phil. coconut rpoducers vs republic

8/21/2019 Phil. Coconut Rpoducers vs Republic

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

PHILIPPINE COCONUT G.R. Nos. 177857-58

, PRODUCERS FEDERATION, INC.

(COCOFED), MANUEL V. DEL

ROSARIO, DOMINGO P. ESPINA,

SALVADOR P. BALLARES,

OSELITO A. MORALEDA,PA! M. "ASON,

VICENTE A. CADI!,

CESARIA DE LUNA TITULAR, #$%

RA"MUNDO C. DE VILLA,

Petitioners, - versus - REPUBLIC OF THE PHILIPPINES,

Responent, &IGBERTO E. TAADA,

OSCAR F. SANTOS,

SURIGAO DEL SUR FEDERATION

OF AGRICULTURAL

COOPERATIVES (SUFAC) #$%

MORO FARMERS ASSOCIATION

OF !AMBOANGA DEL SUR

(MOFA!S), ''s$*% +ROMEO C. RO"ANDO"AN,

!ntervenors"#------------------------------------------------#DANILO S. URSUA, G.R. No. 1781

Petitioner,


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- /'s0s -

REPUBLIC OF THE PHILIPPINES,

Responent,#------------------------------------------------#

Present$

CORONA, C.J.,CARP!O,*

%E&ASCO, 'R",&EONAR(O-(E CASTRO,)

BR!ON,**

PERA&TA,)

BERSAM!N,(E& CAST!&&O,ABA(,%!&&ARAMA, 'R",PERE*,

MEN(O*A,SERENO,RE+ES, anPER&AS-BERNABE, JJ.

Proulate$

'anuar. /0, /12/#-----------------------------------------------------------------------------------------#

D E C I S I O N

VELASCO, R., J.

http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn1


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T2 C#s

Cast aainst a siilar bac3rop, these consoliate petitions for revie4uner Rule 05 of the Rules of Court assail an see3 to annul certain issuances of

the Sanianba.an in its C3/34 C#s No. -A entitle, Republic of the

Philippines, Plaintiff, v. Eduardo M. Cojuangco, Jr., et al ", Defendants,

COCOFED, et al., !""!RE#, et al., Class !ction Movants , an C3/34 C#s No.

-F entitle, Republic of the Philippines, Plaintiff, v. Eduardo M. Cojuangco,

Jr., et al., Defendants. Civil Case 6CC7 Nos" 1188-A an 1188-9 are the results of

the splittin into eiht 6:7 aene coplaints of CC No" 1188 entitle, Republic

of the Philippines v. Eduardo Cojuangco, Jr., et al., a suit for recover. of ill-otten

4ealth coence b. the Presiential Coission on ;oo ;overnent6PC;;7, for the Republic of the Philippines 6Republic7, aainst 9erinan E"

Marcos an several iniviuals, aon the, Ma" Clara &obreat 6&obreat7 an

petitioner (anilo S" Ursua 6Ursua7" &obreat an Ursua occupie, at one tie or

another, irectorial or top anaeent positions in either the Philippine Coconut

Proucers 9eeration, !nc" 6COCO9E(7 or the Philippine Coconut Authorit.

6PCA7, or both"s sub?ect of

the suit, or 4ho are averre as o4ner>s of the assets involve"

The oriinal coplaint, CC No" 1188, as later aene to a3e the

alleations ore specific, is escribe in Republic v. #andiganba$an


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funs to bu. out the a?orit. of the outstanin shares of stoc3 of San Miuel

Corporation 6SMC7"

More particularl., in G.R. Nos. 177857-58, class action petitioners

COCO9E( an a roup of purporte coconut farers an COCO9E( ebers6hereinafterCOCO9E( et al" collectivel.7


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Another petition 4as file an oc3ete as G.R. No. 1875" !t involves

@uestions relatin to Euaro M" Co?uanco, 'r"s 6Co?uanco, 'r"s7 o4nership of

the UCPB shares, 4hich he alleel. receive as option shares, an 4hich is one

of the issues raise in PS'-A"


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The follo4in 4ere soe of the issuances on the coco lev., its collection

an utiliation, ho4 the procees of the lev. 4ill be anae an b. 4ho, an

the purpose it 4as suppose to serve$

2" P.D. No. 679 establishe the Coconut Consuers Stabiliation 9un

6CCSF7 an eclare the procees of the CCS9 lev. as trust fun, pal oil inustries"

5" The relevant provisions of P"(" No" 2, as later aene b. P.D. No.

198 ( Revised Coconut &ndustr$ Code7, rea$

ART!C&E !!!

&evies

http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn23http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn25http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn23http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/177857-58.htm#_ftn25


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Section 2" Coconut Consu'ers #tabili(ation Fund "ev$" The an the =CIDF> as 4ell as all

isburseents as herein authorie, shall $o* be construe as s3#4 #$%?o'


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Co?uanco roup 6collectivel., Pero Co?uanco7 ha control of" The plan, then,

4as for PCA to bu. all of Pero Co?uancos shares in 9UB" Fo4ever, as later

events unfole, a siple irect sale fro the seller 6Pero7 to PCA i not ensue

as it 4as ae to appear that Co?uanco, 'r" ha the e#clusive option to ac@uire the

forers 9UB controllin interests" Eerin fro this elaborate, circuitousarraneent 4ere t4o eesD the first, sipl. enoinate as !gree'ent ,


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As foun b. the Sanianba.an, the PCA appropriate, out of its o4n fun,

an aount for the purchase of the sai /"/H e@uit., #4+3* 3* o04% 4#*'

'3:+0's 3*s4<


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2" On the postulate, inter alia, that its coco-farer ebers o4n at least

52H of the outstanin capital stoc3 of UCPB, the C!!9 copanies, etc",COCO9E( et al", on Noveber /, 2:, file Class !ction O'nibus Motion pra.in for the liftin of the orers of se@uestration referre to above an

for a chance to present evience to prove the coconut farers o4nership of theUCPB an C!!9 shares" The plea to present evience 4as enieD

/" &ater, the Republic ove for an secure approval of a otion for

separate trial 4hich pave the 4a. for the subivision of the causes of action inCC 1188, each etailin ho4 the assets sub?ect thereof 4ere ac@uire an the 3e.roles the principal pla.eD

8" Civil Case 1188, pursuant to an orer of the Sanianba.an 4oul be

subivie into eiht coplaints, oc3ete as CC 1188-A to CC 1188-F"ientities of the over aillion coconut farersD


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Petitioners COCO9E( et al"


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After the pre-trial, but before the Republic, as plaintiff a %uo, coul present,

as it coitte to, a list of UCPB stoc3holers as of 9ebruar. /5, 2:,


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controvers., toether 4ith the aissions an>or e#tent of the aission ae b.

the parties respectin relevant facts, as follo4s$

As culle fro the e#haustive iscussions an anifestations of the parties in

open court of their respective pleains an evience on recor, the facts 4hiche#ist 4ithout an. substantial controvers. are set forth hereuner, toether 4ith theaissions an>or the e#tent or scope of the aissions ae b. the partiesrelatin to the relevant facts$ 2" The late Presient 9erinan E" Marcos 4as Presient for t4o ters " " " an,urin the secon ter, eclare Martial &a4 throuh Proclaation No" 21:2ate Septeber /2, 2/" /" On 'anuar. 2, 28,


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G!TNESSETF$ That

GFEREAS, the SE&&ERS o4n of recor an beneficiall. a total of 28,: shares of stoc3, 4ith a par value of P211"11 each, of the coon stoc3 of the 9irst Unite Ban3 6the Ban37, a coercial ban3in corporation e#istinuner the la4s of the PhilippinesD

GFEREAS, the BU+ERS esire to purchase, an the SE&&ERS are

4illin to sell, the aforeentione shares of stoc3 totalin 28,: shares6hereinafter calle the Contract Shares7 o4ne b. the SE&&ERS ue to their special relationship to E(UAR(O CO'UAN;CO, 'R"D

NOG, TFERE9ORE, for an in consieration of the preises an theutual covenants herein containe, the parties aree as follo4s$ 2" Sale an Purchase of Contract Shares

Sub?ect to the ters an conitions of this Areeent, the SE&&ERShereb. sell, assin, transfer an conve. unto the BU+ERS, an the BU+ERShereb. purchase an ac@uire, the Contract Shares free an clear of all liens an

encubrances thereon" /" Contract Price

The purchase price per share of the Contract Shares pa.able b. theBU+ERS is P/11"11 or an areate price of P/,58,/11"11 6the ContractPrice7" 8" (eliver. of, an pa.ent for, stoc3 certificates

Uo$ *2 0*3o$ o< *23s A@':$*, (3) *2 SELLERS s2#44

%43/' *o *2 BU"ERS *2 s*o; '*3


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6b7 The e#ecution, eliver. an perforance of this Areeent b. theSE&&ERS oes not conflict 4ith or constitute an. breach of an. provision in an.areeent to 4hich the. are a part. or b. 4hich the. a. be boun"

6c7 The. have coplie 4ith the conition set forth in Article K of theAene Articles of !ncorporation of the Ban3" 5" Representation of BU+ERS "

" !pleentation

The parties hereto hereb. aree to e#ecute or cause to be e#ecute suchocuents an instruents as a. be re@uire in orer to carr. out the intentan purpose of this Areeent" " Notices " !N G!TNESS GFEREO9, the parties hereto have hereunto set their hans at the place an on the ate first above 4ritten"

PE(RO CO'UAN;CO E(UAR(O CO'UAN;CO, 'R"6on his o4n behalf an in 6on his o4n behalf an in behalf behalf of the other Sellers of the other Bu.ers7liste in Anne# A hereof7 6BU+ERS76SE&&ERS7B.$ E(;AR(O '" AN;ARAAttorne.-in-9act

b7 Areeent for the Ac@uisition of a Coercial Ban3 for the Benefit of theCoconut 9arers of the Philippines, ae an entere into this /5 th a. of Ma.25 at Ma3ati, Rial, Philippines, b. an bet4een$

E(UAR(O M" CO'UAN;CO, 'R", # # #, hereinafter referre to as theSE&&ERD

an

PF!&!PP!NE COCONUT AUTFOR!T+, a public corporation create b. Presiential (ecree No" /8/, as aene, for itself an for the benefit of thecoconut farers of the Philippines, 6hereinafter calle the BU+ER7

G!TNESSETF$ That GFEREAS, on Ma. 2, 25, the Philippine Coconut Proucers

9eeration 6PCP97, throuh its Boar of (irectors, e#presse the esire of thecoconut farers to o4n a coercial ban3 4hich 4ill be an effective instruentto solve the perennial creit probles an, for that purpose, passe a resolutionre@uestin the PCA to neotiate 4ith the SE&&ER for the transfer to the coconutfarers of the SE&&ERs option to bu. the 9irst Unite Ban3 6the Ban37 uner such ters an conitions as BU+ER a. ee to be in the best interest of the


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coconut farers an instructe Mrs" Maria Clara &obreat to conve. suchre@uest to the BU+ERD

GFEREAS, the PCP9 further instructe Mrs" Maria Clara &obreat to

a3e representations 4ith the BU+ER to utilie its funs to finance the purchaseof the Ban3D

GFEREAS, the SE&&ER has the e#clusive an personal option to bu.

