Republic v. COCOFED

EN BANC
[G.R. Nos. 147062-64. December 14, 2001.]
REPUBLIC OF THE PHILIPPINES, represented by the

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG),
petitioner, vs. COCOFED et al. and BALLARES et al., 1 EDUARDO M.
COJUANGCO JR. and the SANDIGANBAYAN (First Division)
respondents.
The Solicitor General for petitioners.
Mario E. Ongkiko for petitioners-intervenors.
Abello Concepcion Regala & Cruz for COCOFED, et al. & Ballares, et al.
Estelito P. Mendoza for E.M. Cojuangco, Jr.
Catapang Guzman Tiongco & Torres for UCPB & 14 CIIF Holding Co.
Sycip Salazar Hernandez & Gatmaitan for UCPB.
DECISION
PANGANIBAN, J : P
The right to vote sequestered shares of stock registered in the names of private
individuals or entities and alleged to have been acquired with ill-gotten wealth shall, as a
rule, be exercised by the registered owner. The PCGG may, however, be granted such
voting right provided it can (1) show prima facie evidence that the wealth and/or the shares
are indeed ill-gotten; and (2) demonstrate imminent danger of dissipation of the assets,
thus necessitating their continued sequestration and voting by the government until a
decision, ruling with finality on their ownership, is promulgated by the proper court.cdasia
However, the foregoing “two-tiered test does not apply when the sequestered stocks
are acquired with funds that are prima facie public in character or, at least, are affected
with public interest. Inasmuch as the subject UCPB shares in the present case were
undisputably acquired with coco levy funds which are public in character, then the right to
vote them shall be exercised by the PCGG. In sum, the “public character test, not the “two-
tiered one, applies in the instant controversy.
The Case
Before us is a Petition for Certiorari with a prayer for the issuance of a temporary
restraining order and/or a writ of preliminary injunction under Rule 65 of the Rules of Court,
seeking to set aside the February 28, 2001 Order 2 of the First Division of the
Sandiganbayan 3 in Civil Case Nos. 0033-A, 0033-B and 0033-F. The pertinent portions of
the assailed Order read as follows:
CD Technologies Asia, Inc. 2024 cdasiaonline.com
“In view hereof, the movants COCOFED, et al. and Ballares, et al. as well
as Eduardo Cojuangco, et al., who were acknowledged to be registered
stockholders of the UCPB are authorized, as are all other registered stockholders
of the United Coconut Planters Bank, until further orders from this Court, to
exercise their rights to vote their shares of stock and themselves to be voted
upon in the United Coconut Planters Bank (UCPB) at the scheduled
Stockholders’ Meeting on March 6, 2001 or on any subsequent continuation or
resetting thereof, and to perform such acts as will normally follow in the exercise
of these rights as registered stockholders.
“Since by way of form, the pleadings herein had been labeled as praying
for an injunction, the right of the movants to exercise their right as
abovementioned will be subject to the posting of a nominal bond in the amount of
FIFTY THOUSAND PESOS (P50,000.00) jointly for the defendants COCOFED,
et al. and Ballares, et al., as well as all other registered stockholders of
sequestered shares in that bank, and FIFTY THOUSAND PESOS (P50,000.00)
for Eduardo Cojuangco, Jr., et al., to answer for any undue damage or injury to
the United Coconut Planters Bank as may be attributed to their exercise of their
rights as registered stockholders. 4
The Antecedents
The very roots of this case are anchored on the historic events that transpired during
the change of government in 1986. Immediately after the 1986 EDSA Revolution, then
President Corazon C. Aquino issued Executive Order (E.O.) Nos. 1, 5 2 6 and 14. 7
“On the explicit premise that ˜vast resources of the government have been
amassed by former President Ferdinand E. Marcos, his immediate family,
relatives, and close associates both here and abroad,’ the
Presidential Commission on Good Government (PCGG) was created by
Executive Order No. 1 to assist the President in the recovery of the ill-gotten
wealth thus accumulated whether located in the Philippines or abroad. 8
Executive Order No. 2 states that the ill-gotten assets and properties are in the form
of bank accounts, deposits, trust accounts, shares of stocks, buildings, shopping centers,
condominiums, mansions, residences, estates, and other kinds of real and personal
properties in the Philippines and in various countries of the world. 9
Executive Order No. 14, on the other hand, empowered the PCGG, with the
assistance of the Office of the Solicitor General and other government agencies, inter alia,
to file and prosecute all cases investigated by it under E.O. Nos. 1 and 2. IDASHa
Pursuant to these laws, the PCGG issued and implemented numerous

sequestrations, freeze orders and provisional takeovers of allegedly ill-gotten companies,
assets and properties, real or personal. 10
Among the properties 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. (hereinafter “Cojuangco).
In connection with 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.
On November 15, 1990, upon Motion 11 of Private Respondent COCOFED, the
Sandiganbayan issued a Resolution 12 lifting the sequestration of the subject UCPB shares
on the ground that herein private respondents — in particular, COCOFED and the so-
called CIIF companies — had not been impleaded by the PCGG as parties-defendants in
its July 31, 1987 Complaint for reconveyance, reversion, accounting, restitution and
damages. The Sandiganbayan ruled that the Writ of Sequestration issued by the
Commission was automatically lifted for PCGG’s failure to commence the corresponding
judicial action within the six-month period ending on August 2, 1987 provided under
Section 26, Article XVIII of the 1987 Constitution. The anti-graft court noted that though
these entities were listed in an annex appended to the Complaint, they had not been
named as parties-respondents.
This Sandiganbayan Resolution was challenged by the PCGG in a Petition for
Certiorari docketed as G.R. No. 96073 in this Court. Meanwhile, upon motion of
Cojuangco, the anti-graft court ordered the holding of elections for the Board of Directors of
UCPB. However, the PCGG applied for and was granted by this Court a Restraining Order
enjoining the holding of the election. Subsequently, the Court lifted the Restraining Order
and ordered the UCPB to proceed with the election of its board of directors. Furthermore, it
allowed the sequestered shares to be voted by their registered owners.
The victory of the registered shareholders was fleeting because the Court, acting on
the solicitor general’s Motion for Clarification/Manifestation, issued a Resolution on
February 16, 1993, declaring that “the right of petitioners [herein private respondents] 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. 13 The dispositive portion of the said Resolution reads as follows:
“IN VIEW OF THE FOREGOING, the Court recalls and sets aside the
Resolution dated March 3, 1992 and, pending resolution on the merits of the
action at bar, and until further orders, suspends the effectivity of the lifting of the
sequestration decreed by the Sandiganbayan on November 15, 1990, and directs
the restoration of the status quo ante, so as to allow the PCGG to continue voting
the shares of stock under sequestration at the meetings of the United Coconut
Planters Bank. 14
On January 23, 1995, the Court rendered its final Decision in G.R. No. 96073,
nullifying and setting aside the November 15, 1990 Resolution of the Sandiganbayan
which, as earlier stated, lifted the sequestration of the subject UCPB shares. The express
impleading of herein Respondents COCOFED et al. was deemed unnecessary because
“the judgment may simply be directed against the shares of stock shown to have been
issued in consideration of ill-gotten wealth. 15 Furthermore, the companies “are simply the
res in the actions for the recovery of illegally acquired wealth, and there is, in principle, no
cause of action against them and no ground to implead them as defendants in said case. 16
A month thereafter, the PCGG — pursuant to an Order of the Sandiganbayan —
subdivided Case No. 0033 into eight Complaints and docketed them as Case Nos. 0033-A
to 0033-H. CaDEAT
Six years later, on February 13, 2001, the Board of Directors of UCPB received from
the ACCRA Law Office a letter written on behalf of the COCOFED and the alleged
nameless one million coconut farmers, demanding the holding of a stockholders’ meeting
for the purpose of, among others, electing the board of directors. In response, the board
approved a Resolution calling for a stockholders’ meeting on March 6, 2001 at three
o’clock in the afternoon.
On February 23, 2001, “COCOFED, et al. and Ballares, et al. filed the “Class Action
Omnibus Motion 17 referred to earlier in Sandiganbayan Civil Case Nos. 0033-A, 0033-B
and 0033-F, asking the court a quo:
“1. To enjoin the PCGG from voting the UCPB shares of stock registered in the
respective names of the more than 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. 18
On February 28, 2001, respondent court, after hearing the parties on oral argument,
issued the assailed Order.
Hence, this Petition by the Republic of the Philippines represented by the PCGG. 19
The case had initially been raffled to this Court’s Third Division which, by a vote of 3-
2, 20 issued a Resolution 21 requiring the parties to maintain the status quo existing before
the issuance of the questioned Sandiganbayan Order dated February 28, 2001. On March
7, 2001, Respondent COCOFED et al. moved that the instant Petition be heard by the
Court en banc. 22 The Motion was unanimously granted by the Third Division.
On March 13, 2001, the Court en banc resolved to accept the Third Division’s
referral. 23 It heard the case on Oral Argument in Baguio City on April 17, 2001. During the
hearing, it admitted the intervention of a group of coconut farmers and farm worker
organizations, the Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa
ng Niyugan (PKSMMN). The coalition claims that its members have been excluded from
the benefits of the coconut levy fund. Inter alia, it joined petitioner in praying for the
exclusion of private respondents in voting the sequestered shares.
Issues
Petitioner submits the following issues for our consideration: 24
“A.
Despite the fact that the subject sequestered shares were purchased with
coconut levy funds (which were declared public in character) and the continuing
effectivity of Resolution dated February 16, 1993 in G.R. No. 96073 which allows
the PCGG to vote said sequestered shares, Respondent Sandiganbayan, with
grave abuse of discretion, issued its Order dated February 28, 2001 enjoining
PCGG from voting the sequestered shares of stock in UCPB.
“B.
The Respondent Sandiganbayan violated petitioner’s right to due process

by taking cognizance of the Class Action Omnibus Motion dated 23 February
2001 despite gross lack of sufficient notice and by issuing the writ of preliminary
injunction despite the obvious fact that there was no actual pressing necessity or
urgency to do so.
In its Resolution dated April 17, 2001, the Court defined the issue to be resolved in
the instant case simply as follows:
“Did the Sandiganbayan commit grave abuse of discretion when it issued
the disputed Order allowing respondents to vote UCPB shares of stock registered
in the name of respondents?
This Court’s Ruling

The Petition is impressed with merit.
Main Issue:
Who May Vote the Sequestered Shares of Stock?

Simply stated, the gut substantive issue to be resolved in the present Petition is:
“Who may vote the sequestered UCPB shares while the main case for their reversion to
the State is pending in the Sandiganbayan?
This Court holds 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, are “clearly affected with public interest.
General Rule: Sequestered Shares
Are Voted by the Registered Holder

At the outset, it is necessary to restate the general rule that the registered owner of
the shares of a corporation exercises the right and the privilege of voting. 25 This principle
applies even to shares that are sequestered by the government, over which the PCGG as
a mere conservator cannot, as a general rule, exercise acts of dominion. 26 On the other
hand, it is authorized to vote these sequestered shares registered in the names of private
persons and acquired with allegedly ill-gotten wealth, if it is able to satisfy the two-tiered
test devised by the Court in Cojuangco v. Calpo 27 and PCGG v. Cojuangco Jr. , 28 as
follows:
(1) Is there prima facie evidence showing that the said shares are ill-gotten and thus
belong to the State?
(2) Is there an imminent danger of dissipation, thus necessitating their continued
sequestration and voting by the PCGG, while the main issue is pending with the
Sandiganbayan?
Sequestered Shares Acquired with
Public Funds Are an Exception
From the foregoing general principle, the Court in Baseco v. PCGG 29 (hereinafter
"Baseco") and Cojuangco Jr. v. Roxas 30 ("Cojuangco-Roxas") has provided two clear
“public character exceptions under which the government is granted the authority to vote
the shares:
(1) Where government shares are taken over by private persons or entities
who/which registered them in their own names, and
(2) Where the capitalization or shares that were acquired with public funds somehow
landed in private hands.
The exceptions are based on the common-sense principle that legal fiction must
yield to truth; that public property registered in the names of non-owners is affected with
trust relations; and that the prima facie beneficial owner should be given the privilege of
enjoying the rights flowing from the prima facie fact of ownership.
In Baseco, a private corporation known as the Bataan Shipyard and Engineering Co.
was placed under sequestration by the PCGG. Explained the Court:
“The facts show that the corporation known as BASECO was owned and
controlled by President Marcos ˜during his administration, through nominees, by
taking undue advantage of his public office and/or using his powers, authority, or
influence,’ and that it was by and through the same means, that BASECO had
taken over the business and/or assets of the National Shipyard and Engineering
Co., Inc., and other government-owned or controlled entities. 31
Given this factual background, the Court discussed PCGG’s right over BASECO in
the following manner:
“Now, in the special instance of a business enterprise shown by evidence
to have been ˜taken over by the government of the Marcos Administration or by
entities or persons close to former President Marcos,’ the PCGG is given power
and authority, as already adverted to, to ˜provisionally take (it) over in the public
interest or to prevent . . . (its) disposal or dissipation;’ and since the term is
obviously employed in reference to going concerns, or business enterprises in
operation, something more than mere physical custody is connoted; the PCGG
may in this case exercise some measure of control in the operation, running, or
management of the business itself. 32
Citing an earlier Resolution, it ruled further:

“ ˜Petitioner has failed to make out a case of grave abuse or excess of
jurisdiction in respondents' calling and holding of a stockholders' meeting for the
election of directors as authorized by the Memorandum of the President . . . (to
the PCGG) dated June 26, 1986, particularly, where as in this case, the
government can, through its designated directors, properly exercise control and
management over what appear to be properties and assets owned and belonging
to the government itself and over which the persons who appear in this case on
behalf of BASECO have failed to show any right or even any shareholding in said
corporation. 33 (Italics supplied)
The Court granted PCGG the right to vote the sequestered shares because they
appeared to be “assets belonging to the government itself. The Concurring Opinion of
Justice Ameurfina A. Melencio-Herrera, in which she was joined by Justice Florentino P.
Feliciano, explained this principle as follows:
“I have no objection to according the right to vote sequestered stock in
case of a take-over of business actually belonging to the government or whose
capitalization comes from public funds but which, somehow, landed in the hands
of private persons, as in the case of BASECO. To my mind, however, caution
and prudence should be exercised in the case of sequestered shares of an on-
going private business enterprise, specially the sensitive ones, since the true and
real ownership of said shares is yet to be determined and proven more
conclusively by the Courts. 34 (Italics supplied)
The exception was cited again by the Court in Cojuangco-Roxas 35 in this wise:
“The rule in this jurisdiction is, therefore, clear. The PCGG cannot perform
acts of strict ownership of sequestered property. It is a mere conservator. It may
not vote the shares in a corporation and elect the members of the board of
directors. The only conceivable exception is in a case of a takeover of a business
belonging to the government or whose capitalization comes from public funds,
but which landed in private hands as in BASECO. 36 (Italics supplied)
The “public character test was reiterated in many subsequent cases; most recently,
in Antiporda v. Sandiganbayan. 37 Expressly citing Cojuangco-Roxas, 38 this Court said that
in determining the issue of whether the PCGG should be allowed to vote sequestered
shares, it was crucial to find out first whether these were purchased with public funds , as
follows:
“It is thus important to determine first if the sequestered corporate shares
came from public funds that landed in private hands. 39
In short, when sequestered shares registered in the names of private individuals or

entities are alleged to have been acquired with ill-gotten wealth, then the two-tiered test is
applied. However, when the sequestered shares in the name of private individuals or
entities are shown, prima facie, to have been (1) originally government shares, or (2)
purchased with public funds or those affected with public interest, then the two-tiered test
does not apply. Rather, the public character exceptions in Baseco v. PCGG and
Cojuangco Jr. v. Roxas prevail; that is, the government shall vote the shares.
UCPB Shares Were Acquired
With Coconut Levy Funds

In the present case before the Court, it is not disputed that the money used to
purchase the sequestered UCPB shares came from the Coconut Consumer Stabilization
Fund (CCSF), otherwise known as the coconut levy funds.
This fact was plainly admitted by private respondent’s counsel, Atty. Teresita J.
Herbosa, during the Oral Arguments held on April 17, 2001 in Baguio City, as follows:
“Justice Panganiban:
“In regard to the theory of the Solicitor General that the funds used to
purchase [both] the original 28 million and the subsequent 80 million came from
the CCSF, Coconut Consumers Stabilization Fund, do you agree with that?
“Atty. Herbosa:
“Yes, Your Honor.
xxx xxx xxx

“Justice Panganiban:
“So it seems that the parties [have] agreed up to that point that the funds
used to purchase 72% of the former First United Bank came from the Coconut
Consumers Stabilization Fund?
“Atty. Herbosa:
“Yes, Your Honor. 40
Indeed in Cocofed v. PCGG, 41 this Court categorically declared that the UCPB was
acquired “with the use of the Coconut Consumers Stabilization Fund in virtue of
Presidential Decree No. 755, promulgated on July 29, 1975.
Coconut Levy Funds Are
Affected With Public Interest

Having conclusively shown that the sequestered UCPB shares were purchased with
coconut levies, we hold that these funds and shares are, at the very least, “affected with
public interest.
The Resolution issued by the Court on February 16, 1993 in Republic v.

Sandiganbayan 42 stated that coconut levy funds were “clearly affected with public interest;
thus, herein private respondents — even if they are the registered shareholders — cannot
be accorded the right to vote them. We quote the said Resolution in part, as follows:
“The coconut levy funds being ˜clearly affected with public interest, it
follows that the corporations formed and organized from those funds, and all
assets acquired therefrom should also be regarded as ˜clearly affected with
public interest.’ 43
xxx xxx xxx

“Assuming, however, for purposes of argument merely, the lifting of
sequestration to be correct, may it also be assumed that the lifting of
sequestration removed the character of the coconut levy companies of being
affected with public interest, so that they and their stock and assets may now be
considered to be of private ownership? May it be assumed that the lifting of
sequestration operated to relieve the holders of stock in the coconut levy
companies — affected with public interest — of the obligation of proving how that
stock had been legitimately transferred to private ownership, or that those
stockholders who had had some part in the collection, administration, or
disposition of the coconut levy funds are now deemed qualified to acquire said
stock, and freed from any doubt or suspicion that they had taken advantage of
their special or fiduciary relation with the agencies in charge of the coconut levies
and the funds thereby accumulated? The obvious answer to each of the
questions is a negative one. It seems plain that the lifting of sequestration has no
relevance to the nature of the coconut levy companies or their stock or property,
or to the legality of the acquisition by private persons of their interest therein, or
to the latter’s capacity or disqualification to acquire stock in the companies or any
property acquired from coconut levy funds.
“This being so, 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. 44 (Italics supplied)

It is however contended by respondents that this Resolution was in the nature of a
temporary restraining order. As such, it was supposedly interlocutory in character and
became functus oficio when this Court decided G.R. No. 96073 on January 23, 1995. LexLib
This argument is aptly answered by petitioner in its Memorandum, which we quote:

“The ruling made in the Resolution dated 16 February 1993 confirming the
public nature of the coconut levy funds and denying claimants their purported
right to vote is an affirmation of doctrines laid down in the cases of COCOFED
v. PCGG supra, Baseco v. PCGG, supra, and Cojuangco v. Roxas, supra.
Therefore it is of no moment that the Resolution dated 16 February 1993 has not
been ratified. Its jurisprudential bases remain. 45 (Italics supplied)
Granting arguendo that the Resolution is interlocutory, the truth remains: the coconut
levy funds are still “clearly affected with public interest. That was the truth in 1989 as
quoted by this Court in its February 16, 1993 Resolution, and so it is today. Said the Court
in 1989:
“The utilization and proper management of the coconut levy funds, raised
as they were by the State’s police and taxing powers, are certainly the concern of
the Government. It cannot be denied that it was the welfare of the entire nation
that provided the prime moving factor for the imposition of the levy. It cannot be
denied that the coconut industry is one of the major industries supporting the
national economy. It is, therefore, the State’s concern to make it a strong and
secure source not only of the livelihood of a significant segment of the population
but also of export earnings the sustained growth of which is one of the
imperatives of economic stability. The coconut levy funds are clearly affected
with public interest. Until it is demonstrated satisfactorily that they have
legitimately become private funds, they must prima facie and by reason of the
circumstances in which they were raised and accumulated be accounted subject
to the measures prescribed in E.O. Nos. 1, 2, and 14 to prevent their
concealment, dissipation, etc., which measures include the sequestration and
other orders of the PCGG complained of. 46 (Italics supplied)
To repeat, the foregoing juridical situation has not changed. It is still the truth today:
“the coconut levy funds are clearly affected with public interest. Private respondents have
not “demonstrated satisfactorily that they have legitimately become private funds.
If private respondents really and sincerely believed that the final Decision of the
Court in Republic v. Sandiganbayan (G.R. No. 96073, promulgated on January 23, 1995)
granted them the right to vote, why did they wait for the lapse of six long years before
definitively asserting it (1) through their letter dated February 13, 2001, addressed to the
UCPB Board of Directors, demanding the holding of a shareholders’ meeting on March 6,
2001; and (2) through their Omnibus Motion dated February 23, 2001 filed in the court a
quo, seeking to enjoin PCGG from voting the subject sequestered shares during the said
stockholders’ meeting? Certainly, if they even half believed their submission now — that
they already had such right in 1995 — why are they suddenly and imperiously claiming it
only now?
It should be stressed at this point that the assailed Sandiganbayan Order dated
February 28, 2001 — allowing private respondents to vote the sequestered shares — is
not based on any finding that the coconut levies and the shares have “legitimately become
private funds. Neither is it based on the alleged lifting of the TRO issued by this Court on
February 16, 1993. Rather, it is anchored on the grossly mistaken application of the two-
tiered test mentioned earlier in this Decision.
To stress, the two-tiered test is applied only when the sequestered asset in the
hands of a private person is alleged to have been acquired with ill-gotten wealth. Hence, in
PCGG v. Cojuangco, 47 we allowed Eduardo Cojuangco Jr. to vote the sequestered shares
of the San Miguel Corporation (SMC) registered in his name but alleged to have been
acquired with ill-gotten wealth. We did so on his representation that he had acquired them
with borrowed funds and upon failure of the PCGG to satisfy the “two-tiered test. This test
was, however, not applied to sequestered SMC shares that were purchased with coco levy
funds. DHcESI
In the present case, the sequestered UCPB shares are confirmed to have been
acquired with coco levies, not with alleged ill-gotten wealth. Hence, by parity of reasoning,
the right to vote them is not subject to the “two-tiered test but to the public character of their
acquisition, which per Antiporda v. Sandiganbayan cited earlier, must first be determined.
Coconut Levy Funds Are
Prima Facie Public Funds

To avoid misunderstanding and confusion, this Court will even be more categorical
and positive than its earlier pronouncements: the coconut levy funds are not only affected
with public interest; they are, in fact, prima facie public funds.
Public funds are those moneys belonging to the State or to any political subdivision
of the State; more specifically, taxes, customs duties and moneys raised by operation of
law for the support of the government or for the discharge of its obligations. 48 Undeniably,
coconut levy funds satisfy this general definition of public funds, because of 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.
We shall now discuss each of the foregoing reasons, any one of which is enough to
show their public character.
1. Coconut Levy Funds Are Raised Through
the State’s Police and Taxing Powers.

