~epublic of tbe Jlbilippines

~upreme QI:ourt
;fffilan ila
EN BANC
CONFEDERATION OF GR. No. 217965
COCONUT FARMERS
ORGANIZATIONS OF THE Present:
PHILIPPINES, INC. (CCFOP),
Petitioner, SERENO, CJ,
CARPIO,*
VELASCO, JR.,
LEONARDO-DE CASTRO,
PERALTA,
BERSAMIN,
DEL CASTILLO,
MENDOZA,
- versus - PERLAS-BERNABE,
LEONEN,
JARDELEZA, *
CAGUIOA,*
MARTIRES,
TIJAM, and
REYES, JR., JJ

HIS EXCELLENCY PRESIDENT

BENIGNO SIMEON C. AQUINO
III, ACTING COMMISSIONER
RICHARD ROGERAMURAO
of the PRESIDENTIAL
COMMISSION ON GOOD
GOVERNMENT (PCGG),
CHAIRMAN CESAR L.
VILLANUEVA of the
GOVERNANCE COMMISSION
FOR GOCCs (GCG), and
SECRETARY LEILA M. DE
LIMA of the DEPARTMENT Promulgated:
OF JUSTICE,
Respondents. August 8, 2017
~{>;.A(·~
x ----------------------------------- -r( _..ft_ - - - - -
~:..io;.:~---- x

•No Part.

¥
 DECISION 2 G.R. No. 217965

DECISION

MENDOZA, J.:

Through the subject Petition for Prohibition under Rule 65 of the

Rules of Court (Petition), the controversy surrounding the utilization of the
contentious "coco levy funds" is once again put into the fore.

Before the Court proceeds, a brief restatement of the factual

antecedents leading up to the present petition is in order.

The collection of what is known as the coconut levy funds all began
1
on June 19, 1971, following the passage of Republic Act (R.A) No. 6260,
for the purpose of providing the necessary funds for the development of the
coconut industry. The imposition, which was pooled to what was called the
Coconut Investment Fund (CIF), consisted of a sum equivalent to fifty-five
centavos (P0.55) on the first domestic sale by a coconut farmer for every
100 kilograms of copra or other coconut products. In exchange for the levy,
the coconut farmer was to be issued a receipt which shall be converted into
shares of stock of the Coconut Investment Company (CIC).

Playing key roles in the collection, administration and/or use of the

coconut levy funds were the Philippine Coconut Authority (PCA), formerly
the Philippine Coconut Administration (PHILCOA), United Coconut
Planters Bank (UCPB), and Philippine Coconut Producers Federation, Inc.,
or the COCOFED. By legal mandate, COCOFED once received allocations
from the coconut levy funds to finance its projects. Among the assets
allegedly acquired thru the direct or indirect use of the Fund was a block of
San Miguel Corporation (SMC) shares of stock. 2

The declaration of martial law in September 1972 saw the issuance of

several presidential decrees (PDs.), purportedly designed to improve the
coconut industry through the collection and use of the coconut levy
funds. Among those issued included: [l] P.D. No. 276 which established the
Coconut Consumers Stabilization Fund (CCSF) and declared the proceeds
thereof as trust fund to be utilized to subsidize the sale of coconut-based
products, thus, stabilizing the price of edible oil; [2] P.D. No. 582 which
created the Coconut Industry Development Fund (CIDF) to finance the
operation of a hybrid coconut seed farm; [3] P.D. No. 755 which
approved the acquisition of a commercial bank (UCPB) for the benefit of the
coconut farmers to enable such bank to promptly and efficiently realize the
industry's credit policy; and [4] P.D. No. 961 (Coconut Industry Code),

1
Titled "An Act Instituting a Coconut Investment Fund and Creating a Coconut Investment Company for
the Administration Thereof."
2
Republic v. Sandiganbayan, 54 I Phil. 24, 29-30 (2007).

~
 DECISION 3 G.R. No. 217965

which codified and consolidated all existing laws and decrees relative to the
coconut industry.

Apropos to the current controversy are the provisions in P.D. No. 755
and P.D. No. 961, which decreed that the coconut levy funds were not to be
construed or interpreted as special and/or fiduciary funds, or as part of the
general funds of the national government, the intention being that said funds
and the disbursements thereof would be owned by the coconut farmers in
their private capacities.

On November 8, 1977, P.D. No. 1234 was enacted. It decreed that all
income and collections for special and fiduciary funds authorized by law,
including the CCSF and the CIDF, shall be remitted to the Treasury and be
treated as Special Accounts in the General Fund (SAGF).

Then, on June 11, 1978, P.D. No. 1468 (Revised Coconut Industry
Code) was issued. It brought back the declarations made in P.D. Nos. 755
and 961 that the CCSF and the CIDF shall not form part of the SAGF or as
part of the general funds of the national government, but shall be owned by
the coconut farmers in their private capacities.

Through the years, a part of the coconut levy funds went directly or
indirectly to various projects and/or was converted into different assets or
investments. 3 Among these projects was the Sagip Niyugan Program,
established sometime in November 2000 via Executive Order (E. 0.)
Nos. 312 and 313. It created a P 1billion trust fund by disposing of assets
acquired using coconut levy funds or assets of entities supported by those
funds.

