PAMBANSANG KOALISYON NG MGA SAMAHANG In November 2000 then President Joseph Estrada issued
MAGSASAKA AT MANGGAGAWA SA NIYUGAN Executive Order (E.O.) 312, establishing a Sagip Niyugan
(PKSMMN), etc. v. EXECUTIVE SECRETARY, etc. Program which sought to provide immediate income
CONSOLIDATED WITH G.R. No. 147811. supplement to coconut farmers and encourage the creation
of a sustainable local market demand for coconut oil and
FACTS: These are consolidated petitions to declare other coconut products.The Executive Order sought to
unconstitutional certain presidential decrees and executive establish aP1-billion fund by disposing of assets acquired
orders of the martial law era and under the incumbency of using coco-levy funds or assets of entities supported by
Pres. Estrada relating to the raising and use of coco-levy those funds.A committee was created to manage the fund
funds, particularly: Section 2 of P.D. 755, (b)Article III, under this program.A majority vote of its members could
Section 5 of P.D.s 961 and 1468, (c) E.O. 312, and (d) E.O. engage the services of a reputable auditing firm to conduct
313. periodic audits.
On June 19, 1971 Congress enacted R.A. 6260 that At about the same time, President Estrada issued E.O. 313,
established a Coconut Investment Fund (CI Fund) for the which created an irrevocable trust fund known as the
development of the coconut industry through capital Coconut Trust Fund (the Trust Fund).This aimed to
financing. Coconut farmers were to capitalize and provide financial assistance to coconut farmers, to the
administer the Fund through the Coconut Investment coconut industry, and to other agri-related programs.The
Company (CIC) whose objective was, among others, to shares of stock of SMC were to serve as the Trust Funds
advance the coconut farmers interests.For this purpose, the initial capital.These shares were acquired with CII Funds
law imposed a levy ofP0.55on the coconut farmers first and constituted approximately 27% of the outstanding
domestic sale of every 100 kilograms of copra, or its capital stock of SMC.E.O. 313 designated UCPB, through its
equivalent, for which levy he was to get a receipt Trust Department, as the Trust Funds trustee bank.The
convertible into CIC shares of stock. Trust Fund Committee would administer, manage, and
supervise the operations of the Trust Fund. The Committee
In 1975 President Marcos enacted P.D. 755 which approved would designate an external auditor to do an annual audit
the acquisition of a commercial bank for the benefit of the or as often as needed but it may also request the
coconut farmersto enable such bank to promptly and Commission on Audit (COA) to intervene.
efficiently realize the industry's credit policy.Thus, the PCA
bought 72.2% of the shares of stock of First United Bank, To implement its mandate, E.O. 313 directed the
headed by Pedro Cojuangco.Dueto changes in its corporate Presidential Commission on Good Government, the Office
identity and purpose, the banks articles of incorporation of the Solicitor General, and other government agencies to
were amended in July 1975, resulting in a change in the exclude the 27% CIIF SMC shares from Civil Case 0033,
banks name from First United Bank United Coconut entitled Republic of the Philippines v. Eduardo Cojuangco,
Planters Bank (UCPB). Jr., et al.,which was then pending before the
Sandiganbayan and to lift the sequestration over those
shares. and P.D. 276.The funds were collected and managed by the
PCA,an independent government corporation directly
On January 26, 2001, however, former President Gloria under the President.And, as the respondent public officials
Macapagal-Arroyo ordered the suspension of E.O.s 312 and pointed out, thepertinent laws used the termlevy, which
313. This notwithstanding, on March 1, 2001 petitioner meansto tax, in describing the exaction.
organizations and individuals brought the present action in
G.R. 147036-37 to declare E.O.s 312 and 313 as well as R.A. 6260 and P.D. 276 did not raise money to boost the
Article III, Section 5 of P.D. 1468 unconstitutional.On April governments general funds butto provide means for the
24, 2001 the other sets of petitioner organizations and rehabilitation and stabilization of a threatened industry,
individuals instituted G.R. 147811 to nullify Section 2 of the coconut industry, which is so affected with public
P.D. 755 and Article III, Section 5 of P.D.s 961 and 1468 interest as to be within the police power of the State. The
also for being unconstitutional. funds sought to support the coconut industry,one of the
main economic backbones of the country, and to secure
ISSUE: Are the coco-levy funds public funds? economic benefits for the coconut farmers and farm
Are (a) Section 2 of P.D. 755, (b)Article III, Section workers.
5 of P.D.s 961 and 1468, (c) E.O. 312, and (d) E.O.
313 unconstitutional? Lastly, the coco-levy funds are evidently special funds. Its
Have petitioners legal standing to bring the same character as such fund was made clear by the fact that they
to court? were deposited in the PNB (then a wholly owned
government bank) and not in the Philippine Treasury.