Indeed, coconut levy funds partake of the nature of taxes which, in general, are
enforced proportional contributions from persons and properties, exacted by the State by
virtue of its sovereignty for the support of government and for all public needs. 49
Based on this definition, a tax has three elements, namely: a) it is an enforced
proportional contribution from persons and properties; b) it is imposed by the State by
virtue of its sovereignty; and c) it is levied for the support of the government. The coconut
levy funds fall squarely into these elements for the following reasons:
(a) They were generated by virtue of statutory enactments imposed on the coconut
farmers requiring the payment of prescribed amounts. Thus, P.D. No. 276, which created
the Coconut Consumers Stabilization Fund (CCSF), mandated the following:
“a. A levy, initially, of P15.00 per 100 kilograms of copra resecada or its
equivalent in other coconut products, shall be imposed on every first sale, in
accordance with the mechanics established under R.A. 6260, effective at the
start of business hours on August 10, 1973.
“The proceeds from the levy shall be deposited with the Philippine
National Bank or any other government bank to the account of the Coconut
Consumers Stabilization Fund, as a separate trust fund which shall not form part
of the general fund of the government. 50
The coco levies were further clarified in amendatory laws, specifically P.D. No. 961
51 and P.D. No. 1468 52 — in this wise:
“The Authority (Philippine Coconut Authority) is hereby empowered to
impose and collect a levy, to be known as the Coconut Consumers Stabilization
Fund Levy, on every one hundred kilos of copra resecada, or its equivalent in
other coconut products delivered to, and/or purchased by, copra exporters, oil
millers, desiccators and other end-users of copra or its equivalent in other
coconut products. The levy shall be paid by such copra exporters, oil millers,
desiccators and other end-users of copra or its equivalent in other coconut
products under such rules and regulations as the Authority may prescribe. Until
otherwise prescribed by the Authority, the current levy being collected shall be
continued. 53
Like other tax measures, they were not voluntary payments or donations by the
people. They were enforced contributions exacted on pain of penal sanctions, as provided
under P.D. No. 276:
“3. Any person or firm who violates any provision of this Decree or the
rules and regulations promulgated thereunder, shall, in addition to penalties
already prescribed under existing administrative and special law, pay a fine of not
less than P2,500 or more than P10,000, or suffer cancellation of licenses to
operate, or both, at the discretion of the Court. 54
Such penalties were later amended thus:

“Whenever any person or entity willfully and deliberately violates any of
the provisions of this Act, or any rule or regulation legally promulgated hereunder
by the Authority, the person or persons responsible for such violation shall be
punished by a fine of not more than P20,000.00 and by imprisonment of not more
than five years. If the offender be a corporation, partnership or a juridical person,
the penalty shall be imposed on the officer or officers authorizing, permitting or
tolerating the violation. Aliens found guilty of any offenses shall, after having
served his sentence, be immediately deported and, in the case of a naturalized
citizen, his certificate of naturalization shall be cancelled. 55
(b) The coconut levies were imposed pursuant to the laws enacted by the proper
legislative authorities of the State. Indeed, the CCSF was collected under P.D. No. 276,
issued by former President Ferdinand E. Marcos who was then exercising legislative
powers. 56
(c) They were clearly imposed for a public purpose. There is absolutely no question
that they were collected to advance the government’s avowed policy of protecting the
coconut industry. This Court takes judicial notice of the fact that the coconut industry is one
of the great economic pillars of our nation, and coconuts and their by products occupy a
leading position among the country’s export products; that it gives employment to
thousands of Filipinos; that it is a great source of the State’s wealth; and that it is one of the
important sources of foreign exchange needed by our country and, thus, pivotal in the
plans of a government committed to a policy of currency stability.
Taxation is done not merely to raise revenues to support the government, but also to
provide means for the rehabilitation and the stabilization of a threatened industry, which is
so affected with public interest as to be within the police power of the State, as held in
Caltex Philippines v. COA 57 and Osmeña v. Orbos. 58
Even if the money is allocated for a special purpose and raised by special means, it
is still public in character. In the case before us, the funds were even used to organize and
finance State offices. In Cocofed v. PCGG, 59 the Court observed that certain agencies or
enterprises “were organized and financed with revenues derived from coconut levies
imposed under a succession of laws of the late dictatorship . . . with deposed Ferdinand
Marcos and his cronies as the suspected authors and chief beneficiaries of the resulting
coconut industry monopoly. 60 The Court continued: “. . . . It cannot be denied that the
coconut industry is one of the major industries supporting the national economy. It is,
therefore, the State’s concern to make it a strong and secure source not only of the
livelihood of a significant segment of the population, but also of export earnings the
sustained growth of which is one of the imperatives of economic stability. . . .. 61
2. Coconut Funds Are Levied for the Benefit
of the Coconut Industry and Its Farmers.

Just like the sugar levy funds, the coconut levy funds constitute state funds even
though they may be held for a special public purpose.
In fact, Executive Order No. 481 dated May 1, 1998 specifically likens the coconut
levy funds to the sugar levy funds, both being special public funds acquired through the
taxing and police powers of the State. The sugar levy funds, which are strikingly similar to
the coconut levies in their imposition and purpose, were declared public funds by this Court
in Gaston v. Republic Planters Bank, 62 from which we quote:
“The stabilization fees collected are in the nature of a tax which is within
the power of the State to impose for the promotion of the sugar industry
(Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b], P.D.
No. 388). The collections made accrue to a ˜Special Fund,’ a ˜Development and
Stabilization Fund,’ almost identical to the ˜Sugar Adjustment and Stabilization
Fund’ created under Section 6 of Commonwealth Act 567. The tax collected is
not in a pure exercise of the taxing power. It is levied with a regulatory purpose,
to provide means for the stabilization of the sugar industry. The levy is primarily
in the exercise of the police power of the State. (Lutz vs. Araneta, supra.) 63
The Court further explained: 64
“The stabilization fees in question are levied by the State upon sugar
millers, planters and producers for a special purpose — that of ˜financing the
growth and development of the sugar industry and all its components,
stabilization of the domestic market including the foreign market.’ The fact that
the State has taken possession of moneys pursuant to law is sufficient to
constitute them as state funds, even though they are held for a special purpose
(Lawrence v. American Surety Co., 263 Mich 586, 294 ALR 535, cited in 42 Am.
Jur., Sec. 2., p. 718). Having been levied for a special purpose, the revenues
collected are to be treated as a special fund, to be, in the language of the statute,
ãdministered in trust’ for the purpose intended. Once the purpose has been
fulfilled or abandoned, the balance, if any, is to be transferred to the general
funds of the Government. That is the essence of the trust intended (see 1987
Constitution, Art. VI, Sec. 29[3], lifted from the 1935 Constitution, Article VI, Sec.
23[1]. (Italics supplied)
“The character of the Stabilization Fund as a special fund is emphasized

by the fact that the funds are deposited in the Philippine National Bank and not in
the Philippine Treasury, moneys from which may be paid out only in pursuance of
an appropriation made by law (1987 Constitution, Article VI, Sec. 29[1], 1973
Constitution, Article VIII, Sec. 18[1]).
“That the fees were collected from sugar producers, planters and millers,
and that the funds were channeled to the purchase of shares of stock in
respondent Bank do not convert the funds into a trust fund for their benefit nor
make them the beneficial owners of the shares so purchased. It is but rational
that the fees be collected from them since it is also they who are to be benefited
from the expenditure of the funds derived from it. The investment in shares of
respondent Bank is not alien to the purpose intended because of the Bank’s
character as a commodity bank for sugar conceived for the industry’s growth and
development. Furthermore, of note is the fact that one-half (1/2) or P0.50 per
picul, of the amount levied under P.D. No. 388 is to be utilized for the ˜payment of
salaries and wages of personnel, fringe benefits and allowances of officers and
employees of PHILSUCOM’ thereby immediately negating the claim that the
entire amount levied is in trust for sugar, producers, planters and millers.
“To rule in petitioners’ favor would contravene the general principle that
revenues derived from taxes cannot be used for purely private purposes or for
the exclusive benefit of private persons. The Stabilization Fund is to be utilized
for the benefit of the entire sugar industry, ãnd all its components, stabilization of
the domestic market including the foreign market,’ the industry being of vital
importance to the country’s economy and to national interest.
In the same manner, this Court has also ruled that the oil stabilization funds were
public in character and subject to audit by COA. It ruled in this wise:
“Hence, it seems clear that while the funds collected may be referred to as
taxes, they are exacted in the exercise of the police power of the State.
Moreover, that the OPSF is a special fund is plain from the special treatment
given it by E.O. 137. It is segregated from the general fund; and while it is placed
in what the law refers to as a ˜trust liability account,’ the fund nonetheless
remains subject to the scrutiny and review of the COA. The Court is satisfied that
these measures comply with the constitutional description of a ˜special fund.’
Indeed, the practice is not without precedent. 65
In his Concurring Opinion in Kilosbayan v. Guingona , 66 Justice Florentino P.

Feliciano explained that the funds raised by the On-line Lottery System were also public in
nature. In his words:
“. . .. In the case presently before the Court, the funds involved are clearly
public in nature. The funds to be generated by the proposed lottery are to be
raised from the population at large. Should the proposed operation be as
successful as its proponents project, those funds will come from well-nigh every
town and barrio of Luzon. The funds here involved are public in another very real
sense: they will belong to the PCSO, a government owned or controlled
corporation and an instrumentality of the government and are destined for
utilization in social development projects which, at least in principle, are designed
to benefit the general public. . . .. The interest of a private citizen in seeing to it
that public funds, from whatever source they may have been derived, go only to
the uses directed and permitted by law is as real and personal and substantial as
the interest of a private taxpayer in seeing to it that tax monies are not
intercepted on their way to the public treasury or otherwise diverted from uses
prescribed or allowed by law. It is also pertinent to note that the more successful
the government is in raising revenues by non-traditional methods such as
PAGCOR operations and privatization measures, the lesser will be the pressure
upon the traditional sources of public revenues, i.e., the pocket books of
individual taxpayers and importers. 67
Thus, the coconut levy funds — like the sugar levy and the oil stabilization funds, as
well as the monies generated by the On-line Lottery System — are funds exacted by the
State. Being enforced contributions, they are prima facie public funds.
3. Respondents Judicially Admit That
the Levies Are Government Funds.

Equally important as the fact that the coconut levy funds were raised through the
taxing and police powers of the State is respondents’ effective judicial admission that these
levies are government funds. As shown by the attachments to their pleadings, 68
respondents concede that the Coconut Consumers Stabilization Fund (CCSF) and the
Coconut Investment Development Fund “constitute government funds . . . for the benefit of
coconut farmers.
“Collections on both levies constitute government funds. However, unlike
other taxes that the Government levies and collects such as income tax, tariff and
customs duties, etc., the collections on the CCSF and CIDF are, by express
provision of the laws imposing them, for a definite purpose, not just for any
governmental purpose. As stated above part of the collections on the CCSF levy
should be spent for the benefit of the coconut farmers. And in respect of the
collections on the CIDF levy, P.D. 582 mandatorily requires that the same should
be spent exclusively for the establishment, operation and maintenance of a
hybrid coconut seed garden and the distribution, for free, to the coconut farmers
of the hybrid coconut seednuts produced from that seed garden. IDAESH
“On the other hand, the laws which impose special levies on specific
industries, for example on the mining industry, sugar industry, timber industry,
etc., do not, by their terms, expressly require that the collections on those levies
be spent exclusively for the benefit of the industry concerned. And if the enabling
law thus so provide, the fact remains that the governmental agency entrusted
with the duty of implementing the purpose for which the levy is imposed is vested
with the discretionary power to determine when and how the collections should
be appropriated. 69
4. The COA Audit Shows the
Public Nature of the Funds.

Under COA Office Order No. 86-9470 dated April 15, 1986, 70 the COA reviewed the
expenditure and use of the coconut levies allocated for the acquisition of the UCPB. The
audit was aimed at ascertaining whether these were utilized for the purpose for which they
had been intended. 71 Under the 1987 Constitution, the powers of the COA are as follows:
“The Commission on Audit shall have the power, authority, and duty to
examine, audit, and settle all accounts pertaining to the revenue and receipts of,
and expenditures or uses of funds and property, owned or held in trust by, or
pertaining to, the Government, or any of its subdivisions, agencies, or
instrumentalities . . . . 72
Because these funds have been subjected to COA audit, there can be no other
conclusion than that they are prima facie public in character.
5. The BIR Has Pronounced That the
Coconut Levy Funds Are Taxes.

In response to a query posed by the administrator of the Philippine Coconut
Authority regarding the character of the coconut levy funds, the Bureau of Internal Revenue
has affirmed that these funds are public in character. It held as follows: “[T]he coconut levy
is not a public trust fund for the benefit of the coconut farmers, but is in the nature of a tax
and, therefore, . . . public funds that are subject to government administration and
disposition. 73
Furthermore, the executive branch treats the coconut levies as public funds. Thus,
Executive Order No. 277, issued on September 24, 1995, directed the mode of treatment,
utilization, administration and management of the coconut levy funds. It provided as
follows:
˜(a) The coconut levy funds, which include all income, interests, proceeds
or profits derived therefrom, as well as all assets, properties and shares of stocks
procured or obtained with the use of such funds, shall be treated, utilized,
administered and managed as public funds consistent with the uses and
purposes under the laws which constituted them and the development priorities
of the government, including the government’s coconut productivity,
rehabilitation, research extension, farmers organizations, and market promotions
programs, which are designed to advance the development of the coconut
industry and the welfare of the coconut farmers. 74 (Italics supplied)
Doctrinally, acts of the executive branch are prima facie valid and binding, unless
declared unconstitutional or contrary to law.
6. Laws Governing Coconut Levies
Recognize Their Public Nature.