On January 24, 2012, in COCOFED v. Republic (COCOFED), 4 the

Court struck down the provisions of P.D. Nos. 755, 961, and 1468 which
declared the coconut levy funds as private assets. In doing so, the Court
explained:

In sum, not only were the challenged presidential

issuances unconstitutional for decreeing the distribution of the
shares of stock for free to the coconut farmers and, therefore,
negating the public purpose declared by P.D. No. 276, i.e., to
stabilize the price of edible oil and to protect the coconut industry.
They likewise reclassified, nay treated, the coconut levy fund
as private fund to be disbursed and/or invested for the benefit
of private individuals in their private capacities, contrary to the
original purpose for which the fund was created. To compound the
situation, the offending provisions effectively removed the coconut
levy fund away from the cavil of public funds which normally can be
paid out only pursuant to an appropriation made by law. The
3
Id. at 29.
4
679 Phil. 508 (2012).

"
)'
 DECISION 4 G.R. No. 217965

conversion of public funds into private assets was illegally allowed,

in fact mandated, by these provisions. Clearly therefore, the
pertinent provisions of P.D. Nos. 755, 961 and 1468 are
unconstitutional for violating Article VI, Section 29 (3) of the
Constitution. In this context, the distribution by PCA of the UCPB
shares purchased by means of the coconut levy fund a special fund
of the government to the coconut farmers, is therefore void. 5
[Emphasis supplied]

Reiterating the character of the coconut levy funds as public in

character, the Court, in Pambansang Koalisyon ng mga Samahang
6
Magsasaka at Manggagawa sa Niyugan v. Executive Secretary (PKSMMN),
struck down E.0. Nos. 312 and 313, for being violative, among others, of,
Section 29 (3), Article VI of the Constitution.

On March 18, 2015, then President Benigno S. Aquino III (President

8
Aquino) issued E.O. Nos. 1797 and 180. Essentially, E.O. No. 179 calls for
the inventory and privatization of all coco levy assets. E.0. No. 180, on the
other hand, mandates the reconveyance and utilization of these assets for the
benefit of coconut farmers and the development of the coconut industry.
Believing that the twin executive orders are invalid, petitioner Confederation
of Coconut Farmers Organizations of the Philippines, Inc. (CCFOP)
proceeded with the subject petition with this Court.

Hence, this petition raising the following issues:

ISSUES
I

WHETHER THE PRESIDENT, IN THE GUISE OF

IMPLEMENTING THE LAWS RELATIVE TO COCONUT LEVY
FUNDS AND ASSETS, GRAVELY ABUSED HIS DISCRETION IN
ISSUING THE ASSAILED EXECUTIVE ORDERS WITHOUT
PRIOR LEGISLATION;

II

WHETHER THE PRESIDENT GRAVELY ABUSED HIS

DISCRETION WHEN HE ARROGATED UNTO HIMSELF,
WITHOUT LEGISLATIVE AUTHORITY, THE POWER TO
ALLOCATE, USE AND ADMINISTER THE SUBJECT COCONUT
LEVY FUNDS AND ASSETS, WHICH POWERS IS EXCLUSIVELY
LODGED WITH THE PCA; AND

5
Id. at 607-608.
6
685 Phil. 295 (2012).
7
Titled "Providing the Administrative Guidelines for the Inventory and Privatization of Coco-Levy
Assets."
8
Titled "Providing the Administrative Guidelines for the Reconveyance and Utilization of Coco-Levy
Assets for the Benefit of the Coconut Farmers and the Development of the Coconut Industry, and for Other
Purposes."

\1J
 DECISION 5 G.R. No. 217965

III

WHETHER THE PRESIDENT GRAVELY ABUSED HIS

DISCRETION WHEN HE ARROGATED UNTO HIMSELF THE
EXCLUSIVE AUTHORITY OF THE JUDICIARY TO EXECUTE
ITS FINAL AND EXECUTORY DECISISION, IN VIOLATION OF
THE PRINCIPLE OF SEPARATION OF POWERS. 9

Arguments of the Petitioner

Violation of the Constitution

Similar to the controversy laid down in PKSMMN, petitioner assails

the constitutionality of E.O. Nos. 179 and 180 on the argument that the
presidential issuances violated Section 29(1) and (3), Article VI 10 of the
Constitution. In this iteration, petitioner explains that the assailed executive
orders were made without authority of law because they were based on P.D.
No. 1234, a law that had ceased to exist when P.D. No. 1468 re-enacted
provisions of the earlier P.D. No. 755 and 961, retaining the character of the
funds as not part of the general funds of the government. According to
petitioner, with the passage of P.D. No. 1468, it became evident that it was
the intention of the legislature to no longer retain the character of the
coconut levy funds as special public funds as mandated under P.D. No. 1234,
but rather, treat the same as private funds which are owned by the coconut
farmers in their private capacities. To further its argument, petitioner points
out that P.D. No. 1234 expressly limits its application to "all other income
accruing to the PCA under existing laws." Thus, it argues that because the
CCSF and CIDF were covered by P.D. No. 1468, a law passed after P.D. No.
1234, the same cannot be considered as covered by P.D. 1234.

Although petitioner concedes that COCOFED 11 and Republic v.

