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-ORGANIZATIONS v. EXECUTIVE SECRETARY

FACTS:

The case involves consolidated petitions challenging the constitutionality of certain presidential decrees and executive orders from the martial law era related to the raising and use of coco-levy funds. In 1971, Republic Act (R.A.) 6260 was enacted, establishing the Coconut Investment Fund (CI Fund) for the development of the coconut industry. Coconut farmers were required to pay a levy on the sale of copra, which they could convert into shares of stock in the Coconut Investment Company (CIC). In 1973, President Ferdinand E. Marcos issued Presidential Decree (P.D.) 276, which established the Coconut Consumers Stabilization Fund (CCS Fund) to address a crisis in the domestic market for coconut-based consumer goods.

In 1974, President Marcos issued P.D. 582, creating the Coconut Industry Development Fund (CID Fund) to directly benefit coconut farmers. The fund was to be funded by levies paid by coconut farmers and administered by the Philippine Coconut Authority (PCA) and the Philippine National Bank (PNB). In 1975, President Marcos enacted P.D. 755, which approved the acquisition of a commercial bank, which eventually became the United Coconut Planters Bank (UCPB). In 1976, President Marcos enacted P.D. 961, the Coconut Industry Code, which consolidated and codified existing laws. The Code provided for investments in corporations related to the coconut industry, with shares to be distributed to coconut farmers. President Marcos issued other decrees suspending and reviving the collections of the CCS Fund and the CID Fund. In 2000, President Joseph Estrada issued an executive order establishing a program to provide income supplement to coconut farmers and create a sustainable local market demand for coconut products.

The petitioners, various organizations, legislators, and individuals, argue that these decrees and orders violate the Constitution. Former President Gloria Macapagal-Arroyo later ordered the suspension of E.O.s 312 and 313, but the present action was filed to challenge their constitutionality. The issues raised in this case include the propriety of the remedy of certiorari, legal standing of the petitioners, whether coco-levy funds are public funds, and the constitutionality of the mentioned laws and executive orders. The Court recognized the right of the petitioners to file the petitions, clarified that coco-levy funds are prima facie public funds, and emphasized that the use of coco-levy funds should support a proper governmental purpose. The coco-levy funds were imposed by R.A. 6260 and P.D. 276, collected and managed by the PCA, an independent government corporation under the President. The funds sought to support the coconut industry and provide economic benefits for coconut farmers and farm workers. Unlike ordinary revenue laws, the coco-levy funds were specifically raised for the rehabilitation and stabilization of the coconut industry, which is within the police power of the State. UCPB argued that the coco-levy funds are similar to SSS funds, but the SSS Law collects premium contributions, not taxes, and the benefits accrue to SSS members individually. In contrast, the coco-levy funds belong to the government and are subject to its administration and disposition. The Court found no substantial distinction between these funds and the coco-levy funds.

ISSUES:

  1. Whether the coco-levy funds are public or private funds.

  2. Whether Section 2 of P.D. 755, as well as identical provisions in subsequent presidential decrees, declaring coco-levy funds as non-special or fiduciary funds and as private property of coconut farmers, are valid and constitutional.

  3. Whether the provision declaring the coco-levy funds as private properties of coconut farmers is valid.

  4. Whether the provisions removing the coco-levy funds from COA scrutiny are valid.

  5. Whether the provision in E.O. 313 allowing the use of coco-levy funds for improving productivity in other food areas is valid.

  6. Whether Executive Order (E.O.) 313, which allows the use of coco-levy funds for agriculturally-related programs, runs counter to the constitutional provision that money collected on any tax levied for a special purpose shall be treated as a special fund and paid out only for that purpose.

  7. Whether E.O. 313 and E.O. 312 transgress the provisions of Presidential Decree (P.D.) 1445, Section 84(2), which states that the disposition of special funds shall be in accordance with appropriation laws.

  8. Whether or not Executive Order (E.O.) 312 is unconstitutional.

  9. Whether or not E.O. 313 is unconstitutional.

RULING:

  1. The coco-levy funds are public funds. SSS members do not lose ownership of their contributions, as the government merely holds these in trust for their future benefits. On the other hand, the coco-levy funds belong to the government and are subject to its administration and disposition.

  2. Section 2 of P.D. 755, along with identical provisions in subsequent presidential decrees declaring coco-levy funds as non-special or fiduciary funds and as private property of coconut farmers, is unconstitutional. In a previous case, the Court has already held Section 2 of P.D. 755 as unconstitutional for allowing the Philippine Coconut Authority (PCA) to use portions of the funds for purposes unrelated to the benefit of coconut farmers. Identical provisions in subsequent presidential decrees have also declared coco-levy funds as private funds. However, despite these declarations, the government continued to possess and control the funds.

  3. The provision declaring the coco-levy funds as private properties of coconut farmers is void. Coco-levy funds are public funds raised through taxation and cannot be declared as private properties of individuals, even if they fall within a distinct group of persons.

  4. The provisions removing the coco-levy funds from COA scrutiny are invalid. Coco-levy funds, being taxes, are subject to the examination and audit powers of the COA as provided in the 1987 Constitution and other laws.

  5. The provision in E.O. 313 allowing the use of coco-levy funds for improving productivity in other food areas is invalid. The coco-levy funds are specifically raised for the benefit of the coconut farmers and the coconut industry, not for improving productivity in other food areas.

  6. The Supreme Court held that E.O. 313 violates the constitutional provision that funds collected for a special purpose must be paid out only for that purpose. Assisting other agriculturally-related programs is beyond the objective of promoting the interests of the coconut industry and its farmers. Furthermore, E.O. 313 and E.O. 312 violate P.D. 1445, Section 84(2), as they transfer the power to allocate and disburse coco-levy funds without legislative authorization.

  7. The Supreme Court declares E.O. 312 and E.O. 313 as void and unconstitutional.

PRINCIPLES:

  • SSS contributions are not public funds but belong to the members who paid them, while coco-levy funds are public funds subject to government administration and disposition.

  • Coco-levy funds are special funds, similar to other special funds for specific industries, and must be treated and managed as public funds.

  • Section 2 of P.D. 755, declaring coco-levy funds as non-special or fiduciary funds and as private property of coconut farmers, is unconstitutional. Identical provisions in subsequent presidential decrees have the same effect.

  • Ownership requires complete control over a thing that is not prohibited by law or conflicting with the rights of another.

  • Coco-levy funds are public funds raised through taxation and cannot be declared as private properties of individuals.

  • Taxes can only be exacted for a public purpose.

  • Public purpose, for the purpose of taxation, includes the promotion of social justice.

  • Public funds may be used for social amelioration and the support of the poor, which is recognized as a public duty.

  • Appropriating public funds for private purposes violates the citizens' right to substantive due process.

  • Coco-levy funds, being taxes, are subject to the examination and audit powers of the COA.

  • The provisions of a law or executive order must be consistent with its title and special purpose.

  • Funds collected on any tax levied for a special purpose shall be treated as a special fund and paid out only for that purpose.

  • The disposition of special funds shall be in accordance with appropriation laws.

  • An executive order cannot repeal a presidential decree which has the same standing as a statute enacted by Congress.

  • The principle of separability applies when part of a statute is void, but if the parts of a statute are so mutually dependent and connected, the nullity of one part will vitiate the rest.

  • If some parts of a statute are unconstitutional and the remaining provisions are dependent, conditional, or connected with the unconstitutional part, they will also be declared void.