Finally and tellingly, the very laws governing the coconut levies recognize their public
character. Thus, the third Whereas clause of P.D. No. 276 treats them as special funds for
a specific public purpose. Furthermore, P.D. No. 711 transferred to the general funds of the
State all existing special and fiduciary funds including the CCSF. On the other hand, P.D.
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. TcEaDS
Moreover, even President Marcos himself, as the sole legislative/executive authority

during the martial law years, struck off the phrase which is a private fund of the coconut
farmers from the original copy of Executive Order No. 504 dated May 31, 1978, and we
quote:
“WHEREAS, by means of the Coconut Consumers Stabilization Fund
(˜CCSF’), which is the private fund of the coconut farmers(deleted), essential
coconut-based products are made available to household consumers at
socialized prices. (Italics supplied)
The phrase in bold face — which is the private fund of the coconut farmers — was
crossed out and duly initialed by its author, former President Marcos. This deletion, clearly
visible in “Attachment C of petitioner’s Memorandum, 75 was a categorical legislative intent
to regard the CCSF as public, not private, funds.
Having Been Acquired With Public
Funds, UCPB Shares Belong, Prima
Facie, to the Government

Having shown that the coconut levy funds are not only affected with public interest,
but are in fact prima facie public funds, this Court believes that the government should be
allowed to vote the questioned shares, because they belong to it as the prima facie
beneficial and true owner.
As stated at the beginning, voting is an act of dominion that should be exercised by
the share owner. One of the recognized rights of an owner is the right to vote at meetings
of the corporation. The right to vote is classified as the right to control. 76 Voting rights may
be for the purpose of, among others, electing or removing directors, amending a charter, or
making or amending bylaws. 77 Because the subject UCPB shares were acquired with
government funds, the government becomes their prima facie beneficial and true owner.
Ownership includes the right to enjoy, dispose of, exclude and recover a thing
without limitations other than those established by law or by the owner. 78 Ownership has
been aptly described as the most comprehensive of all real rights. 79 And the right to vote
shares is a mere incident of ownership. In the present case, the government has been
shown to be the prima facie owner of the funds used to purchase the shares. Hence, it
should be allowed the rights and privileges flowing from such fact.
And paraphrasing Cocofed v. PCGG, already cited earlier, the Republic should
continue to vote those shares until and unless private respondents are able to
demonstrate, in the main cases pending before the Sandiganbayan, that “they [the
sequestered UCPB shares] have legitimately become private.
Procedural and Incidental Issues:
Grave Abuse of Discretion,
Improper Arguments
and Intervenors’ Relief

Procedurally, respondents argue that petitioner has failed to demonstrate that the
Sandiganbayan committed grave abuse of discretion, a demonstration required in every
petition under Rule 65. 80
We disagree. We hold that the Sandiganbayan gravely abused its discretion when it
contravened the rulings of this Court in Baseco a n d Cojuangco-Roxas — thereby
unlawfully, capriciously and arbitrarily depriving the government of its right to vote
sequestered shares purchased with coconut levy funds which are prima facie public funds.
Indeed, grave abuse of discretion may arise when a lower court or tribunal violates
or contravenes the Constitution, the law or existing jurisprudence. In one case, 81 this Court
ruled that the lower court’s resolution was “tantamount to overruling a judicial
pronouncement of the highest Court . . . and unmistakably a very grave abuse of discretion.
82
The Public Character of
Shares Is a Valid Issue

Private respondents also contend that the public nature of the coconut levy funds
was not raised as an issue before the Sandiganbayan. Hence, it could not be taken up
before this Court.
Again we disagree. By ruling that the two-tiered test should be applied in evaluating
private respondents’ claim of exercising voting rights over the sequestered shares, the
Sandiganbayan effectively held that the subject assets were private in character. Thus, to
meet this issue, the Office of the Solicitor General countered that the shares were not
private in character, and that quite the contrary, they were and are public in nature
because they were acquired with coco levy funds which are public in character. In short,
the main issue of who may vote the shares cannot be determined without passing upon
the question of the public/private character of the shares and the funds used to acquire
them. The latter issue, although not specifically raised in the Court a quo, should still be
resolved in order to fully adjudicate the main issue.
Indeed, this Court has “the authority to waive the lack of proper assignment of errors
if the unassigned errors closely relate to errors properly pinpointed out or if the unassigned
errors refer to matters upon which the determination of the questions raised by the errors
properly assigned depend. 83
Therefore, “where the issues already raised also rest on other issues not specifically
presented as long as the latter issues bear relevance and close relation to the former and
as long as they arise from matters on record, the Court has the authority to include them in
its discussion of the controversy as well as to pass upon them. 84
No Positive Relief
For Intervenors
Intervenors anchor their interest in this case on an alleged right that they are trying
to enforce in another Sandiganbayan case docketed as SB Case No. 0187. 85 In that case,
they seek the recovery of the subject UCPB shares from herein private respondents and
the corporations controlled by them. Therefore, the rights sought to be protected and the
reliefs prayed for by intervenors are still being litigated in the said case. The purported
rights they are invoking are mere expectancies wholly dependent on the outcome of that
case in the Sandiganbayan.
Clearly, we cannot rule on intervenors’ alleged right to vote at this time and in this
case. That right is dependent upon the Sandiganbayan’s resolution of their action for the
recovery of said sequestered shares. Given the patent fact that intervenors are not
registered stockholders of UCPB as of the moment, their asserted rights cannot be ruled
upon in the present proceedings. Hence, no positive relief can be given them now, except
insofar as they join petitioner in barring private respondents from voting the subject shares.
Epilogue
In sum, we hold that the Sandiganbayan committed grave abuse of discretion in
grossly contradicting and effectively reversing existing jurisprudence, and in depriving the
government of its right to vote the sequestered UCPB shares which are prima facie public
in character.
In making this ruling, we are in no way preempting the proceedings the
Sandiganbayan may conduct or the final judgment it may promulgate in Civil Case Nos.
0033-A, 0033-B and 0033-F. Our determination here is merely prima facie, and should not
bar the anti-graft court from making a final ruling, after proper trial and hearing, on the
issues and prayers in the said civil cases, particularly in reference to the ownership of the
subject shares. cTSHaE
We also lay down the caveat that, in declaring the coco levy funds to be prima facie
public in character, we are not ruling in any final manner on their classification — whether
they are general or trust or special funds — since such classification is not at issue here.
Suffice it to say that the public nature of the coco levy funds is decreed by the Court only
for the purpose of determining the right to vote the shares, pending the final outcome of the
said civil cases.
Neither are we resolving in the present case the question of whether the shares held
by Respondent Cojuangco are, as he claims, the result of private enterprise. This factual
matter should also be taken up in the final decision in the cited cases that are pending in
the court a quo. Again suffice it to say that the only issue settled here is the right of PCGG
to vote the sequestered shares, pending the final outcome of said cases.
This matter involving the coconut levy funds and the sequestered UCPB shares has
been straddling the courts for about 15 years. What we are discussing in the present
Petition, we stress, is just an incident of the main cases which are pending in the anti-graft
court — the cases for the reconveyance, reversion and restitution to the State of these
UCPB shares.
The resolution of the main cases has indeed been long overdue. Every effort, both
by the parties and the Sandiganbayan, should be exerted to finally settle this controversy.
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. Furthermore,
the Sandiganbayan is ORDERED to decide with finality the aforesaid civil cases within a
period of six (6) months from notice. It shall report to this Court on the progress of the said
cases every three (3) months, on pain of contempt. The Petition in Intervention is
DISMISSED inasmuch as the reliefs prayed for are not covered by the main issues in this
case. No costs. IAEcCT
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Mendoza, Quisumbing, Buena, De Leon, Jr., and
Carpio, JJ., concur.
Melo, J., see dissenting opinion.
Puno, J., joins the separate opinion of J. Vitug.
Vitug, J., see separate opinion.
Kapunan, Ynares-Santiago, Sandoval-Gutierrez, JJ., concur with the dissenting

opinion of J. Melo.
Pardo, J., Join in the result of the dissents
Separate Opinions
VITUG, J., separate opinion:
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. CaTcSA
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, P.D. 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 me right to vote them." ATcEDS
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. Calpo 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, C OCOFED , 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. aTcESI
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. SEIcAD
Justices 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.
MELO, J ., dissenting opinion:
I respectfully dissent from the majority opinion, penned by Mr. Justice Panganiban,
upholding the right of the PCGG to vote the sequestered UCPB shares of stock.
The petition sprung from the following factual antecedents:
In 1986 and 1987, numerous business enterprises, entities, and pieces of property,
real and personal, were sequestered or taken over by the PCGG on the ground that these
were ill-gotten property of former President Marcos, his family, and close associates.
Among these sequestered property were shares of stock in the United Coconut Planters
Bank (UCPB) registered in the name of 1,405,366 coconut farmers and of the so-called
Coconut Industry Investment Fund (CIIF) companies. IaHDcT
In connection with the sequestration and take-over of said UCPB shares of stock,
the PCGG, on July 31, 1987, instituted an action for reconveyance, reversion, accounting,
restitution, and damages against Eduardo Cojuangco, Jr. and sixty others with the
Sandiganbayan, docketed therein as Case No. 0033.
On November 19, 1990, and during the pendency of the case, the Sandiganbayan
issued a resolution lifting the sequestration of the UCPB shares of stock registered in the
name of "1 million coconut farmers" and the CIIF companies, on the ground that these
entities were not impleaded by the PCGG as party-defendants within the 6-month period
— ending on August 2, 1987 — fixed by the Constitution, having merely been listed in an
annex appended to the complaint in Case No. 0033.
This Resolution was challenged by the PCGG in a petition for certiorari filed with the
Court, docketed herein as G.R. No. 96073. Pending resolution of the case, the
Sandiganbayan, on March 4, 1991, ordered the holding of elections for members of the
Board of Directors of UCPB. Opposing the holding of elections, PCGG applied for, and was
granted by the Court a restraining order enjoining the holding of a stockholders' meeting for
the election of the Board of Directors of UCPB.
However, on March 3, 1992, acting on a petition filed by Eduardo Cojuangco, Jr., the
Court lifted the restraining order it had issued and ordered instead that UCPB elect its
Board of Directors. Furthermore, the Court allowed the sequestered shares of UCPB to be
voted by the registered owners thereof. The shareholders' victory would, however, be
fleeting. On February 17, 1993, acting on the Solicitor General's Clarification/Manifestation
with Motion, the Court issued a subsequent Resolution declaring that "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." Accordingly, the dispositive portion of said Resolution
provided:
IN VIEW OF THE FOREGOING, the Court recalls and sets aside the
Resolution dated March 3, 1992 and; pending resolution on the merits of the
action at bar, and until further orders, suspends the effectivity of the lifting of the
sequestration decreed by the Sandiganbayan on November 15, 1990, and directs
the restoration of the status quo ante, so as to allow the PCGG to continue voting
the shares of stock under sequestration at the meetings of the United Coconut
Planters Bank.
IT IS SO ORDERED.
(Rollo, p. 73.)
Two years thereafter, on January 23, 1995, the Court rendered a decision in G.R.
No. 96073 (240 SCRA 376) nullifying and setting aside the November 19, 1990 Resolution
of the Sandiganbayan lifting the sequestration of the shares of stock of UCPB registered in
the name of "1 million coconut farmers" and of the CIIF companies on the ground that "as
regards actions in which the complaints seek recovery of defendants' shares of stock in
existing corporations (e.g. San Miguel Corporation, Benguet Corporation, Meralco, etc.)
because allegedly purchased with misappropriated public funds, in breach of fiduciary
duty, or otherwise under illicit or anomalous conditions, the impleading of said firms would
clearly appear to be unnecessary" since, if warranted by the evidence, judgments could be
handed down against the defendants divesting them of their ownership of said stock and
imposing upon them the obligation of surrendering said stock to the Government. It may be
noted that in said decision, the Court did not reaffirm and maintain its Resolution dated
February 17, 1993.
A month thereafter, the PCGG, pursuant to the order of the Sandiganbayan,

subdivided Case No. 0033 into eight complaints, docketed as Cases No. 0033-A to 0033-
H.
Six years thereafter, on February 13, 2001, the Board of Directors of UCPB,
received a letter from the ACCRA Law Office. Written on behalf of the Philippine Coconut
Producers' Federation (COCOFED), et al. and the more than one million coconut farmers
who are registered stockholders of UCPB, the letter demanded of UCPB, which had not
held any stockholders' meeting since 1986, to call such a meeting on March 6, 2001, at 3
o'clock in the afternoon, for the purpose of, among other things, electing the Board of
Directors. In the same letter, COCOFED also requested information as to whether UCPB
had investigated and reported to the Bangko Sentral ng Pilipinas the large scale estafa
allegedly committed by the previous members of the board and other responsible officials
of UCPB.
On February 26, 2001, the UCPB Board of Directors, by way of response to the
aforementioned letter, passed and approved a resolution calling for a stockholders' meeting
of the bank on March 6, 2001 at 3 o'clock in the afternoon, the date fixed in the bank's By-
Laws.
In anticipation of the announced stockholders' meeting, COCOFED, et al. and