COCOFED, et. al. (Republic/ 2 [1] annulled Section 5, Article 3 of P.D. No.
1468, Section 2 of P.D. No. 755, as well as Section 3, Article 5 of P.D. No.
961; and [2] declared that coco-levy funds are public funds for a special
purpose, petitioner opines the foregoing decisions of the Court: (a) did
nothing more than invalidate the offending provisions of law; (b) did not
ipso facto direct the transfer of the CCSF and CIDF to the SAGF pursuant to
P.D. No. 1234; and (c) did not authorize the President to create a special
account in the general fund. Petitioner, thus, posits that the President

9
Rollo, pp. 16-17.
10
Section 29. (I) No money shall be paid out of the Treasury except in pursuance of an appropriation made
bylaw.
xxx
(3) 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. If the purpose for which a special fund was created has been fulfilled or
abandoned, the balance, if any, shall be transferred to the general funds of the Government.
11
Supra note 4.
12
423 Phil. 735 (2001).

l,

~
 DECISION 6 G.R. No. 21 7965

assumed a legislative function when he issued the assailed executive orders

directing the transfer of the CCSF and CIDF to the special account in the
general law. Citing several bills pending in Congress, petitioner posits that
Congress saw the need to pass a law in order to properly place the coconut
levy funds in SAGF.

Violation of the mandate

of the PCA

Petitioner also contends that E.O. Nos. 179 and 180 violate the
mandate of the PCA under P.D. No. 232 to administer and utilize coconut
levy funds, inasmuch as it directs the PCA, together with the Governance
Commission for Government-Owned and Controlled Corporations (GCG),
the Department of Finance (DOF) and the Presidential Assistant for Food
Security and Agricultural Modernization (PAFSAM), to make
recommendations to the President for approval of all non-cash coconut levy
assets that will be divested, sold, alienated or disposed. Petitioner explains
that, in effect, the questioned executive issuances would diminish the powers
of the PCA by relegating it to only one of the recommendatory bodies for the
privatization and utilization of coconut funds and assets.

On this point, petitioner, citing PKSMMN, averred that similar

executive issuances empowering the President to allocate, use and dispose of
coconut levy assets were struck down by the Court for being without
legislative authorization and for being violative of P.D. No. 232.

Violation of the authority

of the Judiciary

Finally, petitioner asserts that the questioned executive orders violate

the Court's authority to execute its final and executory decisions. It insists
that with the finality of COCOFED, the release, transfer and deposit of the
government shares in UCPB to the Bureau of Treasury could only be done
by the Sandiganbayan which has the exclusive jurisdiction to execute the
final judgment in the said case.

On June 30, 2015, the Court granted petitioner's prayer and issued a
Temporary Restraining Order enjoining the respondents from implementing
the assailed E.O. Nos. 179 and 180 and from using, disbursing and
dispersing the subject coconut levy assets and funds. 13

13
Rollo, pp. 107-110-L.

'(\
 DECISION 7 G.R. No. 217965

Arguments of the Respondents

Traversing the challenge mounted by petitioner, the respondents,

through the Office of the Solicitor General (OSG), first question the
propriety of the filing of the subject suit on procedural grounds. First, on the
improper inclusion of the President as a respondent, they claimed that the
President, who was then in power at the time this case was initiated, enjoyed
immunity pursuant to the principle of separation of powers. 14 The
respondents likewise challenge petitioner's standing to bring the instant suit,
not only because it had failed to establish any direct injury, but also because
the questioned orders do not involve tax measures, negating any challenge
via a taxpayer's suit. 15 They also point out that despite petitioner's claim
that the twin executive orders had infringed on the powers of Congress, no
member of Congress had joined petitioner in the filing of the present suit.
Finally, the respondents assert that because members of Congress have "a
more direct and specific interest in raising the questions being raised," 16 the
doctrine of transcendental importance cannot be used to justify petitioner's
standing. 17

As for the issues raised in the petition, the respondents counter that
when the Court, in COCOFED, struck down P.D. No. 1468, as well as P.D.
Nos. 755 and 961, the result was as if the aforementioned laws did not exist
at all. Consequently, they argue that, as declared in COCOFED, P.D. No.
1234 should be considered the operative law and that "coconut levies are
special funds to be remitted to the Treasury in the General Fund of the State
but treated as Special Accounts. " 18

As for petitioner's claim that there are pending bills in Congress

providing for the disposition of the coconut levy funds, the respondents
assert that until such bills become law, P.D. No. 1234 should be made to
apply in treating the coconut levy funds as part of SAGF.

The Court's Ruling

Before delving on the substantial issues of this case, a resolution of

procedural matters is in order.

Petitioners legal standing

The Court upholds petitioner's assertion that it has legal standing to

institute the present case. In PKSMMN, the Court recognized petitioner
14
Id. at 327.
15
Id. at 327-328.
16
Id. at 328.
11 Id.
18
Id. at 329.

~
 DECISION 8 G.R. No. 217965

organization as among those representing coconut farmers on whom the

burden of the coco levies attached. Considering that that the coconut levies
19
were imposed primarily for the benefit of petitioner's members, it
behooves the Court to accord standing to petitioner to ensure that the subject
grievance is given its due.

With the procedural issues settled, the Court finds that the present
petition is partially meritorious.

Nature of Coco Levy Funds

Petitioner believes that notwithstanding P.D. No. 1234 and the Court's
pronouncements in COCOFED and Republic, the CCSF and the CIDF
remained to be private funds in nature. It insists that the legislative intent to
treat the CIDF and the CCSF as private funds is evident with the passage of
P.D. No. 1468 because it was a later law.

