SC voids Estrada EOs on coco levy trust fund

The Supreme Court has struck down as unconstitutional two presidential orders creating trust funds for farmers using martial law-era coconut levy funds.

 

In a 23-page decision written by Associate Justice Roberto Abad, the high court nullified Executive Order 312 that sought to raise P1 billion from the assets acquired using coco levy funds, and Executive Order 313 that created an irrevocable trust fund known as the Coconut Trust Fund.

 

While it may be construed that the SC decision effectively stopped any attempt using those EOs to get at the P72-billion coconut levy fund, Deputy House Speaker Erin Tañada cautioned that there were prior SC decisions on the fund.

 

In an interview with GMA News Online, Tañada cited the decision that declared tycoon Eduardo Cojuangco Jr.’s 20-percent stake in diversifying conglomerate San Miguel Corp. did not form part of the fund and neither did it belong to the Philippines.

 

Tañada also cited the SC ruling last January upholding the Sandiganbayan decision that awarded a 24-percent block of shares in San Miguel Corp. to the Coconut Industry Investment Fund (CIIF), which is also known as the coconut levy fund.

Tañada represents the fourth congressional district of Quezon province, one of the country's key coconut-growing areas.  

Because of the “twenty-percent, twenty-four percent” decision of the high tribunal, it would be difficult to make any conclusions at this point that the high tribunal intended its latest decision that way, Tañada added.

Unimplemented EOs  

President Joseph Estrada signed both EOs 312 and 313 in November 2000.

 

On Jan. 26, 2001, then-President Gloria Macapagal-Arroyo ordered the suspension of EOs 312 and 313. That was two months before the petitioners asked the Supreme Court to declare the EOs unconstitutional.

 

“There was really nothing, because these were never implemented…” because of a complaint by various farmer groups that questioned their constitutionality, said Tañada.

 

But in October 2001 or nine months after Estrada was booted out of Malacañang, Cojuangco–then president of San Miguel–and Maria Clara Lobregat, then mayor of Zamboanga City, signed a declaration of unity urging Arroyo to sign an executive order for a P57-billion trust fund to recover the coconut levy fund for the farmers and the coconut industry.

 

At that time Lobregat was also president of the Coconut Farmers Federation or Cocofed, which has legitimate claim to the coconut levy by virtue of its members.

 

The Supreme Court ruling released to the media Friday clarified that the levy funds should not be "shielded from a review and audit of the Commission on Audit."

 

"The Philippine Coconut Authority, which implements the coco levy laws and collects the coco levy funds, is a government-owned and -controlled corporation subject to COA review and audit," the high court said.

 

"Since coco levy funds are taxes, provisions... that remove such funds and the assets acquired through them from the jurisdiction of the COA violate Article IX-D Section 2(1) of the 1987 Constitution," the court added.

 

Section 2(1) empowers COA with the authority to examine uses of government money and property.

 

Both EOs, however, provided for the creation of a Committee that will manage the funds and designate an external auditor to audit the funds.

 

"[G]iven that the provisions of EO 312 and 313, which was already stated invalidly transferred powers over the funds to two committees that President Estrada created, the rest of their provisions became non-operational," the court said."

 

"It is evident that President Estrada would not have created the new funding programs if they were to be managed by some other entity. Indeed, he made himself the Chairman of the Coconut Trust Fund and left to his discretion the appointment of the members and the other committee," it added.

 

EO 313 created the Coconut Trust Fund Committee, which would administer, manage and supervise the Trust Fund, to be chaired by the President himself, and assisted by 10 members to be appointed by him.

 

The Coconut Trust Fund sought to finance programs that would assist coconut farmers and the coconut industry, and other agriculture-related programs that maximize food productivity, develop business opportunities in the countryside, provide livelihood alternatives, and promote anti-poverty programs.

11 SC justices voted to void  

The ruling, which gained favorable vote from 11 justices, was based on a petition–filed by farmer groups led by Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan–to declare the Estrada EOs void.

 

"E.O. 313… runs counter to the constitutional provision which directs that all money collected on any tax levied for a special purpose shall be treated as a special fund and paid out for such purpose only," according to the SC ruling.

 

The court also said that the orders are unconstitutional for vesting the management and disposition of the assistance fund generated from the sale of coco-levy fund-acquired assets into a Committee.

 

"In effect, the above 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 [which created the Philippine Coconut Authority], to the Committees mentioned above. An executive order cannot repeal presidential decree which has the same standing as a statute enacted by Congress," the SC ruled.

 

Four other justices inhibited from the case, including Justice Antonio Caprio–a petitioner in the case–and Justice Teresita Leonardo-De Castro and Diosdado Peralta who earlier decided in a case related to the coco-levy fund.

  

Coco levy funds came from taxes paid by coconut farmers during the Marcos regime. Part of the fund was invested in various corporations, including San Miguel.

 

Approximately 27 percent of the outstanding capital stock of SMC comes from the fund. SC: UCPB shares distinct from Cojuangco shares In 1983, the Cojuangco-controlled UCPB acquired shares of stock in SMC. UCPB was the administrator of a block of shares that included a 27-percent stake in SMC. This block is composed of several companies formed using the coco levy funds. Apart from UCPB's block of shares, Cojuangco also controls another 20 percent of the shares. But the government, through the PCGG, also claimed ownership of these 20-percent share-holdings, saying these were also acquired using coco levy funds. The government argued that the subject shares should have been deemed purchased using public funds because these were purchased supposedly using UCPB funds. In November 2007, the Sandiganbayan dismissed the government's claim to the shares. It said that the government failed to substantiate its claim that the contested shares were bought by Cojuangco’s group using the coco levy funds. The PCGG then appealed the anti-graft court's ruling to the Supreme Court.     In April last year, also while in summer session in Baguio, the Supreme Court ruled that businessman Eduardo "Danding" Cojuangco’s 20-percent stake in San Miguel Corp. (SMC) does not form part of the so-called coco levy funds and does not belong to the Philippine government.   In a 73-page ruling, the high court dismissed the petition filed by the Presidential Commission on Good Government (PCGG), which sought to reverse the Sandiganbayan's ruling in 2007.   The Sandiganbayan ruled that Cojuangco, as chair of SMC, is the rightful owner of the contested shares.   In affirming the Sandiganbayan, the Supreme Court held: “The block of shares in San Miguel Corp. in the names of respondent Cojuangco, et al.... the exclusive property of Cojuangco et al. as registered owners."   “Accordingly, the lifting and setting aside of the writ of sequestration affecting said block of shares… are affirmed and the annotation of the conditions prescribed in the resolutions promulgated on October 8, 2003 and June 24, 2005 is canceled," added the ruling written by SC Associate Justice Lucas Bersamin. — ELR, GMA News