200,011 shares 6the Option Shares7 of the Ban3, constitutin /"/H of the present outstanin shares of stoc3 of the Ban3, at the price of P/11"11 per share,4hich option onl. the SE&&ER can valil. e#erciseD

GFEREAS, in response to the representations ae b. the coconut

farers, the BU+ER has re@ueste the SE&&ER to e#ercise his personal optionfor the benefit of the coconut farersD

GFEREAS, the SE&&ER is 4illin to transfer the Option Shares to the

BU+ER at a price e@ual to his option price of P/11 per shareD GFEREAS, reconiin that o4nership b. the coconut farers of a

coercial ban3 is a peranent solution to their perennial creit probles, thatit 4ill accelerate the ro4th an evelopent of the coconut inustr. an thatthe polic. of the state 4hich the BU+ER is re@uire to ipleent is to achievevertical interation thereof so that coconut farers 4ill becoe participants in,an beneficiaries of, the re@uest of PCP9 that it ac@uire a coercial ban3 to beo4ne b. the coconut farers an, appropriate, for that purpose, the su of P251 Million to enable the farers to bu. the Ban3 an capitalie the Ban3 tosuch an e#tension as to be in a position to aopt a creit polic. for the coconutfarers at preferential ratesD

GFEREAS, # # # the BU+ER is 4illin to subscribe to aitionalshares 6Subscribe Shares7 an place the Ban3 in a ore favorable financial position to e#ten loans an creit facilities to coconut farers at preferentialratesD

NOG, TFERE9ORE, for an in consieration of the foreoin preises

an the other ters an conitions hereinafter containe, the parties hereb.eclare an affir that their principal contractual intent is 627 to ensure that thecoconut farers o4n at least 1H of the outstanin capital stoc3 of the Ban3Dan 6/7 that the SE&&ER shall receive copensation for e#ercisin his personalan e#clusive option to ac@uire the Option Shares, for transferrin such shares tothe coconut farers at the option price of P/11 per share, an for perforin theanaeent services re@uire of hi hereuner"

2" To ensure that the transfer to the coconut farers of the OptionShares is effecte 4ith the least possible ela. an to provie for the faithful perforance of the obliations of the parties hereuner, the parties hereb.

appoint the Philippine National Ban3 as their escro4 aent 6the Escro4 Aent7" Upon e#ecution of this Areeent, the BU+ER shall eposit 4ith the

Escro4 Aent such aount as a. be necessar. to ipleent the ters of thisAreeent"

/" As proptl. as practicable after e#ecution of this Areeent, the

SE&&ER shall e#ercise his option to ac@uire the Option Share an SE&&ER shallieiatel. thereafter eliver an turn over to the Escro4 Aent such stoc3


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certificates as are herein provie to be receive fro the e#istin stoc3holersof the Ban3 b. virtue of the e#ercise on the aforeentione option"

8" To ensure the stabilit. of the Ban3 an continuit. of anaeent an

creit policies to be aopte for the benefit of the coconut farers, the partiesunerta3e to cause the stoc3holers an the Boar of (irectors of the Ban3 toauthorie an approve a anaeent contract bet4een the Ban3 an theSE&&ER uner the follo4in ters$

6a7 The anaeent contract shall be for a perio of five 657 .ears,rene4able for another five 657 .ears b. utual areeent of theSE&&ER an the Ban3D

6b7 The SE&&ER shall be electe Presient an shall hol office at the pleasure of the Boar of (irectors" Ghile servin in such capacit., heshall be entitle to such salaries an eoluents as the Boar of (irectors a. eterineD 6c7 The SE&&ER shall recruit an evelop a professional anaeenttea to anae an operate the Ban3 uner the control an supervision

of the Boar of (irectors of the Ban3D 67 The BU+ER unerta3es to cause three 687 persons esinate b. theSE&&ER to be electe to the Boar of (irectors of the Ban3D 6e7 The SE&&ER shall receive no copensation for anain the Ban3,other than such salaries or eoluents to 4hich he a. be entitle b.virtue of the ischare of his function an uties as Presient, provie an 6f7 The anaeent contract a. be assine to a anaeentcopan. o4ne an controlle b. the SE&&ER"

0" As copensation for e#ercisin his personal an e#clusive option toac@uire the Option Shares an for transferrin such shares to the coconutfarers, as 4ell as for perforin the anaeent services re@uire of hi,SE&&ER shall receive e@uit. in the Ban3 aountin, in the areate, to 5,810full. pai shares in accorance 4ith the proceure set forth in pararaph belo4D

5" !n orer to copl. 4ith the Central Ban3 prora for increase

capitaliation of ban3s an to ensure that the Ban3 4ill be in a ore favorablefinancial position to attain its ob?ective to e#ten to the coconut farers loansan creit facilities, the BU+ER unerta3es to subscribe to shares 4ith anareate par value of P:1,:0,111 6the Subscribe Shares7" The obliation of the BU+ER 4ith respect to the Subscribe Shares shall be as follo4s$

6a7 The BU+ER unerta3es to subscribe, for the benefit of the coconutfarers, to shares 4ith an areate par value of P25,::0,111 fro the present authorie but unissue shares of the Ban3D an 6b7 The BU+ER unerta3es to subscribe, for the benefit of the coconutfarers, to shares 4ith an areate par value of P0,:1,111 fro theincrease capital stoc3 of the Ban3, 4hich subscriptions shall beeee ae upon the approval b. the stoc3holers of the increase of


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the authorie capital stoc3 of the Ban3 fro P51 Million to P201Million"

The parties unerta3e to eclare stoc3 iviens of P: Million out of the

present authorie but unissue capital stoc3 of P81 Million" " To carr. into effect the areeent of the parties that the SE&&ER

shall receive as his copensation 5,810 shares$ 6a7 " 6b7 Gith respect to the Subscribe Shares, the BU+ER unerta3es, inorer to prevent the ilution of SE&&ERs e@uit. position, that it shallcee over to the SE&&ER 0,:1 full.-pai shares out of the SubscribeShares" Such unerta3in shall be coplie 4ith in the follo4inanner$ "

" The parties further unerta3e that the Boar of (irectors ananaeent of the Ban3 shall establish an ipleent a loan polic. for the

Ban3 of a3in available for loans at preferential rates of interest to the coconutfarers "

:" The BU+ER shall e#peitiousl. istribute fro tie to tie the

shares of the Ban3, that shall be hel b. it for the benefit of the coconut farersof the Philippines uner the provisions of this Areeent, to such, coconutfarers holin reistere COCO9UN( receipts on such e@uitable basis as a. be eterine b. the BU+ER in its soun iscretion"

" " 21" To ensure that not onl. e#istin but future coconut farers shall be

participants in an beneficiaries of the creit policies, an shall be entitle to the

benefit of loans an creit facilities to be e#tene b. the Ban3 to coconutfarers at preferential rates, the shares hel b. the coconut farers shall not beentitle to pre-eptive rihts 4ith respect to the unissue portion of theauthorie capital stoc3 or an. increase thereof"

22" After the parties shall have ac@uire t4o-thirs 6/>87 of the

outstanin shares of the Ban3, the parties shall call a special stoc3holerseetin of the Ban3$

6a7 To classif. the present authorie capital stoc3 of P51,111,111ivie into 511,111 shares, 4ith a par value of P211"11 per share into$82,111 Class A shares, 4ith an areate par value of P8,211,111 an28,111 Class B shares, 4ith an areate par value of P28,11,111" All

of the Option Shares constitutin /"/H of the outstanin shares, shall be classifie as Class A shares an the balance of the outstanin shares,constitutin /":H of the outstanin shares, as Class B sharesD 6b7 To aen the articles of incorporation of the Ban3 to effect thefollo4in chanes$

6i7 chane of corporate nae to 9irst Unite Coconut Ban3D


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6ii7 replace the present provision restrictin the transferabilit.of the shares 4ith a liitation on o4nership b. an. iniviualor entit. to not ore than 21H of the outstanin shares of theBan3D 6iii7 provie that the holers of Class A shares shall not beentitle to pre-eptive rihts 4ith respect to the unissue portion of the authorie capital stoc3 or an. increase thereofDan 6iv7 provie that the holers of Class B shares shall beabsolutel. entitle to pre-eptive rihts, 4ith respect to theunissue portion of Class B shares coprisin part of theauthorie capital stoc3 or an. increase thereof, to subscribe toClass B shares in proportion t the subscriptions of Class Ashares, an to pa. for their subscriptions to Class B shares4ithin a perio of five 657 .ears fro the call of the Boar of (irectors"

6c7 To increase the authorie capital stoc3 of the Ban3 fro P51

Million to P201 Million"D 67 To eclare a stoc3 ivien of P: Million pa.able to the SE&&ER,the BU+ER an other stoc3holers of the Ban3 out of the presentauthorie but unissue capital stoc3 of P81 MillionD 6e7 To aen the b.-la4s of the Ban3 accorinl.D an

6f7 To authorie an approve the anaeent contract provie in pararaph /above"

The parties aree that the. shall vote their shares an ta3e all thenecessar. corporate action in orer to carr. into effect the foreoin provisions

of this pararaph 22 "

2/" !t is the conteplation of the parties that the Ban3 shall achieve afinancial an e@uit. position to be able to len to the coconut farers at preferential rates" !n orer to achieve such ob?ective, the parties shall cause the Ban3 to aopt a polic. of reinvestent, b. 4a. of stoc3 iviens, of such percentae of the profits of the Ban3 as a. be necessar."

