147062_64

SEPARATE OPINION

VITUG, J.:

The Presidential Commission on Good Government ("PCGG"), representing the Republic of the Philippines, assails in the instant special action for certiorari under Rule 65 of the Rules of Court, the order, dated 28 February 2001, of public respondent Sandiganbayan (First Division) in Civil Cases No. 0033-A, 0033-B, and 0033-F, entitled "Republic of the Philippines vs. Eduardo Cojuangco, Jr., et al.," on the ground of grave abuse of discretion amounting to lack of jurisdiction. In the order, the Sandiganbayan enjoined the PCGG from voting the sequestered shares of stock of the United Coconut Planters' Bank ("UCPB") and authorized private respondents Philippines Coconut Producers Federation, Inc. ("COCOFED"), et al., Ballares, et al., and Eduardo Cojuangco, Jr., et al., to vote the UCPB shares registered in their names and themselves be voted upon at the stockholders' meeting of the bank.

The institution of sequestration proceedings by the PCGG against the shares of stock of the UCPB claimed to be owned by one million coconut farmers and the "Coconut Industry Investment Fund" ("CIIF") companies, was among the measures undertaken by the Aquino Government shortly after the February 1986 Revolution for the recovery of "ill-gotten wealth" said to have been amassed by former President and Mrs. Ferdinand E. Marcos, their relatives, friends and business associates. Among the initial cases filed with the Sandiganbayan was Case No.003 against private respondent Eduardo Cojuangco, Jr., and sixty others, for reconveyance, reversion, accounting, restitution and damages. Sequestration orders were later issued by the Sandiganbayan.

Subsequently, however, Sandiganbayan issued a resolution lifting the sequestration of the UCPB shares of stock registered in the name of the coconut farmers and the CIIF companies on the thesis that these entities were not so impleaded by the PCGG as party-defendants, having merely been listed in an annex appended to the complaint in Case No.003. The PCGG questioned, via a petition for certiorari, docketed G.R. No. 96073, that resolution before this Court. In the interim, the Sandiganbayan authorized the holding of a stockholders' meeting for the election of the members of the Board of Directors of the UCPB. Ruling in favor of a petition filed by Eduardo Cojuangco, Jr., this Court lifted the temporary restraining order it issued against the holding of said meeting and allowed private respondents to vote the sequestered shares of stock. On 16 February 1993, the Court recalled this order by issuing another resolution, directing the restoration of the status quo ante in G.R. No. 96073. The resolution allowed the PCGG to continue voting the sequestered shares of stock of the UCPB at the bank's meetings, pending determination of the validity of the Sandiganbayan resolution lifting the sequestration of said shares. Justifying the new order, the Court adverted to its earlier decision in COCOFED vs. PCGG[1] which dismissed the petition of private respondent COCOFED to nullify the sequestration order against, inter alia, the UCPB shares of stock. The acquisition of the UCPB shares was explained thusly:

"The United Coconut Planters Bank (or the UCPB) is a commercial bank acquired 'for the benefit of the coconut farmers' (Section 1, PD 755) with the use of the Coconut Consumers Stabilization Fund (CCSF) in virtue of P.D. 755, promulgated on 29 July 1975. The Decree authorized the Bank to provide the intended beneficiaries with 'readily available credit facilities at preferential rates' (Ibid.). It also authorized the distribution of the Bank's shares of stock, free, to the coconut farmers; and some 1,405,366 purported recipients have been listed as UCPB stockholders as of 10 April 1986 (Item A. 1. 1. Of the UCPB List of Stockholders.)"

