinG.R.Nos.17785758and178193.However,theissuesraisedinG.R.
No.180705inrelationtoPartialSummaryJudgmentdatedJuly11,2003andResolutiondated
June5,2007inCivilCaseNo.0033A,shallbedecidedbythisCourtinaseparatedecision.

ThePartialSummaryJudgmentinCivilCaseNo.0033AdatedJuly11,2003,ishereby
MODIFIED,andshallreadasfollows:

WHEREFORE,inviewoftheforegoing,Weruleasfollows:

SUMMARYOFTHECOURTSRULING.

A.Re:CLASSACTIONMOTIONFORASEPARATESUMMARYJUDGMENTdatedApril
11,2001filedbyDefendantMariaClaraL.Lobregat,COCOFED,etal.,andBallares,etal.

TheClassActionMotionforSeparateSummaryJudgmentdatedApril11,2001filedby
defendantMariaClaraL.Lobregat,COCOFED,etal.andBallares,etal.,isherebyDENIEDfor
lackofmerit.

B. Re:MOTIONFORPARTIALSUMMARYJUDGMENT(RE:COCOFED,ETAL.AND
BALLARES,ETAL.)datedApril22,2002filedbyPlaintiff.

1.a.TheportionofSection1ofP.D.No.755,whichreads:

andthatthePhilippineCoconutAuthorityisherebyauthorizedtodistribute,forfree,the
shares of stock of the bank it acquired to the coconut farmers under such rules and
8/22/2015 G.R. Nos. 177857-58
regulationsitmaypromulgate.

takeninrelationtoSection2ofthesameP.D.,isunconstitutional:(i)forhavingallowed
theuseoftheCCSFtobenefitdirectlyprivateinterestbytheoutrightandunconditional
grantofabsoluteownershipoftheFUB/UCPBsharespaidforbyPCAentirelywiththe
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
havingundulydelegatedlegislativepowertothePCA.

b. The implementing regulations issued by PCA, namely, Administrative Order No. 1,
Seriesof1975andResolutionNo.07478arelikewiseinvalidfortheirfailuretosee
toitthatthedistributionofsharesserveexclusivelyoratleastprimarilyordirectly
theaforementionedpublicpurposeornationalpolicydeclaredbyP.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
governmentandsimilarprovisionsofSec.5,Art.III,P.D.No.961andSec.5,Art.III,
P.D. No. 1468 contravene the provisions of the Constitution, particularly, Art. IX (D),
Sec.2andArticleVI,Sec.29(3).

3.Lobregat,COCOFED,etal.andBallares,etal.havenotlegallyandvalidlyobtainedtitle
of ownership over the subject UCPB shares by virtue of P.D. No. 755, the Agreement
datedMay25,1975betweenthePCAanddefendantCojuangco,andPCAimplementing
rules,namely,Adm.OrderNo.1,s.1975andResolutionNo.07478.

4. ThesocalledFarmersUCPBsharescoveredby64.98%oftheUCPBsharesofstock,
whichformedpartofthe72.2%ofthesharesofstockoftheformerFUBandnowofthe
UCPB,theentireconsiderationofwhichwaschargedbyPCAtotheCCSF,arehereby
declaredconclusivelyownedby,thePlaintiffRepublicofthePhilippines.

SOORDERED.

ThePartialSummaryJudgmentinCivilCaseNo.0033FdatedMay7,2004,ishereby
MODIFIED,andshallreadasfollows:

WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY
JUDGMENT(RE:CIIFBLOCKOFSMCSHARESOFSTOCK)datedAugust8,2005of
theplaintiffisherebydeniedforlackofmerit.However,thisCourtorderstheseveranceofthis
8/22/2015 G.R. Nos. 177857-58
particular claim of Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now
consideredaseparatefinalandappealablejudgmentwithrespecttothesaidCIIFBlockofSMC
sharesofstock.