28" The parties aree to e#ecute or cause to be e#ecute such ocuentsan instruents as a. be re@uire in orer to carr. out the intent an purpose of this Areeent"

!N G!TNESS GFEREO9, PF!&!PP!NE COCONUT AUTFOR!T+6BU+ER7 B.$ E(UAR(O CO'UAN;CO, 'R" MAR!A C&ARA &" &OBRE;AT


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6SE&&ER7

" (efenants &obreat, et al " an COCO9E(, et al " an Ballares, et al " aitthat the 6PCA7 4as the other bu.ers represente b. " Co?uanco, 'r" in the Ma.25 Areeent entere into bet4een Pero Co?uanco 6on his o4n behalf an in behalf of other sellers liste in Anne# A of the areeent7 an Co?uanco, 'r" 6onhis o4n behalf an in behalf of the other bu.ers7"(efenant Co?uanco insists he4as the onl. bu.er uner the aforesai Areeent" :" "" " (efenants &obreat, et al., an COCO9E(, et al., an Ballares, et al " aitthat in aition to the 28,: 9UB shares of Pero Co?uanco, et al" covere b.the Areeent, other 9UB stoc3holers sol their shares to PCA such that thetotal nuber of 9UB shares purchase b. PCA increase fro 28,: shares to200,011 shares, the OPT!ON SFARES referre to in the Areeent of Ma. /5,25" (efenant Co?uanco i not a3e sai aission as to the sai ,580

shares in e#cess of the 28,: shares covere b. the Areeent 4ith PeroCo?uanco" 21" (efenants &obreat, et al " an COCO9E(, et al " an Ballares, et al. aitthat the Areeent, escribe in Section 2 of Presiential (ecree 6P"("7 No" 55ate 'ul. /, 25 as the Areeent for the Ac@uisition of a Coercial Ban3 for the Benefit of Coconut 9arers e#ecute b. the Philippine Coconut Authorit.an incorporate in Section 2 of P"(" No" 55 b. reference, refers to theA;REEMENT 9OR TFE ACLU!S!T!ON O9 A COMMERC!A& BAN 9OR TFE BENE9!T O9 TFE COCONUT 9ARMERS O9 TFE PF!&!PP!NES ateMa. /5, 25 bet4een efenant Euaro M" Co?uanco, 'r" an the


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28" Pursuant to the Ma. /5, 25 Areeent, out of the /"/H shares of theauthorie an the increase capital stoc3 of the 9UB 6later UCPB7, entirel. paifor b. PCA, 0":H of the shares 4ere place in the nae of the PCA for the benefit of the coconut farers an ,//H 4ere iven to efenantCo?uanco" The reainin /":H shares of stoc3 in the 9UB 4hich later becae

the UCPB 4ere not covere b. the t4o 6/7 areeents referre to in ite no" , par" 6a7 an 6b7 above"

There 4ere shares forin part of the aforeentione 0":H 4hich 4ere later sol or transferre to non-coconut farers"

20" Uner the Ma. /, 25 Areeent, efenant Co?uancos e@uit. in the 9UB6no4 UCPB7 4as ten percent 621H7 of the shares of stoc3 ac@uire b. the PCAfor the benefit of the coconut farers"

25" That the full. pai 5"810 shares of the 9UB, later the UCPB, ac@uire b.efenant Co?uanco, 'r" pursuant to the Ma. /5, 25 Areeent 4ere pai for

b. the PCA in accorance 4ith the ters an conitions provie in the saiAreeent"

2" (efenants &obreat, et al. an COCO9E(, et al. an Ballares, et al. aitthat the affiavits of the coconut farers 6specificall., E#hibit 2-9arer to 1-9arer7 uniforl. state that$

a" the. are coconut farers 4ho sol coconut prouctsD

b" in the sale thereof, the. receive COCO9UN( receipts pursuant to R"A" No" /1D

c" the. reistere the sai COCO9UN( receiptsD an" b. virtue thereof, an uner R"A" No" /1, P"(" Nos" 55, 2 an

20:, the. are alleel. entitle to the sub?ect UCPB shares" but sub?ect to the follo4in @ualifications$

a" there 4ere other coconut farers 4ho receive UCPB shares althouhthe. i not present sai COCO9UN( receipt because the PCAistribute the unclaie UCPB shares not onl. to those 4hoalrea. receive their UCPB shares in e#chane for their COCO9UN( receipts but also to the coconut farers eterine

b. a national census conucte pursuant to PCA ainistrativeissuancesD

b"


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c" the coconut farers clai the UCPB shares b. virtue of their copliance not onl. 4ith the la4s entione in ite 67 above butalso 4ith the relevant issuances of the PCA such as, PCAAinistrative Orer No" 2, ate Auust /1, 25 6E#h" /:-9arer7D PCA Resolution No" 188-: ate 9ebruar. 2, 2:"

The plaintiff i not a3e an. aission as to the foreoin @ualifications" 2" (efenants &obreat, et al " an COCO9E(, et al " an Ballares, et al. claithat the UCPB shares in @uestion have leitiatel. becoe the private propertiesof the 2,015,8 coconut farers solel. on the basis of their havin ac@uire saishares in copliance 4ith R"A" No" /1, P"(" Nos" 55, 2 an 20: an theainistrative issuances of the PCA cite above" 2:" ""

On 'ul. 22, /118, the Sanianba.an issue the assaile PS'-A finin for the

Republic, the ?uent accentuate b. 6a7 the observation that COCO9E( has all

alon anifeste as representin over a illion coconut farers an 6b7 a

eclaration on the issue of o4nership of UCPB shares an the unconstitutionalit.

of certain provisions of P"(" No" 55 an its ipleentin reulations" On the

atter of o4nership in particular, the anti-raft court eclare that the 0":H

se@uestere 9arers UCPB shares, plus other shares pai b. PCA

are conclusively o4ne b. the Republic" !n its pertinent parts, PS'-A, resolvin the

separate otions for suar. ?uent in seriati' 4ith separate ispositive portions for each, reas$

GFERE9ORE, in vie4 of the foreoin, 4e rule as follo4s$

A" Re$ C&ASS ACT!ON MOT!ON 9OR A SEPARATE SUMMAR+'U(;MENT ate April 22, /112 file b. (efenant Maria Clara &"&obreat, COCO9E(, et al., an Ballares, et al.

The Class Action Motion for Separate Suar. 'uent ate April 22,/112 file b. efenant Maria Clara &" &obreat, COCO9E(, et al" an Ballares,et al", is hereb. (EN!E( for lac3 of erit" B" Re$ MOT!ON 9OR PART!A& SUMMAR+ 'U(;MENT 6RE$

COCO9E(, E1 !". AN( BA&&ARES, E1 !".2 ate April //, /11/ file b.Plaintiff"


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2" a" Section 2 of P"(" No" 55, ta3en in relation to Section / of the saeP"(", is unconstitutional$ 6i7 for havin allo4e the use of the CCS9 to benefit irectl. private interest b. the outriht an unconitional rantof absolute o4nership of the 9UB>UCPB shares pai for b. PCAentirel. 4ith the CCS9 to the unefine coconut farers, 4hich

neate or circuvente the national polic. or public purpose eclare b. P"(" No" 55 to accelerate the ro4th an evelopent of thecoconut inustr. an achieve its vertical interationD an 6ii7 for havin unul. eleate leislative po4er to the PCA"

b" The ipleentin reulations issue b. PCA, nael., Ainistrative

Orer No" 2, Series of 25 an Resolution No" 10-: are li3e4iseinvali for their failure to see to it that the istribution of shares servee#clusivel. or at least priaril. or irectl. the aforeentione public purpose or national polic. eclare b. P"(" No" 55"

/"

Section / of P"(" No" 55 4hich anate that the coconut lev. funsshall not be consiere special an>or fiuciar. funs nor part of theeneral funs of the national overnent an siilar provisions of Sec" 5,Art" !!!, P"(" No" 2 an Sec" 5, Art" !!!, P"(" No" 20: contravene the provisions of the Constitution, particularl., Art" !K 6(7, Sec" /D an Article%!, Sec" / 687"

8" &obreat, COCO9E(, et al. an Ballares, et al. have not leall. anvalil. obtaine title of o4nership over the sub?ect UCPB shares b. virtueof P"(" No" 55, the Areeent ateMa. /5, 25 bet4een the PCA anefenant Co?uanco, an PCA ipleentin rules, nael., A" Orer No" 2, s" 25 an Resolution No" 10-:"

0" The so-calle 9arers UCPB shares covere b. 0":H of the UCPB

shares of stoc3, 4hich fore part of the /"/H of the shares of stoc3 of the forer 9UB an no4 of the UCPB, the entire consieration of 4hich4as chare b. PCA to the CCS9, are hereb. eclare conclusivel.o4ne b., the Plaintiff Republic of the Philippines"

C" Re$ MOT!ON 9OR PART!A& SUMMAR+ 'U(;MENT 6RE$ E(UAR(O

M" CO'UAN;CO, 'R"7 ate Septeber 2:, /11/ file b. Plaintiff"

2" Sec" 2 of P"(" No" 55 i not valiate the Areeent bet4een PCA anefenant Euaro M" Co?uanco, 'r" ate Ma. /5, 25 nor i it ivethe Areeent the binin force of a la4 because of the non-publicationof the sai Areeent"

/" Rearin the @uestione transfer of the shares of stoc3 of 9UB 6later UCPB7 b. PCA to efenant Co?uanco or the so-calle Co?uanco UCPBshares 4hich cost the PCA ore than Ten Million Pesos in CCS9 in 25,


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4e eclare, that the transfer of the follo4in 9UB>UCPB shares toefenant Euaro M" Co?uanco, 'r" 4as not supporte b. valuableconsieration, an therefore null an voi$

a" The 20,011 shares fro the Option SharesD

b" Aitional Ban3 Shares Subscribe an Pai b. PCA, consistin of$

2" 9ifteen Thousan Eiht Funre Eiht.-9our 625,::07 sharesout of the authorie but unissue shares of the ban3, subscribean pai b. PCAD

/" Si#t. 9our Thousan Nine Funre Eiht. 60,:17 shares of the increase capital stoc3 subscribe an pai b. PCAD an

8" Stoc3 iviens eclare pursuant to pararaph 5 an pararaph

22 6iv7 67 of the Areeent" 8" The above-entione shares of stoc3 of the 9UB>UCPB transferre to

efenant Co?uanco are hereb. eclare conclusivel. o4ne b. theRepublic of the Philippines"

0" The UCPB shares of stoc3 of the allee fronts, noinees an uiesof efenant Euaro M" Co?uanco, 'r" 4hich for part of the /"/Hshares of the 9UB>UCPB pai for b. the PCA 4ith public funs later chare to the coconut lev. funs, particularl. the CCS9, belon to the plaintiff Republic of the Philippines as their true an beneficial o4ner" &et trial of this Civil Case procee 4ith respect to the issues 4hich havenot been ispose of in this Partial Suar. 'uent" 9or this purpose,the plaintiffs Motion A Cautela to Present Aitional Evienceate March /:, /112 is hereb. ;RANTE("

9ro PS'-A, &obreat ove for reconsieration 4hich COCO9E(, et al"

an Ballares, et al" aopte" All these otions 4ere enie in the e#tene assaile

Resolution


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subissions an the supervenin rulin in Republic v. COCOFED


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The Mo*3o$


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E#pressl. covere b. the eclaration an the reconve.ance irective are all

dividends declared, paid and issued thereon as 0ell as an$ incre'ents thereto

arising fro', but not li'ited to, e)ercise of pre8e'ptive rights.