The Coconut Consumers Stabilization Fund (CCSF) was established by P.D. 276 on 29 August 1973. Its funds, used in acquiring UCPB, were derived from the collection of a "Stabilization Fund Levy" of fifteen pesos (P15.00) on the first sale of every 100 kilograms of copra resecada or equivalent product. The CCSF, later firmed up by amendatory decrees, was intended to subsidize the sale of coconut-based products at prices set by the Price Control Council in order to stabilize the price of edible oil and other coconut oil-based products for the benefit of consumers.[2]

Relying on these pronouncements, the Court, in its 16th February 1993 resolution, raised the following relevant questions: "How is it that shares of stock in such entities which were organized and financed by revenues derived from coconut levy funds which were imbued with public interest ended up in private hands who are not farmers or beneficiaries; and whether or not the holders of said stock, who in one way or another had had some part in the collection, administration, disbursement or other disposition of the coconut levy funds, were qualified to acquire stock, in the corporations formed and operated from those funds." These issues, the Court noted, were still unresolved and, in fact, unaffected by the issue of the automatic lifting of the sequestration. Thus, the resolution declared: "The right of the petitioners to vote stock in their names at the meetings of the UCPB cannot be conceded at this time. That right still has to be established by them before the Sandiganbayan. Until that is done, they cannot be deemed legitimate owners of UCPB stock and cannot be accorded the right to vote them."

On 23 January 1995, the Court, in a consolidated decision which, among other cases, included G.R. No. 96073, nullified and set aside the disputed Sandiganbayan resolution and upheld the sequestration of the UCPB shares of stock on the ground that the impleading of the subject firms would be unnecessary since, if warranted by the evidence, judgments could be handed down against the defendants divesting them of their ownership of said shares and imposing upon them the obligation of surrendering the shares of stock to the Government. The decision, while not expressly ratifying the 16th February 1993 resolution, was a mandate, nevertheless, for the maintenance of the status quo ante that embraced the exercise by the PCGG of its voting rights on the sequestered shares of stock of the UCPB.

Since 1986, the PCGG had been able to effectively install its nominees to the Board of Directors of the UCPB. Such was the state of affairs when the Sandiganbayan so issued the challenged resolution on 28 February 2001, authorizing COCOFED, et al., Ballares, et al., and Eduardo Cojuangco, Jr., et al., along with all other registered stockholders of UCPB, to vote the shares of stock and themselves be voted upon at stockholders' meetings of the UCPB. In support of this order, preempting the final disposition of the main case in Case No. 003, Sandiganbayan applied the two-tiered test enunciated in Eduardo Cojuangco, Jr., vs. CaIpo[3] and PCGG vs. Eduardo Cojuangco, Jr.[4] As so aptly argued by petitioner, however, the test would find no application to a case of the "takeover of a business belonging to the government or whose capitalization comes from public funds, but which landed in private hands."[5] The Court acknowledged to be a fact that the money used to purchase and capitalize the UCPB had come from the CCSF,[6] a fund raised from the exercise by the State of its inherent police and taxing powers.

To account for their equity holdings in the bank, COCOFED, et al., in their Memorandum,[7] would advance that, in 1975, COCOFED, a private national association of coconut producers, was designated 'by the Philippine Coconut Authority ("PCA") as being the implementing agency for the free distribution of the shares of stock of the UCPB to the coconut farmers. By 02 May 1981, 232,805,852.16 of said shares were distributed to the farmers. Still there remained 15,619,419.84 shares registered in the name of COCOFED which, according to it, were ultimately given to the farmers. Prior to June 1986, a substantial number of the coconut farmers sold their shares in the bank at prices below par value. By way of a financial assistance to the selling coconut farmers, the UCPB Board of Directors authorized the CIIF companies to purchase their holdings in the bank at par value. These transactions, nevertheless, did not change the character of the UCPB shares, these having been bought with coconut levy funds which the Court distinctly characterized to be "clearly affected with public interest" and "raised such as they were by the State's police and taxing powers."[8]

