G.R. No.

147062-64 December 14, 2001

REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL

COMMISSION ON GOOD GOVERNANCE, petitioner,

vs.

COCOFED, ET AL. and BALLARES, ET AL., EDUARDO M. COJUANGCO JR. and

the SANDIGANBAYAN (First Division), respondents
Republic of the Philippines, represented by Presidential Commission on Good Government
(PCGG) filed a case for the issuance of a temporary restraining order and/or a writ of
preliminary injunction against Cocofed et. al. and the rest of the respondents, positing that
sequestered shares of stocks, which were admittedly purchased with public funds, must not be
voted upon by the PCGG in the Stockholders’ Meeting of United Coconut Planters’ Bank

FACTS:

As recognized by the Supreme Court, the case is rooted upon the historic events that
transpired during the change of government in 1986, from Marcos to Aquino
administration.

On the explicit premise that former President Marcos, his immediate family, relatives,
and close associates both here and abroad, have embezzled vast resources of the
government, then President Corazon Aquino enacted the following:

1. Executive Order 1 -- create the Presidential Commission on Good Governance

(PCGG) to assist the President in the recovery of ill-gotten wealth accumulated
by the previous administration;
2. Executive Order No. 2 – stating that the ill-gotten assets that need to be
recovered are in the form of real and personal properties, located in the
Philippines and abroad;
3. Executive Order No. 14 – empowering the PCGG with the assistance of the Office
of the Solicitor General and other government agencies to prosecute all cases
investigated by the same under the previously mentioned executive orders.

In consonance with these laws, numerous sequestrations, freeze orders and provisional
takeovers were issued and implemented by the PCGG. Among the many others
sequestered by the Commission were shares of stock in the United Coconut Planters
Bank (UCPB) registered in the names of the alleged “one million coconut farmers,” the
so-called Coconut Industry Investment Fund companies (CIIF companies) and Private
Respondent Eduardo Cojuangco Jr.
With reference to the sequestration of the said UCPB shares, the PCGG, on July 31,
1987, instituted an action for reconveyance, reversion, accounting, restitution and
damages docketed as Case No. 0033 in the Sandiganbayan.

The Sandiganbayan, however, on November 15, 1990, lifted the sequestration order
made by the PCGG on the ground that COCOFED and CIIF Companies were not
impleaded as parties-defendants in in its complaint and thus, a technical mistake that
resulted to nullify the sequestration order.

This Sandiganbayan Resolution, however, was challenged by the PCGG in a Petition for
Certiorari docketed as G.R. No. 96073.

Meanwhile, the Sandiganbayan, upon the motion of Cojuangco, then ordered the
holding of elections for the Board of Directors of UCPB.

The PCGG applied for and was granted a Restraining Order enjoining the holding of the
election but the Court eventually lifted the same and ordered the UCPB to proceed with
the election, even allowing the sequestered shares to be voted by their registered
owners.

However, this victory was fleeting because the Court issued a Resolution declaring that
their right to vote stock in their names cannot be conceded because their right has to
be established first before the Sandiganbayan.

Five years after, G.R. No 96073 was resolved with the Supreme Court ruling in favor of
the PCGG.

Six years after that, on February 23, 2001, “COCOFED, et al. and Ballares, et al.” filed
the “Class Action Omnibus Motion, asking the court:

1. To enjoin the PCGG from voting the UCPB shares of stock registered in the
respective names of the one million coconut farmers; and
2. To enjoin the PCGG from voting the SMC shares registered in the names of the
14 CIIF holding companies including those registered in the name of the PCGG.

The respondent court then issued the assailed order upon hearing the oral arguments
of both parties. Hence, this petition.

ISSUE:

The case at bar postulates the question:

Who may vote the sequestered UCPB shares provided that the main case for their
reversion to the state is pending in the Sandiganbayan?

RULING:

The Court held that the government should be allowed to continue voting those shares
inasmuch as they were purchased with coconut levy funds—funds that are prima facie
public in character or, at the very least, “clearly affected with public interest.

To explicate, public funds are those moneys belonging to the State or to any political
subdivision of the State; more specifically, those that are raised by operation of law for
the support of the government or for the discharge of its obligations. Categorically,
coconut levy funds satisfy this general definition of public funds, due to the following
reasons:

1. Coconut levy funds are raised with the use of the police and taxing powers of the
State.
2. 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.

Verily, coconut levy funds partake the nature of taxes as they were clearly imposed for
public purpose. They were collected to advance the government’s commitment to
protect the coconut industry which the Supreme Court has taken judicial notice to be
one of the great economic pillars of our nation and thus, crucial and essential for the
government in order to fulfill its duty to the public.

In sum, the Supreme Court held that the Sandiganbayan committed grave abuse of
discretion in grossly contradicting and effectively reversing existing jurisprudence, and
depriving the government its right to vote the sequestered UCPB shares which are
prima facie public in character.

WHEREFORE, the Petition is hereby GRANTED and the assailed Order SET ASIDE. The
PCGG shall continue voting the sequestered shares until Sandiganbayan Civil Case Nos.
0033-A, 0033-B and 0033-F are finally and completely resolved.