On Ma. /, /110, COCO9E( et al., file an onibus otion 6to isiss for lac3 of sub?ect atter ?urisiction or alternativel. for reconsieration an to set

case for trial7, but this otion 4as enie per the Sanianba.ans Resolution


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unconstitutionalD an 6c7 en.in the petitioners plea to prove that the se@uestere

assets belon to coconut farers" Specificall., petitioners aver$ !" The Sanianba.an ravel. erre 4hen it refuse to ac3no4lee that it i nothave sub?ect atter ?urisiction over the ill-otten 4ealth cases because theresponent Republic faile to prove, an i not even attept to prove, the ?urisictional fact that the se@uestere assets constitute ill-otten 4ealth of forer Presient Marcos an Co?uanco" Bein 4ithout sub?ect atter ?urisiction over the ill-otten 4ealth cases, a efect previousl. pointe out an repeatel. assaile b. COCO9E(, et al., the assaile PS's an the assaile Resolutions are all nullan voi"

A" !nsofar as the ill-otten 4ealth cases are concerne, theSanianba.ans sub?ect atter ?urisiction is liite to the recover. of ill-otten 4ealth as efine in Eos 2, /, 20 an 20-A"Consistent 4ith that ?urisiction, the subivie coplaints in the ill-otten 4ealth casese#pressl. allee that the se@uestere assets constitutes ill-otten 4ealthof forer Presient Marcos an Co?uanco, havin been file pursuant to,an in connection 4ith, Eos 2, /, 20 an 20-A, the Sanianba.an ravel.erre, if not e#ceee its ?urisiction, 4hen it refuse to re@uire theresponent Republic to prove the aforesai ?urisictional fact" B" " Favin no evience on recor to prove the sai ?urisictional fact, theSanianba.an ravel. erre, if not rossl. e#ceee its statutor. ?urisiction, 4hen it renere the assaile PS's instea of isissin theill-otten 4ealth cases"

C" Uner Section 2 of Rule of the Rules of Court, lac3 of ?urisictionover the sub?ect atter a. be raise at an. stae of the proceeins" !nan. event, in pursuin its intervention in the ill-otten 4ealth cases,COCO9E(, et al precisel. @uestione the Sanianba.ans sub?ect atter ?urisiction, asserte that the ?urisictional fact oes not e#ist, ove toisiss the ill-otten 4ealth cases an even pra.e that the 4rits of se@uestration over the se@uestere assets be lifte" !n concluin that thoseactions constitute an invocation of its ?urisiction, the Sanianba.anclearl. acte 4hisicall., capriciousl. an in rave abuse of its iscretion"

!!" Throuh the assaile PS's an the assaile Resolutions, the Sanianba.an

eclare certain provisions of the coconut lev. la4s as 4ell as certainainistrative issuances of the PCA as unconstitutional" !n oin so, theSanianba.an erroneousl. eplo.e, if not rossl. abuse, its po4er of ?uicialrevie4"

A" the Sanianba.an ravel. erre, if not braenl. e#ceee its statutor. ?urisiction an abuse the ?uicial po4ers, 4hen it conclue that the public purpose of certain coconut lev. la4s 4as not evient, 4hen it


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thereupon forulate its o4n public policies an purposes for the coconutlev. la4s an at the sae tie isreare the national policiesspecificall. prescribe therein" B" !n rulin that it is not clear or evient ho4 the eans eplo.e b. the

or stare decisis an rante responent Republicsfourth attept to eclare the coconut lev. la4s unconstitutional, espitefact that such eclaration of unconstitutionalit. 4as not necessar. toresolve the ultiate issue of o4nership involve in the ill-otten 4ealthcases"

!!!" !n renerin the assaile PS's an thereafter refusin to procee to trial on theerits, on the ere sa.-so of the responent Republic, the Sanianba.ancoitte ross an irreversible error, ravel. abuse its ?uicial iscretion anflarantl. e#ceee its ?urisiction as it effectivel. sanctione the ta3in of COCO9E(, et al "s propert. b. the responent Republic 4ithout ue process of la4 an throuh retroactive application of the eclaration of unconstitutionalit. of the coconut lev. la4s, an act that is not onl. illeal an violative of the settleOperative 9act (octrine but, ore iportantl., ine@uitable to the coconut farers4hose onl. possible ista3e, offense or isfortune 4as to follo4 the la4"

A" "


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2" !n the course of the alost t4ent. 6/17 .ears that the ill-otten4ealth cases 4ere penin, COCO9E(, et al " repeatel. as3e to beallo4e to present evience to prove that the true, actual an beneficialo4ners of the se@uestere assets are the coconut farers annot Co?uanco, an allee cron. of forer Presient Marcos" The

Sanianba.an rievousl. erre an clearl. abuse its ?uicialiscretion 4hen it repeatel. an continuousl. enie COCO9E(, et al. the opportunit. to present their evience to isprove the baselessalleations of the !ll-;otten Gealth Cases that the se@uestere assetsconstitute ill-otten 4ealth of Co?uanco an of forer PresientMarcos, an error that uneniabl. an illeall. eprive COCO9E(, etal of their constitutional riht to be hear"

/" The Sanianba.an erroneousl. conclue that the Assaile PS'san Assaile Resolutions settle the ultiate issue of o4nership of theSe@uestere Assets an, ore iportantl., resolve all factual an

leal issues involve in the ill-otten 4ealth cases" Rather, as there aretriable issues still to be resolve, it 4as incubent upon theSanianba.an to receive evience thereon an conuct trial on theerits"

8" Favin e#pressl. orere the parties to procee to trial anthereafter ecreein that trial is unnecessar. as the Assaile PS's 4erefinal an appealable ?uents, the Sanianba.an acte 4hisicall.,capriciousl. an contrar. to the Rules of Court, treate the parties inthe ill-otten 4ealth cases unfairl., isobe.e the ictate of thisFonorable Court an, 4orse, violate COCO9E(, et als riht to ue process an e@ual protection of the la4s"

B" The Sanianba.an ravel. erre if not rossl. abuse its iscretion4hen it repeatel. isreare, an outrihtl. refuse to reconie, theoperative facts that e#iste as 4ell as the rihts that veste fro the tiethe coconut lev. la4s 4ere enacte until their eclaration of unconstitutionalit. in the assaile PS's" As a result, the assaile PS'sconstitute a proscribe retroactive application of the eclaration of unconstitutionalit., a ta3in of private propert., an an ipairent of veste rihts of o4nership, all 4ithout ue process of la4"


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Marcos an his cron., Co?uanco" !n toleratin responent Republics antics for alost t4ent. 6/17 .ears, the Sanianba.an so larinl. eparte fro proceure an thereb. flarantl. violate COCO9E(, et al"s riht to spee. trial"

!n ;"R" No" 2:28, petitioner Ursua virtuall. iputes to the Sanianba.an

the sae errors attribute to it b. petitioners in ;"R" Nos" 2:5-5:"


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C" The Sanianba.an ravel. erre in concluin that Section 2of P( No" 55 constitutes an unue eleation of leislative po4er insofar as it authories the PCA to proulate rules anreulations overnin the istribution of the UCPB shares to thecoconut farers" Section 2 of P( 55 4as coplete in itself,

prescribe sufficient stanars that circuscribe the iscretion of the PCA an erel. authorie the PCA to fill atters of etail ane#ecution throuh proulate rules an reulations"

!!!

The coconut lev. la4s, insofar as the. allo4e the PCA to proulate rules anreulations overnin the istribution of the UCPB to the coconut farers, o notconstitute an unue eleation of leislative po4er as the. 4ere coplete intheselves an prescribe sufficient stanars that circuscribe the iscretion of the PCA"

!%

Assuin e#-ratia aruenti that the coconut lev. la4s are unconstitutional,still, the o4ners thereof cannot be eprive of their propert. 4ithout ue processof la4 consierin that the. have in oo faith ac@uire veste rihts over these@uestere assets"

!n su, the instant petitions see3 to @uestion the ecisions of the

Sanianba.an in both CC Nos" 1188-A an 1188-9, alon 4ith the preliinar.

issues of ob?ection" Ge shall aress at the outset, 627 the coon preliinar.

@uestions, incluin ?urisictional issue, follo4e b. 6/7 the coon priar.contentious issues 6i.e. constitutional @uestions7, an 687 the issues particular to

each case"

T2 Co0'*s R043$@

I

T2 S#$%3@#$+##$ 2#s 0'3s%3*3o$ o/' *2 s0+*

:#**' o


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establishe" !n fine, the Republic, so petitioners clai, has faile to prove the ill-

otten nature of the se@uestere coconut farers UCPB shares" Accorinl., the

controvers. is reove fro the sub?ect atter ?urisiction of the Sanianba.an

an necessaril. an. ecision renere on the erits, such as PS'-A an PS'-9, is

voi"

To petitioners, it behooves the Republic to prove the ?urisictional facts

4arrantin the Sanianba.ans continue e#ercise of ?urisiction over ill-otten

4ealth cases" Citin Manila Electric Co'pan$ Meralco/ v. Ortae( ,


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!t is, therefore, clear that ?urisiction over the sub?ect atter is conferre b. la4" !n

turn, the @uestion on 4hether a iven suit coes 4ithin the pale of a statutor.

conferent is eterine b. the alleations in the coplaint, rearless of 4hether

or not the plaintiff 4ill be entitle at the en to recover upon all or soe of the

clais asserte therein"


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coconut lev. funs 4ere ipose an collecte uner P"(" / an uner anoalous an sinister esins an circustances, to 4it$

6i7 (efenant Euaro Co?uanco, 'r" covete the coconut lev. funs as a cheap,

lucrative an ris3-free source of funs 4ith 4hich to e#ercise his private option to bu. the controllin interest in 9UB"

6ii7 to leitiie a posteriori his hihl. anoalous an irreular use an iversion of overnent funs to avance his o4n private an coercial interests (efenantEuaro Co?uanco, 'r" cause the issuance of P( 55 6a7 eclarin that the coconutlev. funs shall not be consiere special an fiuciar. an trust funs convenientl.repealin for that purpose a series of previous ecrees establishin the character of the coconut lev. funs as special, fiuciar., trust an overnentsD 6b7 confirinthe areeent bet4een Co?uanco an PCA on the purchase of 9UB b.incorporatin b. reference sai private coercial areeent in P( 55D

6iii7 "6iv7 To perpetuate his opportunit. to buil his econoic epire, Co?uanco cause the

issuance of an unconstitutional ecree 6P( 20:7 re@uirin the eposit of all coconutlev. funs 4ith UCPB interest free to the pre?uice of the overnent an finall.

