CCFOP v. Aquino (G.R. No. 217965. August 08, 2017)


FACTS: In this case, the controversy surrounding the utilization of the contentious "coco levy funds" is once again put into the fore.

On January 24, 2012, in COCOFED v. Republic (COCOFED), the Supreme Court struck down the provisions of P.D. Nos. 755, 961, and 1468 which declared the coconut levy funds as private assets.

Reiterating the character of the coconut levy funds as public in character, the Court, in Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan v. Executive Secretary, struck down E.O. 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 Aquino) issued E.O. Nos. 179 and 180. Essentially, E.O. No. 179 calls for the inventory and privatization of all coco levy assets. E.O. 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.

ISSUE: 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.

HELD: 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.

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 organization as among those representing coconut farmers on whom the burden of the coco levies attached. Considering that that the coconut levies 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.

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 1(a) of P.D. No. 1234 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 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.

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.
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.[21]
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.

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]

No usurpation of judicial 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.

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

Accordingly, in COCOFED, the Court emphasized that the coconut levy funds were special funds which do not form part of the general fund.

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. The president should not have unlimited discretion as to its disbursement since the funds are allocated for a specific purpose.

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.
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: xxx

e) The balance, if any, shall be utilized for investments for the benefit of the coconut farmers as prescribed in Section 9 hereof.
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.

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. The absence of the requisite legislative authority in the disbursement of public funds cannot be remedied by executive fiat.

For this reason, Sections 6, 7, 8, and 9 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.

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.