ThePartialSummaryJudgmentrenderedonMay7,2004ismodifiedbydeletingthelast
paragraphofthedispositiveportion,whichwillnowread,asfollows:

WHEREFORE,inviewoftheforegoing,weholdthat:

TheMotionforPartialSummaryJudgment(Re:DefendantsCIIFCompanies,14Holding
CompaniesandCocofed,etal)filedbyPlaintiffisherebyGRANTED.ACCORDINGLY,THE
CIIFCOMPANIES,NAMELY:

1.SouthernLuzonCoconutOilMills(SOLCOM)
2.CagayandeOroOilCo.,Inc.(CAGOIL)
3.IliganCoconutIndustries,Inc.(ILICOCO)
4.SanPabloManufacturingCorp.(SPMC)
5.GranexportManufacturingCorp.(GRANEX)and
6.LegaspiOilCo.,Inc.(LEGOIL),

ASWELLASTHE14HOLDINGCOMPANIES,NAMELY:

1.SorianoShares,Inc.
2.ACSInvestors,Inc.
3.RoxasShares,Inc.
4.ArcInvestorsInc.
5.TodaHoldings,Inc.
6.APHoldings,Inc.
7.FernandezHoldings,Inc.
8.SMCOfficersCorps,Inc.
9.TeDeumResources,Inc.
10.AngloVentures,Inc.
11.RandyAlliedVentures,Inc.
12.RockSteelResources,Inc.
13.ValhallaPropertiesLtd.,Inc.and
14.FirstMeridianDevelopment,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
PREEMPTIVE 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
TOTHEGOVERNMENT.

THECOURTAFFIRMSTHERESOLUTIONSISSUEDBYTHESANDIGANBAYANON
JUNE5,2007INCIVILCASENO.0033AANDONMAY11,2007INCIVILCASENO.
0033F, THAT THERE IS NO MORE NECESSITY OF FURTHER TRIAL WITH
RESPECT TO THE ISSUE OF OWNERSHIP OF (1) THE SEQUESTERED UCPB
SHARES,(2)THECIIFBLOCKOFSMCSHARES,AND(3)THECIIFCOMPANIES.AS
8/22/2015 G.R. Nos. 177857-58
THEY HAVE FINALLY BEEN ADJUDICATED IN THE AFOREMENTIONED

PARTIALSUMMARYJUDGMENTSDATEDJULY11,2003ANDMAY7,2004.

SOORDERED.

CostsagainstpetitionersCOCOFED,etal.inG.R.Nos.17785758andDanilaS.UrsuainG.R.
No.178193.

PRESBITEROJ.VELASCO,JR.
AssociateJustice
WECONCUR:

RENATOC.CORONA
ChiefJustice

NoPartIamapetitionerinrelated
casewithsameissueGR147036&
147811Nopart
ANTONIOT.CARPIOTERESITAJ.LEONARDODECASTRO
AssociateJusticeAssociateJustice

(Onofficialleave)
ARTUROD.BRIONDIOSDADOM.PERALTA

LUCASP.BERSAMINMARIANOC.DELCASTILLO

ROBERTOA.ABADMARTINS.VILLARAMA,JR.

8/22/2015 G.R. Nos. 177857-58

JOSEP.PEREZJOSEC.MENDOZA

MARIALOURDESP.ARANALSERENOBIENVENIDOL.REYES

ESTELAM.PERLASBERNABE
AssociateJustice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt.