6v7 Favin full. establishe hiself as the unispute coconut 3in 4ith unliite

po4ers to eal 4ith the coconut lev. funs, the stae 4as no4 set for (efenantEuaro Co?uanco, 'r" to launch his preator. fora.s into alost all aspects of Philippine activit. nael. " oil ills"

6vi7 !n ross violation of their fiuciar. positions an in contravention of the oal tocreate a ban3 for coconut farers of the countr., the capital stoc3 of UCPB as of 9ebruar. /5, 2: 4as actuall. hel b. the efenants, their la4.ers, factotu an business associates, thereb. finall. ainin control of the UCPB b. isusin thenaes an ientities of the so-calle ore than one illion coconut farers"

6b7 create an>or fune 4ith the use of coconut lev. funs various

corporations, such as 6COCO9E(7 4ith the active collaboration an participationof (efenants 'uan Ponce Enrile, Maria Clara &obreat ost of 4ho coprise

the interloc3in officers an irectors of sai copaniesD issipate, isusean>or isappropriate a substantial part of sai coco lev. funs 9!NA&&+ ;A!NOGNERSF!P AN( CONTRO& O9 TFE UN!TE( COCONUT P&ANTERSBAN B+ M!SUS!N; TFE NAMES AN(>OR !(ENT!9!ES O9 TFE SO-CA&&&E( MORE TFAN ONE M!&&!ON COCONUT 9ARNMERSD

6c7 isappropriate, isuse an issipate P:01 illion of the 6C!(97

lev. funs eposite 4ith the National (evelopent Corporation 6N!(C7 asainistrator trustee of sai funs an later 4ith UCPB, of 4hich (efenantEuaro Co?uanco, 'r" 4as the Chief E#ecutive Officer"

67 establishe an cause to be fune 4ith coconut lev. funfs, 4ith theactive collaboration of (efenants 9erinan E" Marcos throuh the issuance of &O! / an of


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6i7 isuse coconut lev. funs to bu. a?orit. of the outstanin sharesof stoc3 of San Miuel Corporation"

20" (efenants Euaro Co?uanco, 'r" of the Anara Concepcion Cru

Reala an Abello la4 offices 6ACCRA7 plotte, evise, schee, conspirean confeerate 4ith each otherin settin up, throuh the use of the coconut lev.funs the financial an corporate structures that le to the establishent of UCPBUN!COM


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his heir 4oul pro#. over the vote of the shares o4ne b. Soriano anCo?uanco"

67 All toether, Co?uanco purchase 88 illion shares of the SMC

throuh the 20 holin copanies

8"2" The sae fourteen copanies 4ere in turn o4ne b. the si# 67so-calle C!!9 Copanies"

6h7 (efenant Corporations are but shell corporations o4ne b.

interloc3in shareholers 4ho have previousl. aitte that the. are ?ust noinee stoc3holers 4ho o not have an. proprietar. interestover the shares in their naes"


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67 Gith his entr. into the sai Copan., it bean to et favors fro theMarcos overnent, sinificantl. the lo4erin of the e#cise ta#es on beer, one of the ain proucts of SMC"

25" (efenants plotte, evise, schee, conspire an confeerate

4ith each other in settin up, throuh the use of coconut lev. funs, the financialan corporate frae4or3 an structures that le to the establishent of UCPB,


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627 Throuh isappropriation, conversion, isuse or alversation of public funs or rais on the public treasur.D

6/7 "D

687 B. the illeal or frauulent conve.ance or isposition of assets belonin to the overnent or an. of its subivisions, aencies or instruentalities or overnent-o4ne or controlle corporationsD

607 B. obtainin, receivin or acceptin irectl. or inirectl. an.shares of stoc3, e@uit. or an. other for of interest or participation in an. business enterprise or unerta3inD

657 Throuh the establishent of aricultural, inustrial or coercialonopolies or other cobination an>or b. the issuance, proulationan>or ipleentation of ecrees an orers intene to benefit particular persons or special interestsD an

67 B. ta3in unue avantae of official position, authorit.,

relationship or influence for personal ain or benefit"


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Petitioners COCO9E( et al" an Ursua, ho4ever, 4oul insist that the Republic

has faile to prove the ?urisiction facts$ that the se@uestere assets inee

constitute ill-otten 4ealth as averre in the aene subivie coplaints"

This contention is incorrect"

There 4as no actual nee for Republic, as plaintiff a %uo, to auce

evience to sho4 that the Sanianba.an has ?urisiction over the sub?ect atter of

the coplaints as it leane on the averents in the initiator. pleains to a3e

visible the ?urisiction of the Sanianba.an over the ill-otten 4ealth

coplaints" As previousl. iscusse, a perusal of the alleations easil. reveals the

sufficienc. of the stateent of atters isclosin the clai of the overnentaainst the coco lev. funs an the assets ac@uire irectl. or inirectl. throuh

sai funs as ill-otten 4ealth" Moreover, the Court fins no rule that irects the

plaintiff to first prove the sub?ect atter ?urisiction of the court before 4hich the

coplaint is file" Rather, such buren falls on the shoulers of efenant in the

hearin of a otion to isiss anchore on sai roun or a preliinar. hearin

thereon 4hen such roun is allee in the ans4er"

COCO9E( et al" an Ursuas reliance on Manila Electric Co'pan$

Meralco/ v. Ortane(


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Ghile the 20 Meralco an the epo'uceno cases are inapplicable, the Courts

rulin in 1ija' v. #ibonhono$


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The ensuin e#cerpts fro Macahilig v. 7eirs of Magalit


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/" The petitioners clai that the assets ac@uire 4ith the coconut lev.funs are privatel. o4ne b. the coconut farers is foune on certain provisionsof la4, to 4it or business associates, uies, aents an noinees of Co?uanco, 'r" or the

Marcoses, an 6/7 the se@uestere shares 4ere not illeall. ac@uire nor ac@uire

throuh or as result of iproper or illeal use or conversion of funs belonin to

the ;overnent" Ghile not sa.in so e#plicitl., petitioners are oubtless

conve.in the iea that 4ealth, ho4ever ac@uire, 4oul not be consiere ill-

otten in the conte#t of EO 2, / an 20, s" of 2:, absent proof that the recipientor en possessor thereof is outsie the Marcos circle of friens, associates, cronies

or noinees"

Ge are not convince"

As a. be note, E"O" 2 an / avert to Presient Marcos, or his associates

noinees" !n its ost coon sinification, the ter no'inee refers to one 4ho is

esinate to act for another usuall. in a liite 4a.D


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;uie b. the foreoin efinitions, the @uer. ust be ans4ere in the

affirative if onl. to ive life to those e#ecutive issuances aie at ensurin the

recover. of ill-otten 4ealth" !t is basic, alost eleentar., that$&a4s ust receive a sensible interpretation to proote the ens for 4hich

the. are enacte" The. shoul be so iven reasonable an practical construction as4ill ive life to the, if it can be one 4ithout oin violence to reason"Conversel., a la4 shoul not be so construe as to allo4 the oin of an act4hich is prohibite b. la4, not so interprete as to affor an opportunit. to efeatcopliance 4ith its ters, create an inconsistenc., or contravene the plain 4orsof the la4" &nterpretatio fienda est ut res 'agis valeat %ua' pereat or thatinterpretation as 4ill ive the thin efficac. is to be aopte"


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characteriation ust inclue 4hat the Sanianba.an consiere

the unidentified coconut farers, ore than a illion of faceless an $#:4ss

oo$0*


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Sanianba.an rante the later otion an accorinl. renere the Partial

Suar. 'uent, effectivel. preeptin the presentation of evience b. the

efenants in sai case 6herein petitioners COCO9E( an Ursua7"

Section 5, Rule 81 the Rules of Court clearl. sets out the orer of presentin

evience$

SEC" 5" Order of trial "Sub?ect to the provisions of section / of Rule 82,

an unless the court for special reasons other4ise irects, the trial shall be liiteto the issues state in the pre-trial orer an shall procee as follo4s$

6a7 The plaintiff shall auce evience in support of his coplaintD (+) T2 %


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suar. ?uent" Suar. ?uent a. be allo4e 4here, save for the

aount of aaes, there is, as sho4n b. affiavits an li3e evientiar.

ocuents, no enuine issue as to an. aterial fact an the ovin part. is

entitle to a ?uent as a atter of la4" A enuine issue, as istinuishe fro

one that is fictitious, contrive an set up in ba faith, eans an issue of fact thatcalls for the presentation of evience"


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&astl., COCO9E( et al" even file their o4n Motion for #eparate #u''ar$

Judg'ent , an event reflective of their aission that there are no ore factual

issues left to be eterine at the level of the Sanianba.an" This act of filin a

otion for suar. ?uent is a ?uicial aission aainst COCO9E( uner Section /, Rule 281 4hich eclares that the act, eclaration or oission of a part.

as to a relevant fact a. be iven in evience aainst hi"

%ie4e in this liht, the Court has to re?ect petitioners self-servin alleations

about bein eprive the riht to auce evience"

III

T2 '3@2* *o s% *'3#4 #s $o* /3o4#*%.

