Republic v COCOFED o Where government shares are taken over by private persons

G.R. Nos. 147062-64 | December 14, 2001 | Panganiban, J. or entities who/which registered them in their own names
(originally government shares) and
Facts o Where the capitalization or shares that were acquired with
 After 1986 EDSA, Aquino issued issued Executive Order Nos. (E.Os.) public funds somehow landed in private hands (purchased
1 (creating PCGG), 2 (defined the ill-gotten assets and properties) and with public funds or those affected with public interest)
14 (PCGG empowered to file and prosecute all cases under EO 1 and  Therefore, when sequestered shares registered in the names of
2) private individuals or entities are alleged to have been acquired with
 Among the properties sequestered by the PCGG were shares of stock ill-gotten wealth, then the two-tiered test is applied. However, when
in the UCPB registered in the names of alleged 1 million coconut the sequestered shares in the name of private individuals or entities
farmers, the Coconut Industry Investment Fund companies (CIIF are shown, prima facie, to fall under the above exceptions, then the
companies) and respondent Eduardo Cojuanco, Jr. two-tiered test does not apply.
 PCGG: Action for reconveyance, reversion, accounting, restitution
and damages  Sandiganbayan UCPB shares were acquired with public funds
 6 years later, on Feb 13, 2001: Board of Directors of UCPB received  UCPB shares were acquired with coconut levy funds and coconut levy
from ACCRA Law Office a letter written on behalf of the COCOFED funds are prima facie public funds
and the alleged nameless one million coconut farmers, demanding the  Public funds  those moneys belonging to the State or to any
holding of a stockholders’ meeting for electing the board of directors political subdivision of the State; more specifically, taxes, customs
 Board approved a Resolution calling for a stockholder’s meeting duties and moneys raised by operation of law for the support of the
 February 23, 2001: COCOFED, et al  filed a Class Action Omnibus government or for the discharge of its obligations.
Motion in Sandiganbayan enjoining PCGG from voting the UCPB and  Coconut levy funds satisfy the general definition of public funds
SMC shares because of the following:
 Sandiganbayan: Issued Order granting the motion
1. Coconut levy funds are raised with the use of the police and taxing powers
Issue: WN the PCGG can vote in the UCPB shares of stock YES of the State.
 3 elements of tax:
Held o Enforced proportional contribution from persons and
 GR: The sequestered shares are voted by the registered holder. properties
o Registered owner of the shares of a corporation exercises the o Imposed by the State by virtue of its sovereignty
right and privilege of voting. o Levied support of the government
o This applies even to shares that are sequestered by the  ITC:
government. In these cases, the PCGG is a mere conservator o Coconut levy funds were generated by virtue of statutory
that cannot exercise acts of dominion. enactments imposed on coconut farmers requiring the
 PCGG is authorized to vote these sequestered shares registered in payment of prescribed amounts
the names of private persons and acquired with allegedly ill-gotten o These were not voluntary payments or donations by people
wealth if it is able to satisfy the two-tiered test (Cojuanco v Calpo and but enforced contributions exacted on pain of penal sanctions
PCGG v Cojuanco): o These were clearly imposed for a public purpose: collected to
o Is there a prima facie evidence showing that the said shares advance the government’s avowed policy of protecting the
are ill-gotten and thus belong to the State? coconut industry (one of the great economic pillars of our
o Is there an imminent danger of dissipation, thus necessitating nation)
their continued sequestration and voting by the PCGG, while  Government policy: policy of currency stability
the main issue is pending with the Sandiganbayan?  Taxation as a means for rehabilitation and
 EXC: Sequestered shares acquired with public funds (Baseco v stabilization of a threatened industry affected with
PCGG and Cojuanco Jr v Roxas) public interest
  Even if the money is allocated for a special purpose
and raised by special means, it is still public in
character

2. Coconut funds are levied for the benefit of the coconut industry and its
farmers.
 Coco levy funds constitute state funds even though they may be held
for a special public purpose
 The Court likened them to the sugar levy funds

3. Respondents have judicially admitted that the sequestered shares were

4. The Commission on Audit (COA) reviews the use of coconut levy funds.
 Because these funds have been subjected to COA Audit, they are
prima facie public in character

5. The Bureau of Internal Revenue (BIR), with the acquiescence of private

6. The very laws governing coconut levies recognize their public character.
 PD No. 276 – treats them as special funds for a specific public purpose
 PD No. 711 - transferred to the general funds of the State all existing
special and fiduciary funds including the CCSF
 PD 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

THEREFORE: Since UCPB shares were acquired with public funds, the
shares belong, prima facie, to the government
 Since voting is an act of dominion, it should be exercised by the share
owner