SC nullifies EOs creating farmers' trust fund from SMC shares

MANILA, Philippines - The Supreme Court (SC) has declared unconstitutional the executive orders of deposed President Joseph Estrada declaring sequestered shares in San Miguel Corporation (SMC) acquired through coconut levy funds as private funds.

In a 23-page decision released yesterday, the high tribunal granted the petition of farmers belonging to Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan and nullified Estrada’s Executive Orders No. 312 and 313, which were supposed to put up trust funds for farmers from sequestered shares in SMC acquired through coconut levy funds.

Former President and now Pampanga Rep. Gloria Macapagal–Arroyo rescinded the two EOs and upheld the previous declaration of the Coconut Industry Investment Fund (CIIF) as public funds took over the presidency in Jan. 2001.

But in a unanimous vote, the SC justices still saw the need to rule on the constitutionality of the orders that were no longer in effect.

The high tribunal said EOs 312 and 313 violated Article IX-D, Section 2(1) of the 1987 Constitution by taking away from the Commission on Audit (COA) its power to look into the use of the coco levy funds that were already declared public by the earlier Presidential Decree 1445 or the Ordaining and Instituting A Government Auditing Code of the Philippines approved by Congress.

“An executive order cannot repeal a presidential decree which has the same standing as a statute enacted by Congress,” according to the Court’s decision penned by Associate Justice Roberto Abad, which Chief Justice Renato Corona and nine other justices concurred with.

Senior Justice Antonio Carpio took no part since he was one of the petitioners in this case. Justices Teresita Leonardo-De Castro and Diosdado Peralta also inhibited since they have decided a related case when they were still in the Sandiganbayan.

The SC also raised a question as to the real motive of Estrada’s orders.

It held that the orders had also transferred the power to allocate, use and disburse coco-levy funds vested in the Philippine Coconut Authority (PCA) to a new coconut trust fund committee, in violation to Section 84(2) of PD 1445.

The high court pointed out that the coco levy funds are special funds that should be treated as taxes.

“The fees were levied for a special purpose and, therefore, constituted special fund when collected. Its character as such fund was made clear by the fact that they were deposited in the PNB and not in the Philippine Treasury.”

It stressed that there is no legitimate reason why such funds should be shielded from COA review and audit.

“The PCA, 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,” it said.

EO No. 312 sought to put up a maximum fund of P1 billion through the sale of assets acquired through the coco levy funds or by entities financed by the coco levy funds.

On the other hand, EO No. 313 sought to create at least P40 billion in trust fund out of a 27-percent stake in SMC under CIIF.

Last January, the SC upheld government’s re-conveyance of the 24-percent block of shares or a total of 753.8 million shares in SMC acquired through coconut levy and registered in the names of the CIIF and its holding companies.

Voting unanimously, the magistrates affirmed the 2004 decision of the Sandiganbayan that had found the subject shares to be ill-gotten during the time of the late strongman Ferdinand Marcos.

The SC ruling penned by Justice Presbitero Velasco Jr., which was not yet released to media yesterday pending completion of signatures of the justices, held that the CIIF shares in SMC valued at about P50 billion to P100 billion would be used for the benefit of the country’s coconut industry and its farmers.