HELD: Coco-levy funds are public funds. The Court was
satisfied that the coco-levy funds were raised pursuant to ***
law to support a proper governmental purpose.They were
raised with the use of the police and taxing powers of the The Court has already passed upon this question in
State for the benefit of the coconut industry and its farmers Philippine Coconut Producers Federation, Inc. (COCOFED)
in general. The COA reviewed the use of the funds.The BIR v. Republic of the Philippines. It held as unconstitutional
treated them as public funds and the very laws governing Section 2 of P.D. 755 for effectively authorizing the PCA to
coconut levies recognize their public character. utilize portions of theCCS Fundto pay the financial
commitment of the farmers to acquire UCPB and to deposit
The Court has also recently declared that the coco-levy portions of the CCS Fund levies with UCPB interest free.
funds are in the nature of taxes and can only be used for And as there also provided, the CCS Fund, CID Fund and
public purpose.Taxes are enforced proportional like levies that PCA is authorized to collect shall be
contributions from persons and property, levied by the considered as non-special or fiduciary funds to be
State by virtue of its sovereignty for the support of the transferred to the general fund of the Government,
government and for all itspublic needs. Here, the coco-levy meaning they shall be deemed private funds.
funds were imposed pursuant to law, namely, R.A. 6260
In any event, such declaration is void.There is ownership This is also the fault of President Estradas E.O. 312 which
when a thing pertaining to a person is completely subjected deals with P1 billion to be generated out of the sale of coco-
to his will in everything that is not prohibited by law or the fund acquired assets.E.O. 313 has a substantially identical
concurrence with the rights of another. An owner is free to provision governing the management and disposition of the
exercise all attributes ofownership: the right, among others, Coconut Trust Fund capitalized with the substantial SMC
to possess, use and enjoy, abuse or consume, and dispose shares of stock that the coco-fund acquired.
or alienate the thing owned. The owner is free to waive all
or some of these rights in favor of others.But in the case of But, since coco-levy funds are taxes, the provisions of
the coconut farmers, they could not, individually or P.D.s755,961 and 1468 as well as those of E.O.s 312 and 313
collectively, waive what have not been and could not be that remove such funds and the assets acquired through
legally imparted to them. them from the jurisdiction of the COA violate Article IX-D,
Section 2 of P.D. 755, Article III,Section 5of P.D. 961, and Section 2(1) of the 1987 Constitution.Section 2(1) vests in
Article III, Section 5 of P.D. 1468 completely ignore the fact the COA the power and authority to examine uses of
that coco-levy funds are public funds raised through government money and property.The cited P.D.s and E.O.s
taxation.And since taxes could be exacted only for a public also contravene Section 2 of P.D. 898 (Providing for the
purpose, they cannot be declared private properties of Restructuring of the Commission on Audit), which has the
individuals although such individuals fall within a distinct force of a statute.And there is no legitimate reason why
group of persons. such funds should be shielded from COA review and
audit.The PCA, which implements the coco-levy laws and
These assailed provisions,which removed the coco-levy collects the coco-levy funds, is a government-owned and
funds from the general funds of the government and controlled corporation subject to COA review and audit.
declared them private properties of coconut farmers,do not
appear to have a color of social justice for their purpose.The E.O. 313 suffers from an additional infirmity.Apparently, it
levy on copra that farmers produce appears, in the first intends to create a trust fund out of the coco-levy funds to
place, to be a business tax judging by its tax base.The provide economic assistance to the coconut farmers and,
concept of farmers-businessmen is incompatible with the ultimately, benefit the coconut industry.But on closer look,
idea that coconut farmers are victims of social injustice and E.O. 313 strays from the special purpose for which the law
so should be beneficiaries of the taxes raised from their raises coco-levy funds in that it permits the use of coco-levy
earnings. funds for improving productivity in other food areas.
On another point, in stating that the coco-levy fund shall Clearly, E.O.313 above runs counter to the constitutional
not be construed or interpreted, under any law or provision which directs thatall money collected on any tax
regulation, as special and/or fiduciary funds, or as part of levied for a special purpose shall be treated as a special
the general funds of the national government,P.D.s 961 and fund and paid out for such purpose only.Assisting other
1468 seek to remove such fund from COA scrutiny. agriculturally-related programs is way off the coco-funds
objective of promoting the general interests of the coconut
industry and its farmers. taxpayers suit is based on the theory that expenditure of
public funds for the purpose of executing an
A final point,the E.O.s also transgress P.D. 1445,Section unconstitutional act is a misapplication of such funds.
84(2),the first part by the previously mentioned sections of
E.O. 313 and the second part by Section 4 of E.O. 312 and The petition in G.R.147036-37 is granted; The petition in
Sections 6 and 7 of E.O. 313.E.O. 313 vests the power to G.R. 147811 is partially granted; the following are declared
administer, manage, and supervise the operations and void: a) E.O. 312; and b)E.O. 313.
disbursements of the Trust Fund it established (capitalized
with SMC shares bought out of coco-levy funds) in a Section 2 of P.D. 755 and Article III, Section 5 of P.D.s 961
Coconut Trust Fund Committee. and 1468 have been previously unconstitutional.
Section 4 ofE.O. 312 does essentially the same thing.It vests
the management and disposition of the assistance fund
generated from the sale of coco-levy fund-acquired assets
into a Committee of five members.
In effect, the provision transfers the power to allocate, use,
and disburse coco-levy funds that P.D. 232 vested in the
PCA and transferred the same, without legislative
authorization and in violation of P.D. 232, to the
Committees mentioned above.An executive order cannot
repeal a presidential decree which has the same standing as
a statute enacted by Congress.
***
The Court has to uphold petitioners right to institute these
petitions.The petitioner organizations in these cases
represent coconut farmers on whom the burden of the
coco-levies attaches.It is also primarily for their benefit that
the levies were imposed.
The individual petitioners, on the other hand, join the
petitions as taxpayers.The Court recognizes their right to
restrain officials from wasting public funds through the
enforcement of an unconstitutional statute.This so-called