Ballares, et al., filed, in the following Sandiganbayan cases:
Civil Case No. 0033-A;
Civil Case No. 0033-B; and
Civil Case No. 0033-F,
a class action omnibus motion dated February 23, 2001, seeking to enjoin the PCGG
from voting in the announced stockholders' meeting of March 6, 2001 (a) the UCPB
shares of stock registered in the names of the more than one million coconut farmers;
(b) the San Miguel Corporation (SMC) shares registered in the names of the 14 CIIF
Holding Companies and beneficially owned by COCOFED; and (c) the shares of stock
registered in the name of PCGG itself.
Because of the motion's extreme urgency, and as prayed for by the movants
themselves, the Sandiganbayan (1st Division) heard the motion on February 28, 2001.
Lorenzo V. Tan, President of UCPB, was present during this hearing and in a
manifestation, he asked to be heard therein.
The Sandiganbayan noted the manifestation of Mr. Lorenzo V. Tan, as follows:

At a certain state of the argument on this matter, the UCPB sought to be
heard in "executive session" upon the alleged significant matters of fact to be
conveyed by the UCPB to this Court. Duly warned by the engaged counsel for
the UCPB, Atty. Roberto San Juan, the Court excluded all private individuals and
all counsel not related to these cases so that whatever matters of a restricted or
confidential character of significance to banks in the business community, and of
the UCPB in particular, could be heard in confidence.
The bank's President in the person of Mr. Lorenzo V. Tan was heard.
While the matters he put forth might be relevant to the bank, the entire
thrust of the clarification made by the president was the need to dispose of this
case expeditiously so that question of ownership of the shares and therefore of
the bank, would be resolved with finality; this apparently is a desirable element in
the business world and in the market in which banks operate, as much for
drawing investments as for acceptability of other transactions and "products" of
banks in the market. It must be stated that the matter, while important in itself, is
of minor relevance to the issue at bar.
(p. 3, Order dated February 28, 2001.)
Following the conclusion of the hearing, the Sandiganbayan issued in open court on
the same date — February 28, 2001 — the Order authorizing COCOFED, et al., Ballares,
et al. and Eduardo Cojuangco, Jr., et al. and all other registered stockholders of UCPB to
vote their shares of stock and themselves to be voted upon at the UCPB announced
stockholders' meeting of March 6, 2001 or in any subsequent continuation or resetting
thereof, and to perform such acts as will normally follow in the exercise of their rights as
registered stockholders. More specifically, the pertinent portion of the Order declared:
In view hereof, the movants COCOFED, et al. and Ballares, et al. as well
as Eduardo Cojuangco, et al. who were acknowledged to be registered
stockholders of the UCPB are authorized, as are all other registered stockholders
of the United Coconut Planters Bank, until further orders from this Court, to
exercise their rights to vote their shares of stock and themselves to be voted
upon in the United Coconut Planters Bank (UCPB) at the scheduled
Stockholders' Meeting on May 6, 2001 or on any subsequent continuation or
resetting thereof, and to perform such acts as will normally follow in the exercise
of these rights as registered stockholders.
On March 1, 2001, the Sandiganbayan issued a writ of preliminary injunction

enjoining PCGG or any person acting in its behalf from voting the sequestered shares of
UCPB at its scheduled stockholders' meeting of March 6, 2001, or at anytime at which the
meeting may be continued or reset until otherwise ordered by the same court. In the same
writ, the Sandiganbayan also directed the chairman and the secretary of the stockholders'
meeting of UCPB on the above scheduled date and other dates to which the meeting may
be reset, to acknowledge the right of Eduardo M. Cojuangco, Jr., et al. to vote the shares
of stock registered in their names on all matters that may be properly considered before
said stockholders' meeting. DaAIHC
Such was the state of things when, on March 5, 2001, herein petitioner Republic of
the Philippines, represented by the PCGG, filed the instant petition premised on the fact
that at all times prior to the questioned order, PCGG had been voting the sequestered
UCPB shares registered in the names of private respondents under the authority of the
Court's pronouncement in G.R. No. 96073 and 104850. PCGG claimed that the right
granted to it to vote the sequestered shares was the status quo and for this status quo to
be disturbed, there must be a clear showing that this Court has reversed or, at the very
least, modified its prior pronouncements on the matter. Since there was none, petitioner
contended that respondent Sandiganbayan gravely abused its discretion, tantamount to
lack or excess of jurisdiction, when it granted the right to vote said sequestered shares to
private respondents COCOFED, Ballares, and Cojuangco, Jr. et al. PCGG likewise
insisted that the subject sequestered shares were purchased with coconut levy funds,
funds declared public in character, and that the Resolution issued by this Court dated
February 13,1993 in G.R. No. 96073 remains effective.
In its Resolution of April 17, 2001, the Court defined the issue to be resolved in the
instant case in this fashion:
Did the Sandiganbayan commit grave abuse of discretion when it issued

the disputed order allowing respondents to vote UCPB shares of stock registered
in the name of respondents?
While the majority declares that, indeed, the Sandiganbayan acted with grave abuse
of discretion in allowing respondents to vote their UCPB shares of stock registered in their
names, I respectfully submit that it did not.
In determining whether there has been "grave abuse of discretion", under Rule 65,
the "unyielding yardstick" is whether the abuse of discretion is "so patent and gross as to
amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion or hostility (Sinon vs. Civil Service Commission, 215
SCRA 410 [1992]; Planters Products, Inc. vs. Court of Appeals, 193 SCRA 563 [1991];
Litton Mills, Inc. vs. Galleon Trader, Inc ., 163 SCRA 489 [1988]; Esguerra vs. Court of
Appeals, 267 SCRA 380 [1997]; Republic vs. Villarama, 278 SCRA 736 [1997]).
To discharge its burden of showing that the Sandiganbayan acted with grave abuse
of discretion, the PCGG relies principally on the Court's February 16, 1993 Resolution in
Republic vs. Sandiganbayan, et al., G.R. No. 96073 where we ordered the restoration of
the status quo ante so as to allow PCGG to continue voting the shares of stock under
sequestration at the meetings of the UCPB.
As correctly pointed out by respondents, the February 16, 1993 Resolution, is in the
nature of a temporary restraining order, having been issued to recall the March 3, 1992
Resolution lifting of the temporary restraining order previously issued by the Court on
March 5, 1991. In other words, the subject resolution merely reinstated the temporary
restraining order which the Court had earlier issued enjoining private respondents from
voting the sequestered shares registered in their names. Being in the nature of a
restraining order, the same is interlocutory in character and it became functus oficio when
this Court decided the PCGG Sequestration Cases, including G.R. No. 96073, on January
23, 1995. A restraining order is but a provisional remedy to which parties may resort "for
the preservation or protection of their rights or interests, and for no other purpose, during
the pendency of the principal action (Commissioner of Customs vs. Cloribel, 19 SCRA 234
[1967]).
Moreover, the Resolution of February 16, 1993 explicitly provided that it shall be
effective only "pending resolution on the merits of the action at bar." G.R. No. 96073, the
"action at bar" referred to, was decided on the merits on January 23, 1995. The dispositive
portion of the decision in the aforementioned PCGG Sequestration Cases, including G.R.
No. 96073, provided:
WHEREFORE, judgment is hereby rendered:
A. NULLIFYING AND SETTING ASIDE:
xxx xxx xxx

B. CONFIRMING AND MAINTAINING the temporary restraining orders
issued in G.R. Nos. 104883, 105170, 105206, 105808, 105809,
107233, and 107908, which shall continue in force and effect during
the continuation of the proceedings in the corresponding civil
actions in the Sandiganbayan, subject to the latter's power to
modify or terminate the same in the exercise of its sound discretion
in light of such evidence as may be subsequently adduced; and
C. DISMISSING the petitions in G.R. Nos. 107908 and 109592, for lack of
merit
(Republic v. Sandiganbayan [First Division, 240 SCRA 376 [1995],

at pp. 474-476.)
Even a casual study of the above dispositive portion would show that the Court's
Resolution dated February 16, 1993 is not among the temporary restraining orders
"confirmed and maintained" in the January 23, 1995 decision.
In fact, in Calpo vs. Sandiganbayan (Third Division) (265 SCRA 380 [1996]), the
Court clarified that the "PCGG Sequestration Cases," including G.R. No. 96073, did not
involve the issue of PCGG's right to vote sequestered corporate shares. The Court held
thus:
The crucial question in "The PCGG Sequestration Cases," capsulized by
the Court in its resolution of 23 January 1995, is this:
"DOES INCLUSION IN THE COMPLAINTS FILED BY THE PCGG
BEFORE THE SANDIGANBAYAN OF SPECIFIC ALLEGATIONS OF
CORPORATIONS BEING "DUMMIES" OR UNDER THE CONTROL OF
ONE OR ANOTHER OF THE DEFENDANTS NAMED THEREIN AND
USED AS INSTRUMENTS FOR ACQUISITION, OR AS BEING
DEPOSITARIES OR PRODUCTS, OF ILL-GOTTEN WEALTH; OR THE
ANNEXING TO SAID COMPLAINTS OF A LIST OF SAID FIRMS, BUT
WITHOUT ACTUALLY IMPLEADING THEM AS DEFENDANTS,
SATISFY THE CONSTITUTIONAL REQUIREMENT THAT IN ORDER TO
MAINTAIN A SEIZURE EFFECTED IN ACCORDANCE WITH
EXECUTIVE ORDER NO. 1, s. 1986, THE CORRESPONDING
"JUDICIAL ACTION OR PROCEEDING" SHOULD BE FILED WITHIN
THE SIX-MONTH PERIOD PRESCRIBED IN SECTION 26, ARTICLE
XVIII, OF THE (1987) CONSTITUTION?
xxx xxx xxx
Neither the qualifications of the PCGG nominees to sit in the SMC Board
of Directors nor the right of the PCGG to vote the sequestered corporate shares
have been mentioned, even in passing, by the Court. In fact, the promulgation of
the Court's resolution in the PCGG sequestration cases should now pave the
way for the cognizance by the Sandiganbayan of the quo warranto proceedings.
(p. 386-387; italics supplied.)
The issue being limited to the propriety of impleading the firms and corporations
subject of sequestration, the Court's failure to "confirm and maintain" the February 16,
1993 Resolution only means that it became functus oficio upon resolution of the main
action on January 23, 1995. The PCGG cannot, therefore, claim the continuing effectivity of
said Resolution so as to authorize it to continue voting the sequestered UCPB shares. AHSEaD
The majority opinion, however, claims that PCGG's right to vote said shares remains
on the ground that the jurisprudential bases for the Court's Resolution dated February 16,
1993 still remain. In Buayan Cattle Co . vs. Quintillan (128 SCRA 276 [1984]), the Court
categorically declared that a complaint for injunctive relief must be construed strictly
against the pleader. Even if the jurisprudential bases for the Resolution are still extant, the
fact that said Resolution was not "confirmed and maintained" by the Court after it decided
the main action militates against its continuing effectivity, otherwise a temporary restraining
order would no longer be "temporary."
With the February 16, 1993 Resolution having lost effectivity, the question as to who
could then vote the sequestered shares should then revert to the Sandiganbayan, in
accordance with our ruling in Philippine Coconut Producers Federation, Inc . (COCOFED)
vs. Presidential Commission on Good Government (178 SCRA 236[1989]), where we
directed:
3. The incidents concerning the voting of the sequestered shares, the
COCOFED elections, and the replacement of directors, being matters incidental
to the sequestration, should be addressed to the Sandiganbayan in accordance
with the doctrine laid down in PCGG vs. Pena, 159 SCRA 556, reiterated in G.R.
No. 74910, Andres Soriano III vs. Hon. Manuel Yuzon; G.R. No. 75075, Eduardo
Cojuangco, Jr. vs. Securities and Exchange Commission; G.R. No. 75094, Clifton
Ganay vs. Presidential Commission on Good Government; G.R. No. 76397,
Board of Directors of San Miguel Corporation vs. Securities and Exchange
Commission; G.R. No. 79459, Eduardo Cojuangco, Jr. vs. Hon. Pedro N. Laggui;
G.R. No. 79520, Neptunia Corporation, Ltd. vs. Presidential Commission on
Good Government, August 10, 1988.
(p. 253.)
Significantly, even the Resolution in dispute recognizes that it is the Sandiganbayan

