CONFEDERATION OF COCONUT FARMERS ORGANIZATIONS OF THE PHILIPPINES

(CCFOP), petitioner, versus

His Excellency President BENIGNO SIMEON S. AQUINO III, Acting Commissioner RICHARD
ROGER AMURAO of the Presidential Commission on Good Government (PCGG), Chairman
CESAR L. VILLANUEVA of the Governance Commission for GOCCs (GCG), and Secretary
LEILA M. DE LIMA of the Department of Justice, respondents
GR No. 217965, August 08, 2017

FACTS:
Republic Act No. 6260 was enacted for the purpose of providing the necessary funds for
the development of the coconut industry. Thus, an imposition on the sale of coconut products by
coconut farmers was implemented which will be pooled to what was called the Coconut
Investment Fund (CIF). In exchange for the levy, the coconut farmer was to be issued a receipt
which shall be converted into shares of stock of the Coconut Investment Company.
Several Presidential Decrees (PDs) were issued purportedly designed to improve the
coconut industry through the collection and use of the coconut levy funds. These are:
a) PD 276 which establishes the Coconut Consumers Stabilization Fund (CCSF);
b) PD 582 which created the Coconut Industry Development Fund (CIDF);
c) PD 755 which approved the acquisition of a commercial bank (UCPB) for the benefit of
coconut farmers; and
d) PD 961 (Coconut Industry Code) which codified and consolidated all existing laws.
PD 755 and PD 961 decreed that the coconut levy funds were not to be construed as special
and/or fiduciary funds, or as part of the general funds of the national government. The intention of
those decrees is that the funds and disbursement thereof would be owned by coconut farmers in
their private capacity.
When PD 1234 was enacted in 1977. It decreed that all income and collections for special
fiduciary funds authorized by law, including the CCSF and CIDF, shall be remitted to the treasury
and be treated as Special Accounts in the General Funds (SAGF).
However, when PD 1468 was issued, it brought back the declarations made in PD 755 and
PD 961. It provided that CCSF and CIDF shall not form part of the SAGF or as part of the general
funds of the government, but shall be owned by coconut farmers in their private capacities.
In 2015, then President Benigno S. Aquino III issued Executive Order Nos. 179 and 180.
PD 179 calls for the inventory and privatization of all coconut levy assets, while PD 180 mandates
the reconveyance and utilization of these assets for the benefit of coconut farmers and the
development of the coconut industry.
Believing that the twin executive orders are invalid, the petitioner filed a petition for
prohibition under Rule 65 of the Rules of Court.
 The Petitioner argues that EO Nos. 179 and 180 are invalid, because they were based from
PD 1234, a law that had ceased to exist when PD 1468 was issued, declaring that CCSF and CIDF
shall not form part of the general funds of the government, but shall be owned by coconut farmers
in their private capacities. Moreover, it did not authorize the President to create a special account
in the general fund.
ISSUES:
1. Whether the President, in the guise of implementing the laws relative to coconut levy funds
and assets, gravely abused his discretion in issuing the assailed executive orders without
prior legislation; and
2. Whether the President gravely abused his discretion when he abrogated unto himself,
without legislative authority, the power to allocate, use and administer the subject coconut
levy funds and assets;
RULING and RATIO:
Partially Granted.
On the first issue: No, the President did not gravely abused his discretion.
1. Executive Order No. 179 and 180 are valid, because it does not create a new special fund
but merely reiterates that revenues arising out of or in connection with the privatization of
coconut levy funds shall be deposited in the SAGF. An automatic appropriation law is not
necessarily unconstitutional for as long as there are clear legislative parameters on how the
amounts appropriated are to be disbursed. A valid delegation of legislative power may be
done as long as it passes through the Completeness Test, that is, where nothing is left to
the executive branch but to implement it; such that the law describes what job must be
done, who is to do it, and what is the scope of its authority.

2. To clarify the contention raised by the petitioner, the court invoked the landmark case of
Cocofed vs. Republic1, where it declared Section 5, Article III of PD 1468 unconstitutional
and categorized coconut levy funds to be public in nature. It explained the nature of these
funds as public based from the following justification, among others:
a. Coconut levy funds are raised through the State’s police and taxing powers. Since,
the coconut industry is one of the major industries supporting the national economy.
It is the State’s concern to strengthen and sustain its growth. As such, taxation is
done not merely to raise revenues to support the government, but also to provide
means for the rehabilitation and the stabilization of a threatened industry, which is
affected with public interest. And even if the money is allocated for a special
purpose and raised by special means, it is still public in character;
b. Coconut funds are levied for the benefit of the coconut industry and its farmers.;
and

1
Cocofed, et al v. Republic, et al, GR No. 177857-58, January 24, 2012.
 c. Several laws recognizes the public nature of these funds. These are: PD 276 which
treats them as special funds for a specific purpose. PD 711 which transferred to the
general funds of the State all existing special and fiduciary funds including CCSF;
and PD 1234 which specifically declared the CCSE as a special fund for a special
purpose.
Thus, since the coconut levy fund is public, it cannot be appropriated in favor of coconut
farmers in their private capacity as it is violative of the Constitutional provision that no
money shall be paid out of the treasury except in pursuance of an appropriation made by
law and all money collected on any tax levied for a special purpose shall be treated as a
special fund and paid out for such purpose only2.
On the second issue: Yes, the President gravely abused his discretion.
On the matter of disbursement provided by Executive Order 180, the Court declared it
unconstitutional. Presidential Decree No. 1234 does not actually provide a mechanism for how the
SAGF is to be disbursed. Moreover, the provision of PD 1468 are simply too broad to limit the
amount of spending that may be done by the implementing authority, which will fail on the
Completeness Test as discussed. Thus, making it will unconstitutional.
Considering that no statute provides for specific parameters on how the SAGF may be
spent, Congress must first provide a law for he disbursements of the funds, in line with its
constitutional authority.

MCB
31 July 2019

2
Philippine Constitution (1987), Article VI, Section 29 (3).