Section l(a) of P.D. No. 1234 reads:

SECTION 1. All income and collections for Special or

Fiduciary Funds authorized by law shall be remitted to the Treasury
and treated as Special Accounts in the General Fund, including the
following:
a. Philippine Coconut Authority - Coconut
Development Fund, including all income derived
therefrom under Sections 13 and 14 of Republic Act
No. 1145; Coconut Investment Fund under Section 8
of Republic Act No. 6260, including earnings, profits,
proceeds and interests derived therefrom; Coconut
Consumers Stabilization Fund under Section 3-A of PD
No. 232, as inserted by Section 3 of P.D. No. 414 and
under paragraph l(a) of P.D. No. 276; Coconut Industry
Development Fund under Section 3-B of P.D. No. 232, as
inserted by Section 2 of P.D. No. 582; and all other fees
accruing to the Philippine Coconut Authority under
the provisions of Section 19 of Republic Act No. 1365,
in accordance with Section 2 of P.D. No. 755 and all
other income accruing to the Philippine Coconut
Authority under existing laws. [Emphasis supplied]

The above-cited provision clearly characterizes the CCSF and the

CIDF as public funds, which shall be remitted to the Treasury as Special
Accounts in the General Fund. Petitioner, however, insists that pursuant to
P.D. No. 1468, the CIDF and the CCSF were excluded from the provisions
of P.D. No. 1234. It noted Section 5 thereof which states that both the CIDF
and the CCSF shall not be construed as special funds or part of the general

19
Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan (PKSMMN) v.
Executive Secretary, supra note 6, at 307.
DECISION 9 G.R. No. 217965

funds of the national government. As such, petitioner concluded that P.D.

No. 1468 takes precedence over P.D. No. 1234, it being the later law.

Petitioner's continuous reliance on Section 5, Article III of P.D. No.

1468 is gravely erroneous.

In the landmark cases of COCOFED and Republic, the Court, in no

uncertain terms, declared Section 5, Article III of P.D. No. 1468
unconstitutional and categorized coconut levy funds to be public in nature.

In Republic, the Court expounded on why coconut levy funds are

public in nature, viz:

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.
Public funds are those moneys belonging to the State or to
any political subdivision of the State; more specifically, taxes,
customs duties and moneys raised by operation of law for the
support of the government or for the discharge of its obligations.
Undeniably, coconut levy funds satisfy this general definition of
public funds, because of the following reasons:
1. Coconut levy funds are raised with the use of the
police and taxing powers of the State.
g. They are levies imposed by the State for the benefit
of the coconut industry and its farmers.
3. Respondents have judicially admitted that the
sequestered shares were purchased with public funds.
4. The Commission on Audit (COA) reviews the use of
coconut levy funds.
5. The Bureau of Internal Revenue (BIR), with the
acquiescence of private respondents, has treated them
as public funds.
6. The very laws governing coconut levies recognize
their public character.
xx xx
1. Coconut Levy Funds Are Raised Through the State's Police and
Taxing Powers.
Indeed, coconut levy funds partake of the nature of taxes
which, in general, are enforced proportional contributions from
persons and properties, exacted by the State by virtue of its
sovereignty for the support of government and for all public needs.
xx xx

't
DECISION 10 G.R. No. 217965

Court takes judicial notice of the fact that the coconut

industry is one of the great economic pillars of our nation, and
coconuts and their byproducts occupy a leading position among the
country's export products; that it gives employment to thousands of
Filipinos; that it is a great source of the State's wealth; and that it is
one of the important sources of foreign exchange needed by our
country and, thus, pivotal in the plans of a government committed
to a policy of currency stability.
Taxation is done not merely to raise revenues to support the
government, but also to provide means for the rehabilitation and
the stabilization of a threatened industry, which is so affected with
public interest as to be within the police power of the State, as held
in Caltex Philippines v. COA and Osmefia v. Orbos.
Even if the money is allocated for a special purpose and
raised by special means, it is still public in character. In the case
before us, the funds were even used to organize and finance State
offices. In Cocofed v. PCGG, the Court observed that certain
agencies or enterprises "were organized and financed with revenues
derived from coconut levies imposed under a succession of laws of
the late dictatorship ... with deposed Ferdinand Marcos and his
cronies as the suspected authors and chief beneficiaries of the
resulting coconut industry monopoly. The Court continued: "....
It cannot be denied that the coconut industry is one of the major
industries supporting the national economy. It is, therefore, the
State's concern to make it a strong and secure source not only of the
livelihood of a significant segment of the population, but also of
export earnings the sustained growth of which is one of the
imperatives of economic stability.
2. Coconut Funds Are Levied for the Benefit of the Coconut
Industry and Its Farmers.
Just like the sugar levy funds, the coconut levy funds
constitute state funds even though they may be held for a special
public purpose.
xx xx
Thus, the coconut levy funds - like the sugar levy and the oil
stabilization funds, as well as the monies generated by the On-line
Lottery System - are funds exacted by the State. Being enforced
contributions, they are prima facie public funds.
xx xx
6. Laws Governing Coconut Levies
Recognize Their Public Nature.
Finally and tellingly, the very laws governing the coconut levies
recognize their public character. Thus, the third Whereas clause
of P.D. No. 276 treats them as special funds for a specific public
purpose. Furthermore, P.O. No. 711 transferred to the general funds
of the State all existing special and fiduciary funds including the
CCSF. On the other hand, P.D. No. 1234 specifically declared the
CCSF as a special fund for a special purpose, which should be
treated as a special account in the National Treasury.