This brins to the fore the allee violation of petitioners riht to a spee. trial an

spee. isposition of the case" !n support of their contention, petitioners

cite "icaros v. #andiganba$an,


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Nonetheless, the Court has ha the occasion to isiss several cases o4in

to the infrineent of a part.s riht to a spee. isposition of cases"


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An e#aination of the petitioners aruents an the cite inicia of ela. 4oul

reveal the absence of an. alleation that petitioners ove before the

Sanianba.an for the isissal of the case on account of ve#atious, capricious

an oppressive ela.s that attene the proceeins" 9ollo4in 1ello, petitionersare eee to have 4aive their riht to a spee. isposition of the case"

Moreover, ela.s, if an., pre?uice the Republic as 4ell" Ghat is ore, the

allee breach of the riht in @uestion 4as not raise belo4" As a atter of settle

?urispruence, but sub?ect to e@uall. settle e#ception, an issue not raise before

the trial court cannot be raise for the first tie on appeal"


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'ust as basic is the precept that lo4er courts are not preclue fro resolvin,

4henever 4arrante, constitutional @uestions, sub?ect onl. to revie4 b. this Court"

To Us, the present controvers. cannot be pereptoril. resolve 4ithout oin into

the constitutionalit. of P"(" Nos" 55, 2 an 20: in particular" 9or petitionersCOCO9E(et al" an Ballares et al" preicate their clai over the se@uestere

shares an necessaril. their cause on la4s an artial la4 issuances assaile b. the

Republic on constitutional rouns" !nee, as aptl. observe b. the Solicitor

;eneral, this case is for the recover. of shares roune on the invaliit. of certain

enactents, 4hich in turn is roote in the shares bein public in character,

purchase as the. 4ere b. funs raise b. the ta#in an>or a i# of ta#in an

police po4ers of the state" 3s2'+ %3'*% *o %'# #$% 0*343 *2 o44*3o$s 0$%' *2 =CCSF>

#0*2o'3% *o + 4/3% + =PD> No. 66, #s #:$%%, *o # #$%

*2 =CIDF> s2#44 $o* + o$s3%'% o' o$s*'0%, 0$%' #$ 4# o' '@04#*3o$,

s3#4 #$%?o'


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A siilar provision can also be foun in Article !!!, Section 5 of P"(" No" 2 an

Article !!!, Section 5 of P"(" No" 20:, 4hich Ge shall later iscuss in turn$

P"(" No" 2

Section 5" E)e'ptions . T2 Coo$0* Co$s0:'s S*#+343#*3o$ F0$% #$% *2Coo$0* I$%0s*' D/4o:$* F0$% #s 44 #s #44 %3s+0's:$*s o< s#3%


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funs save for the purpose it 4as establishe" Other4ise, petitioners clai

of 4@3*3:#* '3/#* o$'s23 over UCPB shares an inirectl. over SMC

shares hel b. UCPBs subsiiaries 4ill have no le to stan on, P"(" No" 55 bein

the onl. la4 authoriin the istribution of the SMC an UCPB shares of stoc3 to

coconut farers, an 4ith the aforeentione provisions actuall. statin anholin that the coco lev. fun shall not be consiere as a special not even

eneral fun, but shall be o4ne b. the farers in their private capacities"


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!n the case no4 before us, the alleations of the Subivie Coplaint areconsistent 4ith those in the sub?ect Motion, an the. sufficientl. raise the issue of constitutionalit. of the provisions of la4s in @uestion" The Thir AeneCoplaint 6Subivie7 states$

6ii7 to leitiie a posteriori his hihl. anoalous anirreular use an iversion of overnent funs to avance hiso4n private an coercial interests, Co?uanco, 'r" cause theissuance of P( 55 6a7 eclarin that the coconut lev. funs shallnot be consiere special an fiuciar. an trusts funs an o notfor part of the eneral funs of the National ;overnent,convenientl. repealin for that purpose a series of coconut lev.funs as special, fiuciar., trust an overnent funs"

6iv7 To perpetuate his opportunit. to eal 4ith an a3e use the

coconut lev. funs to buil his econoic epire, Co?uanco, 'r"cause the issuance b. (efenant 9erinan E" Marcos of anunconstitutional ecree 6P( 20:7 re@uirin the eposit of allcoconut lev. funs 4ith UCPB, interest free, to the pre?uice of the overnent"

The above-@uote alleations in the Thir Aene Coplaint 6Subivie7alrea. @uestion the leitiac. of the e#ercise b. forer Presient Marcos of hisleislative authorit. 4hen he issue P"(" Nos" 55 an 20:" The provision of Sec" 5, Art" !!! of P"(" 2 is substantiall. siilar to the provisions of theaforesai t4o


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Even if Plaintiff a. not have sai so effectivel., the coplaint infact isputes the leitiac., an, if one pleases, theconstitutionalit. of such enactents" The issue is valil. raise on the face of the coplaint an

efenants ust respon to it" Since the @uestion of constitutionalit. a. be raise even on appeal if theeterination of such a @uestion is essential to the ecision of the case, 4e finore reason to resolve this constitutional @uestion at this stae of the proceeins,4here *2 %


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&a4 of the case has been efine as the opinion elivere on a forer appeal" !t is a ter applie to an establishe rule that 4hen an appellate court passes on a @uestion an reans the case to the lo4er court for further proceeins, the @uestion there settle becoes the la4 of the case uponsubse@uent appeal" !t eans that 4hatever is once irrevocabl. establishe as the

controllin leal rule or ecision bet4een the sae parties in the sae casecontinues to be the la4 of the case, so lon as the facts on 4hich such ecision4as preicate continue to be the facts of the case before the court"

Other4ise put, the principle eans that @uestions of la4 that have been previousl.

raise an ispose of in the proceeins shall be controllin in succeein

instances 4here the sae leal @uestion is raise, provie that the facts on 4hich

the leal issue 4as preicate continue to be the facts of the case before the

court" ;uie b. this efinition, the la4 of the case principle cannot provie

petitioners an. cofort" Ge shall e#plain 4h."

!n the first instance, petitioners cite COCOFED v. PC99.


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the issues in both sets of cases are so ifferent as to preclue the application of the

la4 of the case rule"

The secon an thir instances that petitioners ra4 attention to refer to the rulins

in Republic v. #andiganba$an, 4here the Court b. Resolution of (eceber 28,

20, as reiterate in another resolution ate March /, 2, resolve to en.the separate otions of the Republic to resolve leal @uestions on the character of

the coconut lev. funs, ore particularl. to eclare as unconstitutional 6a7 coconut

levies collecte pursuant to various issuances as public funs an 6b7 Article !!!,

Section 5 of P"(" No" 20:"

Prescinin fro the foreoin consierations, petitioners 4oul state$ Favin

file at least three 687 otions see3in, aon others, to eclare certain provisions

of the Coconut &ev. &a4s unconstitutional an havin been rebuffe all threeties b. this Court, the Republic - an necessaril. Sanianba.an shoul have

follo4e as


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State b. virtue of its sovereint.D an c7 it is levie for the support of theovernent" The coconut lev. funs fall s@uarel. into these eleents for thefollo4in reasons$ 6a7 The. 4ere enerate b. virtue of statutor. enactents ipose on the coconut

farers re@uirin the pa.ent of prescribe aounts" Thus, P( No" /, 4hichcreate the Coconut Consueror purchase b., copra e#porters, oil illers, esiccators an other en-users of copra or itse@uivalent in other coconut proucts" T2 4/ s2#44 + #3% + s02 o'#o'*'s, o34 :344's, %s3#*o's #$% o*2' $%-0s's o< o'# o' 3*s

03/#4$* 3$ o*2' oo$0* 'o%0*s uner such rules an reulations as theAuthorit. a. prescribe" Until other4ise prescribe b. the Authorit., the currentlev. bein collecte shall be continue"

&i3e other ta# easures, the. 4ere not voluntar. pa.ents or onations b.

the people" The. 4ere enforce contributions e#acte on pain of penal sanctions,as provie uner P( No" /$

8" An. person or fir 4ho violates an. provision of this (ecree or the

rules an reulations proulate thereuner, shall, in aition to penaltiesalrea. prescribe uner e#istin ainistrative an special la4, pa. a fine of not less than P/,511 or ore than P21,111, or suffer cancellation of licenses tooperate, or both, at the iscretion of the Court"

Such penalties 4ere later aene thus$ "

6b7 The coconut levies 4ere ipose pursuant to the la4s enacte b. the proper leislative authorities of the State" !nee, the CCS9 4as collecte uner P( No" /"


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6c7 The. 4ere clearl. ipose for a 0+43 0'os" T2' 3s #+so40*4$o 0s*3o$ *2#* *2 ' o44*% *o #%/#$ *2 @o/'$:$*s #/o%

o43 o< 'o**3$@ *2 oo$0* 3$%0s*'. This Court ta3es ?uicial notice of thefact that the oo$0* 3$%0s*' is one of the reat econoic pillars of our nation,an coconuts an their b.proucts occup. a leain position aon the countr.s

e#port proucts" Ta#ation is one not erel. to raise revenues to support the overnent,

but also to provie eans for the '2#+343*#*3o$ #$% *2 s*#+343#*3o$ o< #*2'#*$% 3$%0s*', 4hich is so affecte 4ith 0+43 3$*'s* as to be 4ithin the police po4er of the State"

Even if the one. is allocate for a s3#4 0'os an raise b. specialeans, 3* 3s s*344 0+43 3$ 2#'#*'" !n Cocofed v. PC99, the Court observethat certain aencies or enterprises 4ere oranie an finance 4ith revenueserive fro coconut levies ipose uner a succession of la4 of the late

ictatorship 4ith epose 9erinan Marcos an his cronies as the suspecteauthors an chief beneficiaries of the resultin coconut inustr. onopol." TheCourt continue$ " I* #$$o* + %$3% *2#* *2 oo$0* 3$%0s*' 3s o$ o< *2:#o' 3$%0s*'3s s0o'*3$@ *2 $#*3o$#4 o$o:. !t is, therefore, the Statesconcern to a3e it a stron an secure source $o* o$4 of the livelihoo of asinificant seent of the population, +0* #4so o< o'* #'$3$@s *2 s0s*#3$%@'o*2 o< 232 3s o$ o< *2 3:'#*3/s o< o$o:3 s*#+343* "


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the entire sugar industry, and all its components, stabilization of the domestic

market including foreign market, the industry being of vital importance to the

countrys economy and to national interest.