RENATOC.CORONA
ChiefJustice

*Nopart.
**Onofficialleave.
[1]
PertheAffidavitofAtty.ArturoLiquete,thenPCABoardSecretary,LobregatwasamemberofthePCABoardforthe
mostpartfrom1970to1985rollo(G.R.No.180705),p.804.
[2]
G.R.No.96073,January23,1995,240SCRA376.
[3]
SouthernLuzonCoconutOilMills,CagayandeOroOilCo.Inc.,IliganCoconutIndustries,SanPabloManufacturing
Corp,GranexportManufacturingCorp.,&LegaspiOilCo.,Inc.
8/22/2015 G.R. Nos. 177857-58
[4]
Composed of Soriano Shares, ASC Investors, ARC Investors, Roxas Shares, Toda Holdings, AP Holdings, Fernandez
Holdings,SMCOfficersCorps.,TeDeumResources,andAngloVentures,RandyAlliedVentures,RockSteelResources,Valhalla
PropertiesLtd.,andFirstMeridianDevelopment,allnamesendingwiththesuffixCorp.orInc.
[5]
Asidefrombeingcoconutfarmers,petitionersdelRosarioandEspinarepresentthemselvesasDirectorsofCOCOFED
andtheultimatebeneficialownersofCIIFcompanies.
[6]
Penned by Associate Justice Teresita LeonardoDe Castro (now a member of this Court), concurred in by Associate
JusticesDiosdadoM.Peralta(nowalsoamemberofthisCourt)andFranciscoH.Villaruz,Jr.rollo(G.R.Nos.17785758),pp.205
287.
[7]
Id.at289327.
[8]
Id.at32939.
[9]
Id.at341405.
[10]
Id.at40725.
[11]
Id.at42742.
[12]
DatedSeptember2,2009,id.at212749.
[13]
SeePSJA.
[14]
On July 19, 2011, petitioner Eduardo M. Cojuangco, Jr. also filed a Motion to Deconsolidate G.R. No. 180705 from
G.R.Nos.17785758and178193.
[15]
Section8.TheCoconutInvestmentFund.Thereshallbeleviedonthecoconutfarmerasumwhichshallbeconverted
intosharesofstockofthe[CIC]uponitsincorporation.Foreveryfiftyfivecentavos(P0.55)socollected,fiftycentavos(P0.50)shall
besetasidetoconstituteaspecialfund,tobeknownastheCoconutInvestmentFund,whichshallbeusedexclusivelytopaythe
subscriptionbythePhilippineGovernmentforandinbehalfofthecoconutfarmerstothecapitalstockofsaidCompany:Provided,.
Provided, further, That the (PHILCOA) shall, in consultation with [COCOFED] prescribe and promulgate the necessary rules,
regulationsandproceduresforthecollectionofsuchlevyandissuanceofthecorrespondingreceipts.(Emphasisadded.)
[16]
COCOFEDv.PCGG,G.R.No.75713,October2,1989,178SCRA236.
[17]
R.A.6260,Sec.9.
[18]
Republicv.Sandiganbayan, G.R. No. 118661, January 22, 2007 not to be confused with an earlier cited case of the
sametitle.
[19]
PerP.D.No.623,3boardseatsofthePCA7manboardwerereservedtothoserecommendedbyCOCOFED.
[20]
For example: Article III, Sec. 2(c) of the Coconut Industry Code (P.D. No. 961) allows the use of the CCSF levy to
financethedevelopmentandoperatingexpensesofCOCOFEDinclusiveofitsprojectsArt.II,Sec.3(k)ofthesameCodeempowers
thePCAtocollectafeefromdesiccatingfactorytodefrayitsoperatingexpenses.
[21]
Republicv.COCOFED,G.R.Nos.1406264,December14,2001,372SCRA462.
[22]
P.D.No.276,Sec.1(b).
[23]
P.D.No.711isentitled:AbolishingallExistingSpecialandFiduciaryFundsandTransferringtotheGeneralFundthe
OperationsandFundingofallSpecialandFiduciaryFunds.
[24]
VitalLegalDocuments,Vol.69,pp.9095.
[25]
Republicv.Sandiganbayan,G.R.No.118661,January22,2007,512SCRA25.
[26]
Atotalof33.1millionsharesRepublicv.Sandiganbayan,supra.
[27]
AnnexGtoPetitioninG.R.No.180705rollo,pp.459463.
[28]
Noparticulardaywasindicated,althoughthespecialpowerofattorneygrantedtoAtty.EdgardoAngarabyCojuangco
fortheformertosigntheAgreementwasdatedMay25,1975.
[29]
AnnexItoPetitioninG.R.No.180705,rollo,pp.46676.
[30]
RepresentedbyLobregat.
8/22/2015 G.R. Nos. 177857-58
[31]
Albeitnotmentionedinthefirstcontractdocument,thenotionofanoptionwasadvertedtointheSPAinfavorofMr.
AngaraandinthesecondcontractdocumentbetweenPCAandCojuangco.
[32]
OnMay30,1975,FUBissuedStockCertificateNos.745and746covering124,080and5,880shares),respectively,in
thenameof[PCA]forthebenefitofthecoconutfarmersofthePhilippinesRepublicv.Sandiganbayan,supranote25.
[33]
PSJA,p.4.
[34]
Republicv.COCOFED,G.R.Nos.14706264,December14,2001,372SCRA462,477
[35]
Republicv.Sandiganbayan,G.R.No.118661,January22,2007,512SCRA25.
[36]
ThevalidityandproprietyoftheseprocessesweresustainedbytheCourtinBASECOv.PCGG,No.L75885,May27,
1987,150SCRA181.
[37]
PertheSandiganbayansResolutionofOctober1,1991.
[38]
TheComplaintsinCC0033AandCC0033Fcontaincommonallegations,asshallbedetailedlater.
[39]
Rollo(G.R.Nos.17785758),p.216.
[40]
Reportedin372SCRA2001.
[41]
Named as defendants were Cojuangco, Ferdinand and Imelda Marcos, Lobregat, Enrile, Urusa, Jose Eleazar, Jr. and
HerminigildoZaycorollo(G.R.No.180705),pp.48100.
[42]
ClassActionPetitionforReview,pp.3841Rollo(G.R.Nos.17785758),pp.5154.
[43]
UrsuasPetitionforReview,pp.1114Rollo(G.R.No.178193),pp.2629.
[44]
Initspertinentparts,PCAA.O.No.1reads:

Section 1. Eligible Coconut Farmers. All coconut farmers who have paid to the [CIF] and registered their COCOFUND
receiptsandregisteredthesamewiththe[PCA]shallbeentitledtoaproportionateshareoftheequityintheBank,subjecttotheterms
andconditionshereinprovided.

SECTION.3EligibleCOCOFUNDReceipts.AllCOCOFUNDreceiptsissuedbythePCAfromtheeffectivityofR.A.6260
uptoJune30,1975shallbeconsideredeligibleforregistrationbythecoconutfarmersforpurposesofqualifyingthemtoparticipate
intheequityintheBank.

SECTION 4, Registered COCOFUND Receipts All COCOFUND receipts eligible under Section 3 hereof and which are
registeredonorbeforeDecember31,1975shallbequalifiedforequityparticipationintheBank.

SECTION7AdditionalPeriodofRegistrationToenableallqualifiedfarmerstoparticipateinthesharingoftheequityin
theBank,theperiodofregistrationshallbeextendeduptoMarch31,1976,thereafteranyunregisteredCOCOFUNDreceiptscanno
longerqualifyforregistrationforpurposesoftheserulesandregulations.
[45]
COCOFEDetal.sPetition,rollo(G.R.Nos.17785758),pp.5253.
[46]
The list was not adduced in March 2001, the Republic filed a Motion Ad Cautelam for Leave to Present Additional
EvidencewhichCOCOFEDopposed.
[47]
Supranote34.
[48]
Rollo(G.R.Nos.17785758),pp.830871.
[49]
SeePSJA,p.2.
[50]
Rollo(G.R.No.180705),pp.956961.
[51]
Supranote7.
[52]
Supranote34.
[53]
TheAnswerInInterventionofCOCOFEDetal.,readsinpartasfollows:

1.2.ThemorethanonemillionCOCOFEDmembersaretheregisteredownersand/orthebeneficialownersofall,oratleast
8/22/2015 G.R. Nos. 177857-58
notlessthan(51%)ofthecapitalstockoftheCIIFCompanies.TheCIIFCompanieshavewhollyownedsubsidiariesdescribedasthe
14 CIIF Holding Companies. These 14 are the registered owners of SMC shares. As such, COCOFED et al., and the COCOFED
membersaretheultimatebeneficialownersofSMCshares.

1.3. The individual COCOFED members are filing and prosecuting this INTERVENTION in their capacities as: . b)
Coconut farmers/producers who registered receipts that were issued in their favor by the [PCA] as required by Rep. Act No. 6260
(hereinafter referred to as COCOFUND Receipt Law) for themselves and for and on behalf of the more than one million coconut
farmerswhoaresimilarlysituated.

[54]
Section9.InvestmentFortheBenefitoftheCoconutFarmers.Notwithstandinganylawtothecontrarynotwithstanding,
the bank acquired under PD 755 is hereby given full power and authority to make investments in the form of shares of stock in
corporationsengagedactivitiesrelatingtothecoconutandotherpalmoilsindustry.
[55]
Section 10. Distribution to Coconut Farmers. The investment made by the bank as authorized under Section 9 hereof
shallallbeequitablydistributed,forfree,bythebanktothecoconutfarmers.
[56]
OSGsComment,pp.3334rollo(G.R.Nos.17785758),pp.688689.
[57]
TheMOTIONFORJUDGMENT ON THE PLEADINGS AND/OR FOR PARTIALSUMMARY JUDGMENT (Re:
Defendants CIIF Companies, 14 Holding Companies and COCOFED, et al.) dated July 12, 2002 filed by plaintiff Republic of the
PhilippinesinvolvestheTwentySevenPercentCoconutIndustryInvestmentFund(CIIF)BlockofSanMiguelCorporation(SMC)
sharesofstock.Asculledfromtherecordsofthiscase,thefollowingaretheadmittedfactsorthefactsthatappearwithoutsubstantial
controversy:

1.Theabovementioned27%BlockofSMCSharesareregisteredinthenamesoffourteen(14)holdingcompanieslistedhereunder:

3. The CIIF is an accumulation of a portion of the Coconut Consumers Stabilization Fund (CCSF) and the Coconut Industry
DevelopmentFund(CIDF),whichismandatedbySection2(d)andSection9and10,ArticleIII,PresidentialDecrees(P.D.)No.961
andNo.1468tobeutilizedbytheUnitedCoconutPlantersBank(UCPB)forinvestmentintheformofsharesofstockincorporations
organizedforthepurposeofengagingintheestablishmentandtheoperationofindustriesandcommercialactivitiesandotherallied
businessundertakingsrelatingtococonutandotherpalmoilsindustryinallitsaspects.Thecorporations,includingtheirsubsidiaries
oraffiliateswhereintheCIIFhasbeeninvestedarereferredtoasCIIFcompanies.
4.TheinvestmentsmadebyUCPBinCIIFcompaniesarerequiredbythesaidDecreestobeequitablydistributedforfreebythesaid
banktothecoconutfarmersexceptsuchportionoftheinvestmentwhichitmayconsidernecessarytoretaintoinsurecontinuityand
adequacyoffinancingoftheparticularendeavor.
5.Through PCA Resolution No. 13077 dated July 19, 1977 (Exh. 337Farmer), the Philippine Coconut Authority (PCA),
afterhavingascertainedthattheCCSFcollectionsaremorethansufficienttofinancetheprimarypurposesforwhichtheCCSFisto
be utilized, ordered as follows:all unexpected appropriations from out of the CCSF Collections as of this date shall constitute the
initialfundsoftheCoconutIndustryInvestmentFund(CIIF),andthattheActingAdministratorofthePhilippineCoconutAuthorityis
herebydirectedtodelivertotheUnitedCoconutPlantersBankallsuchunexpendedsums.
6.TheUCPBacquiredcontrollinginterestsintheCIIFOilMillsmentionedinparagraph2aboveusingtheCIIF.
7.TheUCPBastrusteefortheCIIFandincompliancewithP.D.1468,prescribedtheequitabledistributionforfreetothecoconut
farmers of the shares of the CIIF Companies and the measures that would afford the widest distribution of the investment among
coconutfarmers.(ExcerptsofMinutesoftheUCPBBoardofDirectorsMeetingheldonNovember17,1981)(Exh.346Farmer).
8.The UCPB distributed a part of the investments made in such companies to the identified coconut farmers and retained part as
administratoroftheCIIF.ThesaididentifiedcoconutfarmersandtheUCPBforthebenefitofthecoconutfarmersaretheregistered
controllingstockholdersoftheoutstandingcapitalstockofthedefendantsCIIFOilMillslistedinparagraph2above.
9.In1983,theUCPB,asadministratoroftheCIIF,authorizedSOLCOM,CAGOIL,ILICOCO,GRANEXandLEGOILto
acquire33,133,266sharesofstockofSanMiguelCorporation(SMC).
10.ToholdtheSMCShares,defendants14HoldingCompanieswereincorporatedundertheCorporationCodeasfollows:.
11.All the outstanding capital stock of defendants 14 Holding Companies are owned by defendants CIIF Oil Mills in the
followingproportion:.
12.The terms and conditions for the purchase of the CIIF Block of SMC Shares were contained in a written agreement
enteredintobetweendefendantEduardoM.Cojuangco,Jr.andlateDonAndresSoriano,Jr.TofinancetheacquisitionoftheCIIF
Block of SMC shares, the parent CIIF Companies extended cash advances to the 14 Holding Companies. The 14 CIIF Holding
CompaniesalsouseditsincorporatingequityandborrowedfundsfromUCPB.