~
 DECISION 11 G.R. No. 217965

Moreover, even President Marcos himself, as the sole

legislative/executive authority during the martial law years, struck
off the phrase which is a private fund of the coconut farmers from
the original copy of Executive Order No. 504 dated May 31, 1978,
and we quote:
"WHEREAS, by means of the Coconut Consumers
Stabilization Fund CCCSF'), which is the private fund of the
coconut farmers (deleted), essential coconut-based products are
made available to household consumers at socialized prices.
(Italics supplied)
The phrase in bold face - which is the private fund of the
coconut farmers - was crossed out and duly initialed by its author,
former President Marcos. This deletion, clearly visible in
"Attachment C of petitioner's Memorandum, was a categorical
legislative intent to regard the CCSF as public, not private, funds. 20
[Emphasis supplied]

On the other hand, in COCOFED, the Court categorically struck down

Section 5, Article III of P.D. No. 1468 for being unconstitutional because it
converted the coconut levy funds into private funds, which may then be
appropriated even without an enabling law, to wit:

In sum, not only were the challenged presidential issuances

unconstitutional for decreeing the distribution of the shares of
stock for free to the coconut farmers and, therefore, negating the
public purpose declared by P.D. No. 276, i.e., to stabilize the price
of edible oil and to protect the coconut industry. They likewise
reclassified, nay treated, the coconut levy fund as private fund to
be disbursed and/or invested for the benefit of private
individuals in their private capacities, contrary to the original
purpose for which the fund was created. To compound the
situation, the offending provisions effectively removed the coconut
levy fund away from the cavil of public funds which normally can
be paid out only pursuant to an appropriation made by law. The
conversion of public funds into private assets was illegally allowed, in
fact mandated, by these provisions. Clearly therefore, the pertinent
provisions of P.D. Nos. 755, 961 and 1468 are unconstitutional for
violating Article VI, Section 29 (3) of the Constitution. In this
context, the distribution by PCA of the UCPB shares purchased by
means of the coconut levy fund - a special fund of the government
- to the coconut farmers, is therefore void. 21 [Emphasis supplied]

Clearly, both cases had definitely settled the public nature of coconut
levy funds, which included the CCSF and the CIDF. The most compelling
reasons to treat coconut levy funds as public funds are the fact that it was
raised through the State's taxing power and it was for the development of the
coconut industry as a whole and not merely to benefit individual farmers.

20
Republic v. COCOFED, supra note 12, at 762-772.
21
COCOFED v. Republic, supra note 4, at 607-608.

~
 DECISION 12 G.R. No. 217965

In addition, petitioner cannot use Article III, Section 5 of P.D. No.

1468 as basis to classify the CCSF and the CIDF as private funds because it
was struck down as unconstitutional. It must be remembered that as a rule,
an unconstitutional act is not a law to such an extent that it is inoperative as
if it has not been passed at all. 22 Consequently, the perceived legislative
intent espoused by Section 5, Article III of P.D. No. 1468 is inoperative
because it is unconstitutional. Hence, the characterization of P.D. No. 1234
of coconut levy funds, including the CCSF and the CIDF, as public funds
stands.

No usurpation ofjudicial
power to execute its own
decision

Petitioner also argues that the release of coconut levy assets held by
the UCPB is in the nature of an execution. Thus, it surmises that there must
be a writ of execution from the Sandiganbayan before the government may
cause the release of the said assets.

Execution has been defined as a remedy afforded by law for the

enforcement of a judgment, its object being to obtain satisfaction of the
judgment on which the writ is issued. 23 Being a remedy, it is thus optional on
the winning litigant and may avail it in case the judgment cannot be
enforced. In other words, a party litigant may choose to have a judgment
enforced and if for some reason he cannot do so, he may decide to avail of
the coercive measure of execution in order for the judgment to be realized. A
writ of execution was never meant to be a prerequisite before a judgment
may be enforced.

With the finality of the decision in COCOFED, there is no question

that the coconut levy assets are public funds. Thus, the government may take
the necessary steps to preserve them and to be able to utilize them. It does
not deprive the courts with its power to issue writs of execution because the
government may resort to it in case it encounters obstacles in the
enforcement of the decision.

Existing appropriation
law treating coconut levy
funds as special funds

The power of the purse lies with Congress. 24 This power is

categorically and explicitly stated by the fundamental law itself. Article VI,
Section 29 of the Constitution reads:

22
Yap v. Thenamaris Ships Management, 664 Phil. 614, 627 (2011 ).
23
Cagayan de Oro Coliseum, Inc. v. CA, 3 78 Phil. 498, 522 (1999).
24
Philippine Constitution Association v. Enriquez, G.R. No. 113105, August 19, 1994, 235 SCRA 506.

v
 DECISION 13 G.R. No. 217965

SECTION 29. (1) No money shall be paid out of the Treasury

except in pursuance of an appropriation made by law.
(2) No public money or property shall be appropriated, applied,
paid, or employed, directly or indirectly, for the use, benefit, or
support of any sect, church, denomination, sectarian institution,
or system of religion, or of any priest, preacher, minister, or other
religious teacher, or dignitary as such, except when such priest,
preacher, minister, or dignitary is assigned to the armed forces, or
to any penal institution, or government orphanage or
leprosarium.
(3) 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. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to
the general funds of the Government.

The said provision provides for two classification of appropriation

measures-general and special appropriation. A general appropriation law is
one passed annually to provide for the financial operations of the entire
government during one fiscal period, whereas a special appropriation is
25
designed for a specific purpose. The revenue collected for a special
purpose shall be treated as a special fund to be used exclusively for the
stated purpose. This serves as a deterrent for abuse in the disposition of
special funds. 26 The coconut levy funds are special funds allocated for a
specific purpose and can never be used for purposes other than for the
benefit of the coconut farmers or the development of the coconut industry.
Any attempt to appropriate the said funds for another reason, no matter how
noble or beneficial, would be struck down as unconstitutional.