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!n this case, the coconut lev. funs 4ere bein e#acte fro copra

e#porters, oil illers, esiccators an other en-users of copra or its e@uivalent in

other coconut proucts"


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S*3o$ 1. All incoe an collections for S3#4 o' F3%03#'F0$%s authorie b. la4 shall be reitte to the Treasur. an treate as SpecialAccounts in the ;eneral 9un,3$40%3$@ *2


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accorance 4ith the special purpose for 4hich it 4as collecte, the balance, if there

be an., after the purpose has been fulfille or is no loner forthcoin, to be

transferre to the eneral funs of the overnent, thus$

Section /687"

687 A44 :o$ o44*% o$ #$ *# 4/3% authorie to be levie b.


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GFEREAS, the ''s$*#*3/s o< *2 oo$0* 3$%0s*' have proposethe ipleentation of an inustr.-finance stabiliation schee 4hich 4ill perit socialie pricin of coconut-base cooitiesD

GFEREAS, it is the polic. of the State to proote the 4elfare an

econoic 4ell-bein o< *2 o$s0:3$@ 0+43D "

2" !n aition to its po4ers rante uner


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!n su, not onl. 4ere the challene presiential issuances unconstitutional

for ecreein the istribution of the shares of stoc3 for free to the coconut farers

an, therefore, neatin the public purpose eclare b. P"(" No" /, i.e., to

stabilie the price of eible oil


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is unerscore in the case of Pascual v" The Secretar. of Public Gor3s anCounications, et al , supra, 4hich hel$

As rears the leal feasibilit. of appropriatin public funs for a

private purpose the principle accorin to Rulin Case &a4, is this$ !t is a eneral rule that the leislature is 4ithout po4er toappropriate public revenue for an.thin but a public purpose it isthe essential character of the irect ob?ect of the e#peniture 4hichust eterine its valiit. as ?ustif.in a ta#, an not theanitue of the interests to be affecte nor the eree to 4hichthe eneral avantae of the counit., an thus the public4elfare a. be ultiatel. benefite b. their prootion" !ncientalavantae to the public or to the state, 4hich results fro the prootion of private interests an the prosperit. of private

enterprises or business, oes not ?ustif. their ai b. the use of public one." /5 R"&"C" pp" 8:-0117 The rule is set forth in Corpus 'uris Secunu in the follo4inlanuae$

The test of the constitutionalit. of a statute re@uirin theuse of public funs is 4hether the statute is esine to proote the public interests, as oppose to thefurtherance of the avantae of iniviuals, althouheach avantae to iniviuals iht incientall. serve the public" 6:2 C"'"S" p" 2207

Neeless to sa., this Court is full. in accor 4ith the foreoinvie4s" Besies, reflectin as the. o, the establishe ?urispruencein the Unite States, after 4hose constitutional s.ste ours has been patterne, sai vie4s an ?urispruence are, li3e4ise, part an parcel of our o4n constitutional la4"

The ift of funs raise b. the e#ercise of the ta#in po4ers of the State 4hich4ere converte into shares of stoc3 in a private corporation, slate for freeistribution to the coconut farers, can onl. be accore constitutional sanction if it 4ill irectl. serve the public purpose eclare b. la4"


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(PCA AO 1), #$% Rso40*3o$ No. 7-75, #'

3$/#43% %4@#*3o$s o< 4@3s4#*3/ o'.

Petitioners arue that the anti-raft court erre in eclarin Section 2 of P(

55, PCA Ainistrative Orer No" 2 an PCA Resolution No" 10-:constitutionall. infir b. reason of allee but unproven an unsubstantiate

fla4s in their ipleentation" Aitionall., the. e#plain that sai court erre in

concluin that Section 2 of P( No" 55 constitutes an unue eleation of

leislative po4er insofar as it authories the PCA to proulate rules an

reulations overnin the istribution of the UCPB shares to the farers"

These propositions are eritless"

The assaile PS'-A note the operational istribution nihtare face b. PCA an

the oe of istribution of UCPB shares set in otion b. that aenc. left uch

roo for iversion" Grote the Sanianba.an$

The actual istribution of the ban3 shares 4as aittel. an enorousoperational proble 4hich resulte in the failure of the intene beneficiaries toreceive their shares of stoc3s in the ban3, as sho4n b. the rules an reulations,issue b. the PCA, 4ithout ae@uate uielines bein provie to it b. P"(" No"55" PCA Ainistrative Orer No" 2, Series of 25 6Auust /1, 257, Rulesan Reulations ;overnin the (istribution of Shares of Stoc3 of the Ban3 Authorie to be Ac@uire Pursuant to PCA Boar Resolution No" /0-5, @uotehereuner iscloses ho4 the unistribute shares of stoc3s ue to anon.ouscoconut farers or pa.ors of the coconut lev. fees 4ere authorie to beistribute to e#istin shareholers of the Ban3$

Section " 9ractional an Unistribute Shares 9ractionalshares an shares 4hich reain unistribute shall beistribute to all the coconut farers 4ho have @ualifiean receive e@uit. in the Ban3 an shall be apportioneaon the, as far as practicable, in proportion to their e@uit. in relation to the nuber of unistribute e@uit. ansuch further rules an reulations as a. hereafter be proulate"

The foreoin PCA issuance 4as further aene b. Resolution No"10-:, still citin the sae proble of istribution of the ban3 shares"$


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Thus, 4hen 52,/11,:1 shares in the ban3 reaine unistribute, thePCA eee it proper to ive a bonana to coconut farers 4ho alrea. ot their ban3 shares, b. ivin the an aitional share for each share o4ne b. thean b. convertin their fractional shares into full shares" The rest of the shares4ere then transferre to a private oraniation, the COCO9E(, for istribution to

those eterine to be bona fie coconut farers 4ho ha not receive shares of stoc3 of the Ban3" " T2 PCA *20s #ss0:%, ue to lac3 of ae@uate uielines set b. P"("

No" 55, *2#* 3* 2#% o:4* #0*2o'3* *o %


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P"(" No" 55 involves an invali eleation of leislative po4er, a concept

iscusse in #oriano v. "aguardia,


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consiere as coconut farers" Goul, sa., one 4ho plants a sinle coconut tree be

alrea. consiere a coconut farer an, therefore, entitle to o4n UCPB

shares !f so, ho4 an. shares shall be iven to hi The efinition of a coconut

farer an the basis as to the nuber of shares a farer is entitle to receive

for free are iportant variables to be eterine b. la4 an cannot be left to theiscretion of the ipleentin aenc."

Moreover, P"(" No" 55 i not ientif. or elineate an. clear conition as

to ho4 the isposition of the UCPB shares or their conversion into private

o4nership 4ill reoun to the avanceent of the national polic. eclare uner

it" To recall, P"(" No" 55 see3s to accelerate the ro4th an evelopent of the

coconut inustr. an achieve a vertical interation thereof so that coconut farers

4ill becoe participants in, an beneficiaries of, such ro4th an evelopent"


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Clearl., P"(" No" 55, insofar as it rants PCA a veritable carte blanche to

istribute to coconut farers UCPB shares at the level it a. eterine, as 4ell as

the full isposition of such shares to private iniviuals in their private capacit.

4ithout an. conitions or restrictions that 4oul avance the la4s national polic.or public purpose, present a case of unue eleation of leislative po4er" As such,

there is even no nee to iscuss the valiit. of the ainistrative orers an

resolutions of PCA ipleentin P"(" No" 55" Gater cannot rise hiher than its

source"

Even so, PCA AO 2 an PCA Resolution No" 1:-0, are in theselves,

infir uner the unue eleation of leislative po4ers" Particularl., Section of

PCA AO ! provies$

SECT!ON " 9ractional an Unistribute Shares 9ractional shares an

shares 4hich reain unistribute as a conse@uence of the failure of the coconutfarers to reister their COCO9UN( receipts or the estruction of theCOCO9UN( receipts or the reistration of COCO9UN( receipts in the nae of an un@ualifie iniviual, after the final istribution is ae on the basis of theconsoliate !BM reistration Report as of March 82, 2 shall be istribute toall the coconut farers 4ho have @ualifie an receive e@uit. in the Ban3 anshall be appointe aon the, as far as practicable, in proportion to their [email protected] relation to the nuber of unistribute e@uit. an such further rules an

reulations as a. hereafter be proulate"

The foreoin provision irects an authories the istribution of fractional

an unistribute shares as a conse@uence of the failure of the coconut farers

4ith Coco 9un receipts to reister the, even 4ithout a clear anate or

instruction on the sae in an. pertinent e#istin la4" PCA Resolution No" 1:-0

ha a siilar provision, albeit proviin ore etaile inforation" The sai

Resolution ientifie 52,/11,:1 shares of the ban3 that reaine unistribute

an PCA evise its o4n rules as to ho4 these unistribute an fractional shares

shall be ispose of, not4ithstanin the earth as to the stanars or paraetersin the la4s 4hich it souht to ipleent"

Eventuall., 4hat happene 4as that, as correctl. pointe out b. the

Sanianba.an, the PCA ave a bonana to suppose coconut farers 4ho alrea.

ot their ban3 shares, b. ivin the e#tra shares accorin to the rules


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establishe on its o4n b. the PCA uner PCA AO 2 an Resolution No" 1:-

0" Because of the lac3 of ae@uate uielines uner P"(" No" 55 as to ho4 the

shares 4ere suppose to be istribute to the coconut farers, the PCA thus

assue that it coul ecie for itself ho4 these shares 4ill be istribute" This

obviousl. pave the 4a. to pla.in favorites, if not allo4in outrihtshenanians" !n this rear, this poser raise in the Courts 9ebruar. 2, 28

Resolution in ;"R" No" 18 is as relevant then as it is no4$ 7o0 is it that shares

of stoc*s in such entities 0hich 0as organi(ed and financed b$ revenues derived

fro' coconut lev$ funds 0hich 0ere i'bued 0ith public interest ended up in

private hands 0ho are not far'ers or beneficiaries= and 0hether or not the holders

of said stoc*, 0ho in one 0a$ or another had had so'e part in the collection,

ad'inistration, disburse'ent or other disposition of the coconut lev$ funds 0ere

%ualified to ac%uire stoc* in the corporations for'ed and operated fro' these funds"


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Article !!!, Section 5 of P"(" No" 2 e#plicitl. ta3es a4a. the coconut lev. funs

fro the coffer of the public funs, or, to be precise, privatie revenues erive

fro the coco lev." Particularl., the aforesai Section 5 provies$

Section 5" E)e'ptions. The Coconut Consuers Stabiliation 9un an theCoconut !nustr. (evelopent fun as 4ell as all isburseents of sai funs for the benefit of the coconut farers as herein authorie shall not be construed or interpreted, under any la" or regulation, as special and/or fiduciary funds, or

as part of the general funds of the national government "ithin the

contemplation of '.(. )o. *11+ nor as a subsidy, donation, levy, government

funded investment, or government share "ithin the contemplation of '.(. -

the intention being that said und and the disbursements thereof as herein

authorized for the benefit of the coconut farmers shall be o"ned in their o"n

private capacity"


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627 %amine, audit, and settle, in accordance "ith la" and regulations,all accounts pertaining to the revenues and receipts of, and e%penditures

or uses of funds and property, o"ned or held in trust by, or pertaining

to, the overnment, or any of its subdivisions, agencies, or

instrumentalities, incluin overnent-o4ne an controlle

corporationsD 3eep the eneral accounts of the overnent an, for such perio as a. be provie b. la4, preserve the vouchers pertainintheretoD an proulate accountin an auitin rules an reulationsincluin those for the prevention of irreular, unnecessar., e#cessive, or e#travaant e#penitures or use of funs an propert."