13.ThepurportedfarmeraffidavitssubmittedbydefendantsCOCOFED,etal.inCivilCasesNo.0033A,BandFuniformlyallege,
mutatismutandis,asbasisoftheirclaimfortheCIIFBlockofSMCShares,that:
a.theyareallegedlycoconutfarmerswhosupposedlysoldcoconutproducts
b.inthesupposedsalethereof,theyallegedlyreceivedCOCOFUNDreceiptspursuanttoRANo.6260
8/22/2015 G.R. Nos. 177857-58
c.theyallegedlyregisteredthesaidCOCOFUNDreceiptsand
d.byvirtuethereof,andunderRANo.6260,PDNos.961and1468,theyareallegedlyentitledtoownership
oftheCIIFCompanies,andultimatelytheCIIFBlockofSMCShares.
However,defendantsCOCOFED,etal.claimintheiroppositiontothesubjectmotionthatthepayorsoftheCIFunderR.A.
No.6260werethesamepayorsoftheCCSFandCIDF,thatsharesofstockoftheUCPBwerealsodistributedtothosewhodidnot
registeranyCOCOFUNDReceiptandthattheirclaimovertheCIIFBlockofSMCSharesisbasedontheexpressmandateoflaws
andtheirimplementingrulesandregulations.
14.Inparticular,theCOCOFED,etal.claimthattheCOCOFEDmembersaretheregisteredownersand/orbeneficialowner
ofall,oratleastnotlessthan(51%)ofthecapitalstockoftheCIIFcompanies,whichhavewhollyownedsubsidiariesdescribedas
the 14 holding companies.These 14 holding companies are the registered owners of the CIIF Block of SMC Shares.Accordingly,
COCOFED,etal.claimthattheyandtheCOCOFEDmembersaretheultimatebeneficialownersofthesaidshare.(Record,Vol.III,
pp.526527andpp.138539).
15. The COCOFED, is a private nonstock, nonprofit corporation which was recognized as the national association of
coconutproducerswiththelargestnumberofmembership.
16.TheidentificationofthecoconutfarmersanddistributionofthesharesofstockoftheCIIFcompaniesforfreetotheso
identified coconut farmers followed the same procedure laid down by PCA Administration Order No. 1, series of 1975 and PCA
ResolutionNo.07478datedJune7,1978.
17.DefendantEduardoM.Cojuangco,Jr.disclaimsanyinterestinthe27%CIIFBlockofSMCShares.
Theplaintiffandthedefendantsareherebydirectedtosubmittheircommentontheforegoinglistofadmittedfactsorfacts
thatappearwithoutsubstantialcontroversywithinten(10)daysfromreceipthereof.
[58]
Rollo(G.R.No.180705),pp.40405.
[59]
Supranote10.
[60]
Supranote8.
[61]
Rollo(G.R.Nos.17785758),pp.501516.
[62]
Supranote11.
[63]
TheparagraphinPSJFwhichtheMay11,2007Resolutiondeletedreads:LetatrialofthisCivilCaseproceedwith
respecttotheissuewhichhasnotbeedisposedinthis[PSAF]includingthedeterminationofwhethertheCIIFBlockofSMCshares
adjudgedtobeownedbytheGovernmentrepresents27%oftheissuedandoutstandingcapitalstockoftheGovernmentaccordingto
plaintifforto31%ofsaidcapitalstockaccordingtoCOCOFED,etal.andBanares,etal.
[64]
Rollo(G.R.Nos.17785758),pp.3540.
[65]
Rollo(G.R.No.178193),pp.1820.
[66]
No.L19557,March31,1964,10SCRA637.
[67]
Rollo(G.R.Nos.17785758),p.86.
[68]
G.R.No.78750,April20,1990,184SCRA449,460.
[69]
1Regalado,REMEDIALLAWCOMPENDIUM11(6threviseded.,1997).
[70]
Id.at271.
[71]
No.L28975,February27,1976,69SCRA456.
[72]
G.R.No.156264,September30,2004,439SCRA667,67273.
[73]
SeePSJF,pp.59.
[74]
SanMiguelCorporationv.Sandiganbayan,G.R.Nos.10463738,September14,2000,340SCRA289.
[75]
Section1.
[76]
Meralcov.Ortaez,119Phil.911(1964).
[77]
G.R.No.78750,April20,1990,184SCRA449.
[78]