An appropriation measure may be defined as a statute the primary and

specific purpose of which is to authorize the release of public funds. 27 The
assailed issuances, however, did not create a new special fund. They were
issued pursuant to previous laws and jurisprudence which declared coconut
levy funds such as the CCSF and the CIDF as public funds for a special
purpose. In fact, P.D. No. 1234 recognized that all funds collected and
accruing to the SAGF shall be considered automatically appropriated for
purposes authorized by law creating such fund.

Sections l(a) and 2 of P.D. No. 1234 expressly provide:

SECTION 1. All income and collections for Special or

Fiduciary Funds authorized by law shall be remitted to the
Treasury and treated as Special Accounts in the General
Fund, including the following:
25
Cruz, Philippine Political Law (2002), p. 167.
26
Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary ( 1996), p. 725.
27
Association of Small Landowners in the Philippines, Inc. v. Secretary ofAgrarian Reform, 256 Phil. 777
(1989).

~
 DECISION 14 G.R. No. 21 7965

a. Philippine Coconut Authority - Coconut Development

Fund, including all income derived therefrom under Sections
13 and 14 of Republic Act No. 1145; Coconut Investment
Fund under Section 8 of Republic Act No. 6260, including
earnings, profits, proceeds and interests derived therefrom;
Coconut Consumers Stabilization Fund under Section 3-A
of PD No. 232, as inserted by Section 3 of P.D. No. 414 and
under paragraph 1(a) of P.D. No. 276; Coconut Industry
Development Fund under Section 3-B of P.D. No. 232, as
inserted by Section 2 of P.D. No. 582; and all other fees
accruing to the Philippine Coconut Authority under the
provisions of Section 19 of Republic Act No. 1365, in
accordance with Section 2 of P.D. No. 755 and all other
income accruing to the Philippine Coconut Authority under
existing laws.
xxx

SECTION 2. The amounts collected and accruing to Special

or Fiduciary Funds shall be considered as being
automatically appropriated for the purposes authorized by
law creating the said Funds, except as may be otherwise
provided in the General Appropriations Decree.

Accordingly, in COCOFED, 28 the Court emphasized that the coconut

levy funds were special funds which do not form part of the general fund, to
wit:

If only to stress the point, P.D. No. 1234 expressly stated that
coconut levies are special funds to be remitted to the Treasury in
the General Fund of the State, but treated as Special Accounts:
Section 1. All income and collections for Special or Fiduciary
Funds authorized by law shall be remitted to the Treasury and
treated as Special Accounts in the General Fund,including the
following:
(a) [PCAJ Development Fund, including all income derived
therefrom under Sections 13 and 14 of [RAJ No. 1145; Coconut
Investments Fund under Section 8 of [RAJ No. 6260, including
earnings, profits, proceeds and interests derived therefrom;
Coconut Consumers Stabilization Funds under Section 3-A of PD
No. 232, as inserted by Section 3 of P.D. No. 232, as inserted by
Section 2 of P.D. No. 583; and all other fees accruing to the [PCAJ
under the provisions of Section 19 of [RAJ No. 1365, in accordance
' with Section 2 of P.D. No. 755 and all other income accruing to the
[PCAJ under existing laws.

Moreover, the Court, in Gaston, stated the observation that

the character of a stabilization fund as a special fund "is emphasized
by the fact that the funds are deposited in the Philippine National
Bank [PNB] and not in the Philippine Treasury, moneys from which
may be paid out only in pursuance of an appropriation made by

2
K COCOFED v. Republic, supra note 4.

~
 DECISION 15 G.R. No. 217965

law." Similarly in this case, Sec. 1 (a) of P.D. No. 276 states that the
proceeds from the coconut levy shall be deposited with the PNB,
then a government bank, or any other government bank under the
account of the CCSF, as a separate trust fund, which shall not form
part of the government's general fund. And even
assuming arguendo that the coconut levy funds were transferred to
the general fund pursuant to P.D. No. 1234, it was with the specific
directive that the same be treated as special accounts in the general
fund. 29 [Emphasis in the original]

Thus, E.O. No. 179 does not create a new special fund but merely
reiterates that revenues arising out of or in connection with the privatization
of coconut levy funds shall be deposited in the SAGF. An automatic
appropriation law is not necessarily unconstitutional for as long as there are
clear legislative parameters on how the amounts appropriated are to be
disbursed. 30 The president should not have unlimited discretion as to its
disbursement3 1 since the funds are allocated for a specific purpose. In Edu v.
Ericta, 32 the Court explained when a valid delegation of legislative power
may be done, viz:

It is a fundamental principle flowing from the doctrine of

separation of powers that Congress may not delegate its legislative
power to the two other branches of the government, subject to the
exception that local governments may over local affairs participate
in its exercise. What cannot be delegated is the authority under the
Constitution to make laws and to alter and repeal them; the test is
the completeness of the statute in all its term and provisions when
it leaves the hands of the legislature. To determine whether or not
there is an undue delegation of legislative power, the inquiry must
be directed to the scope and definiteness of the measure enacted.
The legislature does not abdicate its functions when it describes
what job must be done, who is to do it, and what is the scope of his
authority. For a complex economy, that may indeed be the only way
in which the legislative process can go forward. A distinction has
rightfully been made between delegation of power to make the laws
which necessarily involves a discretion as to what it shall be, which
constitutionally may not be done, and delegation of authority or
discretion as to its execution to be exercised under and in
pursuance of the law, to which no valid objection can be made. The
Constitution is thus not to be regarded as denying the legislature
the necessary resources of flexibility and practicability.33