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isburseent of private propert." Accorinl., Article !!!, Section 5 of both P"("

Nos" 2 an 20: ust be struc3 o4n for bein unconstitutional, be the.

assa.e aainst Section /627, Article K!! 6(7 of the 28 Constitution or its

counterpart provision in the 2: Constitution"

The Court, ho4ever, ta3es note of the ispositive portion of PS'-A, 4hich

states that$or fiuciar. funs nor part of the eneral funs of thenational overnent #$% s3:34#' 'o/3s3o$s o< S. , A'*. III, P.D. 91 #$%S. 5, A'*. III, P.D. 198 contravene the provisions of the Constitution, particularl., Art" !K 6(7, Sec" /D an Article %!, Sec" / 687" 6Ephasis Ours7

Fo4ever, a careful reain of the iscussion in PS'-A reveals that it is

Section 5 of Article !!! of P"(" No" 2 an not Section 8 of sai ecree, 4hich is at

issue, an 4hich 4as therefore hel to be contrar. to the Constitution" The

ispositive portion of the sai PS' shoul therefore be correcte to reflect the

proper provision that 4as eclare as unconstitutional, 4hich is Section 5 of

Article !!! of P"(" No" 2 an not Section 8 thereof"

V

T2 CIIF Co:#$3s #$% *2 CIIF B4o;

o< SMC s2#'s #' 0+43


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funs" Fo4ever, as in the case of UCPB, UCPB itself istribute a part of its

investents in the C!!9 oil ills to coconut farers, an retaine a part thereof as

ainistrator "or

finance usin coconut lev. funs" !n net effect, the C!!9 bloc3 of SMC shares are

sipl. the fruits of the coconut lev. funs ac@uire at the e#pense of the coconut

inustr." !n Republic v. COCOFED,


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sustaine econoic stabilit., an not erel. the livelihoo of a sinificant seent

of the population"


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Moreover, petitioners ipute on the anti-raft court the coission of rave abuse

of iscretion for oin into the valiit. of an in eclarin the coco lev. la4s as

unconstitutional, 4hen there 4ere still factual issues to be resolve in a full blo4n

trial as irecte b. this Court"


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Art" " &a4s are repeale onl. b. subse@uent ones, an their violation or non-observance shall not be e#cuse b. isuse or custo or practice to the contrar."

The octrine of operative fact serves as an e#ception to the aforeentioneeneral rule" !n Planters Proucts, !nc" v" 9ertiphil Corporation, 4e hel$

!he doctrine of operative fact, as an e%ception to the general rule, only applies

as a matter of e3uity and fair play. !t nullifies the effects of an unconstitutionalla4 b. reconiin that the e#istence of a statute prior to a eterination of unconstitutionalit. is an operative fact an a. have conse@uences 4hich cannotal4a.s be inore" The past cannot al4a.s be erase b. a ne4 ?uicialeclaration"

The octrine is applicable 4hen a eclaration of unconstitutionalit. 4ill iposean unue buren on those 4ho have relie on the invali la4" Thus, it 4as applieto a criinal case 4hen a eclaration of unconstitutionalit. 4oul put the accusein ouble ?eopar. or 4oul put in libo the acts one b. a unicipalit. inreliance upon a la4 creatin it"


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operation an presue to be vali in all respects" !t is no4 accepte as aoctrine that prior to its bein nullifie, its e#istence as a fact ust be rec3one4ith" This is erel. to reflect a4areness that precisel. because the ?uiciar. isthe overnental oran 4hich has the final sa. on 4hether or not a leislative or e#ecutive easure is vali, a perio of tie a. have elapse before it cane#ercise the po4er of ?uicial revie4 that a. lea to a eclaration of nullit." !t4oul be to eprive the la4 of its @ualit. of fairness an ?ustice then, if there beno reconition of 4hat ha transpire prior to such a?uication" !n the lanuae of an Aerican Supree Court ecision$ The actual e#istence of a statute, prior to such a eterination


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9urtherore, 4hen petitioner file the instant case aainst responents on Auust5, /110, the '%As 4ere alrea. terinate b. virtue of the MOA bet4een the NFA an RB!" The responents ha no reason to thin3 that their areeents 4ereunconstitutional or even @uestionable, as in fact, the concurrent acts of thee#ecutive epartent lent valiit. to the ipleentation of the Pro?ect" The

SM(RP areeents have prouce veste rihts in favor of the slu 4ellers,the bu.ers of reclaie lan 4ho 4ere issue titles over sai lan, an theaencies an investors 4ho ae investents in the pro?ect or 4ho bouhtSMPPCs" These properties an rihts cannot be isturbe or @uestione after the passae of aroun ten 6217 .ears fro the start of the SM(RP ipleentation"Evientl., the operative fact principle has set in" The titles to the lans in thehans of the bu.ers can no loner be invaliate"


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2" !n aition to its po4ers rante uner Presiential (ecree No" /8/, thePhilippine Coconut Authorit. is hereb. authorie to forulate an ieiatel.ipleent a stabiliation schee for coconut-base consuer oos, alon thefollo4in eneral uielines$

6a7 " The procees fro the lev. shall be eposite 4ith the Philippine NationalBan3 or an. other overnent ban3 to the account of the CoconutConsuers Stabiliation 9un, as a separate trust fun 4hich shall notfor part of the eneral fun of the overnent" 6b7 The 9un shall be utilie to subsiie the sale of coconut-base proucts at prices set b. the Price Control Council, uner rules anreulations to be proulate b. the Philippine Consuers Stabiliation

Coittee"


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to the en that the aforesai coconut farers shall receivecertificates of stoc3 of such coercial ban3 in proportion to their contributions to the 9un"

Unfortunatel., the sai resolution 4as never coplie 4ith in the istribution of

the so-calle farers UCPB shares"

The pa.ents therefore uner R"A" /1 are not the sae as those uner P"(" No"

/" The aounts of C!9 contributions uner R"A" /1 4hich 4ere collecte

startin 22 are uneniabl. ifferent fro the CCS9 lev. uner P"(" No" /,

4hich 4ere collecte startin 28" The t4o 6/7 roups of claiants iffer not onl.

in ientit. but also in the lev. pai, the aount of prouce an the tie the

overnent starte the collection"

Thus, petitioners an the allee farers claiin the pursuant to R"A" /1 o

not have an. leal basis to o4n the UCPB shares istribute to the, #ss0:3$@


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coconut farers 4ithout istinction in fact, ivin the PCA liitless po4er an

free han, to eterine 4ho these farers are, or 4oul be"

Ge cannot sanction the a4ar of the UCPB shares to petitioners 4ho appear to

represent onl. 2"0 illion ebers 4ithout an. leal basis to the e#tree pre?uice of the other 0" illion coconut farers 6E#ecutive Orer No" 0 fi#e

the nuber of coconut farers at illion in 2:27" !nee, petitioners constitute

onl. a sall percentae of the coconut farers in the Philippines" Thus, the

Sanianba.an correctl. eclare that the UCPB shares are overnent assets in

trust for the coconut farers, 4hich 4oul be ore beneficial to all the coconut

farers instea of a ver. fe4 ubious claiantsD

8" The Sanianba.an ae the finin that ue to enorous operational problesan ainistrative coplications, the intene beneficiaries of the UCPB shares

4ere not able to receive the shares ue to the" To reiterate 4hat the anti-raft

court sai$The actual istribution of the ban3 shares 4as aittel. an

enorous operational proble 4hich resulte in the failure of theintene beneficiaries to receive their shares of stoc3s in the ban3,as sho4n b. the rules an reulations, issue b. the PCA, 4ithoutae@uate uielines bein provie to it b. P"(" No" 55" PCAAinistrative Orer No" 2, Series of 25 6Auust /1, 257,Rules an Reulations ;overnin the (istribution of Shares of Stoc3 of the Ban3 Authorie to be Ac@uire Pursuant to PCABoar Resolution No" /0-5, @uote hereuner iscloses ho4 theunistribute shares of stoc3s ue to anon.ous coconut farersor pa.ors of the coconut lev. fees 4ere authorie to be istributeto e#istin shareholers of the Ban3$

Section " 9ractional an Unistribute Shares9ractional shares an shares 4hich reain unistributeas a conse@uence of the failure of the coconut farers toreister their COCO9UN( receipts or the estruction of the COCO9UN( receipts or the reistration of the

COCO9UN( receipts in the nae of an un@ualifieiniviual, after the final istribution is ae on the basisof the consoliate !BM reistration Report as of March82, 2 shall be istribute to all the coconut farers4ho have @ualifie an receive e@uit. in the Ban3 anshall be apportione aon the, as far as practicable, in proportion to their e@uit. in relation to the nuber of


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unistribute e@uit. an such further rules anreulations as a. hereafter be proulate"

The foreoin PCA issuance 4as further aene b. Resolution No" 10-:, still citin the sae proble of istribution of the

ban3 shares" This latter Resolution is @uote as follo4s$ RESO&UT!ON NO" 10-:

AMEN(MENT O9 A(M!N!STRAT!%E OR(ER

NO" 2, SER!ES O9 25, ;O%ERN!N; TFE(!STR!BUT!ON O9 SFARES

GFEREAS, pursuant to PCA Boar Resolution No" /0-5, thetotal par value of the shares of stoc3 of the Ban3 purchase b. thePCA for the benefit of the coconut farers is P:5,8,11"11 4ith

a par value of P2"11 per share or e@uivalent to :5,8"11 sharesD GFEREAS, out of the :5,8,11 shares, a total of 80,5/,0shares have alrea. been istribute in accorance 4ithAinistrative Orer No" 2, Series of 25, to 4it$ 9irst (istribution - 2/,58,15Secon (istribution - 21,:02,01Thir (istribution - 22,25:,8/80,5/,0 GFEREAS, there is, therefore, a total of 52,/11,:1 shares stillavailable for istribution aon the coconut farersD GFEREAS, it 4as eterine b. the PCA Boar, in consonance4ith the polic. of the state on the interation of the coconutinustr., that the Ban3 shares ust be 4iel. istribute as possible aon the coconut farers, for 4hich purpose a nationalcensus of coconut farers 4as ae throuh the PhilippineCoconut Proucers 9eeration 6COCO9E(7D GFEREAS, to ipleent such eterination of the PCA Boar,there is a nee to accorinl. aen Ainistrative Orer No" 2,Series of 25D NOG, TFERE9ORE, BE !T RESO&%E(, AS !T !S FEREB+RESO&%E(, that the reainin 52,/11,:1 shares of stoc3 of theBan3 authorie to be ac@uire pursuant to the PCA BoarResolution No" /0-5 ate 'ul. /5, 25 be istribute asfollo4s$


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627 All the coconut farers 4ho have receive their share

phil. coconut rpoducers vs republic

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