Supreme Court: Coco levy public fund

Voting 10-5, the Supreme Court declared last night that the P130-billion coconut levy funds are public and belong to the government, finally resolving a legal issue that has boggled judicial minds for 15 years.

The decision stemmed from a suit filed by the Presidential Commission on Good Government, which appealed the Sandiganbayan’s ruling on Feb. 28, barring the PCGG from voting the United Coconut Planters Bank (UCPB) shares it sequestered from businessman Eduardo "Danding" Cojuangco Jr.

"Inasmuch as the subject UCPB shares were indisputably acquired with coco levy funds which are public in character, then the right to vote them shall be exercised by the PCGG," read the 47-page majority decision, penned by Justice Artemio Panganiban.

"This court holds that the government should be allowed to continue voting these shares inasmuch as they were purchased with coco levy funds — funds that are prima facie public in character, or at the very least, are clearly affected with public interest," Panganiban wrote.

The jurists who concurred with Panganiban’s position were Chief Justice Hilario Davide and Justices Reynato Puno, Josue Bellosillo, Jose Vitug, Vicente Mendoza, Leonardo Quisumbing, Arturo Buena, Sa-bino de Leon and Antonio Carpio.

Those who dissented were Justices Jose Melo, Santiago Kapunan, Bernardo Pardo, Consuelo Ynares-Santiago and Angelina Sandoval-Gutierrez.

"In the present case, it is not disputed that the money used to purchase the sequestered UCPB shares come from the Coconut Consumer Stabilization Fund (CCSF), otherwise known as coconut levy funds," the decision read.

The CCSF was created by Marcos in 1973 through Presidential Decree 276, which imposed a levy for every 100 kilos of copra that coconut planters sold.

"To avoid misunderstanding and confusion, this Court will even be more categorical and positive than its earlier pronouncements: the coconut levy funds are not only affected with public interest; they are, in fact, prima facie public funds," the decision read.

The ruling has effectively put to rest the legal contention between small coconut farmers and the Philippine Coconut Producers Federation Inc. (Cocofed), who are contesting ownership of the funds that have been frozen by the courts.

The high court declared the levy funds "public" because "it satisfied the general definition of public funds."

The court said the levy was raised "with the use of the police and taxing powers of the state, levies imposed were for the benefit of the farmers; Cocofed and Cojuangco have judicially admitted that the sequestered shares were purchased with public funds, (Commission on Audit) audits the levy funds and (the Bureau of Internal Revenue) treated them as public funds."

"To repeat, the juridical situation has not changed. It is still the truth today: the coconut levy funds are clearly affected with public interest. Private respondents have not demonstrated satisfactorily that they have legitimately become private funds," the court ruled.

Despite the explicit ruling on the nature of the funds, however, the high court clarified the Sandiganbayan can still come up with a final ruling on the original case from which the appeal arose.

"In making this ruling, we are in no way preempting the proceedings in the Sandiganbayan may conduct or the final judgment it may promulgate," the high court ruled.

"Our determination is merely prima facie, and should not bar the anti-graft court from making a final ruling, after proper trial and hearing, on the issues and prayers in the said civil cases," the court said.

The appeal arose from the principal suit filed by the PCGG, docketed as Civil Case No. 003-A, where the government alleged that cronies of former President Ferdinand Marcos allegedly arranged for the Philippine Coconut Authority (PCA) to purchase 72.2 percent of the First United Bank, which is now UCPB, for P85.8 million from the levy funds.

At the same time, the anti-graft court was directed to finish the case within six months after it remained pending in the anti-graft court for several years.

"The Sandiganbayan is ordered to decide with finality the aforesaid civil cases within a period of six months from notice. It shall report to this Court on the progress of the cases every three months, on pain of contempt," the court warned.

The funds totaled some P9 billion when it was last levied in 1982, part of which was supposedly used to purchase a 27-percent stake in food and beverage conglomerate San Miguel Corp. (SMC) under the Coconut Industry Investment Fund (CIIF).

But the government froze the levy funds and sequestered the SMC shares upon the ouster of Marcos, sparking the ownership dispute.

The government has since been able to vote the some uncontested shares in SMC and had been naming at least five nominees in the SMC board to ensure that the value of the shares are not dissipated.

However, the government has not been able to do the same in UCPB.