Cocofed vs Republic Summary

Philippine Coconut Producers Fedration (COCOFED), et al vs. Republic FACTS: 

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In 1971, RA 6260 was enacted, creating the Coconut Investment Company (CIC) to administer the Coconut Investment Fund (CIF). The fund was to be sourved from a PhP 0.55 levy on the sale of every 100 kg of copra. Under the regime of Marcial Law, PD 276 and 582 were enacted creating more funds , specifically the CCSF (Coconut Consumers Stabilization Fund) and CIDF (Coconut Industry Development Fund) PD 755 was enacted to provide credit facilities to coconut farmers. - The Philippine Coconut Administration (PCA) is authorized to handle the funds - The PCA were authorized to use the funds to acquire a bank and to deposit the portion of fund levies. They purchased the First United Bank (FUB), later renamed UCPB, but reimbursed the money from the funds. - The funds were for the benefit of coconut farmers. The funds were used to pay for the financial commitments of farmers and provided them with free shares of the bank. - The stock certificates for the farmers were in the name of the PCA but were supposed to be distributed to the farmers who possessed COCOFUND receipts (PCA Administrative Order No. 1) Eduardo Cojuangco Jr. was one of the mediators of the PCA funds and it was discovered that he caused the issuance of PD 1468 (Revised Coconut Industry Code) through collaboration with Marcos. The Aquino Administration initiated the recovery of ill-gotten gains through the implementation of the following executive orders - EO 1 – establishment of the Presidential Committee on Good Governance (PCGG) - EO 2 – “Ill-gotten gains” included shares of stocks - EO 14 – The Sandiganbayan Sandiganbayan has exclusive jurisdiction The Sandiganbayan ordered the sequestration against stocks in banks owned by more than a million coconut farmers and CIIF companies

ISSUES AND RULING W/N the Sandiganbayan abused its power of judicial review? - No, since the case cannot be solved unless the constitutionality issue is addressed. The case is for the recovery of shares grounded on the invalidity of the enactments and rooted in the nature of the shares being public. W/N Sections 1 and 2 of PD 755, Article 3, Section 5 of PD 961, and Article III, Section 5 of PD 1468 are unconstitutional? - The levy implemented takes on the nature of taxes since they utilized the taxing power and police power of the State, thereby making it a public fund. - The funds were intended for the exclusive benefit of private persons. - Article VI, Section 29 (3)  – “All money collected on any tax levied for a special prupose shall be treated as a special fund and paid out for such purpose only.” 

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The Court also considered the fact that the enactment of the decrees were facilitated by Conjunago Jr. as a tool for hi s own economic empire W/N Article 3, Section 5 of PD 961, Article 3, Section 5, PD No. 1468 violate Article IX, Section 2 of the Constitution? - Yes, they violate Article IX, Section 2 of the 1987 Constitution, which states that the Commission on Audit shall have the power to handle the use of funds pertaining to the Government or its subdivisions. The provisions mentioned above state that the funds shall not be construed to mean special funds or national government funds - The provisions divest the Commission on Audit of its constitutionally mandated function W/N PD 755 and PCA Administrative Order No.1 and Resolutions 074-075 are invalid delegations of legislative power - Yes, PD 755 did not specify the means of distributing the bank shares not claimed by beneficiaries and did not specifically define “coconut farmers”. The P CA assumed authority to define who “coconut farmers” (intended beneficiaries) are and decided that those who did claim shall also be given “gift of bank shares” since the law failed to provide guidelines regarding undistributed shares. The laws failed the completeness test in the sense that they failed to provide guidelines for rules and regulations (the delegate may only implement rules and regulations that enforce the law).

FINAL RULING: Petition denied and the stocks are now considered property of the Republic of the Philippines 