SC: Government Owns SMC Shares Bought from Coco Levy Funds
sc.judiciary.gov.ph
In a 106-page decision penned by Justice Presbitero J. Velasco, Jr., the Court denied the consolidated petitions of the Philippine Coconut Producers Federation Inc. (COCOFED), et al. and Danilo S. Ursua, former COCOFED officer, assailing certain issuances by the anti-graft court that, among others, declared the coco levy fund-bought SMC shares as public funds.
“Since the CIIF companies and the CIIF block of SMC shares were acquired using coconut levy funds – funds, which have been established to be public in character – it goes without saying that these acquired corporations and assets ought to be regarded and treated as government assets. Being government properties, they are accordingly owned by the Government, for the coconut industry pursuant to currently existing laws,” the Court ruled.
It held: “We sustain the ruling of the Sandiganbayan…that the CIIF companies and the CIIF block of SMC shares are public funds necessary owned by the Government. We, however, modify the same in the following wise: These shares shall belong to the Government, which shall be used only for the benefit of the coconut farmers and for the development of the coconut industry.”
The six CIIF Oil Mills were acquired by United Coconut Planters Bank (UCPB) using coconut levy funds. On the other hand, the 14 CIIF holding companies are wholly owned subsidiaries of the CIIF Oil Mills. These 14 CIIF holding companies used borrowed funds from the UCPB to acquire the SMC shares in the aggregate amount of P1.656 billion.
The High Court also upheld the Sandiganbayan’s jurisdiction over the case at bar which was in the nature of a recovery of ill-gotten wealth case. It held that since these cases deal with the recovery of sequestered shares, property, or business enterprises claimed, as alleged in the corresponding basic complaints, to be ill-gotten assets of President of President Marcos, his cronies, and nominees, recovery of these assets “falls within the unquestionable jurisdiction of the Sandiganbayan.”
Citing COCOFED v. PCGG, the Court stressed that it has “already decided that the sequestered shares are prima facie ill-gotten wealth rendering the issue of the validity of their sequestration and of the jurisdiction of the Sandiganbayan over the case beyond doubt.”
The High Court further held that Sandiganbayan did not err when it struck down the constitutionality of Sections 1 and 2 of PD 755, Art. III, Sec. 5 of PD 961 and Art. III, Sec. 5 of PD 1468. Section 2 of PD 755 effectively authorized the Philippine Coconut Administration (PCA) to utilize portions of the Coconut Consumers Stabilization Fund (CCSF) to pay the financial commitment of the farmers to acquire UCPB and to deposit portions of the CCSF levies with UCPB interest free. A similar provision can be found in the other assailed sections. The Court held that the Sandiganbayan may pass upon the constitutionality of the above sections stressing “the present controversy cannot be peremptorily resolved without going into the constitutionality of these in particular.”
The High Court reiterated that the coconut levy funds are in the nature of taxes and can only be used for public purpose. Consequently, they cannot be used to purchase shares of stocks to be given for free to private individuals.
“We have ruled time and again that taxes are imposed only for a public purpose. They cannot be used for purely private purposes or for the exclusive benefit of private persons. The coconut levy funds were sourced from forced exactions decreed under PD 232, 276, and 582, among others, with the end-goal of developing the entire coconut industry,” the Court held. It added: “Clearly, to hold therefore, even by law, that the revenues received from the imposition of the coconut levies to be used purely for private purposes to be owned by private individuals in their private capacity and for their benefit, would contravene the rationale behind the imposition of taxes or levies.”
Citing Republic v. COCOFED, the Court also reiterated that the coconut levy funds are not only affected with public interest but are prima facie public funds.
“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 PD 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,” the Court held.
The assailed purchase of UCPB shares of stocks using the coconut levy funds presents a classic example of an investment of public funds. The conversion of these special public funds into private funds by allowing private individuals to own them in their private capacities is something else, it noted.
The High Court likewise ruled that the COCOFED, et al. and Ursua were not deprived of their right to be heard nor their right to speedy trial violated contrary to their claims. (GR Nos. 177857-58, COCOFED v. Republic; GR No. 178193, Ursua v. Republic, January 24, 2012)
Emphasis and links provided
by Broker Rem Ramirez 0922.883.9308 broker.ramirez@yahoo.com.ph
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