which should determine who has the right to vote said shares, the same stating that "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."
It must also be pointed out that even the temporary restraining orders "confirmed
and maintained" by the Court in the Sequestration Cases were made subject to the
Sandiganbayan's "powers to modify or terminate the same in the exercise of its sound
discretion," thereby reinforcing the conclusion that the February 16, 1993 Resolution relied
upon by PCGG (which was not "confirmed and maintained" by the Court) was, in any
event, subject to modification or termination by the Sandiganbayan.
And in the exercise of its power to determine who should vote the sequestered
shares, the Sandiganbayan must be guided by the principles first enunciated in BASECO
vs. PCGG (150 SCRA 181 [1987]), and further elucidated by the Court in Cojuangco, Jr.
vs. Roxas (195 SCRA 797 [1991]), where we stated that:
Nothing is more settled than the ruling of this Court inBASECO vs.
PCGG, that the PCGG cannot exercise acts of dominion over property
sequestered. It may not vote sequestered shares of stock or elect the members
of the board of directors of the corporation concerned —
a. PCGG May Not Exercise Acts of Ownership
One thing is certain, and should be stated at the outset:the PCGG cannot
exercise acts of dominion over property sequestered, frozen or provisionally
taken over. As already stressed with no little insistence, the act of sequestration,
freezing or provisional takeover of property does not import or bring about a
divestment of title over said property; does not make the PCGG the owner
thereof. In relation to the property sequestered, frozen or provisionally taken
over, the PCGG is a conservator, not an owner. Therefore, it can not perform acts
of strict ownership; and this is specially true in the situations contemplated by the
sequestration rules where, unlike cases of receivership, for example, no court
exercises effective supervision or can upon due application and hearing, grant
authority for the performance of acts of dominion.
Equally evident is that the resort to the provisional remedies in question
shall entail the least possible interference with business operations or activities
so that, in the event that the accusation of the business enterprise being 'ill-
gotten' be not proven, it may be returned to its rightful owner as far as possible in
the same condition as it was at the time of sequestration.

b. PCGG Has Only Powers of Administration
The PCGG may thus exercise only powers of administration over the
property or business sequestered provisionally taken over, much like a court-
appointed receiver, such as to bring and defend actions in its own name; receive
rents; collect debts due; pay outstanding debts; and generally do such other acts
and things as may be necessary to fulfill its mission as conservator and
administrator. In this context, it may in addition enjoin or restrain any actual or
threatened commission of acts by any person or entity that may render moot and
academic, or frustrate or otherwise make ineffectual its efforts to carry out its
task; punish for direct or indirect contempt in accordance with the Rules of Court;
and seek and secure the assistance of any office, agency or instrumentality of
the government. In the case of sequestered businesses generally, (i.e., going
concerns, businesses in current operation), as in the case of sequestered
objects, its essential role, as already discussed, is that of conservator, 'watchdog'
or overseer, it is not that of manager, or innovator, much less an owner.
xxx xxx xxx

d. Voting of Sequestered Stock; Conditions Therefor
So, too, it is within the parameters of these conditions and circumstances
that the PCGG may properly exercise the prerogative to vote sequestered stock
of corporations, granted to it by the President of the Philippines through a
memorandum dated June 26, 1986. That memorandum authorizes the PCGG,
'pending the outcome of proceedings to determine the ownership of . . .
(sequestered) shares of stock,' 'to vote such shares of stock as it may have
sequestered in corporations at all stockholders' meetings called for the election of
directors, declaration of dividends, amendment of the Articles of Incorporation,
etc.' The Memorandum should be construed in such a manner as to be
consistent with, and not contradictory of the Executive Orders earlier
promulgated on the same matter. There should be no exercise of the right to vote
simply because the right exists, or because the stocks sequestered constitute the
controlling or a substantial part of the corporate voting power. The stock is not to
be voted to replace directors, or revise the articles or by-laws, or otherwise bring
about substantial changes in policy, program or practice of the corporation
except for demonstrably weighty and defensible grounds, and always in the
context of the stated purposes of sequestration or provisional takeover, i.e., to
prevent the dispersion or undue disposal of the corporate assets. Directors are
not to be voted out simply because the power to do so exists. Substitution of
directors is not to be done without reason or rhyme, should indeed be shunned if
at all possible, and undertaken only when essential to prevent disappearance or
wastage of corporate property, and always under such circumstances as to
assure that the replacements are truly possessed of competence, experience
and probity.
In the case at bar, there was adequate justification to vote the incumbent
directors out of office and elect others in their stead because the evidence
showed prima facie that the former were just tools of President Marcos and were
no longer owners of any stock in the firm, if they ever were at all. This is why, in
its Resolution of October 28, 1986; this Court declared that —
'Petitioner has failed to make out a case of grave abuse or excess of
jurisdiction in respondents' calling and holding of a stockholders' meeting for the
election of directors as authorized by the Memorandum of the President . . . (to
the PCGG) dated June 26, 1986, particularly, where as in this case, the
government can, through its designated directors, properly exercise control and
management over what appear to be properties and assets owned and belonging
to the government itself and over which the persons who appear in this case on
behalf of BASECO have failed to show any right or even any shareholding in said
corporation.'
It must however be emphasized that the conduct of the PCGG nominees
in the BASECO Board in the management of the company's affairs should be
henceforth be guided and governed by the norms herein laid down. They should
never for a moment allow themselves to forget that they are conservators, not
owners of the business; they are fiduciaries, trustees, of whom the highest
degree of diligence and rectitude is, in the premises, required.
xxx xxx xxx
The rule in this jurisdiction is, therefore, clear. The PCGG cannot perform
acts of strict ownership of sequestered property. It is a mere conservator. It may
not vote the shares in a corporation and elect the members of the board of
directors. The only conceivable exception is in a case of a takeover of a business
belonging to the government or whose capitalization comes from public funds,
but which landed in private hands as in BASECO.
The constitutional right against deprivation of life, liberty and property
without due process of law is so well-known and too precious so that the hand of
the PCGG must be stayed in its indiscriminate takeover of and voting of shares
allegedly ill-gotten in these cases. It is only after appropriate judicial proceedings
when a clear determination is made that said shares are truly ill-gotten when such
a takeover and exercise of acts of strict ownership by the PCGG are justified.
(pp. 808-813.)
These principles were subsequently refined in the cases of Eduardo Cojuangco, Jr.
vs. Calpo (G.R. No. 115352, June 10, 1997) and PCGG vs. Eduardo Cojuangco, Jr. (G.R.
No. 133197, January 27, 1999) where we held that:
The issue of whether PCGG may vote the sequestered shares in SMC
necessitates a determination of at least two factual matters: EDcICT
1. whether there is prima facie evidence showing that the said shares are
ill-gotten and thus belong to the State; and
2. whether there is an imminent danger of dissipation thus necessitating
their continued sequestration and voting by the PCGG while the main issue
pends with the Sandiganbayan.
The foregoing two points require presentation of evidence which can only
be done before the Sandiganbayan, it being settled that the Supreme Court is not
a trier of facts.
(p. 2, Resolution, June 10, 1997.)
However, the majority opinion holds that the two-tiered test above-enunciated finds
no application to the case of a take-over of a business belonging to government or whose
capitalization comes from public funds, but which landed in private hands, citing Cojuangco
vs. Roxas and BASECO as authority therefor. The majority opinion asserts that the
government is granted authority to vote sequestered shares:
1. Where government shares are taken over by private persons or entities
who/which registered them in their own names; and
2. Where the capitalization or shares that were acquired with public funds
somehow landed in private hands.
In fine, the majority points out that since the instant case involves shares that were
acquired with public funds which somehow landed in private hands, there is no more need
to apply the two-tiered test, the right to vote said shares automatically vesting in the
government, acting through the PCGG.
As stated earlier, the Court, in Cojuangco vs. Roxas, unequivocally declared that "
[t]he rule in this jurisdiction is, therefore, clear. The PCGG cannot perform acts of strict
ownership of sequestered property. It is a mere conservator. It may not vote the shares in a
corporation and elect the members of the board of directors. The only conceivable
exception is in a case of a takeover of a business belonging to the government or whose
capitalization comes from public funds, but which landed in private hands as in BASECO."
Thus, it is well-settled that the only instance when PCGG can vote the shares in a
sequestered corporation is in case of a takeover of a business belonging to the
government or whose capitalization comes from public funds, but which landed in private
hands. The foregoing principle, as stated in the majority opinion, has been reiterated in
many subsequent cases, most recently in Antiporda vs. Sandiganbayan (G.R. No. 116941,
May 31, 2001).
On the other hand, the two-tiered test, first enunciated in Cojuangco vs. Calpo and
subsequently in PCGG vs. Cojuangco Jr., provides the guidelines or requisites to be
fulfilled in determining whether or not PCGG can vote shares in a sequestered corporation.
Since PCGG can vote the shares in a sequestered corporation only in case of a takeover
of a business belonging to the government or whose capitalization comes from public
funds, but which landed in private hands, plainly the two-tiered test is applicable only in this
instance. In other words, the two-tiered test is designed precisely to verify whether or not
the sequestered corporation is a business belonging to the government or whose
capitalization comes from public funds, but which landed in private hands! Thus, I submit
that the Sandiganbayan did not err when it applied the two-tiered test in disallowing the
PCGG to vote the sequestered shares.
In authorizing COCOFED, Ballares, and Eduardo Cojuangco, Jr. to exercise their
right to vote their shares of stock, the Sandiganbayan stated:
Jurisprudence, from as far back as the leading case of Baseco (150 SCRA
181), has clearly defined the functions and authority of the PCGG in relation to
sequestered property. Be it noted by way of footnote that government agencies
as well as government officials, do not have rights in the exercise of the functions
of the office. They have only duties to perform and authority by means of which
they may comply with those duties under the law.
In this instance, the issue is whether or not the authority of the PCGG
exists to remain in control of the voting rights of sequestered shares of stock in
general, and whether or not the sequestered shares of stock in the UCPB in
particular may be voted by it as part of its functions as sequestor of these shares
of stock; corollarily, may the moving stockholders exercise of their proprietary
rights over the shares of stock, save for the limitations of free disposal, until
judgment shall have been rendered against them thereon.
It may be stated that jurisprudence has evolved from certain categorical
positions originally enunciated to more refinements as time and events
demonstrated to be appropriate. Let it also be noted that jurisprudence has not
reversed itself; rather, jurisprudence has re-stated the rules as the circumstances
and the facts presented before the courts had required in order to put in proper
perspective the earlier assertions of jurisprudence.
In this light, the Court is faced now with the question: Who may vote
sequestered shares of stock in general, and who may vote them in the particular
instance of the UCPB shares of stock at its scheduled Stockholders' Meeting on
March 5, 2001? CacTIE
xxx xxx xxx

In the light of all of the above, the Court submits itself to jurisprudence and
with the statements of the Supreme Court in G.R. No. 115352 entitled Enrique
Cojuangco, Jr., et al. vs. Jaime Calpo, et al. dated June 10, 1997, as well as the
resolution of the Supreme Court promulgated on January 27, 1999 in the case of
PCGG vs. Eduardo Cojuangco, Jr. , et al., G.R. No. 13319 which included the
Sandiganbayan as one of the respondents. In these two cases, the Supreme
Court ruled that the voting of sequestered shares of stock is governed by two
considerations, namely,
1. whether there is prima facie evidence showing that the said shares are
ill-gotten and thus belong to the State; and
2. whether there is an imminent danger of dissipation thus necessitating
their continued sequestration and voting by the PCGG while the
main issue pends with the Sandiganbayan.
(p. 5, Presidential Commission on Good Government vs. Eduardo

M. Cojuangco, Jr., et al., supra)
This ruling does not state where, what or who the cause of the dissipation
might be to justify the vote by the PCGG of the shares under sequestration. If the
registered stockholders, however, have not participated in the management of
the corporation, and the dissipation has not been demonstrated to have been
caused either by the stockholders' action in the past, nor by action independent
of the management during sequestration, then whatever "imminent danger of
dissipation necessitating their continued sequestration and voting by the PCGG. .
." could not be raised against the voting rights of the asserting stockholders.
The Court has sought to obtain by all means any form of reinforcement
from the PCGG on this matter, not only this morning but over the months that go
as far back as July of the year 2000. Much to the impatience of this Court, the
matter has not been responded to in any satisfactory manner.
(pp. 2-5, Order dated February 28, 2001.)