COCOFED held that the CCSF and the CIDF are to be utilized for the
benefit of coconut farmers and for the development of the coconut industry.
Pursuant to this, E.O. 180 provides:

29
Id. at 603-604.
30
Guingona v. Carague, 273 Phil. 443 (1991 ).
31 Id.
32
146 Phil. 469 (1970).
33
Id. at 485-486.

~
DECISION 16 G.R. No. 217965

SECTION 1. Reiteration of Policy. - All Coco Levy Funds

and Coco Levy Assets reconveyed to the Government,
whether voluntarily or through lawful order from a
competent court, and all proceeds of any privatization of the
Coco Levy Assets, shall be used solely and exclusively for the
benefit of all the coconut farmers and for the development of
the coconut industry.
Any disposition and utilization shall be guided by the
following objectives:
a. Improving coconut farm productivity, developing coconut-
based enterprises, and increasing the income of coconut
farmers;
b. Strengthening coconut farmers' organizations; and
c. Attaining a balanced, equitable, integrated, and
sustainable growth, rehabilitation and development of the
coconut industry.

On its own, E.O. Nos. 179 and 180 appears to have been executed
within the legislative parameters set by COCOFED. P.D. No. 1234,
however, does not actually provide a mechanism for how the SAGF is to be
disbursed. Thus, the assailed issuances do not just implement P.D. No.
1234- it implements P.D. No. 755 and P.D. No. 1468 as well.

Article III, Sections 2 and 3 of P.D. No. 1468, in particular, provides

the specific purpose for how the CCSF and the CIDF should be utilized, to
wit:
SECTION 2. Utilization of Fund. - All collections of the
Coconut Consumers Stabilization Fund Levy shall be utilized
by the Authority for the following purposes:
a) When the national interest so requires, to provide a
subsidy for coconut-based products the amount of which
subsidy shall be determined on the basis of the base price
of copra or its equivalent as fixed by the Authority and the
prices of coconut-based products as fixed by the Price
Control Council; Provided, however, that when the coconut
farmers, who in effect shoulder the burden of the levies
herein imposed, shall have owned or controlled, under
Section 9 and 10 hereof, oil mills and/or refineries which
manufacture coconut-based consumer products, only such
oil mills and/or refineries shall be entitled to the subsidy
herein authorized;
b) To refund wholly or in part any premium duty collected
on copra or its equivalent sold prior to February 17, 1974;
c) To finance the developmental and operating expenses of
the Philippine Coconut Producers Federation including
projects such as scholarships for the benefit of deserving
children of the coconut farmers; and

l
DECISION 17 G.R. No. 217965

d) To finance the establishment and operation of industries

and commercial enterprises relating to the coconut and other
palm oil industry as described in Section 9 hereof; and
e) To finance the Coconut Farmers Refund which is hereby
constituted as the pooled savings of the coconut farmers, to
be utilized for their mutual assistance, protection and relief
in the form of social benefits, such as life and accident
insurance coverage of the farmers.

SECTION 3. Coconut Industry Development Fund. - There

is hereby created a permanent fund to be known as the
Coconut Industry Development Fund, which shall be
administered and utilized by the bank acquired for the
benefit of the coconut farmers under PD 755 for the
following purposes:
a) To finance the establishment, operation and maintenance
of a hybrid coconut seednut farm under such terms and
conditions that may be negotiated by the National
Investment and Development Corporation (NIDC) with any
private person, corporation, firm or entity as would insure
that the country shall have, at the earliest possible time, a
proper, adequate and continuous supply of selected high-
yielding hybrid as well as indigenous precocious seednuts
and, for this purpose, the contract, including the
amendments and supplements thereto as provided for
herein, entered into by NIDC as herein authorized is hereby
confirmed and ratified, and the bank acquired for the benefit
of the coconut farmers under the PD 755 shall administer the
said contract, including its amendments and supplements,
and perform all the rights and obligations of NIDC
thereunder, utilizing for that purpose the Coconut Industry
Development Fund;
b) To purchase all of the seednuts produced by the hybrid
coconut seednut farm which shall be distributed, for free, by
the Authority to coconut farmers on a voluntary basis as well
as for new areas opened for coconut planting in accordance
with, and in the manner prescribed in, the nationwide
coconut replanting program, provided, that farmers who
have been paying the levy herein authorized shall be given
priority;
c) To defray the cost of implementing the nationwide
replanting program which, including the activities described
in sub-paragraphs (b) and (d) of this Section, shall upon
prior approval of the President of the Philippines, be
implemented by the Authority through a private non-profit
foundation owned by the coconut farmers in the manner
prescribed by Sections 9 and 10 hereof;
d) To finance the establishment, operation and maintenance
of extension services, model plantations and other activities
as would insure that the coconut farmers shall be informed
of the proper methods of replanting; and

't
 DECISION 18 G.R. No. 217965

e) The balance, if any, shall be utilized for investments for the

benefit of the coconut farmers as prescribed in Section 9
hereof. [Emphasis supplied]