The fundamental rule is that tax proceeds may only be used for a public purpose, which may either be a general public purpose to support the existence of the state or a special public purpose to pursue certain legitimate objects of government in the exercise of police power, and none other. As a measure to ensure the proper utilization of money collected for a specified public purpose, the 1987 Constitution, restating another general principle, treats the proceeds as a special fund to be paid out for such purpose. If, however, that purpose has been fulfilled or is no longer forthcoming, the balance, if any, shall then be transferred to the general funds of the government,[9] which may thereafter be appropriated by Congress and expended for any legitimate purpose within the scope of the general fund. An entity, whether public or private, which holds the tax money has no authority to disburse it or to pay any of it to anyone, the power to dispose of such money being vested in the legislature.[10] Thus, the 1987 Constitution, like its counterparts in the 1935 and the 1973 Constitution, mandates that no money shall be paid out of the national treasury except in pursuance of an appropriation made by law.[11]

Respondent Eduardo Cojuangco, Jr., upon the other hand, in claiming ownership over a portion of the sequestered UCPB shares, advanced two documents -an agreement in May 1975, where he appeared to have exercised his option to acquire the UCPB shares of stock owned by the family of the late Don Jose Cojuangco, Sr., amounting to 72.2% equity holding in the bank, at two hundred pesos (Php 200.00) per share, and the "Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers of the Philippines", dated 25 May 1975, whereby the PCA purchased with funds from the CCSF the aforesaid UCPB shares from Eduardo Cojuangco, Jr., also at two hundred pesos (Php 200.00) per share.[12] In the latter agreement, it was stipulated that as compensation for exercising his personal and exclusive option to acquire the UCPB shares and for transferring such shares to the PCA, Eduardo Cojuangco, Jr., would receive one (1) share for every nine (9) shares acquired by the PCA and additional equity in the bank. In sum, correlating the two agreements, Eduardo Cojuangco, Jr., would contend, in effect, that he retained title over roughly 10% equity holding in the bank and established his prima facie right over the corresponding shares independently sourced from the coconut levy funds. Even if it were to be conceded that the said 10% holding in UCPB of Eduardo Cojuangco, Jr., could be assailed, pending a conclusive determination on the legality of such a retention, however, it would neither be right nor just to deprive him from meanwhile exercising his right to at least vote the same.

For the foregoing reasons, I vote to grant the petition in part and to deny it insofar as the shares of stock pertaining to the 10% of the 72% equity retention standing in the name of Eduardo Cojuangco, Jr., are concerned.

In passing, I should like to state my understanding of the ruling of the Court. I must first clarify, however, that sequestration does not mean the vesting of title in the hands of the sequestering authority; rather, the term implies the preservation of assets. Neither ownership nor rights thereover are acquired or lost by virtue alone of sequestration – a mere ancillary remedy to secure a disputed asset.

(a) By a vote of ten justices, namely Chief Justice Davide and Justices Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Buena, de Leon and Carpio, the coconut levy funds have been declared prima facie to be “public funds.”

Justices Melo, Kapunan, Pardo, Ynares-Santiago and Sandoval-Gutierrez have dissented from the view of the majority.

(b) The Sandiganbayan must now determine conclusively and with deliberate dispatch the status of sequestered shares of stock, as well as whether or not the shares have been acquired utilizing the coconut levy funds, and ultimately, the ownership thereof.

(c) Meanwhile, the right to vote the disputed shares belongs to whoever or whichever can show prima facie ownership or a better right thereover. Chief Justice Davide and Justices Bellosillo, Mendoza, Panganiban, Quisumbing, Buena, de Leon and Carpio hold that such prima facie showing exists in favor of the government on all the disputed shares. Justices Puno and Vitug concur except for the 10% of the 72% disputed shares in the name of respondent Cojuangco over which the PCGG will yet have to establish a prima facie right of ownership.

Justice Melo, Kapunan, Pardo, Ynares-Santiago and Sandoval-Gutierrez maintain the view that, the coconut levy funds not being public funds and the government not having been able to satisfactorily establish to date its title over the sequestered shares, the PCGG has no right to vote any of the disputed shares.