No.L21450,April15,1968,23SCRA30.
[79]
SeePascualv.Robles,G.R.No.182645,December15,2010,638SCRA712,719.
[80]
G.R.No.141423,November15,2000,344SCRA838.
8/22/2015 G.R. Nos. 177857-58
[81]
G.R.No.75713,October2,1989,178SCRA237,250252.
[82]
BLACKSLAWDICTIONARY1050(6thed.,1990).
[83]
WEBSTERSTHIRDNEWINTERNATIONALDICTIONARY(1981ed.).
[84]
66C.J.S.600.
[85]
Agpalo,STATUTORYCONSTRUCTION259(4thed.,1998).
[86]
Theircloserelatives,subordinates,businessassociates,dummies,agentsornominees.
[87]
Yuchengcov.Sandiganbayan,G.R.No.149802,January20,2006,479SCRA1.
[88]
No.L77663,April12,1988,159SCRA556,574.
[89]
SeparateconcurringopinioninPSJAofAssociateJusticeVillaruzrollo(G.R.No.180705),p.271.
[90]
PNBv.NoahsArkSugarRefinery,G.R.No.107243,September1,1993,226SCRA36.
[91]
CarconDevelopmentCorp.v.CourtofAppeals,G.R.No.88218,December19,1989,180SCRA348.
[92]
Republicv.COCOFED,etal.,TSN,April17,2001,p.198.
[93]
G.R.No.145851,November22,2001,370SCRA394.
[94]
Enriquezv.OfficeoftheOmbudsman,G.R.Nos.17490206,February15,2008,545SCRA618Lopez,Jr.v.Officeof
theOmbudsman,G.R.No.140529,September6,2001,364SCRA569Roquev.OfficeoftheOmbudsman,G.R.No.129978,May
12, 1999, 307 SCRA 104 Dutertev.Sandiganbayan, G.R. No. 130191, April 27, 1998, 289 SCRA 721 Tatad v. Sandiganbayan,
Nos.L7233539,March21,1988,159SCRA70.
[95]
G.R.No.158018,May20,2004,428SCRA787,789790.
[96]
G.R.No.165781,June5,2009,588SCRA519,527528.
[97]
HeirsofBernardoUlepv.Ducat,G.R.No.159284,January27,2009,577SCRA6,19.
[98]
Garciav.ExecutiveSecretary,G.R.No.157584,April2,2009,583SCRA119,13839.
[99]
SurRejoinder,p.17,rollo(G.R.Nos.17785758),p.846.
[100]
AnActtoCodifytheLawsDealingwiththeDevelopmentoftheCoconutandotherPalmOilIndustryandforother
Purposes[PresidentialDecreeNo961],art.III,5.
[101]
PresidentialDecreeNo.1468,Art.III,Sec.5.
[102]
P.D.No.755,Sec.2P.D.No.961,Art.III,Sec.5P.D.No.1468,Art.III,Sec.5.
[103]
Rollo(G.R.Nos.17785758),pp.3337,237241.
[104]
Id.at136.
[105]
G.R.No.164915,March10,2006,484SCRA485,497.
[106]
G.R.No.163103,February6,2009,578SCRA129,143.
[107]
Supranote16.
[108]
Id.at252.
[109]
Republicv.COCOFED,G.R.No.14706264,December14,2001,372SCRA462,48284.
[110]
[111]
PlantersProducts,Inc.v.FertiphilCorporation,G.R.No.166006,March14,2008,548SCRA485,510.
[112]
Id.Pascualv.SecretaryofPublicWorksandCommunications,110Phil.331(1960).
[113]
Id.at511.
[114]
Gastonv.RepublicPlantersBank,No.L77194,March15,1988,158SCRA626,628629.
8/22/2015 G.R. Nos. 177857-58
[115]
Id.at629.
[116]
Id.at634.
[117]
Id.
[118]
Creating a Philippine Coconut Authority [P.D. No. 232], June 30, 1973 Establishing a Coconut Consumers
StabilizationFund[P.D.No.276],August20,1973FurtherAmendingPresidentialDecreeNo.232,AsAmended[P.D.No.582],
November14,1974.
[119]
[120]
No. L77194, March 15, 1988, 158 SCRA 626, 633634 cited in Republic v. COCOFED, G.R. Nos. 14706264,
December14,2001,372SCRA462,48586.
[121]
Gaston v. Republic Planters Bank, No. L77194, March 15, 1988, 158 SCRA 626, 63334 cited in Republic v.
COCOFED,G.R.Nos.14706264,December14,2001,372SCRA462,48586.
[122]
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Phil Coconut V Republic

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