While most of the provisions are aligned with the avowed purpose to
benefit the coconut Industry, Section 3( e), Article III provides that any
remaining balance may be used by UCPB to purchase shares and stocks in
corporations related to the coconut industry, viz:

SECTION 9. Investments For the Benefit of the Coconut

Farmers. - Notwithstanding any law to the contrary, the bank
acquired for the benefit of the coconut farmers under PD 755 is
hereby given full power and authority to make investments in the
form of shares of stock in corporations organized for the purpose of
engaging in the establishment and the operation of industries and
commercial activities and other allied business undertakings
relating to the coconut and other palm oils industry in all its aspects
and the establishment of a research into the commercial and
industrial uses of coconut and other oil industry. For that purpose,
the Authority shall, from time to time, ascertain how much of the
collections of the Coconut Consumers Stabilization Fund and/ or the
Coconut Industry Development Fund is not required to finance the
replanting program and other purposes herein authorized and such
ascertained surplus shall be utilized by the bank for the investments
herein authorized.

The surplus created by this particular Section of P.D. No. 1468

eventually became known as the Coconut Industry Investment Fund (CJJF).
With the use of the CIIF, UCPB acquired coconut oil mills corporation, 14
holding companies, and San Miguel Corporation shares. 34 In short, Section 9
of P.D. No. 1468 allowed Marcos cronies to grow their wealth - to the
detriment of the coconut industry.

A law which provides this kind of open-ended provision cannot be

considered a law which provides clear legislative parameters. Too much
unbridled discretion is given for any surplus or balance that remains
unutilized from the CIDF.

The provision of P.D. No. 1468 are simply too broad to limit the
amount of spending that may be done by the implementing authority.
Considering that no statute provides for specific parameters on how the
SAGF may be spent, Congress must first provide a law for the
disbursements of the funds, in line with its constitutional authority. 35 The
absence of the requisite legislative authority in the disbursement of public
funds cannot be remedied by executive fiat.

34
E.O. No. 179.
35
Article VI, Section 29 of the Constitution.

~
 DECISION 19 G.R. No. 217965

For this reason, Sections 6, 7, 8, and 936 of E.O. No. 180 are declared
void because they are not in conformity with the law. Through these
sections, the President went beyond the authority delegated by law in the
disbursement of the coconut levy funds.

WHEREFORE, the Petition for Prohibition is PARTIALLY

GRANTED. The Court finds, and declares, that Section 6, Section 7,
Section 8 and Section 9 of Executive Order No. 180, series of 2015, are not
in conformity with law.

In accordance with the foregoing, it is hereby reiterated that the

coconut levy funds are to be deposited in the Special Accounts in the
General Fund and are to be appropriated only for the benefit of the coconut
farmers and for the development of the coconut industry.

The Temporary Restraining Order issued by the Court on June 30,

2015 is LIFTED effective immediately.

SO ORDERED.

JOSECAT~TDOZA
AssocU1J~:;Ie
36
SECTION 6. Approval of Roadmap. - The PCA, in coordination with the Office of the Presidential
Assistant for Food, Security, and Agricultural Modernization, is hereby directed to develop and submit
the Roadmap, for the approval of the President.
SECTION 7. Funding Source. - The initial funding for the Roadmap shall be sourced from the money
and funds constituting the Coconut Levy and Coco Levy Assets.
The initial funding shall be released upon approval of the Roadmap by the President, and upon
compliance with all existing applicable laws and budgetary, accounting, and auditing rules and
regulations.
SECTION 8. Utilization of Funds. - The funds, once released, shall be utilized by the PCA together
with the government agencies involved in the Roadmap only for the purpose for which such funds have
been allocated and released, and in all cases only for the benefit of the coconut farmers and for the
development of the coconut industry.
The PCA shall prepare a monthly cash program and shall render an annual report to the President, which
shall be considered in the preparation of the annual budget for the Roadmap.
SECTION 9. Implementing Rules. - The PCA may issue such implementing rules and regulations as
may be necessary to ensure the fulfilment of its mandate and the purposes of this Order.
To ensure the implementation, coordination, and integration of national efforts and programs towards the
total development of the coconut industry for the ultimate benefit of the coconut farmers, the PCA, in
carrying out its responsibilities, shall conduct consultations with the coconut farmers, farm workers and
other key stakeholders. Government agencies shall extend such assistance to the PCA as may be
necessary for the successful implementation of this Order.

~
 ;

DECISION 20 G.R. No. 217965

WE CONCUR:

MARIA LOURDES P.A. SERENO

J/o ~ , , .
Chief Justice

.. ,~~~~~-
ANTONIO T. CARPIO LASCO, JR.
Associate Justice ssociate Justice

~~
TERESITA J. LEONARD&-nE CASTRO
~
Associate Justice

~~
MARIANO C. DEL CASTILLO
Associafe Justice

ESTELA 6-E~S-BERNABE /
MARVIC M.V.F. LEON
Associate Justice Associate Justice

(No Part) (No Part)

FRANCIS H. JARDELEZA ALFREDO BENJAMIN S. CAGUIOA
Associate Justice Associate Justice

~J~ice
~
({jif_~f~RTIRES NO \1AM
Associate Justice As

~
u
ANDR REYES, JR.
As te Justice

~
DECISION 21 G.R. No. 217965

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I hereby

certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court.

MARIA LOURDES P.A. SERENO

Chief Justice

CERTIFIED XEROX COPY:

~tip~~
CLERK OF COURT, EN BANC
SUPREME COURT