A perusal of the above order would show that the Sandiganbayan, in allowing private
respondents to vote their shares, merely followed judicial precedents laid down by the
Court. These decisions have not been challenged by the PCGG. Their review, much less
reversal, has not been sought. They continue to express good law. I find no "patent or
gross" arbitrariness or despotism by reason of passion or personal hostility in the
Sandiganbayan's adherence to these precedents. I thus submit that one can hardly
characterize the Sandiganbayan's order authorizing private respondents to vote their
sequestered shares of stock as having been issued with grave abuse of discretion. CSAcTa
Additionally, Cojuangco, Jr. vs. Roxas is cited by the other side as authority for the
proposition that PCGG should be the one to vote the sequestered shares, the Court having
declared in Roxas that: "[t]he only conceivable exception (to the rule that PCGG may not
vote the shares in a corporation and elect the members of the board of directors) is in a
case of a takeover of a business belonging to the government or whose capitalization
comes from public funds, but which landed in private hands as in BASECO." PCGG thus,
likens the facts of the instant petition to the BASECO case.
The BASECO case does not support petitioner's position. It was proven in the
BASECO case that 95.82% of the outstanding stock of B ASECO, endorsed in blank by the
owners thereof, were inexplicably in the possession of then President Marcos. More, deeds
of assignment of practically all the stock of the corporations owning the aforementioned
95.82% were also inexplicably in the possession of President Marcos. Thus, in the case of
BASECO, the directors thereof were merely Marcos nominees or dummies, it having been
proven that President Marcos not only exercised control over BASECO but also that he
actually owned almost 100% of BASECO's outstanding stock. Then too, it was proven that
BASECO had been able to take-over and acquire the business and assets of the National
Shipyard and Steel Corporation and other government-owned or controlled entities through
the undue exercise by then President Marcos of his powers, authority, and influence. Upon
these premises, the Court held that the government could properly exercise control and
management over what appeared to be properties and assets owned and belonging to the
government itself. Hereunder are the pertinent observations of the Court in said case:
The facts show that the corporation known as BASECO was owned or
controlled by President Marcos "during his administration, through nominees, by
taking undue advantage of his public office and/or using his powers, authority, or
influence," and that it was by and through the same means, that BASECO had
taken over the business and/or assets of the National Shipyard and Engineering
Co., Inc., and other government-owned or controlled entities.
xxx xxx xxx
In the case at bar, there was adequate justification to vote the incumbent
directors out of office and elect others in their stead because the evidence
showed prima facie that the former were just tools of President Marcos and were
no longer owners of any stock in the firm, if they ever were at all. This is why, in
its Resolution of October 28, 1986; this Court declared that —
Petitioner has failed to make out a case of grave abuse or excess
of jurisdiction in respondents' calling and holding of a stockholders'
meeting for the election of directors as authorized by the memorandum of
the President (to the PCGG) dated June 26, 1986, particularly, where as in
this case, the government can, though its designated directors, properly
exercise control and management over what appear to be properties and
assets owned and belonging to the government itself and over which the
persons who appear in this case on behalf of BASECO have failed to
show any right or even any shareholding in said corporation."
In contrast, respondents in the instant case are the registered stockholders. No

evidence was presented before the Sandiganbayan showing that respondents are mere
"tools of President Marcos and were no longer owners of any stock in the firm if they ever
were at all."
Nor has it been shown that the sequestered UCPB shares of stock were inexplicably
acquired by respondents. Respondent Cojuangco Jr. obtained his shares by virtue of an
agreement with the Philippine Coconut Authority (PCA) whereby, as compensation for
exercising his personal and exclusive option to acquire UCPB shares, Cojuangco Jr. would
receive 1 share for every 9 acquired by PCA. The UCPB shares of stock in the name of the
1,405,366 coconut-farmers, on the other hand, were distributed to them by virtue of
Presidential Decree No. 755, which authorized the distribution of UCPB's shares of stock,
free, to coconut farmers. Other UCPB shares were acquired by the CIIF companies. It is
precisely the validity of these acquisitions which is under litigation in the main case pending
with the Sandiganbayan.
The view expressed by the majority that the UCPB shares, having been acquired
with the use of coconut levy funds, and, therefore belong to the government, may very well
turn out to be correct. However, since these issues are still pending litigation at the
Sandiganbayan, it would be premature, I submit, to rule on this point at this time. Verily,
the validity of the acquisition by Cojuangco Jr., et al. of their UCPB shares is the very lis
mota of the action for reconveyance, accounting, reversion, and restitution filed by the
PCGG with the Sandiganbayan. To rule on this matter would be to preempt said court.
Too, the argument that the coconut levy funds used to purchase the sequestered
UCPB shares of stock are public funds does not appear to have been raised before the
Sandiganbayan; consequently, the Sandiganbayan did not rule on the nature of the fund. It
would be absurd to hold that the Sandiganbayan gravely abused its discretion in not
holding that the sequestered shares belong prima facie to the government, the issue of
whether or not coconut levy funds are public funds not having been raised before it.
Moreover, and as mentioned earlier, the nature of the funds used is a matter which
should be decided first-hand by the Sandiganbayan when-it resolves the merits of Civil
Case No. 0033-A. Note should also be taken of the fact that the determination of whether
the coconut levy funds are public funds involves the ascertainment of the constitutionality
of Section 5, Article III of Presidential Decree No. 961 and Section 5, Article III of
Presidential Decree No. 1468, both of which contain the following identical provisions:
Section 5. Exemptions. — The Coconut Consumers Stabilization Fund and

the Coconut Industry Development Fund as well as all disbursements of said
Funds for the benefit of the coconut farmers as herein authorized shall not be
construed or interpreted, under any law or regulation, as special or fiduciary
funds, or as part of the general funds of the national government within the
contemplation of P.D. 771; nor as a subsidy, donation, levy, government funded
investment or government share within the contemplation of P.D. 898, the
intention being that said Fund and the disbursements thereof as herein
authorized for the benefit of the coconut farmers shall be owned by them in their
own private capacities.
Presidential Decree No. 961 and 1468 have not been repealed, revoked, or declared
unconstitutional, hence they are presumed valid and binding. Without a previous
declaration of unconstitutionality, the coconut levy funds may not thus be characterized as
prima facie belonging to the government. That issue must first be resolved by the
Sandiganbayan. In fact, when the Solicitor General, in G.R. No. 96073, filed a motion to
declare the coconut levies collected pursuant to the various issuances as public funds and
to declare Section 5, Article III of Presidential Decree No. 1468 as unconstitutional, the
Court denied the same in a Resolution dated March 26, 1996.
Parenthetically, in Philippine Coconut Producers Federation, Inc . vs. PCGG (supra),

the Court ruled that the fund is "affected with public interest," implying that the fund is
private in character. If the coconut levy funds were public funds, then the Court would have
so held and there would be no reason to describe the same as funds "affected with public
interest." It may not, thus, be immediately said that the coconut levy funds are public funds,
the resolution of the issue being left, at the first instance, with the Sandiganbayan. HDTSIE
And if it is to be recalled, the issue involved herein is whether or not the

Sandiganbayan committed grave abuse of discretion when it issued the disputed order
allowing respondents to vote the UCPB shares of stock registered in their names. The
question of whether the coconut levy funds are public funds is not in issue here. In fact, the
constitutionality of Presidential Decree No. 961 and 1468 have not been raised by the
PCGG during the proceedings before the Sandiganbayan.
Moreover, it should be pointed out that the avowed purpose of sequestration is to
preserve the assets sequestered to assure that if, and when, judgment is rendered in favor
of the petitioner, the judgment may be implemented. "Preservation", not "deprivation"
before judgment, is its essence. That is why in BASECO, we emphasized:
d. No Divestment of Title Over Property Seized

It may perhaps be well at this point to stress once again the provisional,
contingent character of the remedies just described. Indeed the law plainly
qualifies the remedy of takeover by the adjective, "provisional." These remedies
may be resorted to only for a particular exigency: to prevent in the public interest
the disappearance or dissipation of property or business, and conserve it pending
adjudgment in appropriate proceedings of the primary issue of whether or not the
acquisition of title or other right thereto by the apparent owner was attended by
some vitiating anomaly. None of the remedies is meant to deprive the owner or
possessor of his title or any right to the property sequestered, frozen or taken
over and vest it in the sequestering agency, the Government or other person.
This can be done only for the causes and by the processes laid down by law.
That this is the sense in which the power to sequester, freeze or
provisionally take over is to be understood and exercised, the language of the
executive orders in question leaves no doubt. Executive Order No. 1 declares
that the sequestration of property the acquisition of which is suspect shall last
"until the transactions leading to such acquisition . . . can be disposed of by the
appropriate authorities." Executive Order No. 2 declares that the assets or
properties therein mentioned shall remain frozen "pending the outcome of
appropriate proceedings in the Philippines to determine whether any such assets

or properties were acquired" by illegal means. Executive Order No. 14 makes
clear that judicial proceedings are essential for the resolution of the basic issue
of whether or not particular assets are "ill-gotten," and resultant recovery thereof
by the Government is warranted.
(pp. 211-212.)
In the instant case, however, the actuations of PCGG with regard to the sequestered
shares partake more of deprivation rather than preservation. As pointed out by
respondents, since 1986, only one (1) stockholders' meeting of UCPB has been held. At
this meeting, PCGG voted all of the shares, as a result of which all members of the Board
of UCPB, since 1986 to the present, have been PCGG nominees. When vacancies in the
Board occur because of resignation, replacements are installed by the remaining members
of the Board-on nomination of the PCGG. The stockholders' meeting scheduled on March
6, 2001 would have been the first stockholders' meeting since 1986 at which registered
stockholders would exercise their right to vote and by their vote elect the members of the
Board of Directors.
Also, the shares of stock in UCPB were sequestered in 1986. The civil action
"Republic of the Philippines v. Eduardo M. Cojuangco, Jr. , Civil Case No. 033," was
instituted before the Sandiganbayan on July 30, 1987. This action included, among other
things, the UCPB shares of stock and was filed to maintain the effectivity of the writs of
sequestration pursuant to Section 26, Article XVIII of the Constitution. Notwithstanding the
lapse of more than 14 years, the proceedings have barely gone beyond the pre-trial stage.
PCGG's exercise of the right to vote the sequestered shares of stock for a period of 14
years constitutes effectively a deprivation of a property right belonging to the registered
stockholders (18 Am. Jur. 2d, Corporations 2d Section 1065, p. 859, citing cases), a state
of affairs not within the contemplation of "sequestration" as a means of preservation of
assets.
To recapitulate, evaluated in accordance with applicable jurisprudence, I hold that
the issuance by respondent Sandiganbayan of its impugned Order dated February 28,
2001, is clearly not an act committed in grave abuse of discretion. Simply put, petitioner
PCGG failed to persuade the Sandiganbayan — on the basis of the "two-tiered test"
enunciated by this Court in the San Miguel case, supra — that it is entitled to vote the
UCPB sequestered shares. Verily, the Sandiganbayan was duty-bound to comply with the
jurisprudence laid down by the Court on the matter. This is certainly not a case of abuse,
much more grave abuse of discretion, on the part of respondent Sandiganbayan.
I regret to say that I find unacceptable the contention that the " law of the case"
herein should be the Resolution dated February 16, 1993 in Republic of the Philippines vs.
Sandiganbayan, et al. For one, the UCPB shares of stock of respondents COCOFED, et
al. and Ballares, et al. are not the subject of the case relied upon. Hence, the Resolution
therein could not have referred to or covered said shares. For another, and more
importantly, what is invoked by petitioner is, in effect, merely a restraining order which was
not re-affirmed by the Court when we rendered the main decision in the said consolidated
sequestration cases.
Rather, what I believe is truly applicable herein is the Court's decision in COCOFED
vs. PCGG (178 SCRA 236 [1989]) wherein it was held that "the incidents concerning the
voting of the sequestered shares, the COCOFED elections, and the replacement of
directors, being matters incidental to the sequestration, should be addressed to the
Sandiganbayan." Thus, the Sandiganbayan has been given by the Court full discretion to
evaluate and to allow or disallow the duly registered stockholders of the UCPB shares to
exercise the right to vote the said shares in the UCPB elections and/or
appointment/replacement of its directors. If, as in the case at hand, the Sandiganbayan, in
the exercise of its sound discretion and for justifiable reasons cited in its assailed Order of
February 28, 2001, allowed herein private respondents to vote the sequestered shares in
question, one would simply be at a loss to understand how such action could be said to be
tainted with grave abuse of discretion. AcHEaS
FOR THE FOREGOING REASONS, I vote to DISMISS the instant petition for lack
of merit.
Footnotes
1. According to Section 1, Rule 7 of the 1997 Rules of Court, “[t]he title of the action
indicates the names of the parties. They shall all be named in the original complaint or
petition; . . . . Furthermore, Section 2, Rule 3 of the same Rules, states that “[e]very
action must be prosecuted or defended in the name of the real party in interest. The
said Rule defines a real party in interest as “the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. The
Court however notes that the names of all the private respondents have never been
specifically stated or identified. Often, they are merely referred to as the “one million
coconut farmers, but no names have been listed here or in the Sandiganbayan
pleadings submitted as annexes to the submissions in this case.
2. Rollo, pp. 34-41.
3. Signed by Presiding Justice Francis E. Garchitorena and Associate Justices Catalino R.

Castañeda Jr. and Gregory S. Ong.
4. Assailed Order, p. 6; Rollo, p. 39.
5. See Vital Legal Documents in the New People’s Government, Vol. 99, pp. 23-25.
6. Ibid., pp. 30-32.
7. Id., pp. 49-52.
8. Republic v. Sandiganbayan, 310 Phil 401, 415-416, January 23, 1995, per Narvasa,
C.J.
9. Second Whereas Clause, Executive Order No. 2.
10. Republic v. Sandiganbayan, supra., note 8, p. 418.
11. Entitled "Class Action Omnibus Motion", rollo, pp. 418-446.
12. Resolution dated November 15, 1990; Rollo, pp. 448-465.
13. Resolution dated February 16, 1993, pp. 5-6; Rollo, pp. 72-73.
14. Ibid., p. 6; Rollo, p. 73

15. Republic v. Sandiganbayan, supra., per Narvasa, C.J.
16. Ibid.
17. Rollo, pp. 42-67.
18. Ibid., p. 42; original in upper case.

19. Pursuant to this Court’s Resolution dated April 17, 2001, the parties submitted their
respective Memoranda: on May 2, 2001, the Court received those of the main parties
and on May 8, 2001, the Memorandum for the intervenors. Finally, on May 21, 2001,
intervenors filed their Manifestation (In Aid of Memorandum). The case was deemed
submitted for decision on the last-mentioned date.
20. Justices Vitug, Panganiban and Gonzaga-Reyes voted in favor and Justices Melo and
Sandoval-Gutierrez voted against.
21. Resolution dated March 6, 2001; Rollo, p. 221.
22. Urgent Motion dated March 7, 2001; Rollo, pp. 224-230.
23. Resolution dated March 13, 2001; Rollo, p. 728-A.
24. Urgent Petition, pp. 12-13; Rollo, pp. 13-14. Original in upper case.
25. Sec. 24 of the Corporation Code (Batas Pambansa Blg. 68) provides as follows:
“SEC. 24. Election of directors or trustees. — At all elections of directors or trustees, there
must be present, either in person or by representative authorized to act by written proxy,
the owners of the majority of the outstanding capital stock, or if there be no capital
stock, a majority of the members entitled to vote. The election must be by ballot if
requested by any voting stockholder or member. In stock corporations, every
stockholder entitled to vote shall have the right to vote in person or by proxy the number
of shares of stock standing, at the time fixed in the by-laws, in his own name on the
stock books of the corporation, or where the by-laws are silent, at the time of the
election; and said stockholder may vote such number of shares for as many persons as
there are directors to be elected or he may cumulate said shares and give one
candidate as many votes as the number of directors to be elected multiplied by the
number of his shares shall equal, or he may distribute them on the same principle
among as many candidates as he shall see fit: Provided, That the total number of votes
cast by him shall not exceed the number of shares owned by him as shown in the books
of the corporation multiplied by the whole number of directors to be elected: Provided,
however, That no delinquent stock shall be voted. Unless otherwise provided in the
articles of incorporation or in the by-laws, members of corporations which have no
capital stock may cast as many votes as there are trustees to be elected but may not
cast more than one vote for one candidate. Candidates receiving the highest number of
votes shall be declared elected. Any meeting of the stockholders or members called for
an election may adjourn from day to day or from time to time but not sine die or
indefinitely if, for any reason, no election is held, or if there are not present or
represented by proxy, at the meeting, the owners of a majority of the outstanding capital
stock, or if there be no capital stock, a majority of the members entitled to vote.
Under this Section, a director must own at least one share in his name.
26. Baseco v. PCGG, infra; and Cojuangco Jr. v. Roxas, infra.

27. G.R. No. 115352, June 10, 1993.
28. 302 SCRA 217, G.R. No. 133197, January 27, 1999.
29. 150 SCRA 181, L-75885, May 27, 1987.

30. 195 SCRA 797, G.R. No. 91925, April 16, 1991.
31. Baseco v. PCGG, supra, p. 219, per Narvasa, J. (later C.J.).
32. Ibid., p. 237.
33. Id., p. 239.
34. Id., p. 253.
35. Supra.
36. Ibid., p. 813, per Gancayco, J.

37. G.R. No. 116941, May 31, 2001.
38. Supra.
39. G.R. No. 116941, May 31, 2001, p. 16, per Ynares-Santiago,J.
40. Transcript of Oral Arguments, April 17, 2001, pp. 171, 173. During the same Oral
Argument, Private Respondent Cojuangco similarly admitted that the “entire amount
paid for the shares had come from the Philippine Coconut Authority. TSN, p. 115.
41. 178 SCRA 236, 245-246, October 2, 1989, per Narvasa,J. (later C.J.).
42. Resolution dated February 16, 1993, G.R. No. 96073.
43. Ibid., p. 3.
44. Id., pp. 5-6.

45. Memorandum for Petitioner, pp. 56-57.
46. Cocofed v. PCGG, supra, pp. 252-253.
47. Supra.
48. Beckner v. Commonwealth, 5 SE2d 525, November 20, 1939.
49. Fitch v. Wisconsin Tax Commission, 230 NW 37, April 1, 1930, citing Cooley on
Taxation (3rd ed.).
50. Par. 1(a), P.D. No. 276, August 20, 1973.
51. July 14, 1976.

52. June 11, 1978.
53. Art. III, Â§1, P.D. No. 961, July 14, 1976; and Art. III, Â§1, P.D. No. 1468, June 11,
1978.
54. Par. 3, P.D. No. 276, August 20, 1973.

55. Art. IV, Â§1, P.D. No. 961, July 14, 1976; and Art. IV, Â§1, P.D. No. 1468, June 11,
1978. It should be noted that in P.D. No. 1468, the last sentence reads, “Aliens found
guilty of any offense shall, after having served his sentence, be immediately deported . .
.
56. Memorandum for Petitioner, supra, p. 23.

57. 208 SCRA 726, May 8, 1992.
58. 220 SCRA 703, March 31, 1993.
59. Supra.
60. Ibid., p. 239.
61. Id., p. 252.
62. 158 SCRA 626, March 15, 1988, per Melencio-Herrera, J.
63. Ibid., pp. 632-633.
64. Id., pp. 633-634.
65. Osmeña v. Orbos, 220 SCRA 703, 711, March 31, 1993, per Narvasa,C.J.
66. 232 SCRA 110, 155, May 5, 1994.
67. Ibid., pp. 155-156.

68. Exh. “196. This Exhibit is the July 18, 1975 letter of Rolando de la Cuesta, acting
corporate secretary of the Philippine Coconut Authority, to Finance Secretary Cesar
Virata, submitted as part of the Class Action Omnibus Motion for Respondents
COCOFED, et al. (which was adopted by Private Respondent Cojuangco), found in
Folder 6.
69. Ibid.
70. Attachment “M of the Memorandum for Petitioner.
71. Ibid.
72. Art. IX-D, Â§2(1).
73. BIR Ruling No. 354-92, December 15, 1992.
74. Vital Legal Documents, pp. 329-330.

75. E.O. No. 504 directed the COA “to make an examination into the . . . Coconut
Consumers Stabilization Fund Levy.
76. Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the

Philippines, Vol. III, 1996 ed., p. 535.
77. Ibid.
78. Vitug, Compendium of Civil Law and Jurisprudence, 1993 ed., p. 283.
79. Ibid.
80. SECTION 1. Petition for certiorari — When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is
no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
81. Cuison v. Court of Appeals, 289 SCRA 161, April 15, 1998, per Panganiban,J., citing
People v. Court of Appeals, 101 SCRA 450, 465, per Melencio-Herrera, J.
82. Ibid., p. 173.
83. Diamante v. CA, 206 SCRA 52, 63-64, February 7, 1992, per Davide, Jr.,J . (now
C.J.), citing Insular Life Assurance Co. Ltd. Employees Association-NATU v. Insular Life
Assurance Co. Ltd., 76 SCRA 50, 61-62, March 10, 1997, per Castro,C.J.
84. Ibid.
85. Rollo, pp. 779-797.
VITUG, J.:
1. 178 SCRA 236.
2. Id., p. 242.
3. G.R. No. 115352, 10 June 1997.
4. 302 SCRA 217.
5. Cojuangco vs. Roxas, 195 SCRA 797; BASECO vs. PCGG, 150 SCRA 181.
6. COCOFED vs. PCGG, supra.
7. Memorandum for Respondents COCOFED, et al. and Ballares, et al., pp. 4-6.
8. COCOFED vs. PCGG, supra.

9. Article VI, Section 29, par. 3, 1987 Constitution.
10. Corpus Juris Secundum, 1057-1059; State ex rel. Sathre vs. Hopton, 265 N.W. 395,
66 N.D. 313; citing Glendale Union High School Dist. No. 11, 99 P. 2d 482, 55 Ariz. 151.
11. Art. VI, Sec. 29 (1), 1987 Constitution.
12. Memorandum for Respondent Eduardo Cojuangco, Jr., p. 3; Comment on the Petition,
Annexes A and B.

Republic v. COCOFED

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Republic v. COCOFED

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EN BANC

[G.R. Nos. 147062-64. December 14, 2001.]

REPUBLIC OF THE PHILIPPINES, represented by the

The Solicitor General for petitioners.

Mario E. Ongkiko for petitioners-intervenors.

Estelito P. Mendoza for E.M. Cojuangco, Jr.

Sycip Salazar Hernandez & Gatmaitan for UCPB.

Pursuant to these laws, the PCGG issued and implemented numerous

The Respondent Sandiganbayan violated petitioner’s right to due process

This Court’s Ruling

Who May Vote the Sequestered Shares of Stock?

General Rule: Sequestered Shares

Are Voted by the Registered Holder

Sequestered Shares Acquired with

Public Funds Are an Exception

Citing an earlier Resolution, it ruled further:

In short, when sequestered shares registered in the names of private individuals or

UCPB Shares Were Acquired

With Coconut Levy Funds

xxx xxx xxx

Coconut Levy Funds Are

Affected With Public Interest

The Resolution issued by the Court on February 16, 1993 in Republic v.

xxx xxx xxx

CD Technologies Asia, Inc. 2024 cdasiaonline.com

This argument is aptly answered by petitioner in its Memorandum, which we quote:

Coconut Levy Funds Are

Prima Facie Public Funds

1. Coconut Levy Funds Are Raised Through

the State’s Police and Taxing Powers.

Such penalties were later amended thus:

2. Coconut Funds Are Levied for the Benefit

of the Coconut Industry and Its Farmers.

The Court further explained: 64

“The character of the Stabilization Fund as a special fund is emphasized

In his Concurring Opinion in Kilosbayan v. Guingona , 66 Justice Florentino P.

3. Respondents Judicially Admit That

the Levies Are Government Funds.

4. The COA Audit Shows the

Public Nature of the Funds.

5. The BIR Has Pronounced That the

Coconut Levy Funds Are Taxes.

6. Laws Governing Coconut Levies

Recognize Their Public Nature.

Moreover, even President Marcos himself, as the sole legislative/executive authority

Having Been Acquired With Public

Funds, UCPB Shares Belong, Prima

Facie, to the Government

Procedural and Incidental Issues:

Grave Abuse of Discretion,

and Intervenors’ Relief

The Public Character of

Shares Is a Valid Issue

Melo, J., see dissenting opinion.

Puno, J., joins the separate opinion of J. Vitug.

Vitug, J., see separate opinion.

Kapunan, Ynares-Santiago, Sandoval-Gutierrez, JJ., concur with the dissenting

Pardo, J., Join in the result of the dissents

VITUG, J., separate opinion:

11. Entitled "Class Action Omnibus Motion", rollo, pp. 418-446.

70. Attachment “M of the Memorandum for Petitioner.